We just received our renewal rates for one of our clients. The following statement was listed on the renewal notice:

The premium rates and other fees shown above include amounts to cover your broker’s compensation for this transaction. This compensation could include up to $20.00 per member per month for base commission, up to $10.00 per enrolled employee per quarter for a volume override bonus and up to $1.55 per member annually for a renewal bonus. Upon meeting certain criteria, your broker may also be eligible to receive additional benefits including educational meetings and carrier-sponsored events.”

So let me get this right. . .  for a once a year renewal shopping on a group of 17 employees, you are getting a commission of $4,000 plus quarterly kickers of $680 and additional monies for cruises and educational retreats?  I realize that it took a $15 per hour assistant 5 hours to pull the information together and you had to visit the office up to three times so perhaps they probably did “earn” that commission.

I have another suggestion.   Why not develop an industry wide standard of 15 (or whatever the number is) uniform plan designs and let the employers shop based on quality of service.   This shopping could be done over the internet.   Include in that shopping a way for insurance companies to compete for that business.   Don’t give us smoke and mirrors with all kinds of deductibles, copays, networks etc that we can’t analyze.

The Private Insurance industry advocates for “competition in the healthcare marketplace” but they refuse to compete in their own industry.    They enjoy monopoly protection and right now insurance brokers are protected from commission price competition because they are not allowed to discount their commissions.     I recommend that they be forced to compete based on service AND commission.    Perhaps if we saw this kind of “competition” we would see lowering of costs in the business similar to what we saw in the automobile and housing insurance industry.