New Agency - Advice on MGA Contract and SIAA

I am a new insurance agent with a P&C license. I just incorporated my agency in CA and plan to focus on commercial insurance. I am running into the same problem as everyone else getting started out - getting appointments. I have reviewed the forums and done a lot of internet research. I initially decided to approach a small MGA for mentorship and appointments. I offered to the MGA that I come only seeking appointments (access to all 40 of their markets) and training on basic sales and insurance products. I have my own office, phone, email/website, E&O, and all other aspects needed for my business to get started. I have also selected 2 courses I am paying to send myself to attend that provide a more in depth training on sales and commercial insurance. When I reviewed the forums for info on typical commission splits, I found 70/30 or 80/20 (in favor of the producer) to be typical. However, here is what the MGA presented to me.

-50/50 commission split on all business initiated and written by me
-33/67 commission split on all business I write that was sent to me by the MGA (I'm still responsible for the close)
3 year right of first refusal for the MGA on all business I find on my own.

Am I off base in thinking this is not a good deal? Any advice on a counter offer?

Secondly, after receiving this offer, I went back to my research to find even more comparisons and thats when I learned about clusters/aggregators and SIAA. The Master Agency for SIAA in my area of CA is ICA. Does anyone have experience with ICA and can you tell me if they accept brand new agents? Any advice on making a decision about using SIAA vs. Clusters/Aggregators vs. MGAs?

Thanks in advance for all the advice!!
 
Secondly, after receiving this offer, I went back to my research to find even more comparisons and thats when I learned about clusters/aggregators and SIAA. The Master Agency for SIAA in my area of CA is ICA. Does anyone have experience with ICA and can you tell me if they accept brand new agents? Any advice on making a decision about using SIAA vs. Clusters/Aggregators vs. MGAs?

Thanks in advance for all the advice!!

Sorry there were no answers. I am in a very similar position as you currently and would appreciate if you can share your experience since this post. which routes have you choose? how happy are you with the outcome? what would you have done differently?

Many Thanks
 
Well you have a decision tree here. I'll lead you down one path, but it is biased.



"Begin with the end in mind"- 7 habits of Highly effective people.



Decision #1:



What end of the Ins Spectrum do you want? if you answered P&C keep reading. If ''Other" wait for the others to respond



Decision #2: Captive or Independent.



Captive:

Pro: They will teach you a lot but inevitably you will go Indy at some point in your career. Another Pro, they will subsidize your life for a time.

Con: The District Manager will push too hard or force life on you or cut your commissions or change your contract, or, ext, ext. Your Captive will take rate increases and kill your production and you will have one price point while others dissect your book one policy at a time.



Independent: :

Pro: Control expenses. Get higher commission. Higher conversion. Higher retention. All of those factors equal more money.

Con: Starting out. Getting knowledge. Your personality type could sink yourself.



Decision #3:



Once you decide Indy is for you, in the next week or 22 yrs from now. The question will be how to do it. Your options include:



Buy an agency.

Join a group.

Become a producer for an agency.

Get direct appointments.

Get an agency that provides the back end service so you can hunt full time.



You decide which one is best for you.





Decision #4: What group should I join?



There are a lot. Consider the following. NOT ALL GROUPS ARE CREATED EQUAL! They range from good, better and best.



Any group claiming to be best of class should provide the following:

  1. Transparency
  2. Training and support
  3. Carrier Alignment
  4. and a great Contract
Give me a call, shoot me am IM. Good luck and have fun with your choices.



I have been in Insurance for 13+ years and the great thing in this industry is you can choose to never stop learning. Your learning curve is never ending. Meaning you will never get bored.
 
To be frank, that is a horrible deal. The agency you are dealing with is looking
at you as an annoyance rather than a semi-partner.

However, your lack of experience may be holding you back.

Just keep checking at other places, and keep in mind you want at least an 80/
20 split.

Anything lower than that and it will be impossible to make a living.

Sorry, I cant help on where to check but I am not familiar with your
state, try to find a cluster with only a few agents.
 
I should jump in here real fast, and Address ^^^^^That post as misinformation. It should be corrected and not left without a response:

It appears you are looking for the following list of things to be detailed in your dream contract, so lets address it:
  1. Provides direct appointments
  2. Does not have a non-compete
  3. Does not have a penalty clause for moving your business-
  4. Does not require a buy-out to move your business

In most contracts you will find there is a period of time where you are locked into a group. It appears you don't like that idea. But let me explain why it exists in P&C and does not exist on the Life side. (If it does not exist with a cluster you find on the P&C side, ask why, or how the group you are joining makes a margin of income from the arrangement you are contractually getting into?)

If a group brings you on Jan 1st, 2020 and you can come and go as you please, that group is going to do a ton of Shiz for you to get you up and running. But for times sake, lets just say the only thing they do is get you access to MUCHO carriers. They get you appointed and contracted with said carriers. PGI has at least 4 full time staff that do just that for PGI agents and it is often labor intense at a few levels for PGI and Carriers (That costs money)

To go through all that and then have you say, "Peace out, thanks for all the work! I am taking my carrier access to start my own thing or rolling my book to someone else" makes no sense. There is no monetary gain for the group or cluster that just bent over backwards to get you up and running.

So, year one you grow your little P&C book to 400k in WP (Or 60k in commission) Lets just pretend you have a 90/10 split with your cluster or group or Aggregator, so they get $6,000 for their roll in getting you up and running and after year one you want to bail. The cluster or group is now sitting there thinking, "We hired staff to get them onboarded or appointed with carriers. We gave them access to a full time trainers to teach them how to...., We hired a full time Marketing person to create a logo for them, and a website, and teach them how to fill their pipeline indefinitely, We provided an expensive Commercial lines person to help them write that dentist account for that friend of theirs so they did not look like an ***, and now they are bailing after we have invested $60,000, the agent made $54,000 and AND WE ONLY GOT BACK $6,000!

It does not work on the P&C side like it does on the Life or Benefits side because we all get paid 10-15% a year over the life time value of the client as they renew longer and longer not 130% the First year.

So most groups or clusters lock you in for a time (IMPORTANT: and let you out easily after a time), because they are dirty supporters of Capitalism (Wait- we are all supporters of Capitalism still....correct?) If they don't lock you in for a time the Splits are not as nice or they keep the overrides and or Profit share agreements, or both. Or the contract is written in a way that they make more money in a shorter period of time knowing that you could bail at any time. Or they simply supply you access to carriers and nothing else so they don't have to invest in support staff.

I have been on the carrier side where I have handed over HUGE bonus checks over expensive steak dinners and have had owners take that check, folded it up in his coat pocket and say, "Thanks, but lets make sure none of my agents and staff know about his." ….The model of that group..... Agents can come and go as they please. The agency will make its profit off an unhealthy split and all the extra comp the agents don't know about. - no good at all.

THERE IS SO MUCH MORE TO SAY....IN PROBABLY MORE ELOQUINT WAYS.... JUST DON'T HAVE THE TIME....
 
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