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Who does this? I’ve never heard of anyone offering to rebate flood premiums.
Quite a few in and around Pinellas County. Since this is the last year they can rebate some agents are giving back up to 20%. Sad, next thing you know NFIP will start cutting commissions if agents can afford to give so much back.
This is like buying business. Its not like the commission per policy is a large amount. So basically everytime they have to make a mortgagee change or fax the policy to someone, they arent getting paid, where is the logic.
It can be a significant amount, especially on commercial accounts like condo associations. I’m glad to see this practice ending.
I may be mistaken but I thought rebating, regardless of policy type, was against FL OIR rules anyway.
It is not against the rules if it is defined and applied to all in the clients class of business.
24% is standard WYO commission. A quarter for every dollar – for being nothing more than a third party administrator of a gov policy – paying a csr 8 bucks to issue a preform certificate….no claims are handled at agency level…it makes great sense to LEGALLY follow the FL statutue and issue a rebate…our have the commission reduced and allow the association to capture the reduction directly…agents are supposed to be an extension of the dept. not their wallets…
So 25% is not a large amount, on a 100k premium policy? On a 250k pp? We are taking condo not residential homes people.
Yes that’s sad – very sad when you represent your pocket not client
It sounds like it has been standard practice in some parts of the country. It’s always been illegal in my state to rebate any of your commission.
The agencies that do the rebating are weak in their sales efforts. They say it is creative, but it is merely a compensating factor for their lack of sales skill and product knowledge. At the end of the day, you get what you pay for!
That statement is pure rubbish, flood premiums are continuing to increase each and every year as well as every other line of coverage. With the state of the economy in Florida what is wrong with giving back to your clients? Sounds like greed talking to me.
I agree with Caresaboutclients and for all you readers out there, here is a real life example. Our current package, excluding primary flood coverages runs $280,000 per year. Our agent earns 10% or $28,000. We pay another $20,000 for primary Flood coverage. Under the flood rebate program, he retains another 8% or $1,600. Together, the gross commission income is $29,600.Our Community Association currently receives $2,500 of Flood Rebate commission which will go away on 10/1/12. Our agent will now earn $32,100 while we, as an Association, will pay $2,500 more per year, assuming Flood rates remain flat and we all know that is not going to happen. Agents wake up……you have won the battle and lost the war. Your Association clients do not need to be rocket scientists to figure out what is going on here. The pigs get fed and the hogs get slaughtered! Your victory has been won at the expense of your client and believe me when I say that when they figure this out, and they will, your business relationship will be severely damaged by this. A petition is underway, the media is catching hold of it and it will become most apparent that the lobbying efforts of many agents at the expense of their clients will require a much better explanation than much of the dribble contained in the comments above.
Not being an agent or familiar with NFIP I have to ask; other than the competing agents whose commissions are being under cut, who is being hurt by this? Also, is anyone else alarmed that FEMA is asserting power it does not have, legally? It really makes me concerned about what things could look like by this time next year.
Ah Little Frog you sound like you know more than you are letting on. If this is ok to do why would 48 other states outlaw it? The only other state that does allow doesn’t practice it. Agents make their money on commission. Their commission can depend on how much business they place with a carrier. If it’s a small mom and pop shop versus a larger agency network, obviously you are cutting off mom and pops income.
Everything worked just fine before this unbusinesslike practice was started a few years back. This is not something that has been going on forever and everything worked very well before it was started.
OK SFlaagent. You were on your way to answering my questions when you swerved for no apparent reason and went into the canal. I wasn’t endorsing the practice and pointed out that it undercuts other agents ability to make a living. I CONDEMN IT! Is that clear enough?????
MY questions were directed at the propriety of FEMA asserting its influence into lawful, local business transactions. Perhaps your sense of justice is determined by whose Ox has been gored.
Lets call “a spade, a spade” . Yes, the rebate flood allowance is somewhat unique since it applies to only Flood policies and only in two states, Florida being one of them. Having said that, lets not camoflage the issue here. Brokers hate losing revenue. Flood policies pay 20+% commission. The brokers that provide coverage also insure the other lines of business Condo Associations need. With that in mind, brokers average gross commission retentions of $30,000+ per account yet feel the need to strongly lobby to abolish giving up $2,200 in Flood commissions. Plain and simply, they make additional dollars while their clients pay more for their coverage. How does this scenario differ from net commision arrangements based upon fee agreements. These transactions take place every day and we all participate in them for large accounts. Condo Associations pay a large percent of their operating budgets for P and C coverage. This matter simply adds insult to injury.