Agent and Broker Groups Differing Extremes On Reform

Business Insurance Magazine had an article on agent and broker groups reactions to the Health Insurance Reform bill.

As we have posted reform is far from the end of brokers and their value but will require change. It seems these 2 industry groups represent constituencies that may or may not be positioned or prepared for success in the new world reform will usher in.

There was a significant difference in the agent reactions vs. those of larger brokers.

CIAB represents large and mid sized brokerage firms who likely represent 80%++ of all employee benefit plan in the nation takes a realistic and measured view of reform acknowledging the state level regulation and involvement of brokers in exchanges (emphasis mine below):

Joel Kopperud, director of government relations for the Washington-based CIAB said the association is “concerned” about the impact the reform bill will have on the employer-provided marketplace.

“We worry the mandates are ineffective and may not truly cover the cost of market reforms, possibly resulting in higher premiums,” Mr. Kipperud said in an e-mail this morning. “That said, we are relieved that premium regulation remains at the state level with solvency regulations, and that brokers may be able to represent their clients through state exchanges,” he said.

IIABA,  or the Big I – represents independent Agents and Brokers and clearly is not representing the facts of the bill properly and thus to its members as it relates to a number of topics:

“It was “disappointed” with the bill’s passage, saying it does “little to stem the skyrocketing cost of health care” and that it will be financed “on the backs of small business during one of the most delicate financial periods in American history.”

In particular, the IIABA said it is concerned with the .9% Medicare surtax and new 3.9% tax on nonwage income that will be imposed on some individuals and small businesses that file as individuals to finance the government-run health insurance plan.

“A tax increase, especially during today’s tough economic climate, will put many small businesses in the untenable position of deciding between job cuts, employee pay cuts, or shutting their doors,” said Charles Symington, IIABA’s senior vp of government affairs, in the statement.

Mr. Symington needs to read the bill a little closer and get “government run healthcare” out of his vocabulary. That clearly is a not true as we have shown repeatedly.

He also needs to look to the vast  majority of its membership to really assess these changes in the bill, its tax credits for small business, the size of employers it applies to et al.

For  brokers who provide value to its customers this will be an opportunity. CIAB firms are in good shape to do benefit.

For firms that do little health insurance or employee benefits and lack the ability to develop new practice areas and operate in a fee for service world, reform may cause them to focus on areas other than benefits and healthcare. IIABA members likely have more of a challenge here.

No one in any business was ever guaranteed that their industry would not change. Most in America have changed radically over the last 10-25 years and insurance remains the last living dinosaur.

Change creates opportunity for ambitious entrepreneurs and the insurance brokerage world has plenty of those.

If you are not ready for the change and the race to success sell your healthcare or benefits business now to a firm that is and focus elsewhere.

You’ve got 3 years to prepare…the choice is yours.

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One Comment on “Agent and Broker Groups Differing Extremes On Reform”

  1. jeremy Says:

    don’t want to be a chronic poster (left site out of sig) but as I am a subscriber I would love to point out that as a pretty evolved health insurance brokerage I am of the opinion that individual health insurance will be massacred regardless of how ambitious I am. from your own email feed I read this article which pretty much sums up my views of health insurance and this bill which can be summed up by the falling stock price of ehealth.


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