Local hometown insurance agents better hold tight or prepare to see their businesses either damaged to eliminated entirely, if Minnesota DFLers get their way. That’s because a bill that proposes eliminating most competitive agents from the loop of bidding for school district health insurance has taken another step forward, winning approval today in the Minnesota House.
While hometown insurance agencies in outstate Minnesota have historically had to submit to a bidding process to win the health insurance and other insurance business of their local school district, the bill being considered would cut local bidding out of the process entirely, awarding only a handful of six “superagents” the vast bulk – if not all – of the Minnesota public school district insurance contracts in the state.
While family policies and private business group policies will still be up for grabs, this power-grab by state officials to eliminate true competition in the school insurance industry. While the surviving policies will be marginally more affordable, what is certain to suffer are areas like personalized customer service, the “hometown touch,” and the ability of local agents to customize policies to local district needs.
While most people believe the insurance business is a red-carpet-lined path to easy street, the agents who do well only do so after surviving several years – sometimes a decade or more – that it takes to build up a new practice and gain a reputation for dependability and customer service. It’s not a get-rich-quick industry with every agent owning Tuscany Villas that they visit six times a year.
In place of local agents and options will be a sparse plate of six benefits package options that most education professionals will be restricted to. And in the final analysis, the loss of all those education contracts could be enough of a hit to put a significant number of independent insurance agents and other small, local insurance offices, out of business for good.