Agent Compensation

January 19, 2007 by bob.

Q. I am a well educated, intelligent individual who is perfectly capable of finding the health insurance plan I want without agent involvement. Why should I pay extra to have an agent tell me which plan to buy?

A. I can appreciate the fact that you seem to be intelligent and well educated.

Someone once said, we are all ignorant, just in different areas.

While you may be quite informed in many areas, it is highly unlikely you have absolute, or even adequate knowledge in others. You may know how to drive a car, but that does not mean you know how to design & build a car.

Health insurance is a highly specialized area that balances the dynamics of risk management with price competitiveness. Any agent can offer quotes on multiple plans but few can effectively balance underwriting savvy and the ability to anticipate final offers from carriers with plan design and price point.

I have been involved in the health insurance industry for more than 30 years on a daily basis, and I still learn things that surprise me. What is available today may not be next month. I can’t imagine how difficult it is for those who only occasionally have to look for insurance.

As for agent compensation, it should be comforting for you to know you are not paying any more to use the services of an agent. The premiums charged by the carrier are exactly the same regardless of whether you go direct to the carrier, buy through an online “direct seller”, buy through a third party endorser or buy through an agent.

Given this scenario, would you rather deal direct with a carrier that can only tell you what they have to offer and cannot, or will not, tell you what their competitors offer?

Or would you like to go through an online direct seller that can only show you 15 - 20% of the plans available?

Possibly you would prefer to buy from a warehouse club or social organization that has been paid to promote a handful of products from a single carrier.

You can also deal with a knowledgeable agent who represents multiple carriers and can take the time to explain the differences in one plan over the other.

Your choice.

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