Consumer Group Blasts Insurance Agents and Brokers

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A consumer advocacy group, pushing back strong against insurance brokers’ and agents’ request for relief from a healthcare reform provision, published documents on Friday showing they are paid as much as 20 percent of a customer’s insurance premium.

The nation’s insurance commissioners this weekend are set to consider a request from agents and brokers to back changes to a healthcare regulation they say will push them out of the marketplace.

The so-called “medical loss ratio” rule, which aims to limit administrative expenses and executive pay, requires insurers to spend at least 80 percent of premiums on providing healthcare and improving care quality. Brokers and agents, upset that they’re lumped in with administrative costs, fear the rule will severely cut their business.

But Consumer Watchdog says the new documents show that brokers and agents are overpaid.

“Eliminating this sort of excessive spending is the whole reason health reform capped insurance companies' overhead,” said Carmen Balber, Washington director of Consumer Watchdog. “If the [National Association of Insurance Commissioners] tries to override these protections it would cost consumers millions.”

The watchdog group also released a draft letter from NAIC that expresses support for delaying implementation of the MLR rule.

“If HHS were to delay the implementation … that would give time for the Congress to act (or not), and the markets would have the ability to sort out this thorny issue over time as they adjust to the new realities of health insurance in 2014,” the draft letter reads. The National Association of Health Underwriters defended the profits, saying that first-year commissions are higher for a number of factors.

Three Democrats signed on early to a bill from Rep. Mike Rogers (R-Mich.) that would amend the federal regulation to no longer define agents and brokers as an administrative expense.

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