As every agent knows, the great thing about insurance is that you sell it once and get paid on it month after month. Residual commissions are the reason that most agents, at least those that continue to work rather than just sitting on their book of business, make more money every single year. Not only do you get paid on what you sell this year, you get paid on what you sold last year, and the year before that, and the year before that.
Of course, that’s only true if you’re able to hang on to the business you’ve sold, and we all know that that’s easier said than done. That’s especially true of health insurance plans sold through the individual Marketplace. The fear all along has been that people would sign up for coverage and then never bother to pay their first month’s premium, so agents would do a lot of up-front work and never even get a commission check. The other concern about selling individual plans is that they’re very labor-intensive, both initially and at renewal time. With only a limited annual enrollment window, it’s easy to see how a broker could spend all her time renewing her existing clients and no time recruiting any new ones. Remember, the way to get rich in insurance is to hang on to the clients you have and add new ones on an ongoing basis.
Retention higher than originally anticipated
The good news is that all the fears about people signing up for coverage and then not paying their bills seems to have been overblown. As it turns out, the vast majority of people who sign up for ACA plans are paying their premiums and hanging on to their policies.
As reported in a recent philly.com article entitled “Health insurance customers are holding on to their ACA plans,” Independence Blue Cross “had a first-payment rate of 87 percent” for the 2014 initial enrollment period, “well above the national average of 80 percent.” For the 2015 open enrollment period, though, that number jumped to 94 percent, and of those that made their initial payment, 97 percent “have continued making their monthly premium payments.” This is huge. It seems to indicate that the majority of people who purchase Marketplace plans, most of which are subsidized with a premium tax credit, will hang on to that coverage long-term. That’s important for agents who want to grow their income year after year.
Renewals don’t have to be labor-intensive
The other very legitimate concern is that the more business an agent has, the harder it will be for her to write new business, primarily because of the amount of time she has to spend each open enrollment period renewing her existing clients. Because people’s income changes over time, they may need to re-apply for a premium tax credit. And because their health status changes over time, they may need to consider switching plans. True, if people take no action, the Marketplace will just renew them on their existing plan with their existing tax credit, but an annual review is probably in order…and that takes time.
The good news is that there is an alternative. An agent with a private exchange website can spend her time rounding up individual leads. She doesn’t have to make the sale herself, nor does she have to spend time each year renewing her existing clients. There’s a national call center staffed with knowledgeable, licensed agents who can take care of that for her.
Whether your focus is group health coverage and you just want to be able to help the occasional individual lead you run across or you’d prefer to spend your time getting as many individuals as possible signed up, having a private exchange paired with call-center support can save you an immense amount of time, make your job infinitely more enjoyable, and help you reach your true earning potential.