A company that sells health insurance products outside the reach of the Affordable Care Act is paying a lot more compensation to outside distributors.
Health Insurance Innovations Inc. says it spent $108 million on third-party commissions for all of 2016. That was about 100 percent higher than the $54 million third-party commission spending total for 2015.
The Tampa, Florida-based company hopes to cut the share of revenue going to commissions as it makes more sales through its own web-based store, AgileHealthInsurance.com. But Gavin Southwell, the company’s chief executive officer, said today during a conference call with securities analysts that he sees plenty of room for revenue to grow.
“We’ve got the potential for some favorable tailwinds,” Southwell said, suggesting that the new atmosphere in Washington could be good for Health Insurance Innovations.
Health Insurance Innovations distributes short-term medical insurance and hospital indemnity insurance for insurance companies. It also distributes what it classifies as supplemental insurance products, such as cancer insurance, vision plans, critical illness insurance plans and life insurance.
The company reported a net loss of about $200,000 for the latest quarter on $51 million in revenue, compared with a net profit of $200,000 on $34 million for the fourth quarter of 2015, because of costs associated with the departure of two top executives.
But the company took in 85,300 applications for short-term medical policies and hospital indemnity policies in the fourth quarter, 23 percent more than it received during the fourth quarter of 2015.
The number of applications for supplemental policies increased 11 percent, to 93,600.
Customers seem to be keeping their policies in force longer, because the number of short-term medical and hospital indemnity policies in force on Dec. 31 increased 58 percent between the end of 2015 and the end of 2016, to 133,600.
Gavin Southwell says investments in flexible computer systems have paid off. (Photo: Thinkstock)
Traditionally, insurers have thought of short-term medical policies as being health insurance policies designed to stay in force less than 12 months.
Regulators have treated both short-term medical and hospital indemnity insurance “excepted benefits,” or products exempt from the benefits mandates and underwriting rules that apply to major medical coverage.
Since key ACA individual major medical rules took effect in January 2014, the products’ excepted benefits status has given them a major sales boost.
The ACA now prohibits issuers of individual major medical coverage from thinking about whether applicants have cancer or need liver transplants when selling them coverage, or deciding how much the coverage should cost.