Producer Contracts

anthony · Post by **anthony** » Wed May 18, 2005 8:10 am

I am interested in knowing what a fair contract for a producer would be. I am thinking about hiring one.

tsorrels · Post by **tsorrels** » Wed May 18, 2005 10:37 am

Pay him/her 4% per month, 12 months a year. Now, that's FORTY-EIGHT percent.......or IS it?

Some agents take a cut in commission from FIFTEEN to TEN and think that they have only lost FIVE percent......NOT Thirtythree and a third percent of their income.

Oce had an agent friend tell me that he got 7% the FIRST six months of a policy and another 7% when it renewed....so, "FOURTEEN percent per year is not a bad income!" We did some quick math lessons and showed him where he was being taken advantage of!

Mr. P. · Post by **Mr. P.** » Fri May 20, 2005 9:49 am

I worked for an agency that paid 40% for New Business and 25% for renewals. The problem is, they agreed to this up front and would then reduce both percentages every few years.

I quit.

What I am saying is to be up front and honest and try to strike a contract that WILL be honored.

The new company I work for offers 30% for new P/L business, no renewals and 30% for new and renewal C/L business.

They also offer a base salary (no draw) of $25,000.

Nick

independent guy · Post by **independent guy** » Fri May 20, 2005 11:21 am

</div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Mr. P. @ May 20 2005, 10:49 AM)</td></tr><tr><td id='QUOTE'> I worked for an agency that paid 40% for New Business and 25% for renewals. The problem is, they agreed to this up front and would then reduce both percentages every few years.

I quit.

What I am saying is to be up front and honest and try to strike a contract that WILL be honored.

The new company I work for offers 30% for new P/L business, no renewals and 30% for new and renewal C/L business.

They also offer a base salary (no draw) of $25,000.

Nick [/quote]
That sounds like a nice agreement... So they're wanting you to write mostly commercial by not giving you personal lines renewals?

loudmouth · Post by **loudmouth** » Wed Jun 15, 2005 9:54 pm

removed..

navgod · Post by **navgod** » Thu Jun 16, 2005 5:16 am

I'm a recruiter looking for a P&C person. $30k base. Know any people who are looking?

Lee3632005 · Post by **Lee3632005** » Thu Jun 16, 2005 12:02 pm

I HIGHLY recommend that you take a look at a book put out by The Academy of Producer Insurance Studies. The book is titled Producer Compenstion; A Profile of Pay and Performance. The book goes into great detail about the compensation arrangements for a variety of scenarios, rural, urban or suburban agency, P/L to C/L mix of business and so on. The types of other compensation that should be considered when determining a fair commission: health insurance, 401k, cell phone provided, travel expenses, car reimbursement, etc.... On top of that you should have an idea of the following:

How will they generate leads?
What type of leads will they generate?
Will you be paid differently on agency generated leads?
Do they have access to the markets you need to be successful?
How much service will you need to do on the account(s)?
What are their expectations for you?
What happens if the agency changes hands and you do not want to work with the new owners?
Who owns the business?
What kind of turnover have they had?

This is just a small number of the questions that you need to consider. I have been working without a contract for several years, and I am told a contract is forthcoming. Will I like it? Will they agree to negotiate or is it take it or leave it? On top of that, the agency I work for has undergone some changes in how we operate and generate leads, this can have a dramatic impact on your income. I recommend you sit down with the agency owner and figure out what each of you is looking for, your plans to get there, the level of support you can expect, then develop a contract around that.

Good luck.

sanddog · Post by **sanddog** » Thu Jun 16, 2005 12:39 pm

Loudmouth and Anthony, contract with a producer's agent is a very important step. I know a lot of agencies that drag there feet. They have no idea if you can produce. <_< I can tell you from many years of experience that 90% of new producer are done in two years. :blink: Sorry that's the truth. If your good there's a contract waiting for you.

Now as for commissions they all very depending on your WORTH. The following is and example that apply to all: If you write a policy with The Hartford Ins., $10,000 in premium. The revenue or commission for you "˜new guys' is 15% or $1500 bucks.
Your contract with the broker or agent say 60% for agency and 40% for producer.
So you get 40% of 1500. The agency gets 60%. That's 100% of 15%

And the renewal is also 60/40. I hope this is of help.

Has for P/L you should get revenue split. I have loss a very nice commercial account because some agent give the client a sweet deal on P/L. And then did a BOR for business later. I didn't want to quote it as there no money in it for me, and it's a lot of work. You should get split that not Fair. ANy I do now and yes make money

independent guy · Post by **independent guy** » Thu Jun 16, 2005 1:56 pm

</div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (independant guy @ May 20 2005, 12:21 PM)</td></tr><tr><td id='QUOTE'> </div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Mr. P. @ May 20 2005, 10:49 AM)</td></tr><tr><td id='QUOTE'> I worked for an agency that paid 40% for New Business and 25% for renewals. The problem is, they agreed to this up front and would then reduce both percentages every few years.

I quit.

What I am saying is to be up front and honest and try to strike a contract that WILL be honored.

The new company I work for offers 30% for new P/L business, no renewals and 30% for new and renewal C/L business.

They also offer a base salary (no draw) of $25,000.

Nick [/quote]
That sounds like a nice agreement... So they're wanting you to write mostly commercial by not giving you personal lines renewals? [/quote]
Sam PM'd me this, I think it was meant to be a reply:

"30% on new P/L business and 0 on renewals....wow I must be a dinosaur. Our office still pays 75% for first year new business P/L and C/L and 50% for all renewal business. I don't think 30% is right....producers need to make a living too."

dbriseno · Post by **dbriseno** » Thu Jun 16, 2005 3:36 pm

I'm working at a C/L and P/L agency in CA where I make 50% new and 50% renewal, plus an allowance for cell phone, mileage, and expenses. Leads are provided.

Problem is I do all the work. I collect the app, submit to market, receive and check quotes, prepare proposals, bind, set up the account, and do most of the servicing. Currently I spend half my day doing service and the other half doing everything else. Looking at the positive, this is a very "laid back" office. If that's a positive?!

The best scenario would be to have a C/L producer, a P/L producer, and a service rep. teamed up. All would share a split of the production.

sanddog · Post by **sanddog** » Thu Jun 16, 2005 6:29 pm

You guys out there complaining about commission, i know your considering all office expenses right. I'm sure the producer's out there with higher commission split don't have to many companies to excess. We have every major carrier that is admitted to CA. My Split is 60/40% new and renewal. There is nothing we can't quote on. I also have plenty of support. You can't sell without could support...................

gennydill · Post by **gennydill** » Fri Jun 17, 2005 10:44 am

I have worked for several agencies, all urban small to mid-size (under 50 employees). With the exception of "Program Producers" (those that work solely on agency-made program business) all leads are generated by the producer, who is given phone, computer, office, vehicle, and other expenses, 40 to 50% commissions on new and renewal, and support staff if the book of business warrants it (meaning your book has to generate enough income to support the expense).

If you can't make money on this set up, you are in the wrong business. If you are good at what you do, you will make a ton of money for both you and for the agency. Remember, the agency is there to make money. If you are not making enough, neither are they.

IinusreU · Post by **IinusreU** » Tue Jun 21, 2005 9:08 am

I enjoy reading the feedback, what about this scenario:

I started in March of 05 with nothing but a CPU and phone. I generate my own leads, quote, issue and service the account. No car or trans expense. No draw. In the midwest.

To that end, I have about $391,000 in written premium to date, all commercial which average about 12.5% commission.

What would/SHOULD my salary be in this type of set-up?

I just want to make sure I'm getting what I deserve. I enjoy my job & office, but given the above responses it make me wonder.

Dawgnacious · Post by **Dawgnacious** » Tue Jun 28, 2005 8:19 am

IinsureU:

At a 35% producer split, you are looking at $68,425 annually if you keep up the same pace. So, if your draw were wet up at say $50,000, you will exceed your draw very quickly (that is a good thing). If this occurs, you will receive a normal paycheck based on the draw ($50,000) and will then be able to receive monthly or quarterly producer reconciliation checks based upon your excess income over and above your draw (again, a good thing).

BTW, wish I had a new producer doing the numbers you mentioned. Great start! Keep it up and you will make lots of $$$$$.