Travelers reducing commissions

[lonestar]

Yesterday, Travelers announced via conference call, that they are reducing agent's commissions on their new personal lines auto policy to 12% NB and renewal. The red umbrella has lost it's luster in my agency. I can't believe that Travelers thinks that holding back an extra $30 in commission for every $1,000 in premium I give them, will make or break them. They are really going to have to go the extra mile from a rate and coverage perspective to earn business from me moving forward. If they move commissions back up to 15%, then we can talk.

[jtownagent]

Travelers is going the Progressive route.

[mmh6]

What state(s) is this in???

[lonestar]

Per Travelers, this will be in all states that get the new auto product.

[lonestar]

Travelers is going the Progressive route.

This may be the case. If so, my Travelers rep better get used to the same answer I give my Progressive rep when they come in and ask:"What can we do to help you write more of our policies?" My answer will be the same for Travelers. "Pay me the same commission schedule I get with other companies..." I expect to hear crickets...

[Smalltownagent]

Yep, confirmed with my sales rep. Should be rolling out in Texas sometime after the start of the new year. 12% new and renewal.

I still remember their retort a few years ago when they started Travelers Direct. "We're committed to our independent agents!".

I've been looking for some good opportunities to roll my book...

[paulbennings]

I hate to say it but Travelers has been on a long, slow decline for the last few years it seems. We lost our PL appointment for not writing enough business which was no big deal as we have other, better appointments. The issue was none of the agents wanted to take the software engineering courses required to learn to use their ridiculous website.

We still write CL, and while the technology is better, the underwriters and support staff are always absentee. Two or three day turnaround responses to emails. They never answer the phone. And we write quite a bit of business with them. We have also had multiple issues with their billing department giving us wrong information and then totally screwing us with our clients. You can tell when you talk to Travelers employees they are not really happy there. Travelers is too focused on short term profits to really be a great carrier.

We have had much better luck with the Hartford.

[lonestar]

And to add insult to injury, Travelers will still be paying 20% or more commission to the large aggregators such as SIAA and Smart Choice...

[lonestar]

So, are all the agents that represent Travelers thrilled with the new, lower commission schedule on the new auto product?
Are all of you willing to support Travelers in their endeavor?

[d's insurance store]

So, are all the agents that represent Travelers thrilled with the new, lower commission schedule on the new auto product?
Are all of you willing to support Travelers in their endeavor?

Come on, Lonestar, you've been around long enough to realize a few things...
First, by no means is the participation level and resulting opinions from this forum representative of a broad number of the entire universe of independent agency principals or producers, so posing a question of 'all agents that represent Travelers' here isn't going to get a consensus answer.

Secondly, you've expressed the opinion that you'll be cutting back on Travelers placements. That works if Travelers isn't currently the competitive leader in your immediate market and you've got alternatives. It doesn't work if an agency is bonded with Travelers due to pricing and volume and contingency plus added ability to sell outweighs the lower commission. If Travelers is an agency's 'go-to' market that often wins the price point, then an agency is faced with making 15% of nothing or 12% of something plus possible bonus monies. How do you think that decision will be made?

Third, agencies come in all shapes and sizes. In a small to medium retail 'all lines' agency where owner involvement is paramount to the business model, then stability and relationships with both carriers and clients is what keeps the lights on and dinner on the table for the owner and any employees that extend beyond immediate family. In a larger agency model where personal lines may or may not be the dominant premium/commission driver and the owner stops by twice a week when not on the golf course and an agency manager is the 'boss' and a personal lines department can consist of one or two producers and a CSR or two, then there's a limited awareness of commission levels and sales are made based on rates and ease of doing business and the extra 3% isn't going to disrupt the selling process with Travelers if that's the carrier of choice for that particular agency.

So, if by posing the question the way you have, your hope is to marshal agency owners with pitchforks and torches outside the gates of the Travelers headquarters to protest what they see as a valid business decision, I don't think your wish will be granted.

[lonestar]

d's... ouch.

[lonestar]

It is interesting to see everyone's perspective on this. Some agents are of the opinion that the movie ending has already been determined, so why do anything about protecting one's income, while others feel like some things could be done. I feel that while there may not be a whole lot a single agent can do, I do feel that the bigger picture should be looked at closely here, before throwing up one's hands and walking away.

Here is a quote from a poster from the comments section of the Travelers article on the commission reduction, and I think he makes a valid point.

Quotation from poster named "No Doubt"
“When I started in the business, commissions had just been reduced from 20 to 17.5%. Agents complained but didn’t do anything. Then 15% started being the norm. Agents complained more, but carriers merged or were bought out so there were fewer choices for the agent, so they again buckled under.
Travelers is now trying 10 and the others are watching closely to see what the fallout is. Unless Travelers loses a lot of business and not merely Auto, then expect others to follow suit pointing to “industry expense ratio pressures”.
Best thing to do would be to avoid using Travelers for new business and actively remarket their business until they reverse this. It might be short term pain for agents but in the long run, all agents will be better off.”

[ins-atty]

Folks, that's why we've got to strongly favor the regionals with our business. Most of them truly appreciate their agents and generally provide much better compensation, especially as regards profit sharing. They should win all ties. Can you imagine what the nationals would be paying us if the regionals didn't exist? Write with the nationals only when you have to.

[yoyowordup]

Folks, that's why we've got to strongly favor the regionals with our business. Most of them truly appreciate their agents and generally provide much better compensation, especially as regards profit sharing. They should win all ties. Can you imagine what the nationals would be paying us if the regionals didn't exist? Write with the nationals only when you have to.

Regionals = better service, better relationship, actual underwriting, comparable or better coverage forms!! ~~ Cincinnati Insurance ~~ Auto-Owners Insurance etc

[Smalltownagent]

I agree with the sentiments of regional carriers. I love that I can pick up the phone, dial an extension and get my underwriter within seconds. I can also talk to billing, claims, IT, marketing, etc all under one roof with the same phone number. If we have a processing problem, I know who to call on by first name.

They value their agents and I believe they are going to be instrumental in the coming 10-20 years for our business.