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The silence from agents on this topic is deafening. Either the new auto product is a non issue or agents don't feel like contributing to the discussion.

The new product hasn't been approved yet in WA. Keeps getting delayed, supposedly in May it will be available.

Still waiting in PA as well. I don't think it will change anything at our agency... regionals get most of our business.

The bad news is that it gives the other companies "permission" to also cut commissions. And it's already started: Mercury and Grange (long known as agent friendly companies) have announced cuts. Mercury is now 14 new and 12 renewal and starting next year Grange will be as low as 10 new /10 renewal depending upon how many new policies you write and your PIF count.

long known as agent friendly companies

Post commission change, their new production figures and retention on good accounts will reflect "formerly known as agent friendly companies" status.

Foremost (formerly Zurich Small Business), sent us a letter dated 4/28/14 announcing that it is "committed to providing consistently competitive and profitable commercial lines products."

Wait for that other shoe to drop ... There it goes ...

"For that reason, effective July 1, 2014, we are CHANGING your agency's commission rate ..." to 10% across the board except for 12% for the first $3,000 of WC premium and sliding as low as 2%.

"We believe our commission are competitive in the market and this change will further strenghten the position of our commercial lines products long term." What market are they talking about?

Their 'F' logo says it all .. we all just got F'ed.

Every state is different, every agency is different...the feeling of betrayal and violation occurs when an agency feels it has played by the unwritten rules of fair play and proper field underwriting to give a carrier only the most likely of profitable business, passing or marketing to a 'lesser' carrier the 'less than preferred' business and then the company receiving all of this loyal, profitable business acts like the victim and drops the commission rate.

Thanks for nothing...and boy, am I glad I'm within a few years of retirement. After I'm gone, commissions can go to zero for all I care...heck, let the carrier send a bill to the agency for the 'opportunity' to business.

I thought I would bring this thread back up to the top, so agents can update us on how Travelers is working out for everyone. In my neck of the woods(Texas) they are terminating several agents. Excuse is lack of doing 4 policies per month. Anyone else seeing this in other states?

agent14, you aren't the first person I've heard this from. A colleague of mine said his marketing rep pretty much said the same thing in not quite the same words. If the new agents are writing the new Quantom 2.0, then they might get the axe.

For my agency, we're in the process of collecting dec pages to roll our Travelers book. And I know of a different colleague that is doing the same. I also hope that more of our peers do the same to send a message to Travelers (and the rest of the companies) that if you start backstabbing your agents with commission cuts, then it might back fire on you.

I was very surprised that Travelers did not come up with a competitive rate to get agents interested in writing with them. They have very mediocre rates in Illinois. We have placed them on the "do not quote" list with the other commission cutters like Progressive and Foremost -- unless they have a clear edge in price. Close does not count -- especially among the commission cutters.

Interestingly, direct mail solicitations are now showing up in the mail from Travelers, asking customers to call Travelers direct to "Save Money". All the while Travelers is demanding that the agents sell on "Value", not price. Anybody else's BS meter going off the charts?

For agents and brokers in California:

Golden Bear Insurance Company pays 20% on new and renewal. We're A- 6 Rated, Admitted and accepting new appointments.

Please give me a call to discuss further.

Erik M. Olsen, CIC
Senior Underwriter
Golden Bear Insurance Company
209-870-2936
erik@goldenbear.com

Erik, do you offer policies in Texas?

Hi Agent14,

No. We only write in California.

Thanks for checking in though!

Erik

I came across the following article recently, written by the IIAT.(Independent Insurance Agents of Texas) I heard Travelers was not happy that the author was calling out Travelers for what they are.

Starving the Cow
David VanDelinder, Executive Director

Raise rates, reduce commissions, institute a new business incentive program. Sounds like an unlikely formula for success: starve the cow to produce more milk; yet, that is what many companies are doing in property markets in Texas today. Countrywide, companies are experiencing increases in property claims frequency and severity, their investment returns are dismal and catastrophes are lurking around the corner. Agents understand the need for profitability, but cutting the lifeblood income of agents who produce that business seems like a short-term solution to a long-term problem.
Consider the economics of commission reductions. At 15 percent commission on a $1,000 homeowner premium, an agent makes $150. Reduce that commission to 12 percent and the agent’s income is reduced by 20 percent to $120. Some companies are reducing commissions to 10 percent or less on monoline property, which lowers the agent’s income by at least a third; but, some company public relations departments argue that premiums have increased as well. That’s true for a variety of reasons, including increases in Coverage A amounts dictated by carriers. A recent market report by the Texas Department of Insurance concluded that average homeowner premiums in Texas had increased 61 percent from 2000 to 2011, but during the same period cumulative inflation has eaten up at least 30 percent of that income and contributed to rising wage costs which often make up more than half an agent’s expenses. For many agents facing commission reductions next year, income on that $1,610 homeowners policy will be up only $11 over what they would have made on that policy in 2000 (at $1,000 premium) – hardly enough to make up for inflation.
Once again agents are asked to dig into their pockets to address company profitability, and this at a time when agents are struggling to gain market share from the directs and captives. For Texas agents, who live in a state where it is not all that hard to get rate increases, this makes no sense. The hallmark of independent agency business is customer service but that very service is threatened today by rising costs and reduced income. A starving cow costs less to keep, but she won’t produce more milk.

David VanDelinder, CPCU, AAI
President and CEO
P.O. Box 684487
Austin, Texas 78768
1115 San Jacinto Blvd.