(?) General Information on Partnering with a P&c Agency

[Apollo]

I've been selling p&c for an independent agency for the past three years. I'm starting my own gig, but looking to hook up with an agency for contracts.

Anyone know the best way to go about this? What to look for? What to look out for? What % of commission in fair? Will I need my own p&C e&o or will I be covered under the agency?

I know forum etiquette and searched, but couldn't find this basic information.

I'm in California, if there are any agency owners in California with experience in this situation please let me know.

Thanks

 

[Bertolinoins]

If you don't have the contracts, then you are not starting your own agency, you are simply a 1099 producer for a different agency. They may let you "own" the book of business but sine CA doesn't enforce non competes, you technically own your book of business right now.

What is it you are looking for? A higher split of to truely own your own agency?

 

[Apollo]

All I'm looking for is an agency to give me access to their companies for a piece of the commission.

 

[Bertolinoins]

Do you need their comparative rater, agency management system and E&O? How much premium volume with their direct/ profit sharing carriers can you deliver? These are the first few questions I ask when dealing with a sub producer. If I like the answers, then I want to know how they attract and field underwrite new business.

People think this is a simple process for an agency owner but we are putting our E&O, our profit sharing, our contracts and reputation on
the line with every sub producer we have working under us. To work with a good agency and have binding authority, you need to convince the agency owner that you know what you are doing and that the risk is worth the reward that you will provide.

 

[Apollo]

No, I just need access to their markets. I would give a higher split if covered under their e&o, or I can just purchase my own.

If an agent said all the right things and you felt like taking on that risk. How would you go about the splits? what %?

Thanks for your replies.

 

[Bertolinoins]

I have paid anywhere from 75 new/60 renewal for an established agent with a book fo business worth $650K that required little handholding to 40/30 for a green agent with no insurance experience, no market knowledge and a lot of hand holding. With three years experience and limited commission volume you are sure to bring over... I think 50/50 would be a reasonable request on your part. In exchange I would ask for E&O coverage and access to their comparative rater and agency management system.

They key for you is to find a stable agency with great market access (direct appointments with rating and binding authority). I would also invest in quickbooks or request that the agency allow you to run your own accounting reports through their AMS... because accounting for 1099 producers is a pain. Every carrier pays in differently... some pay upfront (exposing you to backcharges) and some pay as earned... which puts a cramp on your cash flow for the first year.


If you have the money to buy E&O ($2K min as a start up), a comparative rater ($150 per month), agency management software ($1200-2400 per year) then why not just work through GA's that will pay you 10% (which equals a split of 66%) until you have enough volume to get a direct appointment?

 

[Apollo]

Yea, I'm starting to lean towards going to superior access route, or something similar. I thought it would be simpler with less upfront costs to go the local agency route. I'm getting 40% new/renewal now, so all the hassle of transferring to another agency for a10-20% bump just doesn't seem worth it.

Thanks again, you hit what I was looking for in terms of a % request. I was thinking 10-15% to the agency would be worthwhile to them.

 

[Bertolinoins]

Yea, I'm starting to lean towards going to superior access route, or something similar. I thought it would be simpler with less upfront costs to go the local agency route. I'm getting 40% new/renewal now, so all the hassle of transferring to another agency for a10-20% bump just doesn't seem worth it.

Thanks again, you hit what I was looking for in terms of a % request. I was thinking 10-15% to the agency would be worthwhile to them.

Unfortunately it isn't worth it for an agency owner unless that 10-15% equals over $50k. The profit just isn't there. Good luck with SA, I would try to build up $100k with Travelers and then approach them for a direct appointment.