Smaller agencies selling employee-benefits services face increased compliance demands and lower commissions now that the healthcare-reform law has been upheld by the Supreme Court, but agents are not throwing in the towel just yet, concludes the National Underwriter.

“The independent agent is an incredibly resilient creature,” says Andrew C. Harris, president of Liberty Insurance Associates in Millstone, N.J. and president-elect of the National Association of Professional Insurance Agents. “So many times, the small Mom and Pop independent agent has been counted out, but they just keep adapting and changing and finding ways to be important to their customer. I think it is going to happen in this.”

A major concern the executives point to is compensation. Because healthcare companies are obligated under the healthcare-reform law to spend between 80 and 85 percent of premium dollars on paying claims, carriers will be forced to cut administrative expenses, under which agent commissions fall according to the current medical loss ratio formula. Agents have unsuccessfully fought to have their commissions excluded from the limited administrative expenses.

Harris says while agents will make less money, they will have to do more work, as there will presumably be more compliance issues to meet and more paperwork to file. He added that there is some help on the way in the area of technology that will aid agents with compliance issues.

“This will force us to be bigger and stronger benefit managers and not just healthcare [insurance] providers,” says Harris. “That is the opportunity. If we look to be something new and different, let’s not do it halfway, let’s do it all the way.”

See Andrew Harris' full comment: Agents, Challenged by Healthcare Decision, Vow to Soldier On (National Underwriter 7/3/12)