Do companies really need a health insurance agent?

We all probably have that one industry conference or annual meeting that we really look forward to and enjoy attending. I was at one of those recently. Yes, there are insurance related conferences that are cool and fun to attend. While there, I was trading stories with a peer. He told me about a recommendation made to an employer group that they purchase a plan from a particular health insurance carrier. It was a sizable client, about 500 employees. The CFO was appreciative of his time and wanted to proceed without having an “agent of record” for the group.

You see, in insurance agent circles, the “agent of record” is the most important designation you can have with a client, as it assigns all commissions built into the premium to that agent. Typically these commissions are a flat, per-head dollar amounts or a percentage of premium. This particular carrier pays a percentage of premium at a rate of 5 percent. On a 500-person group, we are looking at commissions in excess of $150,000 annually.

Of course, the agent appealed to the CFO. It is customary and, in this case, probably justified, that he be kept on as agent of record. But the question lingered with me: Is it necessary to have a health insurance agent?