The following are portions of a letter I wrote to Carmen Balber of Consumer Watchdog…
I especially liked your article regarding Mega Life and Health from March 10th. I regretfully, started my career with Mega and left for the exact reasons you site in your article, failure to pay claims. Fortunately, I never had a claim like the ones we read about of $400,000. I had several however, that were over $30,000.
However, your current column “Smoking Gun Documents Show Health Insurance Broker’s are Paid Commissions as High as 20% of Consumer’s Premium” is slightly misleading.
First, yes often times a broker is paid a commission of 20% of the first year commissions, not for the life of the policy. This is less than a sales force in many industries.
Second, the process is difficult to find a plan to meet a person of familes needs. Every family is different and has different resources and medical conditions. We as brokers work for the client, long after the point of sale. When a client’s child falls down the stairs at 9PM and they call you asking which hospital can they go take the child to, or the call at 6am, my child has a really high fever, what should I do? Sometimes it is after a claim when they need to understand how to read their explanation of benefits.
Also, most of us do not bill for our time, like a lawyer or many consultants. To put this in perspective, in the Chicago market, where I am, my clients average premium on an individual policy is $250 per month. So I at a 20% commission make $50 per month on the client the first year and ongoing years more like $10 or $11. This is not an hour it is a month. What would a Lawyer charge per month?
Also as a broker, like every other self employed person in America, we pay our own expenses. My expense last year were $62,910.07. That is client lists, postage, brochures, semiars travel, etc. Again, I do not bill the client for my time. I have a client who this year I met with for six hours over three weeks. I had a hour drive each way, so I spent on that client before the sale 12 hours. I still speak with her every month. Is that not worth $50 per month? I would have billed more if I was not working on a commission. A consultant would have billed her more than likely over $100 per hour and included travel time.
I think you would have to agree is having access to your insurance professional for less than $50 per month is a bargain.
Eric Wilson is President of I Sell Health Inc. A Chicago area insurance agency.
Thanks for reading