It’s not easy being an insurance broker these days.
As health care reform kicks into high gear, local brokers say uncertainty and anxiety clouds their rapidly changing business and future.
For many insurance agents their livelihoods hang in the balance. There are still many unknowns surrounding the Affordable Care Act, like how much money brokers will be paid for helping clients purchase coverage through Connecticut’s new health insurance exchange.
In recent years, experts say, many independent brokers have fled the industry or joined forces with larger firms because they lacked the resources to prepare for the regulatory overhaul, or were downright pessimistic about the future.
Other brokers, however, see opportunity in serving a new customer base.
“The business has changed dramatically in just the last few years,” said Edward Rapacky, president of Benefits Resource Group in Plantsville. “Just trying to keep up on all the changes requires significant time and resources.”
Rapacky said he added 33 percent more staff to his firm so they could stay on top of all the new regulations from the ACA.
The past six to 12 months have been particularly intense, Rapacky said, because employers are staring down a Jan. 1 deadline when many of the new regulations actually kick in. That spurred employers, many of whom haven’t paid much attention to Obamacare until now, to look for more advice and counseling.
The amount of time Rapacky now spends with each of his clients has doubled, he said, from 40 hours annually to about 80 hours.
“New sales and business development have kind of taken a backseat,” Rapacky said. “We have to spend a lot more time with our current clients. It’s amazing to me the number of employers that have no idea what’s coming.”
To be certain, insurance brokers across the country are nervous about their future. A recent nationwide survey by Aflac found that 45 percent of brokers were considering exiting the health insurance business altogether.
Although the future is cloudy, Rapacky said he is still optimistic there will be a place for brokers in the changing health care industry. After all, employers are being hit with all sorts of new rules and regulations that will require them to overhaul their benefits packages; they’ll need help sorting through that morass, he says.
The biggest new development is the state’s health insurance exchange called Access Health CT. The online marketplace will allow individuals and small businesses to shop for competing insurance plans.
Brokers raised concerns early on that exchanges would threaten their business, eliminating the need for a middleman between the insurer and customer. Those fears have retreated because insurance agents will be able to collect commissions for bringing customers to the exchange. What exactly they will be paid, however, remains a mystery.
Commissions will be paid by insurance carriers, not Access Health CT, but insurers haven’t shared their rate schedules with brokers, sources say. Traditionally, commissions can range anywhere from $10 to $20 per member per month, or 2 percent to 4 percent of annual premiums. Brokers speculate payouts will be much less through the exchange.
Phil Boyle, Access Health CT’s business-to-business outreach manager, said he expects about 300 to 350 brokers to become certified for the exchange. Insurance agents must go through up to 20 hours of training before they can help clients purchase coverage through the new online marketplace.
Boyle said brokers will be a vital part of the program, helping to inform individuals and small businesses of the various tax credits and benefit mandates required under the ACA.
“The broker community here historically has been very engaged, very well educated and informed,” Boyle said, adding that he expects about 20,000 to 30,000 people to enroll in the state’s small business exchange.
John Calkins, president of Watertown brokerage firm Bozzuto Associates, said he sees the exchange as another “tool in our tool box to help our clients,” but he admits many unknowns still exist. Besides commission rates, brokers say they have also been kept in the dark about what provider networks will look like.
“No carriers have been willing to disclose that, but it will be a huge factor in whether or not people buy exchange products,” Calkins said.
Calkins said the changing landscape is making him focus more on the individual insurance market, where he predicts the most future growth will occur. More individuals (about 100,000) are predicted to use the online marketplace than small businesses.
West Hartford broker Jason Gutcheon, whose firm Professional Business Insurers largely focuses on employer health plans, said he too will increase his presence in the individual market. He sees the new insurance exchange as a chance to grow his business.
Gutcheon said he is currently going through the broker certification program, and he sees potential enrollees facing serious challenges shopping for coverage, particularly with the vast amount of personal information people must offer up to sign up for coverage and qualify for potential tax credits.
“There will be a need to help people buy insurance through the exchange,” Gutcheon said.
One broker who is bullish on the future is Jennifer Lovett, owner of Crystal Financial in South Windsor. Lovett opened her agency in 2006, specializing in helping people with preexisting conditions find insurance coverage.
Lovett admits it wasn’t the most lucrative business to be in, largely because she was dealing with government insurance programs that didn’t pay her a commission. She made money by cross-selling to or being referred by clients she helped find health coverage.
The ACA now restricts insurers from discriminating against people with preexisting conditions (called guaranteed issue), opening up a significant opportunity for Lovett and her firm, which recently added four agents.
“With guaranteed issue its opening a whole new opportunity,” Lovett said.