An agents renewals are his stock-in-trade
and his security. It can also be his retirement plan or bargaining chip should he wish to sell his business. It costs a lot to create a new account, and somewhat less to maintain it. Without repeat or renewal customers, an agent has to constantly look for new accounts. Those renewals should belong to the agent, not the Company scooping them at the anniversary of the policy each year. But then, what company really wants to insure
high risk drivers??
The issue remains that the agent writes and services the business. The agent should receive the commission. It is up to the agent to decide which accounts to target. Unless MAIP is going to act as a direct writer and process new business applications, take payments, stamp RMV-1’s and provide coverage and claims advice, the agent should be compensated. If an agent knows that they will not be compensated for the risk in the long term, there will be a huge disincentive to write MAIP accounts. This seems to be in conflict with the DOI’s emphasis on public policy?
Assumming one markets for auto insurance it takes approx 8 years to break even on an auto new business account at 10% commission. The life expectancy on a normal account is 9 years. Not much of a window to make a profit. High risk policies have a higher lapse rate and without renewal commission will create a loss for the agent. A smart agent will let his competitors handle this type of account. I would recommend referring them to the GEICO agency. Let them be encumbered with this type of crap.
An agents renewals are his stock-in-trade
and his security. It can also be his retirement plan or bargaining chip should he wish to sell his business. It costs a lot to create a new account, and somewhat less to maintain it. Without repeat or renewal customers, an agent has to constantly look for new accounts. Those renewals should belong to the agent, not the Company scooping them at the anniversary of the policy each year. But then, what company really wants to insure
high risk drivers??
The issue remains that the agent writes and services the business. The agent should receive the commission. It is up to the agent to decide which accounts to target. Unless MAIP is going to act as a direct writer and process new business applications, take payments, stamp RMV-1’s and provide coverage and claims advice, the agent should be compensated. If an agent knows that they will not be compensated for the risk in the long term, there will be a huge disincentive to write MAIP accounts. This seems to be in conflict with the DOI’s emphasis on public policy?
Assumming one markets for auto insurance it takes approx 8 years to break even on an auto new business account at 10% commission. The life expectancy on a normal account is 9 years. Not much of a window to make a profit. High risk policies have a higher lapse rate and without renewal commission will create a loss for the agent. A smart agent will let his competitors handle this type of account. I would recommend referring them to the GEICO agency. Let them be encumbered with this type of crap.