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I'm in California, and I TOTALLY agree with you!

Reviving this thread back from 2013. Looks like our predictions have come true. Travelers was the first to do it, now in the past 6 months three more standard lines companies have announced their new commission rates, citing "..as market trends continue to shift."

So, to those who continued to write Travelers with 12%...you can pat yourself on the back.

As of now, the list includes:

Nationwide / Allied
State Auto (going 14/10 on auto!)
Safeco - announced yesterday. Going to 15/12 on auto

This looks like a major turning point in our industry.

The "Alamo" moment was in fall of 2013 when Travelers announced this. If agents, as a collective group, would have had a "sack" then to stop writing in mass, perhaps that would have changed where we are today, who knows. Or at least put off this reduction.

Once thing is for sure: Since agents rolled over and agreed to do more work for less money, why would other carriers not join in?

lonestar wrote:The "Alamo" moment was in fall of 2013 when Travelers announced this. If agents, as a collective group, would have had a "sack" then to stop writing in mass, perhaps that would have changed where we are today, who knows. Or at least put off this reduction.

Once thing is for sure: Since agents rolled over and agreed to do more work for less money, why would other carriers not join in?

Agreed. We immediately started the process of rolling our Travelers book to, none other than, Safeco. Now Safeco is doing the same thing.

Of course the other carriers looked around and said, "Wow, look at Travelers writing all that business while cutting the agent's commissions. We should be able to pull that off too."

Welcome to the "new normal". In order for independents to be competitive with direct writers this is just a function of math. We're lucky to have choices of carriers to represent I know I always prefer to put my business with a company committed to the IA. I do not like companies like Travelers doing this, but you need to keep producing to make up the difference. It's a shame but I don't think IAs are going to go on strike. This is not an easy business but still viable for the disciplined. You can have complaints or results, but you can't have both.

You can add Mercury to the list of commission cutters. Their auto is now 14/12.

Another slap to the face of the agent from Travelers, is their website: travelers.com. If any IAs are sending their clients to the Travelers website for information, they need to have their heads examined. The focus of the website is to have visitors obtain "direct quote" from Travelers. You might as well send them to Geico.com.

The small to mid sized agencies and their principals have to finally begin to accept the reality that carriers are recognizing they can get away with commission reductions because simply, they can. We can shuffle, weave and dodge all we want, but the time and expense of rolling a book to what appears to be a more favorable environment is only a temporary stopgap, as demonstrated by the prior poster who spoke of moving a Travelers book to SAFECO, only to find Liberty/SAFECO in a new cost cutting/commission reduction environment.

The large agencies have the scale and the contingency potential to roll with these kinds of punches and perhaps this is yet another way of telegraphing the message that small/mid sized agencies are not part of the long term plan of any of the carriers. We may be profitable, we may enhance retention, we may shoulder a majority of service work, but you can't beat the economies of scale when you have a mega, whale agency on the agency roster speaking for thousands of policies, rather than a few hundred or thousand.

The carriers may say they're committed to the agency delivery system...they just want the large scale agencies that are continuously growing to represent that segment.

At my advancing age, I'm reconciled to the fact this retail end of the business isn't going back to the 70's, 80's or 90's and frankly, I'm glad I'm the age I am because over the next five years, I just think elements of the business that were fun or profitable or both are only going to get smaller and smaller.

Once again d's is right.

The local agent is going the way of travel agents, book stores, and to a lesser degree hardware stores. I recall 20 and 30 years ago you could go to an agents meeting and see some pretty prosperous people with homes in Florida or large boats. Now, not so much. The money and profits are just not there except for the really big guys and they really don't make the money they used to at that size agency.

Just a few years ago my kids graduated from good Universities with business degrees. I didn't try very hard to get them to come in to the insurance business. They started out with $60,000 jobs with company cars and 401k's. 6 or so years later they both make close to or over 6 figures with more security than in insurance. I now go to insurance meetings and the typical younger agent doesn't even have a college degree.

I agree with the others.

Currently, there is still a good opportunity to earn a very good living if you own your own agency. You can still be pulling in multiple 6 figure incomes even with medium to small sized agencies, but it probably won't be there in 15-20 years. So that's why I'm bumping up my retirement savings as fast as I can.

Think niche markets with regional carriers. The smaller companies tend to be the receptive to new ideas and are willing to provide resources.