Net Loss In Commission From 15% Down To 12%
Moderators: Josh, independent guy
What is the true loss for an agency when they are hit from 15% down to 12% commission or even 10%. The true net loss can be up to 50% or more if my calculations are correct. If an agency has overhead expenses of 5% of premium and they go from 15% down to 10% that is a 50% loss for the agency. What is the AVERAGE overhead % for agents. Why do agents just keep taking it and taking it. We need a true study and the agents needs to foward the study to the companies in MASS.
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FiniteReUnderwriter
- Insurance Journal Enthusiast
- Posts: 22
- Joined: Mon Dec 29, 2003 6:57 am
Would be interesting to know what line of business you refer to.
Seems to me that the real issue is not what the agent's costs are, but what are the costs of the possible alternative distribution channels that might displace this agent?
If the carrier (or more accurately, the insured client) can get the business placed alternatively at lower frictional cost .... that agent will surely lose the business to the "competition" (not necessarily another agent) no matter how loud the complaint.
For true commodity business, hasn't this disintermediation process already started with direct writer / web-enabled distribution systems?
Seems key would be for the agent to find a way to lower the frictional costs of servicing the business (automate?) and boost profits that way?
Seems to me that the real issue is not what the agent's costs are, but what are the costs of the possible alternative distribution channels that might displace this agent?
If the carrier (or more accurately, the insured client) can get the business placed alternatively at lower frictional cost .... that agent will surely lose the business to the "competition" (not necessarily another agent) no matter how loud the complaint.
For true commodity business, hasn't this disintermediation process already started with direct writer / web-enabled distribution systems?
Seems key would be for the agent to find a way to lower the frictional costs of servicing the business (automate?) and boost profits that way?