Unique Producer Relationship

[PotentialFarmer]

I'm wondering what you feel is fair commission for a Mortgage Broker who is sending me soft ball leads but doesn't want to get his hands dirty at all by doing any of the actual insurance work or servicing. (PS he is taking his P&C test 1st week in January so he can solicit and I can pay him a commission as per California State laws and my Lawyers say so.)

One of his main reasons for starting to send me business is that he realizes the beauty of annuitized income streams and wants a piece of that, but I can hardly pay him street. Although the caliber of clients he brings to the table are quite nice, I'd say average of around 7K premiums for homeowners/auto bundles. What is fair?

He was told by a larger insurer they'd do a 50/50 split. I'm guessing that they wanted to pay him 50/50 new and something else on renewal. I'm wondering if 50/50 new and 60/40 (in my favor) would be fair enough for a non-servicing agent or if perhaps it should be even higher like 70/30 renewal. or 60/40 new and renewal?!? What's your thoughts from anyone who's done this before.

 

[gambrinus]

Re: Unique Producer Relationship.

50/50 on new business is more than fair. Paying him anything on the renewals is just nuts.

 

[Josh]

Re: Unique Producer Relationship.

50/50 on new business is more than fair. Paying him anything on the renewals is just nuts.

Plus one for that.

 

[FL P&C Broker]

Re: Unique Producer Relationship.

50% is high for a non servincg agent. That is about what I pay a regular agent in my office. Does he want to be a mortgage broker or an insurance agent?

 

[djs]

Re: Unique Producer Relationship.

I would work out a win/win deal with some co-marketing dollars, totally forgetting about the commission split stuff for this.

It would also be volume based, not just a percentage rate. Basically, send me 5 'grade A' referrals a month and I'll spend $500 a month marketing YOU, or maybe $750 a month in joint marketing (pick numbers that actually work for you). This should be done in a way to help him get more business, ultimately so you can get more business.

Handing him a check is not going to work long term. I've tried it, somehow at the end of the deal, they always feel they don't get enough. You always feel like you don't get enough. Very hard to make it work if they aren't doing the work, outside of a straight referral fee.

Dan

 

[Bertolinoins]

Re: Unique Producer Relationship.

50% new and 20% renewal is more than fair for both parties. He cannot expect much more than that for a warm lead.

 

[APInsurance]

Re: Unique Producer Relationship.

The hardest thing to do is getting new customers. It is also the most expensive. If you can make money on someone who is basically handing you business, I would do 60/40 him, and then 10% renewal. You then have the opportunity to cross sell and make the full commission on that free business. sometimes it's not wise to be greedy on free business.

Kevin
APinsurance