WASHINGTON BUREAU — About 75% of the insurance producers who participated in a recent survey said their health insurance commissions have fallen since Jan. 1.

The National Association of Insurance and Financial Advisors (NAIFA), Falls Church, Va. – the group that conducted the study – said another 13% of the 520 survey participants said health insurers have informed them that commissions will be cut in the near year.

NAIFA conducted the survey by polling members who have been active in the health insurance market.

About 11% of the survey participants said they have stopped selling and servicing policiesDown arrow for individuals, and 4% said they have gotten out of the health insurance market altogether.

NAIFA says it organized the survey in response to reports that the new minimum medical loss ratio (MLR) requirements in the federal Patient Protection and Affordable Care Act of 2010 (PPACA) have hurt commission rates.

The PPACA MLR provisions require health insurers to spend 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts.

The MLR requirements took effect Jan. 1.

Health insurers have told agents and brokers that they are cutting commissions in an effort to meet the MLR requirements.

Producers say the commission cuts have been substantial, NAIFA says.

  • 53% of the survey participants said their commissions have been lowered by 25% or more.
  • 17% of the participants said the carriers they work with have cut commissions by 50% or more.

NAIFA President Terry Headley, NAIFA president says members of Congress and regulators have

acknowledged that professional, licensed health insurance agents are vital to the health insurance market.

“These agents do a fantastic job ensuring that people and businesses get proper coverage and the service they deserve,” Headley says in a statement about the survey results. “But we can’t drastically cut agents’ pay, sometimes in half or more, and expect them to continue working at the same level, with no consequences for the clients they serve.”

If survey participants’ commissions remain depressed:

  • 29% plan to stop selling individual health insurance.
  • 18% plan to stop selling health insurance.
  • 44% plan to charge fees for services they have traditionally performed at no additional cost to clients.

Some producers will have a hard time adding service fees, because many states prohibit insurance agents who receive commissions from charging fees, Headley says.

“Congress needs to fix this part of the health care law so consumers will continue to benefit from the valuable services agents provide,” Headley says.

Other MLR coverage from National Underwriter Life & Health: