I am currently an exclusive agent and have been extremely succeful, however I am looking to switch to the Independant side. I see the benefit of both sides but I like the opportunity to receive 15% commision vs. 10%. This is obvoiusly significant long term. I have been speaking with a group called SIAA, they are a group that has about 12 carriers. Would anyone recommend joing a group? They do take a portion of your earnings. Are there any other groups you would or would not recommend? Thank you for all of your input.
With a successful track record I would think you could contract with a reputable regional carrier directly. Especially in this soft market situation. From what I learned in talking with SIAA, they will charge an up front franchise fee, a monthly service fee and basically a cut of the commission. We did not sign on with them for several reasons, but they do have a nice system for the right agency who needs carriers and can't commit to volume requirements.
I certainly would send out some feelers to some competitive regional carriers before I signed away a portion of my commissions.
With a successful track record I would think you could contract with a reputable regional carrier directly. Especially in this soft market situation. From what I learned in talking with SIAA, they will charge an up front franchise fee, a monthly service fee and basically a cut of the commission. We did not sign on with them for several reasons, but they do have a nice system for the right agency who needs carriers and can't commit to volume requirements.
I certainly would send out some feelers to some competitive regional carriers before I signed away a portion of my commissions.
Agreed. We looked at their model also and came to the same conclusion. I believe they also want a portion of the proceeds of your agency once you sell.
Further, If you get 15 new and renewal commish you will be doing better then most small independent agencies.
------------------------------------ You can do this if you try................Ronnie VanZant
I like the idea because it allows me to have carriers I may need on a limited basis. I also like the no minimums, not that it would be an issue nut 10-15 years down the road it might. They do pay 15% before they take their 1.5%. You should also get a year end bonus. The agency idea in my opinion is a good one.
I think it is a good idea if you need tohose markets to be competitive and can't get them on your own. Wouldn't you need to do a book roll over to them of your current business? I know of a producer who started off this way but with the book he had from the current agency he was with he was required to do all of the quoting himself to get it all in SIAA. May want to look into what is required of you as it may be a lot of work or upset your current book if yopu are forced to move it.
One thought.....if you are "extremely successful" and earning 10%, can we assume you are making contingencies for profitability ?? If so, doesn't this get you close to, or over 15% commission ? Probably a pretty well written "non-compete" that will prevent you from rolling clients from your captive company..... seems like a shitload of work to do for taking a giant step backwards in your book size ???? I'd be wondering if I really was going to be making more $$ or not ??
My thinking is my wife is entering the insurance arena. Instead of her being captive I think it would be wise to look at the independant route. I am being told there are no minimun requirements at SIAA. This would be nice for her while learning with my assistance. I also would like to give her the opportunity to close my turndowns. With good profitability, retention, and financial sales I am at about 13%. This is 15% before a year end bonus at SIAA. I know they take 1.5% so worst case with no bonus we are at 13.5%. For me to get a`3% bonus at my current carrier I must grow by 640 policies, maintain, 87%r retention, hit my financial requirement, and write enough renters/motorcycles/etc. to get that bonus. It is getting tougher to do by the year. I also see the disadvantage of being captive as great as we are doing because what happens when my carrier takes a 50% rate increase on certain lines. It is and has happened within the last quarter. At least the independant side I couldpossibly switch companies for them. What do you say as an exclusive other that I am sorry. It is tough to get customers and when you get them you need to be able to keep them as long as possible. I do have a non compete but they can't stop my wife from making a living. I am thinking of assisting her grow a book and not touching mine, then sell .my book. I wouldn't try and steal any customers back, I wouldn't want it done to me. The extra 2-4% commission would be extremely helpful once you are at 1-2 million.
Too much is said of the commissions and not enough about the contract itself. Who controls what and owns what. What really happens to your current assets? Computers, furniture, buildings, name itself , existing books of business
How are you protected? Can you leave them ? Under what circumstances and how much does it cost IF allowed? What happens if they can not give you markets??
Last edited by STEPHEN636 : 04-30-2008 at 03:50 PM.
Those details make much more sense !! I know of several husband/wife agencies who are doing very similar business models with great success. Wouldn't it be nice to send those unhappy recipients of a double digit rate increase to comparison shop and get paid again if they move ?
When we looked at clusters/SIAA/Smart choice, etc... SIAA did have the best carriers, the better contract and the highest return on investment for the start-up agency. Although they did not fit into our ageny future, I did find out that they were very open to negotiation and to making amendments to their contracts. So..... I'd be sure the contract I signed was the absolute best deal I could make.
Grow by 640 policies !!! In this market ?? I guess that's the politically correct corporate way of saying we'll keep your bonus for now.
He buy in is 10500, the buy out would be 30% of previous year revenue. However, there is nothing stopping me from getting appointed elsewhere and rolling a large chunk if I decided to go with SIAA. What kind of negotiations did you get to? I currently sit at app. 1.2 million on my current book, one thought is if they want me to roll that book, then we can play with the buy in.
SIAA has been around a while and works well for those that can afford the fee. In the 1990's I looked into them but I think their fee was about $10,000.
I have read some negative thoughts about who owns the book of business problems, encountered if you try to sever relations with SIAA.
Originally Posted by Rhinoguy
I am currently an exclusive agent and have been extremely succeful, however I am looking to switch to the Independant side. I see the benefit of both sides but I like the opportunity to receive 15% commision vs. 10%. This is obvoiusly significant long term. I have been speaking with a group called SIAA, they are a group that has about 12 carriers. Would anyone recommend joing a group? They do take a portion of your earnings. Are there any other groups you would or would not recommend? Thank you for all of your input.
I had the buy-in down to 6K and I think they would have gone lower to get the business. We were talking with Smart Choice and Iriquois(sp) Group at the same time.AP at the time was around 3mil for my agency and we already had several of the same carriers they offered. It got sticky when their contract wanted a cut of all growth with those same carriers going forward and we would then be lumped into the group for profit sharing. For an agent who wasn't at profit sharing level it would not have been a problem. To give up something that I would have been getting anyway, without them, was a bit bigger pill than I could swallow.
We even negotiated a larger buyout than their standard contract offers if I decided to turn my book over to SIAA at retirement. I would advice you to approach them with your concerns about "anything" in their contract that you don't like and see if you can negotiate.
1manshow.....new to business..but if I understand your comments you arae trying to sell your agencies book of business for $3M? If so did you have an agencies with several agents (ie: 5 agents with total commission of ??). And how long did it take to grow the agencies from start? Any help you can give would be great (trying not to reinvent the wheel and learn as much now)... and was this business in only health, or other lines?
RT, the 3Million figure is the Annual Premium generated by my book of Property/Casualty business = approx $500K/year in commissions. That is entirely auto/home/business premium, no health or life included. In my area an agency like mine will sell for 3X annual commission.
I've been at it for 21 years in a small rural area. I know agents who have reached 3mill in larger cities within 5-7 years.
1manshow....thanks for the reply. Seems like the P&C business (auto, home, business) could be a niche.
Am I correct in saying that once you have a large book of business you'll need to hire an assistant to service accts.? Is there a threshold where you see this happening (ie: If you have 1000 existing accts need assistant to maintain clients while you grow business). Another way of looking at it..(ie. $200k in commission need assistant to get to $400k so pay assistant estimated $50k) ?
Right on the money, I don't do service work. CSR's do all the account servicing and we calculate approx 30K in payroll per 100K in commission for account service charges. I wouldn't call auto/home/business a niche anymore than I would call life/health a niche. P & C has allowed me more of a comfort zone than some of my life/health associates. They still have to maintain a proactive sales attitude 24/7 whereas I do a little more R&R (I think ??)
Have you heard of SIAA?
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