Note: This should not be taken as tax or legal advice
In a recent article in TIME, Kate Pickert suggests that the
first victims of health reform will be insurance agents and brokers.
"Insurance agents and brokers and small insurance companies are among those who may have to scramble to stay afloat over the next few years. This is partly by design and partly an unintended consequence of a new law that is so sweeping, it will affect nearly every corner of an industry that accounts for one-sixth of the U.S. economy.... Agents and brokers are also worried about the future for another reason: a vital part of their current role, sales and marketing, could be made redundant thanks to the new state insurance exchanges that will go online by 2014. These Web-accessible marketplaces will be where individuals and small groups go to purchase insurance. In addition to listing plans available by location, the exchanges will post quality and price information and administer federal subsidies for those who qualify, making it easier for individuals and small-business owners to compare plans and choose the options that best suit their needs."
What do you think?
Health Reimbursement Arrangements (HRAs) make the most sense for employers who want to provide employee health benefits but have been priced out of traditional group plans.
The best time to offer an HRA is when your client is unable to afford an annual rate increase on a group health insurance plan.
HRAs are 100 percent employer-funded and controlled, and there is no maximum or minimum amount employers may contribute. Generally, employees cannot take unspent HRA funds with them when they changes jobs.
In addition,
HRAs allow reimbursement of an employee's individual insurance premiums, making them a capable alternative to group health insurance plans for many businesses.
On September 4th, Steve Davis discussed
how new web-site capabilities could boost the sale of individual policies. In the article, Mr. Davis reveals some interesting statistics about individual health policy sales over the past year and tributes most of the growth in individual policies to the rising cost of group health insurance policies and unemployment. In response to the increasing demand for individual policies, insurance companies like Assurant Health are dedicating additional web-based technology to online consumers. For insurance agents, this article highlights the importance of
building your online presence.
Below are some interesting statistics from the article for 2008-2009:
New-age Growth: "Companies that focus on the individual insurance market (such as Assurant Health and eHealthInsurance.com) saw substantial growth in Web traffic"
Old-school Decline: "Many large health plans had far fewer virtual visitors. UnitedHealth Group, for example, saw its visitors decline to 3.2 million unique visits in June 2009, down 29% from the same month a year ago. The number of visitors to Aetna Inc.’s Web site fell 12% to 1.9 million"
Increased Search Traffic: "The growing interest in individual plans over the past year is tied directly to the rise in unemployment. Online searches for the word 'COBRA,' for example, soared 176% during the past year; searches on the term 'affordable health insurance' increased 41%."
Many of our readers work as insurance agents which means they are responsible for building and promoting their own brand. If you're one of these people, or you work independently in any other industry, you probably consider your business cards to be your best friend. Business cards offer a physical, permanent reminder to people that you exist and they're virtually free to produce.
A Harvard Business blog recently pointed out that in today's increasingly online world,
business cards aren't as valuable as they once were. The post suggests that rather than having a business card, you should just have a website that people can find on Google. Building an online presence is certainly important, but it's not quite as easy to rise up the Google ranks as the article makes it seem.
First, why is a website so much better than a business card? One of the main reasons is because your contact information is bound to change from time to time. If you get a new phone number or email address, every business card you've ever handed out becomes worthless. If you have a website, you can simply update your contact information on the site and you're all set. Websites also provide a lot more information than you could ever fit on a small card.
The problem with the suggestion to simply get your website on Google is that, aside from how hard it can be to make the website in the first place, it can be really challenging getting your site on the first page of Google results if you have a common name.
So what should you do? Well, if you've got the resources, there really is no replacement for your own customized site. If you don't want to spend the time and money it takes for that, make sure that you've got a strong presence on a site like
LinkedIn. Being on LinkedIn isn't enough if none of your contacts know about it. You should put a link to your profile on a business card to make sure that everyone you meet knows where they can find you online.
There are also tools out there that let you put up your own website without having to make it yourself. At
Zane Benefits we have a program specifically for insurance agents that provides a customized website along with some other tools most independent business people need. If you want to see other ways you can establish an online presence, check out my post on the
5 tools that every insurance agent needs.
Because 1/6 of the total U.S. economy is related to healthcare, there are a lot of people whose livelihood may be affected by the pending reform. It's easy to sit back and wait at a time like this because of all the uncertainty, but I think you should already be preparing your business for what lies ahead (even if you don't know what lies ahead).
In this post I'm going to focus specifically on what insurance agents can do to future-proof their businesses. It's worth noting that there's a decent chance that the reform will pass without having a significant impact on agents in which case a lot of this advice won't end up being too helpful.
Let's step through all the different things that might happen, and how you can prepare.
If employers are required to offer insurance to their employees...
This wouldn't really impact the existing markets for group or individual insurance. However, about half of all companies in America aren't offering any benefits right now and so there would be a huge growth opportunity for your business.
The key is that if a company isn't currently offering benefits, they're not going to jump straight to a low deductible group plan. These companies will only offer whatever bare minimum plan is required by the government.
It's worth noting that I'm pretty biased toward HRAs, but I really think that there's no better plan to offer the employers that can't afford top-notch benefits. HRAs allow the employers to contribute whatever they want, so if they only want to only meet the minimum requirements, they can do so. HRAs also make it easier on employers that want a high-deductible group plan which will be popular among cash-strapped companies.
So what does this mean for you? Basically, if you currently only offer insurance products, you might want to look for another product along the lines of an HRA. Full disclosure: Zane Benefits (the company I work for) has a program to help agents sell HRAs to employers, so this advice is self serving, but I think it's still good advice.
If individuals are required to purchase their own insurance...
This is slightly different than employers being required to offer insurance. If every American is required to buy insurance, the individual market will skyrocket and you'll be sorry if you miss out.
If you're not already an individual insurance guru, there are two basic things you need to do to get started. The first thing is understanding the differences between individual and group insurance so that you can help your clients make the right choice. It's worth putting in a little bit of research time.
The second thing you need is a better system for organizing your sales leads. Group agents are often able to make a living by selling to a few large clients which means it's easy to keep track of priorities. Selling individual insurance can be incredibly lucrative, but you'll be selling to hundreds, or even thousands of clients. Keeping track of more contacts requires more efficient operations.
The most obvious place to start getting organized is with your software. Your CRM is your most important friend when it comes to keeping track of all your contacts.
I posted earlier about the best CRM tools for insurance agents, so I'd take a look at that post if you don't already have this stuff figured out.
If all policies become guaranteed-issue
There's a reasonable chance that insurance carriers will have to accept all applicants at the same price. This means both that the price of individual insurance will go way up, and that one of the main problems with individual insurance will be solved. It's hard to predict the impact of this change, but one thing it will certainly do is make employers more willing to help pay for individual policies rather than group.
Selling individual insurance through an employer is much easier than going around selling it to random people. While the organizational tools I described above will be important in this case, the real opportunity lies with the employer clients. You should start looking into other products that you can offer employers like HRAs, HSAs, FSAs, and POP (Premium Only Plan).
You may be thinking that I already made this suggestion, but this is different. Selling to employers that don't currently offer benefits is all about value. In this situation, you'll be selling to employers that are already offering expensive group policies so the sale needs to be more about improving benefits and less about cutting costs (although it's easy to do both).
No matter what...
Regardless of what happens, everyone will be confused and looking for someone they can trust. You can be that person. Read up on the impact of raising group deductibles, individual insurance, and how new plans like HRAs and HSAs fit in. Keep reading blogs like this, and I'd even encourage you to start your own blog if you're interested in this stuff. There's no better way to learn new things than to teach others.
Ambitious agents are in a great position. The entire insurance industry is notorious for it's inability to accept change, and that means that you can get a huge head start on the rest of the market. It doesn't matter what changes, as long as something changes.
Think about all those people that made millions off of the tech bubble ten years ago. The only reason many of them were successful was because they were the first ones to enter the market.
I know that the idea of dramatically changing your existing business isn't very appealing, but if you don't take advantage of this tremendous opening in the market, someone else will. If you're not moving forward, you're moving backward.
