Small Group Health 101 for New Agents


I will follow John's lead and take on group health. There are several people who are more qualified to write this (Like Bob) and I hope they will add to it.

I think that the first address for anyone trying to sell small group health is to visit the state department of insurance website. They are all listed here You can usually find a list of companies that operate HMO's in that state. Some states, like Wyoming, have just one or two. Other states may have ten or more. It takes very little for an insurance company to be licensed to operate in most states, but it takes a lot of compliance to run an HMO. That means that this company is probably committed to doing business in your state.

You can call a handful of the companies and ask if they write direct or through wholesalers. In my opinion, you are far better off if there are a couple of wholesalers that operate in your state. Usually, they just take overrides that you would not have access to anyway. I have found that they usually give much better training than life wholesalers do.

They are usually happy to give you an education about the state laws, products, and specific markets. The most important information to find out is:
Do they offer all of the companies in the area?
Do they give you the full commission?
Will they come on meetings with you?
Who owns your book of business?
What is the state law on medical underwriting?
How much is the allowable rate up?
Can you get a rate down for a healthy group?
Are renewals pooled or underwritten?
Can you BOR a case that they already hold?

There are several wholesalers that operate nationally. Benefitmall and Rogersbenefits are the biggest.
Many regions have local outfits that do an excellent job. I have found that states that do not have wholesalers are often not very profitable places to write small group health. In my opinion, it is much easier to crack the market in guaranteed issue states, because you don't need too much information to get fully mature rates. It sucks to get a census, beat their rates, take apps and then get rated up to wazoo because of a hip replacement.

Commissions from reputable companies range from 1% to at least 7% and renewals often pay the same. Many companies are switching to a per enrollee or per subscriber commission. With those deals, you can make out better on the young groups and worse on the older. Bonuses can give you a substantial boost for persistency and numbers. Commissions are almost always on an as earned basis. It is also important to note you will not be getting a check when the group first goes live. This is a slow business and you need to be able to pay your bills for a while before the checks start coming in.

Underwriting is what makes or breaks you in this business. New York bases all their rates on county; they don't even care about age. Arizona can rate you up to 400%. In underwritten states, some companies will give separate rates for each employee others will average it in, so the laws on underwriting are very important. Some factors that may go into the underwriting are:
Average age
% of employees that are female
SIC code
Zip code of the business
Zip code of each individual
Overall health status
Individual health status
Current and renewal premiums

Once you have a case on the books, there is huge opportunity to cross-sell. You have free access to every single employee and an excuse to call them at least twice a year. You may also know their age, family size, where they live, and health issues that may affect their need for other products. Whenever I run my employee enrollment meetings, or do a general presentation, I drop in some information about other products into the presentation. You may be pitching group health, but it is a great opportunity to present your other areas of knowledge.

If anyone needs help getting started in their local area, you can email me and I will try to point you in the right direction.
You might also want to add Allied National to your national sources for small group. I have found them competitive and relatively easy to work with.

If involved in larger cases, 100+ lives, you should consider using a TPA and setting up a self funded plan. There is a great deal of flexibility in using self funded over fully insured and usually at a lower cost.
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I agree, if the demographic is decent, you can even partially self-fund for groups of 40+. However, that is a whole different ballgame as far as a direction to take your career. I make more from my few big groups than I do from my many small groups, but it is a lot easier to get started with small. Additionally, there is a lot more cross-selling with small group, since there can be more individual interaction.
Would small group be something an independent agent working out of their home could tackle if they really busted it out, or do you really need to work for a large agency? How would a newer agent break into the company group market?
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It can absolutely be done from home with little infrastructure. However, your checks will come in much more slowly than with individual. It takes longer to get groups on the books and then there are no advances. From a long-term perspective, it is a good way to make a living, especially with the cross-sell ability. However, you need a lot of patience and persistance. Undoubtadly, after one year, you will have made more money off of individual. After 5, you may make more with group, and you won't need the constant stream of new clients to maintain your earnings.
john_petrowski said:
Would small group be something an independent agent working out of their home could tackle if they really busted it out, or do you really need to work for a large agency? How would a newer agent break into the company group market?


I agree with melmunch on this one. You can definitely work the small group market from home. You can even get some minor back office help if you use someone like Benefit Mall.

Additionally, as melmunch stated, you may make more off the individual plans in the short term, but can make a nice income in the long run from the group cases.
Benefitmall and Rogersbenefits

I'm in CA. would it be better to work with them. I am new to health sales.
Assume that is what used to be Pat Rogers group. Didn't know they still existed. Got a contact for them or a site?
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  • #9 They have about 60 offices nationwide. They don't have as many carriers as benefitmall, and they don't really do individual. They have been very helpful to me in many varied markets. I find them much easier to get someone knowledgable on the phone than benefitmall. They are very clear about state laws and underwriting which is sometimes hard to find for some states.
I have found BenefitMall to be a waste. The software almost never does what they claim it can do. Calls or emails to my rep are never answered.

WHEN I can get a quote it looks good. Just the other day I tried running a group HDHP on a 10 life group. Came back that KP was the only one available.

Wrong answer.

Called my rep & emailed. That was 2 days ago. No response.

I suppose they are OK for agents that dont know the market but I am just about over them.