Commission Split?

[Producer23]

I am a P&C producer that Is paid commission only for an independent agency. I pay all my expenses and marketing/leads. What is a fair commission split? Also is it common for Independent Agencies that have producers set up the way I am to let producers own a percentage of their book of business?

 

[USF3983]

Yes, I have the same question.

I make $17 an hour with 2% of all business I write semi-annualized. (i.e. I only get half commission on annual policies) I am provided roughly 15-20 leads per week. My agent receives leads that his father's Allstate agency doesn't anticipate writing or can't write. He pays his father a 25% commission on the life of the client but nothing for the leads we don't write.

My ideal situation (and one I've seen advertised with other independent agencies) is that I wouldn't have to deal with BS customer service and just sell insurance.

I understand I might have to take a hit on the hourly for not doing any customer service, but I've seen producers making 50/50 on commissions. I make 0 on renewals! Well that's not entirely true. If I rewrite someone for whatever reason, I make $5 or 2%, whichever is lesser.

This is my friend from high school BTW of the past 15 years. He started his agency from scratch but he doesn't take many steps to increase his book of business the way he should. He doesn't like to risk paying for leads. I know leads have to be priced competitively for agents to make money otherwise there wouldn't be a market for lead generation companies. He doesn't trust my ability to make a return on his investment I guess.

Our book of business is about 1.6 million with 3 full-time employees. Me and one other producer and the third a CSR who is fairly dimwitted.

Opinions?

 

[plewi003]

My associates that do not get a base earn 70-80% of the commission. This is new and renewal, as long as they service the clients as well. I also provide monthly bonus based on hitting our DWP number. However, every situation is different, so all my agents have different models. As for growing, something better happen soon. 1.6 mil is not going to support the office expenses you all currently have.

 

[CaptiveGuy]

My associates that do not get a base earn 70-80% of the commission. This is new and renewal, as long as they service the clients as well. I also provide monthly bonus based on hitting our DWP number. However, every situation is different, so all my agents have different models. As for growing, something better happen soon. 1.6 mil is not going to support the office expenses you all currently have.

I agree, 3 employees with 1.6m book is tough unless the owner is not taking home a check. I have one full time CSR and my book is around 1.8m. She gets a based salary and a % of the office dwp. My goal is to hire 1 FT employee per $2m in premium.

 

[FL P&C Broker]

My associates that do not get a base earn 70-80% of the commission. This is new and renewal, as long as they service the clients as well. I also provide monthly bonus based on hitting our DWP number. However, every situation is different, so all my agents have different models. As for growing, something better happen soon. 1.6 mil is not going to support the office expenses you all currently have.

How do you make any money at 20%? Yeah, I guess they are servicing their own book so you have no CSR cost involved. I would still have to consider return on liability. At the end of the day you are the one who is liable if something ever happens.

 

[scooter33]

Yes, I have the same question. I make $17 an hour with 2% of all business I write semi-annualized. (i.e. I only get half commission on annual policies) I am provided roughly 15-20 leads per week. My agent receives leads that his father's Allstate agency doesn't anticipate writing or can't write. He pays his father a 25% commission on the life of the client but nothing for the leads we don't write. My ideal situation (and one I've seen advertised with other independent agencies) is that I wouldn't have to deal with BS customer service and just sell insurance. I understand I might have to take a hit on the hourly for not doing any customer service, but I've seen producers making 50/50 on commissions. I make 0 on renewals! Well that's not entirely true. If I rewrite someone for whatever reason, I make $5 or 2%, whichever is lesser. This is my friend from high school BTW of the past 15 years. He started his agency from scratch but he doesn't take many steps to increase his book of business the way he should. He doesn't like to risk paying for leads. I know leads have to be priced competitively for agents to make money otherwise there wouldn't be a market for lead generation companies. He doesn't trust my ability to make a return on his investment I guess. Our book of business is about 1.6 million with 3 full-time employees. Me and one other producer and the third a CSR who is fairly dimwitted. Opinions?

If you get a base and a little new business money, it pretty common to not get anything on renewal.

I totally get as an employee, you want to maximize your pay. Also maybe you think the owners cut is way more work than they deserve. However, you have to realize there is tons of overhead to run an office.

I have a small office, 5 years in, but my overhead is 6-7k a month and that just to turn my lights on. This includes, office lease, E&O and GL insurance, utilities, agency managment system, advertising, state and federal tax, etc.

 

[USF3983]

Yeah I understand there is an overhead. I know he isn't taking in what he'd like to at this point, but I think other agents might be able to offer something more competitive. Our office is roughly 200 square feet or so with all utilities included. We don't advertise at all.

He is a very frugal guy with his business and in life.

The agency began in October 2006. I started March 2007. Then another friend started working part-time one day a week and is currently at 4 days a week. He works 1 day a week at my agent's father's Allstate agency next door. Then the latter's brother started working there a couple of years ago. He is nearly full-time now. He was given a generous base wage to begin since he has a degree and was expected to learn quickly. Don't judge a book by it's degree, lol. I make 17 an hour with 2% on new business and $5 per rewritten policies. My friend makes $15 an hour with the same commission splits as me. His brother makes $12 an hour, no commission. We don't make any bonus and we don't earn any promotional stuff that the companies may run on completed apps.


We were chugging along until PIP fraud hit Florida and things have gotten better on that front but we've become pretty stagnant. I just wanted to see what other structures are out there even though I know it might be tougher for my current agent to cope with.

 

[plewi003]

I figure that if I can have a small slice of 30 pies instead of only one. Why not pay 70 to 80%? Don't forget what that does to my company bonuses that I keep.