Has an insurance agent ever promised that he can deliver cheaper rates than his competitors? Almost like a used car salesman stating he’ll beat his competitors by half, right? While that may be a tactic to lure customers in, how many times has that tricked worked to deceive people while purchasing a car? We don’t want insurance to fall in the same category as car buying.
As much as we, as brokers, would like to have better prices than our competitors, the statement that “Our rates are better than our competitors,” simply isn’t true.
The Affordable Care Act essentially defines two categories employers would fall into, small employers who are 2-49 in size, and large employers, 50+ full-time equivalent employees. The Texas Department of Insurance (TDI) has complete control over the plans that are made available to small employers. TDI decides on pricing, plan design, etc. Carriers have absolutely no authority to offer agent X a lower price than agent Y.
On the other hand, when preparing a proposal for a large employer, an agent has a limited ability to influence the total outcome of the plan design. Ultimately designing a less expensive plan results in less benefits. Several methods used to decrease your overall premium may include altering these items within the plan:
- increasing the deductible
- decreasing the employee’s coinsurance
- changing the prescriptions to generic-only
- offering a limited network of physicians
- Decreasing maximum chiropractor visits or rehab visits
It becomes hard to compare apples to apples for large employer proposals, based on the number of carriers, size of provider network, benefits, and other changes. Another way a plan can be minimally lowered is if the standard commission rate is lowered by the agent.
Assuming that claims are lower than expected, an insurance carrier may offer a credit for a group only if they renew their policy another year.
Overall, remember that for small employers, there is nothing a broker can do to lower the rates, while there is minimal change the agent can do on behalf of the large employer to affect the monthly premium. Ultimately, the agent you choose to implement a benefit plan for your company should hold high customer service values and a maintain a working knowledge of available products to serve your company.