Insurance brokers’ businesses are taking a hit due to Obamacare, according to a new survey from McKinsey and Company.
One-third of independent insurance brokers say they’re considering leaving their profession entirely because of the health-care law, according to a nationwide survey of 1,000 independent brokers during Obamacare’s first open enrollment period, the Washington Examiner reports. Twenty-nine percent report that the law has hurt their businesses directly.
Although brokers say Obamacare is hurting their profits, that doesn’t mean they haven’t been working harder than ever. Respondents reported working intensively with Obamacare exchange customers — especially trying to get applicants through glitchy websites like HealthCare.gov.
It took 69 percent of brokers two or more sessions to get a customer through Healthcare.gov.
“There has been a 300 percent increase in time spent sharing information compared to the past — about three hours per enrolled life,” one broker said.
The insurance experts also have long-term concerns about the health-care law itself — not just their own ability to thrive. Twenty-three percent are worried about “premium stability” under Obamacare and 16 percent don’t believe the law is financially sustainable. (RELATED: Economist: Worst Obamacare Premium Hikes Will Hit In 2017)
Insurance brokers — especially small businesses and independent agents, which don’t have the resources of larger firms — have long been pushing back against poorly-thought out Obamacare policies.
In several states, brokers have reported that the exchanges aren’t even paying brokers their commissions. Six insurance brokers filed a class action lawsuit against the Nevada Obamacare exchange and its former contractor, Xerox, for failing to pay. (RELATED: Nevada Obamacare Exchange Isn’t Paying Its Insurance Brokers)
The Washington, D.C. exchange was also charged with similar claims after the first open enrollment period. The hold-up is partly due to exchange officials failing to include broker information when sending electronic customer applications to insurance companies, The Washington Post reported. (RELATED: DC Obamacare Exchange Still Hasn’t Paid Its Insurance Brokers For Sign-ups)
On top of exchanges simply not paying up as required, brokers charge that Obamacare has cut their commissions in the first place. Brokers now have a limit to the amount of revenue they’re allowed to spend on “administrative overhead,” which includes commissions — similar to the new limits on insurance companies’ administrative spending.
“I think there is going to be an exodus of agents over the next 5 years,” one respondent said.
“Many brokers who did work with me are leaving the business and there is no incentive for new people to go into insurance anymore,” another warned.