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The Commission Guessing Game

By on | 4 Comments

Question: Have IFP agent commissions been announced yet?

Answer: I get that question every day and it’s time I deal with it. So here we go. They can’t stall much longer. A highly placed spokesperson for one of the “Big 4” IFP carriers told me that they will announce IFP agent commissions within the next 10 days and their commission will be between 4% to 6% of premium with renewals at the same rate. We cannot assume, however, that all carrier commission rates will be the same. In fact, we could see some pretty dramatic variations in commission rates among carriers. I know this because, carriers had to include agent commissions in their DOI Rate Filings for 2014 and though they are not bound by the fillings, you can assume that’s what they targeted in order to meet their MLR goal. The range among carriers is surprisingly wide: from a high of 7.6% of premium to a low of 2.5% of premium. By the way, I don’t mean to imply that all carriers will pay on a percentage basis. We will probably see some carriers paying a flat fee per member per month. While IFP commissions used to be 4 times higher on average, selling will be a lot easier. Even so, agents may feel like the famous discount seller. When asked how he could afford to sell so cheap, he answered, “I lose money on every sale, but I make it up on volume”.


Anthem BC is not on the Exchange. Personally, I choose not to represent Anthem BC for other reasons, so I do not know what Anthem’s commission structure is or is not. But changing commissions in the manner described is perhaps one of the reasons they were kicked off the Exchange — you cannot discriminate against persons on the basis of age, but maybe this is Anthem’s way of meeting MLRs.

Commissions are at the discretion of the insurer. However, I don’t understand the final comment about “keep the agents and leave out the carriers”. Agents cannot be compensated by the Exchange, so if you leave out the carrier, then agents get $0.

Fundamental lack of understanding here.

Regarding your post entitled: The Commission Guessing Game. From Aug 21st, 2013. I suppose the ‘small’ agent is fairly screwed. They are weeding out brokers while they pretend to offer respect. Agent volume must get automated. Good service will be less and less available for applicants and clients. Or am I not quite getting it? Less time and no underwriting will be needed is the claim by the health insurance carriers. But still a lot of hand holding will be needed with explanation, provider searches, financial eligibility assessment, plan review and selection, follow through after submission, then upon approval. Claims and appeals.Not to mention applicants hopping on and off the Marketplace, change in financial eligibility, moving to and from employer plans, etc… And all this service for for 2% or less? $10 per member is coming from Anthem. Write a couple age 59 each with a $1,000 premium monthly policy now and get 12% commission = $120. Renewal at 5% = $50. But rates higher at age 60, so higher commissions upon renewal. Anthem will now pay $20. Equivalent to 2% commission. Wow! How rude! ‘Affordability’ leaves out the agent. Yet applicants and members want help from agents. Seems to make better sense to keep the agents and leave out the carriers.

Yes. New business effective Jan. 1, 2014.

Does this apply to new business only?

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