The Government ShutDown, is only a Result of The Prognosticator's Fear of ACA !!

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 The Republican Prognosticators, are truly afraid of loosing the insurance profitability that has continuely occured ove the years. Instead, of working with the Democratic Party to solve some of the issues concerning the ACA plan, there is this constant fear and future projection of how it will not work.

It is the Insurance companies, that make  considerable profits and at this very moment, the Market thriving today.  Repealling Obamacare, will cause the insurance companies to negogiate more and  insurance companies will not be able to hoard the profits, as in years pass.

In the House debates last night, and this morning you would hear the same comments over and over, from the Republican party, of how the American people are not in favor of the ACA plan. In all actuality, it is there party that is not in favor. We, the American people voted, back when Romney ran for office and He lost. The Presidential debates, were about these very same issues. The budget, that  Sen. Paul Ryan pruposed was about cutting spending and the ACA plan and the numbers" Never" added up. The sequester, had to do with the monies, that had already  been spent !

The real facts are behind the Insurance Companies profits:

"According to the 2010-2011 Growth and Performance Standards (GPS) study, pre-tax agency profit varies from 4.25 percent to 10.00 percent, depending on agency size. The smallest agencies in the revenue range of $500,000 and less had the lowest profit of 4.25 percent, while agencies in the largest revenue range of $3,000,001 and over had the highest profit of 10.00 percent. For comparison purposes, this profit percentage is calculated as a percentage of total revenues. If we look at the best performing “top 25 percent” of agencies for these same revenue ranges, the profit varies from 14.62 percent to 20.11 percent. By focusing on these numbers, agencies can compare themselves to the averages in their peer group, or better yet, they can strive to be like the top performing (top 25 percent) agencies and be the cream of the crop.

To be profitable, agencies need good control over their compensation expenses. Typically, compensation expenses account for over 70 percent of all agency expenses. Based on all agencies in the GPS study, the following breakdown exists for compensation expenses:

Compensation Expenses percent of Total Revenues

Executive or Owner Compensation

19.33 percent

Sales Salaries and Commissions

15.97 percent

Office or Staff Salaries

21.80 percent

Insurance – Employee Benefits

4.79 percent

Payroll Taxes

3.61 percent

Pension and Profit Sharing

1.83 percent

Total Compensation Expenses

67.32 percent

Executive or owner compensation consists of commissions, salaries, and bonuses paid to agency principals. Typically, owners are compensated in three different ways: (1) agency owners earn commission on the business they write just like other producers in the agency; (2) owners need to be compensated for the time they spend on managing the agency; and (3) agency owners should receive a return on the money they have invested in the agency; basically, a percentage of the profits. With this in mind we find that compensation per owner varies significantly based on agency size. Compensation per owner varies from $52,600 in the smallest agencies to $260,500 in the largest agencies.

Sales salaries and commissions is basically producer compensation. This is the compensation paid to non-owner producers who have less than 10 percent ownership in the agency. While the majority of producers receive all or most of their compensation from commission, some producers, especially newer producers, receive a greater compensation percentage from salaries. Average compensation per producer varies from $48,000 to $116,000, depending on agency size.

While agency owners and managers should focus on expense control and monitoring compensation expenses, controlling all other agency expenses is still important. The remaining agency expenses typically make up about 21 percent to 30 percent of agency revenues, depending on the agency size category. Shaving a few percentage points from these expenses can often mean the difference between being profitable and unprofitable. These remaining expense categories include:

  • Accounting, Legal and Professional

  • Advertising and Promotion

  • Amortization of Intangibles

  • Automation and Data Processing

  • Automobile

  • Bad Debts

  • Contributions

  • Depreciation

  • Dues and Subscriptions

  • Education

  • Equipments and Service Agreements

  • Insurance – Key Person

  • Insurance – Property/Casualty, Errors and Omissions

  • Interest

  • Licenses, Permits and Taxes

  • Office Supplies and Printing

  • Postage

  • Rent or Leases

  • Repairs and Maintenance

  • Telephone

  • Travel and Entertainment

  • Utilities

  • Miscellaneous Expenses

Based on a percent of agency revenue, some of the more important expenses to focus on include: Rent or Leases (3.54 percent); Insurance – property/casualty, errors and omissions (1.72 percent); Advertising and Promotion (1.40 percent); Automation and Data Processing (1.32 percent); and Accounting, Legal and Professional (1.28 percent).

 

Average account size is another important benchmark. Larger accounts typically lead to higher productivity numbers and increased agency profitability. Agencies can increase their commercial lines account size by targeting larger accounts and working in niches where the larger accounts exist. For personal lines, account rounding, or writing several policies per account, can increase account size. Commercial lines account size (in commission) varies from $506 in the smallest agencies to $1,634 in the largest agencies. For the top performing agencies (top 25 percent), the commercial lines account size varies from $1,204 to $2,751. Personal lines account size does not vary as much with agency size, from $178 to $259 in commission per account. The top performers do better getting $284 to $453 in average account size.

http://www.insurancejournal.com/news/national/2010/12/20/115803.htm

 

 So, instead of the Republican party, playing Political games and forcasting doom on the ACA plan and for those members ,that hold Board positions on Insurance companies and will are paid lucrative salaries.  They will now have to share instead of hoard. The American people, should not be subjected to their selfishness !

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