selling commercial vs personal lines.

[angelhat]

I have a fairly large personal lines agency with a good csr/producer. Premiums average about $900 across the board and business is decent. I’ve often wondered what I’ve been missing out on by not having access to commercial markets. Many of my peers with large agencies have large commercial books.

Due to a recent affiliation I obtained direct access to a variety of commercial markets and have written a little commercial business. I find it frustrating. It takes more time, is much more complex, and the premiums are usually less than what I average on personal lines.

My biggest problem with commercial seems to be inexperience. A friend suggested going to a producer school to short circuit my learning curve. There is one being offered this summer that has a good reputation for results but it is expensive. I can afford the price, but not easily.

I’m having a hard time deciding what I should do. Investing in the training would be fine if it pays off and there must be good premium out there or agencies would not be selling commercial. Sometimes I’m tempted to just stick with the personal side and keep life simple but I don’t know well enough what I would be passing up. Any advice would be appreciated.

[jimmyr1978]

I'm on the flip side...I am an independent agent and part-owner of a business unit at a cluster agency that primarily focuses on commercial lines. We have a personal lines division with two dedicated CSR's for my business unit.

When I started out, I did a 2-week Hartford School of Insurance program. I HIGHLY recommend it. It's $2500 + room/board, but you'll learn ISO commercial forms inside and out. To effectively sell to larger commercial accounts, you must know the coverage very well. I also try to do one extended training course on commercial coverage forms every year (2+ days). Work comp, commercial auto, CGL - these require a lot more depth of knowledge to sell them well (and avoid E&O issues).

In my first year, I generated $85,000 in commissions from commercial accounts, with only 3 personal accounts written that only generated a few hundred bucks. I focus on a smaller group of larger accounts to ensure I provide them excellent service. Most of my accounts generate $2,500 or more in commissions/$25,000+ in premiums. Of course, I have the advantage of being associated with a US Top 100 agency, and all the negotiating power and extensive markets that it provides. I couldn't imagine doing this without the extensive market network that we enjoy.

It's not for everyone - selling to a business owner, CFO or office manager is much different than a homeowner, though if you can sell, I imagine the transition shouldn't be too tough. Of course, once you start landing some bigger commercial accounts, you may not want to go back!

[gmann1957]

Where is your agency located? We work with many agencies to assist them in placing commercial business. We are also exploring mergers and/or acquisitions. Call me if you wish to discuss.

Greg Heitmann
IPA Risk Management, LLC
201-797-1215
www.ipariskmanagement.com

[ED3771316]

I started with the easiest commercial product in the mix. Workers Comp is easy and its cut and dry. Someone gets hurt on the job, it pays. The employer get sued it pays. everyone understands it.Then it boils down to Carrier Rating and pricing.

Get some of them under your belt, your carriers will be offering training for you.

Hook up with a GA that knows more then you and they will also offer to do training. Then its up to you to market the product. Some will offer field support for you too.

When you start chasing the BOPS, pick an industry you are familiar with. Restaurants, Manufacturing, Medical, what ever. Dont bite off too much. Do not forget to KISS it.

[robbiecobb]

As for selling commercial lines, I am with the other gentleman. Get some additional training. Things can get complex, but the best agents are those that specialize in a couple of industries. Become an expert in those industries and you will do fine. Become a member of their organizations as well, ie.. trade groups, chambers, etc... Also, as for the time reward. Just remember you can take the time to write one $75K account and make $7500 or you can write 100 new autos. Now which is more time consuming. Also, if the time vs. reward is a big issue, focus on accounts that will bring in enough premium to make it worth your time. I am not sure what state that you are based in, but some of the commercial rates are very high and can be very rewarding in states that have a lot of litigation (GL) and high property rates (Earthquake issues, fires, flood, etc...). Also, work comp rates can vary widely from state to state. There is a lot to learn, but the reward for learning can be a nice check.

[BigBlue8]

As the saying goes, don't work harder work smarter. If you've invested yourself in a career, invested your time and energy, then you pick up and leave for what appears to be greener pastures then you've just walked away from your investment. I've been in insurance for over 25 years, worked for carriers, brokers, risk management, client services, and now marketing and in all those years there is no perfect environment or company. What I can say is that Farmers has so many more resources to help agents than any other carrier in the industry. In commercial for instance, you have customer service, field underwriters to work with agents one on one, commercial marketing, a broad product line, free commercial training schools each month at the district level, online training, and the service center for MyCommercial Expert.

It sounds more to me that you don't have a business or a marketing plan and that you're just being tossed in and out with with the rising tide rather than having a firm idea as to where you are headed and how you are going to get there.

Good luck to you.

[volstrike3]

My answer depends on what you do. If your a producer at a large agency... selling commercial lines gives you the chance to make more money. If your a small agency owner, I think personal lines is the way to go if you do it right. I have walked both paths and personally prefer owning an agency and selling personal lines and small commercial.

The middle and large commercial market is dominated by alphabet houses and large regional agencies that pick a niche and develop exclusive programs for that niche. You can pile on a lot of commission quickly if you have the hot exclusive product and you can lose a lot of commission quickly if a competitor does or if that industry tanks (like work comp for construction right now). The sales process is long and the competition is fierce. Insurance is a big expense for these companies so while they like you and your "great customer service"... there are always 3/4 very skilled agents waiting in the wings on every account. If you hold onto a large commercial account in a competitive industry (construction, trucking, hospitality, etc) for 6/7 years... you have done a good job. Small agencies may have a few jumbo accounts for whatever reason but they eventually get picked off by somebody with a exclusive program. Your relationship with the owner may be good... but getting whipped by $50K+ will strain any relationship you thought you had. Selling service is almost a waste of time because most agents playing in that level provide great service... it is a minimum expectation.

As a small agency owner, personal lines and standard market bops are where the money is. You may not do huge volume... but you can put just as much money in your pocket as the highest profile CL producer in your region. Commissions and contingencies are higher and they require less touching (which equals less payroll and overhead). Carriers and smart agents are highly automated so the sales cycle is very quick and the insureds don't tend to move around as much. The premiums/commissions on each line is smaller but if you write the entire account and offer life/health... the commissions can get up there. I target niches in personal lines like I did in commercial lines. Teen drivers, Classic Cars (premiums are really low but it opens the door to a group of people with money), Art buyers, jewlery buyers, Motorcycles(Harley/BMW dealerships), RV's, etc. I have written some personal lines accounts that were over $40k in commission when you figured in home, auto, Vacation homes/rentals, toys, umbrella, life and annuities (great money right now in annuities), disability, LTC and rollover IRA. The key is to be a well rounded agent if your going to sell personal lines. Your income will be limited if you just write home and auto. The majority of the accounts I take over are scattered between different carriers and agents for home/auto/life, etc. People are busy and they don't understand insurance... they want you to take control and place everything with one/two carriers and give them one bill (premium finance = more money).

You can make great money writing BOPS if you stick to standard market stuff that you can online rate and bind and your good at rounding out accounts(including PL/Life/Health for the owners). I basically treat small commercial likes personal lines... I find them a good home, round out the account and put them on auto pilot with email drips, automatic post cards/newsletters and 3/4 phone calls a year. You can make great money in personal lines and small commercial if you provide good service but don't over service.

[earlybird]

You might start the decision making process by sitting down and making a plan for the remainer of your working life. Are you content with your income and dealing with the perosonal lines policies and issues, then hitting the golf course around 2 pm every day? If so, continure what you are doing. (Of course, some of my commercial associates get there about the same time!)
Would you rather continue learning about insurance products, be challenged and be competitive, and reap some nice rewards in the form of commissions? If this is your wish, by all means, get additional information and training and get started with the commercial P & C products. The Hartford School is a wonderful way to get a jump start I am told. It certainly looks good on paper. If you have the time, enroll in the CIC program and learn more about both personal and commercial lines.
I am not knocking either way you go. Both can be rewarding financially and from my experience, 40 years so far, both career paths have their advantages. I took the commercial route and find that it continues to be interesting and financially rewarding. It appears to me that independent agents have more control of their destiny than those who are direct writers, but then I have never been employed as a direct writer. Good luck with which ever you choose!

[Tim Hoelle]

You've received some good replies. I'd also suggest you consider going to a commercial casualty CIC or other class. It gives you a good overview of several commercial lines classes of business and you'll have the ability to network with many other agents and agency professionals. If you like it you should seriously consider getting your designation.

It's hard to be specific as to advice without knowing where you are located geographically and the size and type of agency you work for currently. I'd suggest that if you're an employee you check to see if your employer will pay for some or all of your training. I'm assuming you feel like or know they won't, in which case you should also talk with other local agencies to see what your options are in that regard. Most good employers are excited to think that an employee is eager to learn more and grow in this business, so take advantage of that if you can.

Finally, if you're really serious about learning new coverages, commercial or otherwise, there is a ton of info on the internet in addition to other courses you can take as self study. Look at the IRMI website for example http://www.irmi.com/, or http://www.scic.com/. Or better yet, check out your local or state agents association and see what sort of education they offer.

You can probably make a good living as a personal lines agent, but I would have to think you can earn more and it would be alot more interesting if you decide to move over to commercial lines. No matter what you do, you're going to have to study a great deal to be the best agent for your customer - there's no easy way to get there. Good luck.

[MarnyB]

As a Managing General Agent of commercial lines insurance programs, we would agree that the rewards of commercial markets can be very significant, but it can also be frustrating to get up to speed on the many programs available. Getting as much training as possible, and specializing in industries that you know something about (or can learn something about), can help ease the transition from personal lines to commercial insurance.

In addition to paid training from reliable sources, our agency (Stuckey & Company) offers free webinars on commercial programs, which we sell through a network of about 8,000 licensed agents. Our next webinar is March 13, 2009 at 1:00pm CST, on the topic of Network Operations Security, but throughout 2009 we will address a variety of commercial programs offered at Stuckey & Company. If you are interested, you can sign up for the March 13 webinar using a link on our home page (http://www.stuckey.com). You can also check back frequently to see upcoming webinars on other topics, such as errors and omissions for technology professionals and commercial lines insurance for other industry segments.

[tflood]

There's an old saying that less = more.
For example, say you want a $100,000 commission income book.
Would you rather have 40 commercial clients paying you $2500 each (revenue per relationship) or
1000 personal lines clients paying you $100 each (revenue per relationship) that you have to service like crazy-

The revenue per relationship is 25 X that of the small personal lines, with alot less work...

The answer becomes self evident... and yes, less does = more.