But when the co-op declared bankruptcy, it was taken over by insurance regulators. The Iowa insurance department, which oversaw the co-op, decided to suspended commission payments to agents. Many agents who enrolled consumers in the co-op were facing the prospect of losing significant revenue owed to them and feeling the strain on their businesses.
NAIFA-Nebraska and NAIFA-Iowa lobbied promptly by first sending letters and then immediately meeting with regulators to get this decision reversed. Due to those critical efforts, agents will be placed higher in the bankruptcy process of the co-op to retrieve payments owed. State insurance regulators are working to receive funds from ACA risk programs to enable the co-op to meet some of its financial obligations, which include compensating agents. It is not known when the co-op will receive such funds and is uncertain how much advisors can recoup.
“We’re not sure how it will ultimately play out,” Olsen said. “Agents were moved into the upper ranks of debtors to be paid, above $140 million owed the U.S. government, but we just don’t know how much money will become available.”
A similar situation is now occurring in Colorado, where the failed co-op announced that it would suspend commission payments to agents for the final two months of this year. Equally troubling, the co-op in Michigan, which will shut down at the end of this year, is now under the control of the state insurance department and therefore cannot legally pay commissions on policies sold prior to November 13, 2015. Advisors who are owed commissions will soon have to file claims to receive those payments through a process to be set up by the co-op.
NAIFA-National urges NAIFA state association executives and their government relations teams to be on the lookout for any co-ops that might be in financial trouble and to meet with the appropriate regulators to make the case for the continued payment of agent commissions.
“This is definitely something advisors in other states need to be aware of,” Olsen said. “They need to be ahead of the curve rather than just waiting for it to happen.”
“People put their trust in these co-ops and it ended up hurting consumers and hurting agent reputations,” he added. “What it comes down to is that we do what’s right for the client every time. We hope regulators will do what’s right for us.”
The foundation of his work philosophy is reflected in the following:
“My company is dedicated to providing prompt service and assistance in the areas of employee benefit design, consultation, implementation, related business insurance needs and estate planning for business owners and key executives.”
Hyatt is a graduate of Carroll College in Helena, Mt., earning a Bachelor’s Degree in general business. Hyatt and his wife, Belen, have four children. His activities in the insurance industry include having served as President for both the local and state Insurance and Financial Advisors Association. He is a past board member of the National Association of Health Insurance Advisors, and currently chairs a national committee for the Insurance and Financial Advisors Association. Currently, Hyatt is the Chairman of the Board of the Idaho Small Employer Reinsurance and Individual High Risk Reinsurance Pool for the State of Idaho. He also serves as a board member of the Idaho Exchange “Your Health Idaho” These activities, coupled with Hyatt’s commitment to serving his clientele in the ever-changing benefits arena, have made him an invaluable resource.
Through a consummate desire to provide exemplary service and a reputation for integrity, Hyatt has been recognized by his peers with the receipt of The Presidents Achievement Award, The Glennon Award, The Rankin Award and Isern Award.
Hyatt would welcome the opportunity to work with your organization.
Latest posts by Hyatt Erstad (see all)
- Elimination of Commission Payments in Health Markets - April 22, 2016
- As ACA Co-Ops Go Under, Advisors Are Left in the Lurch - January 21, 2016
- Employee Benefits Change or Not? - October 26, 2015