Independent Agency Commissions to Agents

[dgg]

I have plans to be an Agent for an Independent Insurance Agency after passing the P&C / L&H state exams. The agency I'm interested in working for has offered to pay 75% to me for new business, and 65% for residuals. I'll be a 1099, not an employee. Although the company is doing some advertising, I'm counting solely on myself to generate leads.

I have a few questions.

- Is this commission split a good deal for me, or should I try to negotiate?

- Should I ask for agreement that if I leave the agency, that I continue to receive my residuals?

- The agency wants me to specialize in business insurance. I'm fine with that. However, should I focus on another avenue starting out until I get some cash flow? What about Medicare Supplemental Coverage?

- Aside from my warm market and networking, what forms of marketing should I consider?

Thanks for taking time to read this. Looking forward to your comments!

 

[VolAgent]

Sounds like wonderful splits if that applies to L&H and P&C.

That said, you're going to fail and here is why. BTW, please prove me wrong, I hope you do.

1. I gather you are brand new. Right now you don't know how to prospect and you probably don't know the target market for their carriers.
2. You have no prospects and generally commercial insurance is all about the X-date. So you need a while to build a list of X-dates for renewal. And not only will you not be the current agent, but you are new to the business.
3. You will have no cash flow until you get some sales. You probably need to get some quick life hits to put some money in your pocket.

All of that is probably going to chase you out of the business before you can start bringing in some cash.

Now you have some idea of what you face, again prove me wrong and succeed.

 

[dgg]

Thank you for commenting - Need to give this some thought.

 

[kspear81]

Hi, are you getting 65% residuals on Life and health? Should i be getting that much too?

CA Agent

 

[dgg]

I'll be working for an independent agency. They will pay me 75% of the commission paid by any particular insurance company initially; and 65% of the renewals. The insurance companies pay the agency, and the agency splits the commissions with me based on the aforementioned percentages.

 

[VolAgent]

I'll be working for an independent agency. They will pay me 75% of the commission paid by any particular insurance company initially; and 65% of the renewals. The insurance companies pay the agency, and the agency splits the commissions with me based on the aforementioned percentages.

I really can't recall anyone posting a split that high on here. My guess is you will have absolutely no support in exchange. I highly recommend asking if they can put you in touch with their wholesalers for at least some product training.

 

[kgmom219]

The splits are fine, assuming they are providing leads and basic office supplies (including business cards).

The most important question you need to ask is what happens when/if you leave the agency. If you make it and in 3 years you want to have your own agency, what happens to all the policies you've already written?

And starting a business selling insurance is like any other business. You are going to starve in year 1, eat Ramen noodles in year 2 and by the end of year 3 if you aren't making enough to survive, you need to find a job with a salary and benefits.

 

[VolAgent]

The splits are fine, assuming they are providing leads and basic office supplies (including business cards).

There isn't a P&C agency alive that will give you 75/65 AND provide leads. It sounds weak on the L&H side until you realize the agency is probably just getting street level contracts and wants to keep something for themselves.

Almost certainly everything will flow through the agency and they will cut you a check for your commission.

 

[thomasm]

Anybody care to divulge how the insurance contract/commissions work? I'm a first year semi-captive agent. I generally understand that everything the insurance company receives in premium the first year goes to the broker and that gets split with the agent. I have two carriers I can offer for whole life (FE), and my contract is about 55%. I've heard FE contracts can go as high as 115%, maybe more. Is 55% a decent contract for whole life, just starting out? How much more can an good agent negotiate?

 

[Newby]

Anybody care to divulge how the insurance contract/commissions work? I'm a first year semi-captive agent. I generally understand that everything the insurance company receives in premium the first year goes to the broker and that gets split with the agent. I have two carriers I can offer for whole life (FE), and my contract is about 55%. I've heard FE contracts can go as high as 115%, maybe more. Is 55% a decent contract for whole life, just starting out? How much more can an good agent negotiate?

I'm not sure the meaning of semi-captive. Does that mean that the leads you get from the agency you have to put with them and leads you get on your own you can write through any company you want?

The street level for you is 110-115 with most FE companies. You can get a feel for how things work by reading all the open pages in the training section of our site at http://www.fexcontracting.com

But the answer to your main question is yes. You do get the entire street level commission when you contract.

You are currently giving up quite a bit of yours but that could be fair if you are getting office space, training and/or good free leads.