Producer Commission Splits

[Bertolinoins]

Just my opinion but hiring green producers is not something a small agency should attempt. 8/10 fail and those that survive are looking for a better deal once you start turning a profit on them. Focus your time and resources on hiring established producers and/or acquiring established small agencies. Let the direct writers and national agencies pay to train the next generation of producers and then pick them off when they have proven to be successful.

 

[insurance1822]

We pay our producer straight commission. 100% of the first year premium and a tiered renewal scale from 20%-50%. We supply the bare essentials. He's 100% new to the business (and was only making 20k a year previously) so we really sold him on the renewals. He's writing around 11k a month right now.

He knew NOTHING about selling beforehand, so we immediately trained him to always ask for referrals from each and every person he writes. Many of us hold back on this because we get into a routine (and sometimes you feel a bit pushy just straight up asking for 3 names.) This guy has no barometer and that's all he does and he's putting premium on the books.

The way I see it is I'm investing in him. We'll make the small override year 1 on profit sharing, but everything after that it's all profit. I want him to be successful and make good money eventually so I gave him that potential w/ the renewals.

Our MA insists upon salaried staff with small production incentives. If I had a large book already, I'd do that too....

 

[applecali]

Hi Everyone,

I wanted to resurrect this thread for a simple question.

Is a 50% 1st year and 50% renewal commission a standard structure in the Independent Agency world?

 

[Josh]

Hi Everyone,

I wanted to resurrect this thread for a simple question.

Is a 50% 1st year and 50% renewal commission a standard structure in the Independent Agency world?

There really isn't a standard, but that sounds low.

 

[FL P&C Broker]

There really isn't a standard, but that sounds low.

Depends what you are getting.....

 

[applecali]

We do 65% Commercial and 35% Personal Lines...

Commission is split 50% with agency and 50% to producer. Renewals always 50%.

I would like a higher first year commission, of course. I think 50% for renewals is good, right?

 

[nyc2phi]

Depends on what else are you providing them, you are just giving them space in your office it sounds low but if you included leads, salary, benefits then its a different story.

 

[applecali]

Office space, a CSR, Benefits...

$1,500 monthly draw salary if they want it.

 

[Josh]

Office space, a CSR, Benefits...

$1,500 monthly draw salary if they want it.

That sounds like a very fair deal.

 

[bayoubelle]

I have been brainstorming for the past year how to recruit and find better producers. I have felt that I have lost out on some good people because the first year income can be so low on the P&C side and they have decided to go another route where there is fast money. On a 50% split they will be lucky to make $2500/month for the first year. For somebody that is new in the industry it is hard for him or her to grasp the long term outlook. We are not in the position to offer a salary, all our producers are commission only.

I have thought about offering a much higher split on the first year so that they can make some money now. Maybe 80% for the first year and not paying renewals until the third year.

That sounds a lot better than my 50% split and 50% renewal deal as a producer.