Fired a Prospective Customer Today

[longfisher]

Had a guy referred to me who was incensed at the price hike he got on his existing Blue Cross plan for his family. Please take the use of the word incensed literally. He was really off the planet with rage at what he thought caused the price increases...Obama.

OK, every customer's entitled to his opinions just so long as they don't result in irrational behavior. Buying insurance is a considered process. It's not like buying a book online at Amazon nor is it like ordering a pair of leather hiking boots from Cabellas. Done right it's an intensely personal effort and good agents like me peform a veritable act of magic to find policies that are custom fitted to a customer's needs.

That's why we get paid.

But we can only do that when our customer is rational and when the customer partners with us to solve his problems. This guy was so FOX news corrupted that he absolutely could not think straight.

It was not that he merely didn't understand insurance principles or the intricacies of a health insurance policy or even it's terms. It's that his raw anger, misplaced anger at that, erected a barrier to his understanding of these things. That made me believe I stood a good chance of just selling him a policy that would not be good for him or is family in the long run.

When an agent, even if through no fault of his own, does an exceptionally poor job for someone, especially for someone who views everyone in the insurance field including independent agents like me (whose job it is to represent the customer as a lawyer might) as supporting legislation that FOX had deemed evil, the agent's very likely to get sued in the process.

Even though I carry substantial Errors and Ommissions insurance protection, I've never been cavalier about getting sued. I just don't need the aggravation or the increase in E&O premiums that would result. So, I'm careful of the sort of person with whom I work. It's a good way to do business as 80% of the problems come from 10% or less of the customers.

So, I politely suggested that his anger at his predicament was clouding his judgement and that to do a good job for him I needed his rationalism more than his emotionalism, that in my professional capacity I don't take sides, that he'd become overly-emotional about this purchase and that he'd probably do better working with another agent.

That decision cost me approximately $1,800 in first year commissions.

Just another propagandized then clueless nutcase on the right. He's perfect for e-surance.com.

LongFisher

[Glenn W]

Perhaps you're in the wrong business if you can't handle a customer's aggrivation and venting over large price increases---- regardless of his perceptions

[Scooper]

1. You can't fire a customer that wasn't yours in the first place.
2. What you did was let an opportunity slip by.
A Emotional/passionate potential customer will become one of your best clients when you are able to resolve their issue(s) or solve their problems. Its in their nature, as they will be just as emotional/passionate when they sing will your praises to other potential customer & future clients...

Next time, try to see if you can rise up and meet the challenge/ opportunity.

In sales, Problems=Opportunities. That's just my $.02 from 20+ years of sales experience.

[Squidnation]

Hey at least he was passionate about something. I heard a great anology over insurance purchasing today on the news. Can't remember if it was Fox or not

People spend more time pondering their cell phone plan then their health insurance choices. Thats pretty scary!

I much rather have the gruesome details up from then be blind sided by things that aren't covered or out of network doctors 6 months down the line after I have paid my premiums.

[longfisher]

I felt I couldn't do a good job because his misplaced ire at Health Reform prevented him from thinking and making sound choices and if I allowed him on my book of business owning a policy that would likely subvert his needs I'd be in line for a lawsuit.

There was no other sane way but to let him go to the Internet and buy unsound insurance on his own or find another agent who felt less keenly than I do about doing it right.

I'm sure I did exactly the right thing for both him and for me.

LongFisher

[FLATLINER]

UMMMMM, can you clarify? Was that a typo? $1800 first year commissions? Is that correct?


Dont you think that might be the problem right there? EVERYONE is bitching about the prices of healthcare and you are making more on one person than some on this board make in one month! Reduced coverages, increased patient Co-Pay's, increased deductables, decreased patient care networks, increased testing to verify need for care...........

Do you want a medal for what you did for the guy today? I can only think yes since you posted it on here. Sorry, Im fresh out.

NO WONDER you want Obama and his healthcare mandate to succeed. If everyone needs health insurance and many major companies will no longer offer insurance, you are multiplying your potential customer base by millions of people.

So, with your 1800 / year commission, lets look at this further... Shall we?
1800 commission and lets say 1, just 1, new customer a day..... There are millions needing insurance so 1 is a fair goal...... Thats $3,000 per month....... remember we have 12 months....... so thats $36,000 per year...... and thats just one patient customer per day. Now, if the boondoggle goes through, millions will need insurance or risk jail and fines.
What if we have a great day and bring on 8 new customers? 288K, and thats just the new customers. Now I know why premiums are 500 or more a month for individuals.
Your "compassion" for the poor irate man is neither felt nor believed. You sir, are the problem, not the cure.......

[obxfish]

LF just couldnt stand listening about his man Obamanator and not being able to give his spiel! I dont think for a minute he did what was right for the customer. He just let his liberalism (excuse me, his progressiveness!) get in the way of helping that guy out.

[Reefraft]

I felt I couldn't do a good job because his misplaced ire at Health Reform prevented him from thinking and making sound choices and if I allowed him on my book of business owning a policy that would likely subvert his needs I'd be in line for a lawsuit.

There was no other sane way but to let him go to the Internet and buy unsound insurance on his own or find another agent who felt less keenly than I do about doing it right.

I'm sure I did exactly the right thing for both him and for me.

LongFisher

He did what he had to do...let the guy go because he was taking to much of his time......He needs that time to post here>
HE ONLY HAS 5 TREADS GOING When is he going to have time to write the lengthy discourse
Get a life.

[longfisher]

UMMMMM, can you clarify? Was that a typo? $1800 first year commissions? Is that correct?


Dont you think that might be the problem right there? EVERYONE is bitching about the prices of healthcare and you are making more on one person than some on this board make in one month! Reduced coverages, increased patient Co-Pay's, increased deductables, decreased patient care networks, increased testing to verify need for care...........

Do you want a medal for what you did for the guy today? I can only think yes since you posted it on here. Sorry, Im fresh out.

NO WONDER you want Obama and his healthcare mandate to succeed. If everyone needs health insurance and many major companies will no longer offer insurance, you are multiplying your potential customer base by millions of people.

So, with your 1800 / year commission, lets look at this further... Shall we?
1800 commission and lets say 1, just 1, new customer a day..... There are millions needing insurance so 1 is a fair goal...... Thats $3,000 per month....... remember we have 12 months....... so thats $36,000 per year...... and thats just one patient customer per day. Now, if the boondoggle goes through, millions will need insurance or risk jail and fines.
What if we have a great day and bring on 8 new customers? 288K, and thats just the new customers. Now I know why premiums are 500 or more a month for individuals.
Your "compassion" for the poor irate man is neither felt nor believed. You sir, are the problem, not the cure.......

Every business I know targets 20% gross operating margin at a minimum. That's before all expenses, taxes, salaries, etc., you know.

Why the amount of that commission, paid out over a year's time in small monthly installments and subject to termination at any time should the customer become dissatisfied (which he certainly would have become), is of such a small amount that it won't even pay 75% of a single bi-weekly marketing mailing we do just to stay afloat. It would have been gone in a poof.

Ever been in business, champ? It sure doesn't seem so.

LongFisher

[longfisher]

NO WONDER you want Obama and his healthcare mandate to succeed. If everyone needs health insurance and many major companies will no longer offer insurance, you are multiplying your potential customer base by millions of people.

And, that just shows how sincerely ignorant you are about the mechanics of Health Reform and the impact they will have on agent commissions. At the end of this message, I'll use the phrase, "You must be confusing independent agents with insurance companies." and you'll understand at that point why that's a relevant phrase.

Here's the fact, dipstick.

Health Reform contains an important provision called "Minimim Medical Loss Ratio (MMLR). Essentially, the government is telling the insurance companies they've been spending lavishly on themselves and not enough on the claims of their members, so, the government is setting standards for how much of the premiums they collect must be spent on paying medical claims. For large groups the insurers must spend 85% of their premium dollars on claims and for small groups and individual/family plans they must spend 80%. If they don't they are required to issue a check to each of their members to bring their MLR back into line with the target percent.

By the way, two or three decades ago it was not uncommon for insurers to spend close to 90% of the premiums collected on claims. In some cases today, they spend less than 70%. The Feds were on to that and didn't like it.

Oh, I should point out one thing too. This provisions does not effect other sources of income from the insurer such as investment income. They're free under Health Reform to earn and keep as much as they like of that income or any other form of income. It's not figured into the MLR. Insurers make a ton of investment income.

I should also mention that the independent broker sales distribution channel is not the only one the insurers use to sell their products. They also sell via large brokers like e-surance.com, via their own websites, via their own mailings and via television, billboard and radio advertisements. Independent agency sales amouts to about 40% of their sales, that's all.

Well, the long and the short of the matter is that insurance companies must now live within the 20% operating margin I mentioned above that is a common target minimum for most American businesses. Now, with agent commissions across all years the policy is in force averaging about 12% across the nation and with independent agency sales representing only about 40% of the total sales for health insurers the cost of supporting the independent agency sales corridor is 4.8% of premium revenue collected.

Still, insurers are taking the opportunity of Health Reform's MLR to reduce agent commissions substantially. None of us know what they'll be after midnight on January 1, 2011 (zero hour as it's begun to be called) and none of the insurers are telling us so we'll not be pre-emptively alarmed. But rumors at that first year commissions will be cut to somewhere between 7 - 10% of the monthly premium and that what are called residuals (commission for years after the first year) will be cut to zero or very nearly zero.

If that's true the commissions will fall to unstustainable levels and below what it costs to market those products, much less service them. It's entirely possible that independent health insurance brokers will go the way of the dinosaur...into extinction.

We couldn't run this business on commission of that magnitude if we focused solely on health insurance premiums. So, we will change our business model to reduce health sales to a bare minimum. They may very well become a secondary or tertiary sale altogether or may even become a incidental sale to our other work. We also sell annuities, disabiity, accident, long-term care, group health insurance and a variety of what are generally called voluntary benefits like cancer or major illness insurance. None of those products are involved in the MLR calculation.

Virtually ever independent broker I know is doing the same thing. That's how deep the cuts in commissions will be.

Now that you know the real story of the commissions agents make now and will make after January 1st, doesn't your statement that I support health reform for the money ring pretty hollow? I support Health Reform for reasons other than the impossibility that it might enrich me. I've known from the outset that it would just the opposite.

I don't blame you for not knowing these things. And, I don't begrudge you for having an uninformed opinion on the matter. It's sort of an inside baseball sort of thing. But now that you know this I would blame you if you kept to your incorrect assessment of why I like health reform; i.e. the money.

The money is leaving health insurance sales in a very big way. So, "You must be confusing independent agents with insurance companies" who will, indeed, make big bucks, ultimately.

It is, indeed, true that insurance companies are going to be the great winners in all of this. They'll be getting upwards to 50 million new customers who the government will mandate the purchase of insurance. The mandate was and is AT THE INSISTENCE OF THE INSURANCE COMPANIES AND AT THEIR INSISTENCE ALONE. Now you know why.

Those guys are going to make out like bandits. And, if you're in the market I'd advise you to buy insurance stocks now while their value is depressed due to the uncertainties of Health Reform because in less than 4 years when the mandates kick in those stocks are going to soar through the roof.

Now, why do I support Health Reform. Well, for two reasons.

Firstly, I'm a populist and I don't like corporations to run over the middle class (a class that most of us on this board are in). When Wall Street got hold of heath insurers their pressure on the insurers to ceaselessly increase profits caused the insurers to commit every conceivable form of mendacity against their customers. The insurer's practices became a social ill (all the way back to about 1970) and something had to be done to stem all the suffering in the middle class.

Health Reform is not perfect. But it's a step in the right direction and it is certainly aimed at the jugular of both health insurance companies and their Wall Street patrons. As a populist I sincerely enjoy seeing that.

Secondly, I'm a talented guy and I can make the same money I do now selling virtually any insurance product. So, unlike virtually all of my agent colleagues who seem to be both uniformly Republican and uniformly opposed to Health Reform I won't be unnecessarily harmed by supporting it.

Supporting Health Reform is the right thing to do and I'm doing it. In the long run both I and the country will be better off for having done so. Commissions don't now and never have entered into the matter.

OK?

LongFisher