Health insurance agents, welcome to the life insurance market.
With the Supreme Court upholding the Patient Protection and Affordable Care Act, it would seem many of the estimated 100,000 health insurance producers will either diversify their business or leave the health insurance market altogether. Many of you have already seen your commissions slashed up to 50% by health insurance carriers in efforts to comply with the medical loss ratio (MLR) component of PPACA, making your commission-based business model unsustainable. Many of those hoping to adapt to the post-PPACA world will find that the new health care exchanges will lead to a huge migration from the traditional health insurance agent channel, which is predicted to substantially reduce the volume of business underwritten by agents.
While prospects look bleak in the health insurance market, I hope you realize that the life insurance market — in desperate need of more producers — provides a great opportunity to rebuild your insurance practice. What you may not know is that the average age of an independent life insurance producer is 56, and producers are retiring faster than they are being replaced by newcomers. And these newcomers — usually with little to no experience in the insurance industry — wash out to the tune of about 85% within the first four years.
For complete coverage of the PPACA ruling, see: LifeHealthPro.com/PPACA
Don't get me wrong: I think the independent life insurance distribution channel needs any and all new blood it can get. But the new blood it needs most is that of people with some experience in the insurance business who have a much better shot of making it over the long haul. Health insurance agents, this means you.
In an article I wrote for the July issue of Life Insurance Selling about the challenges presented by the independent distribution channel's graying workforce. (See it here.), Daniel Mulheran, president of Retail Life Distribution at ING U.S. Insurance, said flat out that an opportunity to grow the ranks of agents selling life insurance is by looking to health insurance agencies. "The Affordable Care Act has greatly reduced commissions to health insurance agents. These agents are making much less than they did in the past and can consider life insurance as a natural companion product," Mulheran said.
