Insurance regulators in Kentucky are opposing carrier efforts to cool major medical insurance sales by changing agent and broker compensation structures.
Sharon Clark, the Kentucky insurance commissioner, says in a new advisory opinion that the Kentucky department believes insurers include agent commission payments in the filings they submit when they develop their individual major medical rates.
“Failure to pay commissions in accordance with the rate filing will be considered a violation of the Insurance Code,” Clark says in the opinion.
Clark has addressed the opinion to all health insurers authorized to offer health benefit plans in Kentucky.
The department notes in a disclaimer at the top of the opinion that the opinion is not legally binding on either the department or the reader.
The insurance agent editors of InsureBlog, who drew industry observers’ attention to the opinion in an article posted last week, noted that the opinion affects only carriers and agents in Kentucky for now but could influence regulators in other jurisdictions.
At the beginning of the year, Humana Inc. (NYSE:HUM) sent agents and brokers an alert warning them that it would stop paying commissions on sales of silver and gold individual major medical plans with an initial effective date on or after March 2, 2016, and cut commission rates on sales of bronze and catastrophic plans. Humana then warned at the end of the week, in a notice about its earnings forecast for 2016, that it believes it will have to record a premium deficiency reserve for 2016 individual major medical policies that comply with the Patient Protection and Affordable Care Act (PPACA).