4 Proactive Ways to Embrace Change and Protect Your Commissions
Debbie Stocks has the right attitude. As a one-time high school French teacher turned health insurance agent, she’s preparing for the worst, but hoping for the best.
Like many in her industry, she’s being told that, due to health care reform, her role as a self-employed independent insurance agent is about to become obsolete.
Instead of running for the hills like some independent agents, she’s staying the course, but keeping her options open.
In addition to offering more high-deductible health insurance plans to her small business clients, she also made the decision to diversify her income channels. She purchased a property for investment purposes and plans to add on casualty insurance for back up business.
Kim Stanley’s the same way. As a veteran Jacksonville Beach health insurance agent, she’s seen the ups and downs of commission-payouts over the years—but this time, it’s different. She’s been getting the “Dear Jane” notices since May about the commission cuts.
While Kim is still passionate about health insurance, instead of it being 70 percent of her focus, she’s reallocating her portfolio of services to include financial and retirement planning in anticipation of the financial hit.
Both of these sales professionals understand that the only thing that is constant is change; they are taking initiative to protect themselves financially instead of waiting on the sidelines to see what will happen.
Whether you want it to or not, the economy is going to change. Politics will change. Commission structures and payouts will change. Technology will change. YOU will change.
But while change is automatic, progress is not.
To make progress, you’ve got to look at your life in a different way. Doing so can help you make proactive changes that move you forward in life.
And this doesn’t relate to just health insurance agents … It’s true that commission cuts to health insurance agents are getting most of the publicity, but the reality is that cuts in commission payouts are affecting every sales industry.
What’s happening to health insurance agents can just as easily happen, (and in many cases is already happening), to someone selling mortgages, software, medical technology, annuities, auto and life insurance, merchant services—even real-estate.
Regardless of the 1099 commission sales career you’re in, it’s always critical to put Plan B’s in place.
The “flat fee” compensation option initiated by the Affordable Care Act is a good example of this…
This flat fee concept is something that gravely concerns commission-based agents.
How it works is that instead of paying commissions on policies sold, brokers are paid a flat fee for each individual they help enroll (In Utah, for example, it’s $37 per month).
Even the executive vice president and CEO of the National Association of Health Underwriters, Janet Trautwein, worries that although the agent would still get paid for doing something, it will be difficult for them to actually make a living with a flat fee structure.
And that may very well be the case if that’s the only compensation structure an agent relies on…
Take the insurance agent in Idaho who suffered an income drop of 20 percent when insurers began paying flat fees a few years back.
That would have been devastating for most agents. Fortunately, he developed a different outlook. He not only started selling more flat fee policies to a vastly underserved niche (small businesses), he also proactively inquired about what their other needs were. This enabled him to expand his portfolio with services that directly met those needs.
So in the spirit of thinking more ambitiously, and embracing a take-charge attitude, let’s examine 4 other options to protect you financially and keep you progressing—regardless of the changing environment.
- Modify Your Niche – like Debbie, Kim, and countless others, adjusting not just what you sell, but who you sell to, even if it’s on a part-time basis, can make up for lost commission income—sometimes, even replacing the full-time commissions you were used to.
- Cash Flow, Cash Flow, Cash Flow – Commissions are great, but cash flow income is more sustainable—especially in a tough economy where everyone is looking to cut costs any way they can. But being able to generate both? Now that’s a strategy that will not only lead to progress, but will allow you to get paid what you’re worth. There are thousands of smart, savvy sales professionals that have been able to structure their compensation this way. You should too if you want to protect your financial present and future.
- Daily-Use Products and Services – Even though health insurance can offer life-saving value to clients, the reality is that it is not meant to be used on a daily, weekly, or even monthly basis. If an individual or small business employee were using their health insurance frequently, their premiums would go up. Most people know this and it leaves a bitter taste in their mouth. Therefore, having a service or product to offer that can be used every single day without any negative financial impact will not only open doors, but it’ll retain clients.
- Lower Cost Products and Services – Especially in today’s economy, it’s all about bang for the buck. People want to pay less, but get more. Adding products and services to your portfolio of offerings that impress clients on a value and price level is the most effective way to secure and enhance your income.
The time is ripe to embrace these inevitable cuts and changes in commission payouts. As a 1099 independent sales professional, your skill-set is second-to-none. There is absolutely no reason why impending cuts to commissions should slow you down. Just the opposite, in fact. It opens up the opportunity for you to transform your sales career so that regardless of what is happening in the economy, your revenue streams are protected.
*The people mentioned in this blog post came from the following articles:
Gold, Jenny. Health Insurance Brokers Fight For Their Future. Kaiser Health News, 2010
Cox, Jeremy. Health Insurance Agents Face Measure to Cut 2011 Costs. The Florida Times-Union, 2010
I have offered health insurance to my clients over the last 30+ years and it has become a major source of income for my agency. However, since “health care reform”, I have received letters from every carrier I do business with informing me of major cuts in commissions — some as much as 50%. Thank goodness, I have been working on Plan B for years and will be able to make up or exceed the loss of commissions that is coming down the pike by offering my individual and group clients ancillary products with good first year commissions and lifetime renewals.
Wayne – thank you for sharing your experience as a health insurance broker affected by the dramatic changes of health care reform. “As much as 50%” commission cut? That’s incredible! Congratulations for not only adapting to changing circumstances, but also the foresight to position yourself with other products.
Modify – go with what over 230 unions and Major American corporations – representing over 1.5 million working American – have gotten waivers from the US government to keep = LIMITED BENEFIT – Defined Benefit plans – couple it with a solid “non med” CI – AR and/or Cancer – still less monthly than Major Medical with NO deductible for the client – no hassle no underwriting no declines and YES COMMISSIONS – layer product upon product from many different sources – a LB/DB from one – CANCER from another – AR from a third – get 3 revenue source streams of commissions – all guarantee issue (except cancer – if it rs a good policy= always only sell good policies)
Thank you for your comment Lydia. There’s no doubt we’re living in interesting times. However, we’re hearing from more and more sales professionals like yourself having success coupling creativity with strategy!
Great information. Thank you for posting this insightful article. Just what I needed!
You’re very welcome Alexander, thank for stopping by and leaving feedback. We wish you the best during this time of transition. Stop back again and be sure to let us know if we can further assist you in any way.