CAHU Healthy Solutions

Operation Drumbeat

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Letter:	I am writing you to ask you to oppose AB 1521. I am very concerned at the cost and responsibilities placed on the independent agent in complying with this bill. I am a professionally licensed insurance agent who specializes in employee benefits and individual health insurance. Agents are the HR department for small employers and the search engine for individuals seeking to find health coverage that fits their needs and budget. I am the educator when new laws such as the recent COBRA changes that affect employers or their employees are passed. I provide a unique set of services for my clients which they cannot find in any other place. If a consumer calls the insurance company directly, or calls an independent insurance agent, the cost of the policy is the same. The independent insurance agent is paid a commission only if the policy is sold. The commissions are paid as earned. What this means is if the consumer cancels the policy after a few months, the commissions from that policy cease. The independent agent gets a percentage of the premium, only if the premiums are being paid. The health insurance marketplace has many distribution channels ranging from an internet purchase, a purchase directly from a carrier or purchasing from an independent professional insurance agent like myself. All of these distribution channels have one thing in common, the price.The price of the product to the consumer is the same no matter what channel through which they purchase a health insurance product. The price may vary by carrier and product but does not vary by distribution channel. What will the consumer learn from this disclosure when the price for the product is the same in both distribution systems? How does it help them make a better health insurance purchasing decision? Commission disclosure will not only confuse the purchaser it will also discriminate against the independent agent distribution system. The cost for a carrier to sell a policy direct is different than an independent agent. The carrier employees usually get a base salary plus a commission which is much lower than the one I receive. In your bill the base salary, benefits, overhead, and bonuses is never disclosed. I have a different cost structure as I must pay my own overhead such as rent, phones, office space, retirement, health coverage, etc. Yet I would be required to disclose my higher commission while the carrier only discloses a small part of their cost to place a product. This creates an unlevel playing field between distribution channels and creates a misperception for the consumer. So not only does this bill create a significant competitive business disadvantage for me and my employees in the middle of a recession, I will be compelled to explain all the differences in commission or payment schemes that I know about so the consumer has some context to understand what the disclosure means. This is a solution in search of a problem where one does not exist. Please oppose bill AB1521, because it does nothing to assist the consumer in choosing the best coverage to fit their health care needs. Respectfully
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