Minnesota’s State Health Exchange Done Wrong


Insurance Agents who haven’t kept abreast of the debate surrounding the establishment of the Minnesota State Health Exchange are in for a rude awakening. Minnesota’s State Health Exchange has been put in motion and millions of dollars are being spent to help people understand and purchase health care plans without insurance industry input.

In fact, Minnesota consumer advocates were adamant that the insurance industry not contaminate any part of the setup or act in a future advisory role to the Health Exchange.

Why would so many consumers be so vehemently against people who have spent their lives studying to understand the nuances of the health care processes? Why would they turn their back of the agents that care deeply about delivering a good product at a price people can afford?

Apparently insurance agents and companies have managed to alienate the very people we have sought to serve. In our effort to commoditize insurance and offer clear choices based on price, we have managed to make ourselves an antiquated piece of the old process. Instead of building on the role as advisor, we’ve adopted the role of the intermediary who only acts to deliver the news that prices are going up, while services are going down.

By building a system that is based on the lowest price available rather than working to get the best coverage available for clients, it appears the agent and company have become an expense without a return.

“So what,” you say! “It doesn’t matter what happening in the Minnesota health care market because my agency (or company) doesn’t rely on health sales for income. My agency sells Property & Casualty Insurance.”

P & C agents and companies that fail to see the torrent of advertisements poured on the consumer based solely on claims of reducing cost with little or no emphasis to explain the value of insurance are leaving their head stuck firmly in the sand. You can’t open a magazine or cruise a website without hearing about insurance price. (Quote your auto and save!) Many direct marketing companies actually provide the competitor’s quotes for the customer with little or no regard to the value of the coverage or the integrity of the company.

Direct writer’s dream of commoditizing the insurance sale! By doing so, they hope to eliminate the expense of competing on the issues of service and value. In a web article by the Simon Graduate School of Business John Lucker of Deloitte Consulting shares this though “Technically from a legal perspective you’re consuming the product, but you don’t feel like you’re consuming anything, because you’re not getting anything back.”

As a professional independent insurance agent or company, this sales approach should be rejected. If we have learned anything from the health care debate, we should have learned the folly of being cast as an order taker rather than a trusted advisor.

Unless insurance agents work together nationally to reinforce the role of advisor and stop the sale of price, the P & C Industry is doomed to follow health care into the exchange-like environment.


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