I’m not a broker. I’ve never personally sold a single dollar’s worth of insurance to anyone unless you want to count a condom I sold to a buddy for two beers back in grad school. The broker/agent side of the business is one where I’m curious about how it works as the insurance agent selling policies is usually the most public facing side of the insurance universe. The broker/agent model is broken on the individual market.
Connecticut exchange: Carriers won't pay brokers for 2017. Will customer service suffer as a result? https://t.co/q9Kaq2ncsc @EyeOnInsurance
— LouiseNorris (@LouiseNorris) September 28, 2016
The fundamental problem is how brokers get paid and who pays them. Brokers who work the individual market and the very small group market are paid by the insurance carriers. Their commission can be a flat fee per covered life per month, it can be a percentage of commission, it can be a combination of a head fee and a percentage. The actual payment structure varies. At the same time, a good broker should be seeking to find the best situation possible for the person who is looking for insurance. And this is where the problem lies.
A good agent will place people into insurance products that are very appropriate for them. We looked at this in March: