Company insurance "agent" earning 5% commission

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Topic Author
AirTimeMD
Posts: 124
Joined: Mon Mar 23, 2015 9:55 pm

Company insurance "agent" earning 5% commission

Post by AirTimeMD » Mon Oct 07, 2019 4:35 pm

Good afternoon BH,

My company recently switched our health insurance carrier from UHC to BCBS. One of the documents that BCBS sent over was an "Agent Acknowledgement" form. This form shows that our company agent is earning a 5% commission percentage that is included in our insurance rates.

We have 58 insured employees and we are currently due to spend an approximate $413,457.60 in insurance for 2019/2020.

Would any of you that are more familiar with corporate insurance agents chime in on whether 5% is a reasonable fee for an agent to charge. I have a friendly relationship with the owner of the "agent" company so it wouldn't at all surprise me if I was being taken advantage of.

Thank you!
ATD

Silk McCue
Posts: 3115
Joined: Thu Feb 25, 2016 7:11 pm

Re: Company insurance "agent" earning 5% commission

Post by Silk McCue » Mon Oct 07, 2019 4:56 pm

This was a big land for BCBS. 5% Commission seems fair for someone that make a living selling insurance. What they get paid shouldn’t be of concern to you. It’s just business.

Cheers

Topic Author
AirTimeMD
Posts: 124
Joined: Mon Mar 23, 2015 9:55 pm

Re: Company insurance "agent" earning 5% commission

Post by AirTimeMD » Mon Oct 07, 2019 4:59 pm

Silk McCue wrote:
Mon Oct 07, 2019 4:56 pm
This was a big land for BCBS. 5% Commission seems fair for someone that make a living selling insurance. What they get paid shouldn’t be of concern to you. It’s just business.

Cheers
Hi Silk,

My understanding is that they are paid based on my rates. I'm paying 100% of my employees insurance so my thought process is that I'm paying 5% of the $413,457.60 (approximate) to this entity. You and I are free to disagree but I feel that there's a responsibility on my part to ensure that I'm not being taken advantage of (ex. if industry standard was 1% or 2%). Since the 5% comes out of my pocket, what the agent is paid is relevant.

ATD

bbqguru
Posts: 87
Joined: Sat Sep 17, 2011 8:31 pm

Re: Company insurance "agent" earning 5% commission

Post by bbqguru » Mon Oct 07, 2019 5:08 pm

It may be a fair rate for the group size. For our group, our agent is paid a per covered person fee. I don't remember the exact amount, but it includes family members, not just the employee. It's included in our rate.

P&C agents will make 8-15%, so 5% doesn't seem unreasonable. Especially if they do a lot of service work. Our agent, for example, handles all the paperwork for making member changes and if a member has an issue they assist with finding someone at the insurance company who can make a decision.

dbr
Posts: 30419
Joined: Sun Mar 04, 2007 9:50 am

Re: Company insurance "agent" earning 5% commission

Post by dbr » Mon Oct 07, 2019 5:49 pm

AirTimeMD wrote:
Mon Oct 07, 2019 4:59 pm
Silk McCue wrote:
Mon Oct 07, 2019 4:56 pm
This was a big land for BCBS. 5% Commission seems fair for someone that make a living selling insurance. What they get paid shouldn’t be of concern to you. It’s just business.

Cheers
Hi Silk,

My understanding is that they are paid based on my rates. I'm paying 100% of my employees insurance so my thought process is that I'm paying 5% of the $413,457.60 (approximate) to this entity. You and I are free to disagree but I feel that there's a responsibility on my part to ensure that I'm not being taken advantage of (ex. if industry standard was 1% or 2%). Since the 5% comes out of my pocket, what the agent is paid is relevant.

ATD
That is about $20,000. The question is what services does this agent perform and how much time does he need to do it. If your company is his only client he obviously cannot continue to work for such piffulous pay. If has ten clients and gets $20k each he is doing very, very well. Keep in mind you have to find out if all the 5% actually is paid to that single agent. The company may get some or a lot of it, and I don't know much about that.

123
Posts: 5041
Joined: Fri Oct 12, 2012 3:55 pm

Re: Company insurance "agent" earning 5% commission

Post by 123 » Mon Oct 07, 2019 6:29 pm

AirTimeMD wrote:
Mon Oct 07, 2019 4:35 pm
...whether 5% is a reasonable fee for an agent to charge...
I think the commission percentage is set by the company offering the insurance, I'm sure it likely varies based on the size and terms of the policy which is sold. The agent is at the bottom of the totem pole.

It's similar to a real estate commission, the buyer ends up paying the price for the house and the seller normally determines how much the real estate commission will be, including any discounts or sales incentives in the listing agreement.

As with life insurance and a lot of other financial products I wouldn't be surprised if the agent steered you to the product with the highest commission given the amount of the expected purchase. Of course maybe similar products had similar commission so it may not matter in the end.
The closest helping hand is at the end of your own arm.

cashmoney
Posts: 316
Joined: Thu Jun 29, 2017 11:15 pm

Re: Company insurance "agent" earning 5% commission

Post by cashmoney » Mon Oct 07, 2019 7:39 pm

AirTimeMD wrote:
Mon Oct 07, 2019 4:35 pm
Good afternoon BH,

My company recently switched our health insurance carrier from UHC to BCBS. One of the documents that BCBS sent over was an "Agent Acknowledgement" form. This form shows that our company agent is earning a 5% commission percentage that is included in our insurance rates.

We have 58 insured employees and we are currently due to spend an approximate $413,457.60 in insurance for 2019/2020.

Would any of you that are more familiar with corporate insurance agents chime in on whether 5% is a reasonable fee for an agent to charge. I have a friendly relationship with the owner of the "agent" company so it wouldn't at all surprise me if I was being taken advantage of.

Thank you!
ATD


I have been a health agent for almost 30 years mostly in the Medicare Health Plans but did a few small groups plans many years ago and the biggest case I did was about 70 employees and if I remember correctly I got 6 % .There is more work involved in putting a case together than you think and besides why do you care what the agent gets paid if they won your business on a competitive bid.Be glad the insurance carrier pays the agent to service your account.Some ACA plans went to paying agents 0% commissions so guess how much help the consumers interested in buying those plans got.

sonic1124
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Joined: Tue Jun 26, 2018 9:20 pm

Re: Company insurance "agent" earning 5% commission

Post by sonic1124 » Mon Oct 07, 2019 9:31 pm

AirTimeMD wrote:
Mon Oct 07, 2019 4:35 pm
Good afternoon BH,

My company recently switched our health insurance carrier from UHC to BCBS. One of the documents that BCBS sent over was an "Agent Acknowledgement" form. This form shows that our company agent is earning a 5% commission percentage that is included in our insurance rates.

We have 58 insured employees and we are currently due to spend an approximate $413,457.60 in insurance for 2019/2020.

Would any of you that are more familiar with corporate insurance agents chime in on whether 5% is a reasonable fee for an agent to charge. I have a friendly relationship with the owner of the "agent" company so it wouldn't at all surprise me if I was being taken advantage of.

Thank you!
ATD

I work as a group health insurance broker. Carriers differ in commission models- some pay a percentage some pay on a per employee per month. 5% is a higher number on a percentage basis, however the BCBS in my state would pay $36 per employee per month for a group your size which would actually be around $25k/year. UHC would pay us 3.75%. I would say you are paying an amount that I would consider a fair number.

Topic Author
AirTimeMD
Posts: 124
Joined: Mon Mar 23, 2015 9:55 pm

Re: Company insurance "agent" earning 5% commission

Post by AirTimeMD » Tue Oct 08, 2019 11:40 am

Thank you all, as always, for contributing and enhancing my education on the matter.

BruDude
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Location: Las Vegas

Re: Company insurance "agent" earning 5% commission

Post by BruDude » Tue Oct 08, 2019 1:55 pm

5% is a standard commission rate for a large group. There can be A LOT of work in dealing with a group this size, especially if the agent is shopping the rates each year. Just transferring one group this size to a new company can take several months. Plus the agent should be available to answer questions, help resolve problems, etc. You’re paying for their help year round, not just the initial enrollment and then you never hear from them again.

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