The Oceania Times

Top Menu

  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions

Main Menu

  • Australian Economy
  • Brokers
  • Commodities
  • Currencies
  • Financial Market
  • Gold and Precious Metals
  • Investment
  • Stock Shares
  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions

logo

The Oceania Times

  • Australian Economy
  • Brokers
  • Commodities
  • Currencies
  • Financial Market
  • Gold and Precious Metals
  • Investment
  • Stock Shares
  • YHB Investment Advisors Inc. Has $433,000 Stake in FedEx Co. (NYSE:FDX)

  • Jeffrey Michael Dergurahian Sells 100,000 Shares of loanDepot, Inc. (NYSE:LDI) Stock

  • YHB Investment Advisors Inc. Makes New $309,000 Investment in W. R. Berkley Co. (NYSE:WRB)

  • YHB Investment Advisors Inc. Purchases 105 Shares of The Sherwin-Williams Company (NYSE:SHW)

  • Capital Investment Advisors LLC Purchases Shares of 26,164 Coterra Energy Inc. (NYSE:CTRA)

Brokers
Home›Brokers›Broker compensation disclosure: Will CAA put brokers on the hot seat?

Broker compensation disclosure: Will CAA put brokers on the hot seat?

By Megan
February 2, 2022
3
0
Share:
Now that plan sponsors can see exactly what they’re paying for, they may be able to take a more evidence-based approach on which brokers are providing the best value for their dollars. (Photo: 2019 kentoh/Shutterstock)

The new broker compensation disclosure law that went into effect at the end of December will add transparency to the broker/client equation—and that may benefit some brokers more than others, according to industry observers.

The Consolidated Appropriations Act of 2021 (CAA) requires brokers and consultants who work in the health benefits field to disclose compensation from sources such as insurance carriers, including commissions, fees, and non-cash compensation. The new disclosure rules are similar to rules that went into effect for the retirement plan industry about 10 years ago.

The law requires any provider of insurance brokerage services to disclose their compensation, whether the compensation is direct (bonuses and fees) or noncash (gifts such as meals or tickets). The new regulations require disclosure of direct and indirect payments to brokers that equal $1,000 or more, and disclosure of non-cash compensation that equals $250 or more.

The new requirements are part of the broader ERISA law regulations and should help employers who provide health benefits for workers through plans sold by brokers (also called service providers), according to Amy Gordon, an attorney with the Chicago office of Winston and Strawn. “Under ERISA, if you engage a service provider, the compensation needs to be reasonable,” she said. “And the only way to know that the compensation is reasonable to know exactly what those providers are being paid—and then you can make an assessment on whether that payment is reasonable compensation.”

The benefits of transparency

For some in the industry, the disclosure rules will not be a big change: a growing number of brokers already offer full disclosure of what they’re being paid by carriers. David Contorno, founder of E Powered Benefits has been a proponent of full disclosure for brokers for some time. “Most employers don’t understand how brokers are compensated,” he said. “Brokers are not out there actively disclosing how they’re getting paid, and employers are not demanding to know how brokers are getting paid. Brokers are essentially purporting to represent the interests of their clients, but they’re paid by this third party that has very different interests—that’s the problem with the system.”

Contorno added that the commission-based system that many are familiar with has strong disincentives to lower health care costs overall. “In a commission-based model, you make more money as your client’s costs go up,” he said. “In our model, we get paid a bonus by the client for lowering their health care costs.”

He noted that the changes to the 401K and retirement plan disclosure rules showed that brokers can be transparent and still do well. “That changed the industry, when those laws were changed,” he said. “It really brought fees and overhead down for 401K plans. And it really improved the performance of the participation in those plans. So, I’m hoping that’s the case here as well.”

Will the new regs affect premiums?

Gordon noted that the majority of brokers still make their money from commissions but agreed that the new transparency might give some brokers an edge. She added that similar regulations about disclosure around health insurance plan commissions were suggested at the time of the retirement plan changes but were put off when the Department of Labor (DOL) received pushback from the brokerage industry. “This has kind of been in the works with the DOL for years,” she said.

Another interesting question will be whether the new disclosure of compensation will have any ongoing effect on premiums, Gordon said. For example, if brokers start relying less on commissions, or cut back on that type of compensation as part of a competitive strategy, would that bring down costs for the carriers?

“If you ask an insurer to [quote a price] for an insurance policy on a no-commission basis, it typically does not change the premium. This is an amount that the insurers have essentially ‘baked in’ to the premiums,” she said. “I’m wondering if now this is going to shake up the industry because maybe they’re going to pay lower brokerage commissions on some products… will that essentially result in lower premiums? Right now, they say no, but I’m wondering if down the road that will change.”

What she does expect is that the transparency will have an impact on how clients/employers make decisions about what brokers they work with. Gordon said now that plan sponsors can see exactly what they’re paying for, they may be able to take a more evidence-based approach on which brokers are providing the best value for their dollars.

“I think once a plan sponsor sees exactly what they are paying for the services they are receiving… if the service provider is stellar and provides great service, and the sponsors see they’re paying a little more than they thought; I don’t know they’re going to fire that broker,” she said.

“But if the broker or consultant is just passing muster with the plan, and the fiduciary of the plan now sees, ‘we’re paying them the X-plus-20% for barely passable service,’ I think the plan fiduciary is likely to look elsewhere for better service, based on the compensation that’s being paid.”

Gordon added that most of her clients are reporting that their brokers are ready for the new disclosure regulations. “No one is saying ‘we’re not going to be ready,’” she said. “So now it’s going to be up to the fiduciaries of these plans to decide whether this is a lot more compensation than they were anticipating, and then act accordingly.”

Source link

Previous Article

Reserve bank keeps interest rates on hold ...

Next Article

Coalition boasts of tough line on China ...

0
Shares
  • 0
  • +
  • 0
  • 0
  • 0
  • 0

Megan

Related articles More from author

  • Brokers

    Cannes Film Festival – Deadline

    May 26, 2022
    By Megan
  • Brokers

    ‘Fat finger’ trade on NSE may have cost broker Rs 250cr loss

    June 2, 2022
    By Megan
  • Brokers

    9 tips for communicating through language barriers

    June 6, 2022
    By Megan
  • Brokers

    iCorpSecurities Review – What Makes iCorpSecurities an Excellent Broker for Traders?

    June 22, 2022
    By Megan
  • Brokers

    Johnson & Johnson (JNJ) Management Presents at UBS Global Healthcare Brokers Conference [Transcript]

    May 24, 2022
    By Megan
  • Brokers

    Brokers Set Expectations for Oxford Industries, Inc.’s FY2023 Earnings (NYSE:OXM)

    June 13, 2022
    By Megan

Leave a reply Cancel reply

You may interested

  • Investment

    7 Surefire Investments You’ll Thank Yourself for Later

  • Investment

    Carvana Is a Great Business (But a Terrible Investment)

  • Stock Shares

    Insider Selling: Velodyne Lidar, Inc. (NASDAQ:VLDR) CTO Sells 17,179 Shares of Stock

  • LATEST REVIEWS

  • TOP REVIEWS

Timeline

  • June 26, 2022

    YHB Investment Advisors Inc. Has $433,000 Stake in FedEx Co. (NYSE:FDX)

  • June 26, 2022

    Jeffrey Michael Dergurahian Sells 100,000 Shares of loanDepot, Inc. (NYSE:LDI) Stock

  • June 26, 2022

    YHB Investment Advisors Inc. Makes New $309,000 Investment in W. R. Berkley Co. (NYSE:WRB)

  • June 26, 2022

    YHB Investment Advisors Inc. Purchases 105 Shares of The Sherwin-Williams Company (NYSE:SHW)

  • June 26, 2022

    Capital Investment Advisors LLC Purchases Shares of 26,164 Coterra Energy Inc. (NYSE:CTRA)

Best Reviews

Latest News

Investment

YHB Investment Advisors Inc. Has $433,000 Stake in FedEx Co. (NYSE:FDX)

YHB Investment Advisors Inc. trimmed its stake in shares of FedEx Co. (NYSE:FDX – Get Rating) by 18.3% during the first quarter, according to its most recent disclosure with the ...
  • Jeffrey Michael Dergurahian Sells 100,000 Shares of loanDepot, Inc. (NYSE:LDI) Stock

    By Megan
    June 26, 2022
  • YHB Investment Advisors Inc. Makes New $309,000 Investment in W. R. Berkley Co. (NYSE:WRB)

    By Megan
    June 26, 2022
  • YHB Investment Advisors Inc. Purchases 105 Shares of The Sherwin-Williams Company (NYSE:SHW)

    By Megan
    June 26, 2022
  • Capital Investment Advisors LLC Purchases Shares of 26,164 Coterra Energy Inc. (NYSE:CTRA)

    By Megan
    June 26, 2022
  • Recent

  • Popular

  • Comments

  • YHB Investment Advisors Inc. Has $433,000 Stake in FedEx Co. (NYSE:FDX)

    By Megan
    June 26, 2022
  • Jeffrey Michael Dergurahian Sells 100,000 Shares of loanDepot, Inc. (NYSE:LDI) Stock

    By Megan
    June 26, 2022
  • YHB Investment Advisors Inc. Makes New $309,000 Investment in W. R. Berkley Co. (NYSE:WRB)

    By Megan
    June 26, 2022
  • YHB Investment Advisors Inc. Purchases 105 Shares of The Sherwin-Williams Company (NYSE:SHW)

    By Megan
    June 26, 2022
  • YHB Investment Advisors Inc. Has $433,000 Stake in FedEx Co. (NYSE:FDX)

    By Megan
    June 26, 2022
  • Australian economy survived Covid better than most but recovery could slow, OECD says | Australian ...

    By Megan
    September 14, 2021
  • The Best Online Brokers, According to 5 Financial Experts

    By Megan
    September 14, 2021
  • Is Disaster Looming for Australia’s Economy?

    By Megan
    September 29, 2021

Trending News

  • Investment

    YHB Investment Advisors Inc. Has $433,000 Stake in FedEx Co. (NYSE:FDX)

    YHB Investment Advisors Inc. trimmed its stake in shares of FedEx Co. (NYSE:FDX – Get Rating) by 18.3% during the first quarter, according to its most recent disclosure with the ...
  • Stock Shares

    Jeffrey Michael Dergurahian Sells 100,000 Shares of loanDepot, Inc. (NYSE:LDI) Stock

    loanDepot, Inc. (NYSE:LDI – Get Rating) insider Jeffrey Michael Dergurahian sold 100,000 shares of loanDepot stock in a transaction on Wednesday, June 22nd. The stock was sold at an average ...
  • Investment

    YHB Investment Advisors Inc. Makes New $309,000 Investment in W. R. Berkley Co. (NYSE:WRB)

    YHB Investment Advisors Inc. purchased a new position in W. R. Berkley Co. (NYSE:WRB – Get Rating) during the 1st quarter, Holdings Channel reports. The institutional investor purchased 4,633 shares ...
  • Investment

    YHB Investment Advisors Inc. Purchases 105 Shares of The Sherwin-Williams Company (NYSE:SHW)

    YHB Investment Advisors Inc. boosted its position in The Sherwin-Williams Company (NYSE:SHW – Get Rating) by 9.9% during the first quarter, according to its most recent 13F filing with the ...
  • Investment

    Capital Investment Advisors LLC Purchases Shares of 26,164 Coterra Energy Inc. (NYSE:CTRA)

    Capital Investment Advisors LLC purchased a new stake in Coterra Energy Inc. (NYSE:CTRA – Get Rating) during the first quarter, HoldingsChannel.com reports. The firm purchased 26,164 shares of the company’s ...
  • About us
  • Contact Us
  • Cookie Policy
  • Disclaimer
  • Privacy Policy
  • Terms and Conditions
© Copyright The Oceania Times. All rights reserved.

SUBSCRIBE TO OUR NEWSLETTER

Get our latest downloads and information first. Complete the form below to subscribe to our weekly newsletter.