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NAIC Resolution Expresses Support for Agents In Healthcare

A resolution that received the support of 25 insurance commissioners at the recent meeting of the National Association of Insurance Commissioners (NAIC) in Seattle notes...
August 31, 2010

A resolution that received the support of 25 insurance commissioners at the recent meeting of the National Association of Insurance Commissioners (NAIC) in Seattle notes "the indispensable role that licensed insurance professionals play in serving consumers" should be acknowledged and preserved under the federal health reform law. The federal law itself already specifies that agents and brokers will continue to be involved in selling policies that are offered through the new health insurance exchanges. But the role of agents and brokers under the new system is something that remains to be defined.

The resolution was sponsored by Illinois, Maine, Florida, Kansas, Oklahoma, Louisiana, Alaska, New Hampshire, Utah, South Carolina, North Carolina, Nevada, Montana, Ohio, New Jersey, Kentucky, Missouri, Michigan, Connecticut, Tennessee, Washington, Delaware, California, New York and North Dakota.

Illinois Insurance Director Michael McRaith, who supported the NAIC resolution affirming the role of agents and brokers, nevertheless says agents and brokers should expect new payment structures under the health reform law, with flat fees likely replacing percent commissions based on premiums. However, McRaith says they will remain viable because "counseling advice is still needed."

The resolution was passed just as the NAIC was debating a much-anticipated set of recommendations on how insurance companies should calculate their medical and administrative expenses, known as Medical Loss Ratios (MLRs). Under the Affordable Health Care Act, beginning in January, plans sold to individuals and small groups must spend 80 percent of premiums on actual medical care (as opposed to administrative costs); the figure is 85 percent for large group plans. Plans that spend less will be required to send rebates to customers. The NAIC counted agent and broker commissions in the administrative category. But these commissions could end up on the chopping block as insurers scale back total administrative expenses to comply with the new rules.

Meanwhile, members of Congress are also rallying support for agents and brokers. Twenty-five members of the House have asked federal health regulators to ensure a role for licensed insurance agents in the web portal that will be used to aid consumers in comparing coverage options.

"We strongly encourage you to include the ability for consumers to contact certified, state-licensed independent health insurance agents and brokers for assistance when comparing coverage options," a letter from the House members to federal regulators said. "It is important the consumer's options to contact independent and state-licensed health insurance agents and brokers be included no later than October 1." The letter, signed by eight Democrats and 17 Republicans, was originated by former PIA member Rep. Charlie Melancon (D-La.), PIA National's 2010 Legislator of the Year. Last year, Rep. Melancon was instrumental in adding language to the new healthcare law that guarantees that licensed professional insurance agents will be able to sell policies through the new health insurance exchanges. Prior to that, licensed agents would have been banned from participating.

What It Means to Agents: Both the NAIC and our allies in Congress are working to ensure that agents and brokers don't get squeezed out under the new healthcare law as it is being implemented.

Time magazine has a look at the potential for changes to the roles of insurers, agents and brokers under the new system:

Click here to read "The First Victims of Healthcare Reform" (Time 8/26/10)

NAIC Resolution (adopted 8/17/10)

August 31, 2010
 

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