Tuesday, June 14, 2016

Conflicting Fees

As previously noted, many carriers have decided to stop paying commissions on new health insurance business written between Open Enrollment Periods. This has prompted agents to look at other income models, including fee-based.

Back in April, I wrote about my own search for an answer, and a webinar I attended explaining the ins and outs of such an arrangement. One key point that was made more than once was that one couldn't "offer to refund any part of [the fee] based on the completion of a sale or any commissions." That is, there can be no off-setting for plans that do generate a commission.

Which made sense in the context of rebating, and that was fine.

But last week, I received new guidance from another source. In their newsletter, Ohio Insurance Agents, also mentioned the issue, and offered its own take on commissions and fees:

"To help with this troubling trend, OIA wants agents to be aware that Ohio law does permit agents to charge fees for services in several instances. For personal lines policies, such as sickness or accident insurance, agents may charge a fee if the policy is sold on a no-commission basis" [emphasis added]

You can see the dilemma: one reliable source says an agent can (must) collect both a fee and a commission, while another equally trustworthy source says one may only charge a fee if there is no commission.

There's really no middle ground here.

I've reached out to the folks at Cornerstone to see what they have to say about this, and will keep readers posted as the situation develops.
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