Newbie Question about Pay

[NewinSD]

I am in the process of interviewing with an Independent Insurance Agency. I will do Sales for them. They will pay my expenses, but there really is no advertising, I am going to be expected to pound the pavement myself. Just wondering what type of pay I should expect? I believe I would be paid straight commision. I appreciate your help and any sage advice anyone has to offer. I am located in San Diego if that matters.

[jshall]

Do you have your Lic?

[NewinSD]

Yes, I have my P & C lic. and have worked as a "Captive Agent" for a large insurance company for the past few years. They have very unattainable sales goals, though, which puts a lot of pressure on me. The Agency I am applying with has no sales quotas which is one of the reasons I am thinking of pursuing a change.

[InsMgmt]

How much you receive in commission (percentage of the commission paid to the agency) will depend pretty much on how involved you are in the marketing, sale, placement and servicing of the account. If, for example, you are receiving reimbursement for all of your expenses (marketing and sales expenses - including transportation expense), and you simply knock on the prospective client's door and pitch the proposal (which assumes that someone in the office determines the best market for the risk, develops the quote and presentation piece, completes the application(s), submits and follows up on the application(s), verifies that the requested coverage has been issued and delivers the policies (via mail), follows up with periodic phone calls to check on the client's needs, services the account, and then works through the renewal), then you should be content with a low commission split - say, 35% first year and 25% on renewal. Of course you could ask for 100% first year...not saying you'll get it, but you can ask.

You need to put yourself in your employer's shoes for a moment and ask yourself what you would be willing to pay a producer. You need to consider the variables (education, age, appearance, level of confidence, passion and drive), which go into a decision to motivate an employee to stay with the agency. Now, take stock of yourself. How motivated would you be as an employer to hire and groom you for success? Are you a hot talent? If not, don't be insulted if you're not offered the store in exchange for your services. If not, groom yourself to the point that you would be sorely missed if you were to leave (upgrading your professional education, polishing your appearance, and turning in impressive production numbers from month to month), and then renegotiate your contract

I have seen agencies give 100% first year, others offer 75% first year/25% renewal, 50%/50%, 40%/30%, and still others pay a straight salary with performance bonuses - pretty much all over the board. Normally, the higher the expense reimbursement and lower involvement in the account, the lower the commission split. Makes sense, eh?

[earlybird]

Josh, if you are in a large metropolitan area, I suggest that you try to interview with large independent agents. You are more likely to get a salary against future commissions. If you are young, fairly new at insurance and cant bring a book of business with you, it will be tough living on straight commission. Depending on the agency, you should be able to start from $30,000 or more and 35-50% commission "against salary." That means after you obtain more sales, your commissions will be your income. Many larger agencies will give you a salary for 1-3 years if you are a promising new talent!

[Shagster12]

Newbie,
With prior sales experience even without ownership of your book, I would think you could expect somewhere in the $50,000 neighborhood on a commission draw basis. If you were able to convert some of your former clients you would have an edge. If not, you'd better be ready to burn up the pavement and cold call your brains out to make up the draws as soon as possible. You'll usually get a 2 year trial at this but if you're not showing success quickly in todays market, don't expect a free ride for long!
Good Luck!
Shagster

[mattbalt]

We pay our agents straight commission 70 new business, 55% renewal. They help service all policy's and pay their own expenses. We take care of all marketing and leads. This enables us to have low turnover and happy producers.

[St.CaptiveGuy]

Another factor to consider is what types of policies will you be targeting? Shops targeting personal lines & small BOPs may offer a higher split of the commission because these policies are cheaper for the agency to service, but the commission dollars may not add up to much either. Contrast that with an agency targeting larger or specialty lines commercial where premiums are larger and service issues more complex, and you may see a lower commission split but higher producer incomes because they're given the tools and support to book more premium.

While the split is an important issue to get clarified, it's not the only issue. Try & find out what the other producers make per year that are already working at your prospective employers shop. How well does the owner do? If a good portion of the producers there appear to be "successful" (however you define that word), then you probably have a decent opportunity to do the same.

[Producer19]

what do you all consider a solid year for a producer? i have been in the business for 4 years now and i am doing close to $500,000 new premium each year mostly commercial P&C small and medium business. i am an independent agent. i am just curious, i am also in Mass. thanks

[jimmyr1978]

what do you all consider a solid year for a producer? i have been in the business for 4 years now and i am doing close to $500,000 new premium each year mostly commercial P&C small and medium business. i am an independent agent. i am just curious, i am also in Mass. thanks

Reasonable seems to be 55% gross to the producer on new business and 35% on renewal. The level of services and support you receive will also affect this, i.e., how much is the agency paying out-of-pocket to support you and how much are you paying? To be honest, premium means very little in commercial P&C in terms of revenue. Are you selling work comp-driven accounts, such as construction firms? Then gross commissions to the agency will be 5% - 10% of your $500,000, or $25,000 - $50,000. Or is this BOP business, mostly with standard markets? Then 10% - 17% gross to the agency should be the norm, or $50,000 - $85,000? My guess is that it all equals out to roughly 10% gross to the agency, or $50k, and your take home (not deducting for personal expenses) would be roughly $25,000. Sooo...on your $150k renewal gross commissions, you would be getting in the ballpark of $50,000 (35%); plus $25,000 for new = $75,000 to you.

If your receiving far under this, perhaps it's time to negotiate a better deal...