10 ways to Increase your Agency’s Profit Sharing Bonus

[AgencyEquity]

1. Join a Cluster, Alliance, or Network
This is the best way to increase profit sharing for a small to medium size agency. This can do more wonders for profit sharing than a Merger or an Acquisition. A merger or acquisition usually involved two agencies, most cluster groups have twenty or more agencies, with some regional and national groups having hundreds of agencies. This does wonders for the profit sharing volume requirements as these groups can participate in the most generous top tier profit sharing bonuses. While membership in these groups can cost thousands a year in either fees or commission splits, in most cases the pooled profit sharing returned to agency members are well worth the return on the investment.

2. Acquire an Insurance Agency
With an acquisition, one plus one can equal three when it comes to profit sharing. An example on why it works this is way is because of minimum profit sharing volume requirements. If a carrier has a 500k minimum to participate in profit sharing, an agency with 200k of premiums and another agency has 300k of premiums would not make profit sharing on their own. However combining those two books gives a production volume of 500k. If both of those agencies combined have 150k of underwriting profit at a 6% bonus, they would get a 9k bonus they would have never received on their own. This is why insurance agencies sell for a premium, because when added to an existing agency, the multiples increase beyond the premium volumes and commissions of the two agencies on their own.

3. Seek a Merger
A merger will do the same things as described under “Acquire an Agency.” The power of volume, as pointed out in nearly all the other methods listed here, is the key to increasing an agency’s profit sharing.

4. Loss Ratio Management
While production is important, without a profitable book of business, there is no profit to share. Managing the agency’s book of business is key in addition to writing quality business. One way to do this is by working with the carrier and their underwriters by reviewing each account. Another way to do this is by hiring a consultant to do this for you and can also advise you on loss ratio management.

5. Hire a producer
A producer with a book of business can instantly add to your profit sharing production requirements as sell as a producer without a book who is motivated to build a book.

6. Hire an agency coach or mentor
There are a number of consultants who have previously had a career in sales management with a national or regional firm who have opened up their own consulting practice to help small to medium size agencies increase their production.

7. Beef up your marketing
Increasing your agency production to meet profit sharing goals requires you to market your agency. Some examples of marketing would be to purchasing leads, sending out a press release or sending an agency newsletter.

8. Improve your efficiency
Efficiency brings more productivity to an Insurance Agency, it also helps you access more information to help you make better underwriting decisions.

9. Expand into another State
For the agencies that specialize, are near a state line or want to open a branch office, expanding into another state opens up a bigger market for your agency. Getting licensed into a state you want to expand into is your first step.

10. Upgrade your website
A contemporary looking website with updated information is essential, your best prospects will review your website. Don’t lose business because you either don’t have a website of your website is outdated.

[tomwarren]

I think 1st one is the best way to increase your agency's profit sharing bonus..It is the initial investment required to join the network. In addition to a monthly membership fee you pay for the office services group, including "direct access" and binding on the market, based on the Agency's actual increase in monthly premiums earned during the preceding year basis.

[pecosins]

I am in need of hiring more producers especially commercial producers to meet quota. Direct online quote to Preferred carriers such as CNA, Hartford, Colorado Casualty, Travelers etc. My agency is licnesed in NV, CA and working on AZ. I have been working with exclusive agents in NV. They send me business that their companies do not write. I can offer higher commission split, negotiable and Ownership of the book.

Any suggestion on hiring producers?

my email is pecosgroup@gmail.com

[jimschubert]

Numbers 7 and 10 are what we're doing right now. Social media marketing has made this easier for us, but I admit it takes time to begin seeing results from it. There's just no replacement for good old marketing. We've recently had success using social media with our GA homeowners insurance clients.

[landersinsurance]

Thanks for these tips. These seem like pretty logical ideas.

[WRITER]

Thanks for these tips. These seem like pretty logical ideas.

Can you help me find a cluster in California that will give me direct access, binding authority, and get paid direct so I do not have to wait six months to get my money ?

[AgencyEquity]

Each cluster or alliance group has different arraignments, some member agencies get paid direct, but some go to the cluster and then the cluster pays the agency. My research tells me that there are really no two groups that are alike, though there may be some similarities. Review each group’s website and learn as much as you can about each group. Find out what their requirements and if you can meet them. Find out what carriers they represent and compare yourself with these groups. Ask yourself which carrier mix will be better for your agency. Once you find a compatible group, contact the members. Most websites have a listing of the members, but some don’t. If they don’t, then look up their license on the state’s website. Most states have a listing of all their appointed producers; in a master organization, you should find them listed under “producers.”

Once you are able to locate the members, I would talk to the principals of at least 3 different agencies within each organization, if not more. I would not recommend talking to the agencies that are recommended by any of these organizations, as you may get biased feedback. In addition to talking to existing members, you may also want to:

 Check out the licensing page on the states they do business in. You can find out with whom they are appointed with and any other information that may be helpful to you. In most states, you can also see a list of license appointees.
 Do a Google search and find out what is written about the organization online. You may find articles in insurance publications, information on an insurance forum, or be able to locate an agency member’s website.
 Talk to carrier representatives. They often know of the groups in your area and can make recommendations to you

No single item mentioned above should determine which group you choose. Please use a combination of the research methods. If you do a Google search and find some negative commentary about an organization, remember that anyone can post what they want online. It’s always best to verify the accuracy of what you read online with more than one source. Finally, no one size fits all. What may be good for you may not be good for another agency. Each group is different, and that is what is great about the marketplace. Different needs are filled with different options.

[Esmond]

Hi,
The best way to increase your agency's profit sharing bonus..It is the initial investment required to join the network. In addition to a monthly membership fee you pay for the office services group, including "direct access" and binding on the market.

[Anthoney]

I have read all the 10 ways to increase the profit sharing ratio and i find it quite real and practical. But you have to be extra careful while changing your strategies as even a single wrong step will lead you to total destruction because of the volatile nature of this business.