How are homeowner's insurance agents compensated when....

[Harold-07]

I switch between a homeowner's insurance policy that insures my house for business use and one for no business (which is cheaper) every 6 months instead of just renewing once per year. Long story, but I only conduct business at my home for 6 months out of the year. This means having to switch carriers. I was wondering if my agent makes money each time a new policy is sold? And is there a trailer commission paid out over time that gets cut off when I end the policy early, in which case the agent has to work twice as hard for the same amount of money?

So I'm basically wondering if an agent might be conflicted one way or another in discouraging me from wanting to switch policies every 6 months instead of sticking to the same policy all the time.

 

[adjusterjack]

Property/Casualty agencies are typically paid a flat commission regardless of whether it's a new or renewal policy. At least it was that way back in my day when I was an agent. I'll defer to anybody currently an agent if it works differently.

I'm curious as to what kind of business you run for only 6 months out of the year. The answer is important because you may be operating under the illusion that you have something that you don't have. It doesn't make sense to have to switch carriers every 6 months.

 

[Harold-07]

I'm curious as to what kind of business you run for only 6 months out of the year. The answer is important because you may be operating under the illusion that you have something that you don't have. It doesn't make sense to have to switch carriers every 6 months.

Airbnb not covered by normal homeowner's policy. More expensive to add that coverage.

If they're paid a flat commission for each new policy written (even if the previous policy was cut short) then that reassures me. But would that commission be baked into each new policy, such that I'm actually paying extra for a new policy to be written? Although it could still work out to my advantage when considering the 6 months of savings versus the commission baked into the new policy.

 

[Markthebroker]

Generally an agent makes money as you pay premiums, whether its a new policy or not.

I don't write personal insurance any more, but my personal lines team shops and rewrites homeowners policies every 5 years or so on average. So, basically, you are giving your agent 10 times the work with no upside. Bottom line, be very nice to him, and refer him business.

 

[Harold-07]

So, basically, you are giving your agent 10 times the work with no upside.

But when it's time to renew don't agents still have to email forms to review and what not anyway? There's at least some work to do every 12 months, right?

Also, according to this site, agents may make MORE in the first year of a contract. How much is your insurance agent making off you?

 

[Markthebroker]

But when it's time to renew don't agents still have to email forms to review and what not anyway? There's at least some work to do every 12 months, right?

Nope. Unless your policy is a high risk policy it automatically renews with no paperwork. Even if it is a high risk policy the renewal is much less paperwork. I've been doing this for almost a decade.

Also, according to this site, agents may make MORE in the first year of a contract. How much is your insurance agent making off you?

Ok. There are several websites on the internet claiming that Obama is a space alien.

 

[WinoBlues]

Also, according to this site, agents may make MORE in the first year of a contract.

According to that marketing article the P&C agent is maybe making 10%. How much is your premium for six months? How much are saving by switching back forth?

 

[mplsmm]

Renewals are always less money than new business. It's not a huge gap, 5% maybe. In some cases, like an agent left and the agency isnt getting renewals but is servicing, they will want to rewrite with another carrier to get new business and then renewals.

 

[Harold-07]

According to that marketing article the P&C agent is maybe making 10%. How much is your premium for six months? How much are saving by switching back forth?

Car Ins is about $1,500 a year. That policy doesn't change.
Homeowner's Ins is about $1,600 a year.
Saving about $85 a month (for 7 months) by switching.

 

[Markthebroker]

Renewals are always less money than new business. It's not a huge gap, 5% maybe. In some cases, like an agent left and the agency isnt getting renewals but is servicing, they will want to rewrite with another carrier to get new business and then renewals.

Both the agency and I get the same on new and renewals, but rewriting a policy is more work, so they net income is less on a rewrite.