Most agents do not have a problem disclosing commissions they earn. One of the earlier respondents said they average 11% commission on their accounts. That number closely represents our average commission compensation percentage to our agency.
Commission compensation earned by agents is based on the sale of the carrier’s products. Today, the independent agent is forced to provide a higher level of client service than is available through most insurance carriers.
Today, your agent has to be your advocate to get claims paid promptly, policies issues correctly, premium audits amended, certificate language amended to meet contractual agreements, provide safety consulting that benefits your business instead of just the insurance carrier, provide classification and rate reviews, complete a loss analysis for your business, property valuations, etc…
Today, the value of service your independent agent provides goes beyond just the sale of the insurance product. Since we believe it is necessary to provide this level of service, we are not shy about sharing with our clients what we would make on their account.
The earlier writers are correct in the fact agents will incur additional expenses getting signed compensation/acknowledgement forms from our clients. To create, print, monitor, and follow up will add incremental costs to the process. It creates extra steps, hurdles, and potential legal risk to our business.
It is very unfortunate the illegal activities by a select few, and the comments of Mr. Spitzer, have created a public perception that all agents have, and are engaged in these activities.
I have been an insurance agent for 32 years and whenever I tell my clients what I earn on the sale of a policy they can’t believe that I can run my business on that amount. The gross profit for most businesses is significantly greater per sale than in our business. Volume has always been an important component in the profitability of an insurance agency. If you suffer a severe loss and the proceeds of your insurance program make you whole again and keep your head above water while you are rebuilding your business, your agent has truely earned every cent of his commission. If you are interested in what everyone makes when they sell you an item then you better be prepared to disclose that information to your buyers. Good Luck Inquisitive.
Are there any brokers or agents out there who object to disclosing to their insureds the amount or percentage of commission they receive on each policy they write or place?
As an insurance buyer both commerical and personal, I weant to know what my broker earns on my account. Am I being unreasonable?
Good for PIA National! It is time all of us get together and stand up for our profession, not sit back and wait for the regulators to tell us how bad we are and how “they” are going to fix it!
Surely insurance agents do not need to add 4 of 5 more steps to the already complicated process of getting a policy ordered and issued. We are doing most of the company’s work, now they want us to do the regulator’s work, too.
I for one had never heard of the fantastic placement incentives paid to some of the national brokers like Marsh & Aon ands the like. I have never had the ability to rig a bid, but, at least according to the Attorney General of NY, they did. So why should I, as a little independent agent be penalized and burdened with more reporting because these big guys got greedy?
Maybe the solution is to eliminate the big brokers! Put the insurance needs of the country in the hands of local agents.
Won’t happen, but it would increase the honesty factor a little bit, maybe.
Personally, if you were my client I wouldn’t have a problem with disclosure if you asked me; our staff works hard for our clients. Most clients know it and appreciate it. Mandate disclosure – I suspect a few clients would try to negotiate, including my commish, if they thought it was too much… some clients have very short memories or fail to realize just how hard we work…the old “what have you done for me today” line. It costs a fortune to run a professional agency but some clients just want cheap insurance… I guess the same concept could hold true with other professions and businesses. Before I get my loan from the bank I should ask the banker how much he stands to make on my loan if he turns around and sells it which will give me poorer service and who else gets a little piece of the action along the way. Maybe a law should be written for the big box stores such as Home Depot or WalMart to disclose how much they really make on the Washer Machine I was planning to buy (not). I suppose I should call up my pharmacist and ask him what his margin is on the new $350 “a pop” medicine my Mom has to take to keep her “regular”. Agents are mostly small business people trying make a go at the American dream. It’s ludicrous to lump every insurance person who sells insurance in the same coral. Brokers in the alphabet houses have their own deals and are truly experts at sweetening their revenue streams. They have to appease stockholders; I have to appease my daughter’s college tuition bills. My agency struggles and (more often lately) fails to make profit sharing with most carriers unless the stars and moons of five planets line up perfectly; for which I won’t even know the actual amount until the generous insurance companies mail me a check 6 months after the fact. Please tell me how I should disclose that to my clients, Mr. Inquisitive. By the way, my agency comission across all lines averages about 11%, with not a great fluctuation between policies. You can use that as your bench mark. Good Luck on negotiating your renewals.
I just think insureds have a right to know what their broker/agent is being paid to service their insurance account. We know what we pay our lawyer, we know what we pay our accountant-why not know what we pay our insurance broker?
When an insured’s premium account is over $100,000, I might suggest negotiating a fee rather than straight commish. But that wasn’t my point, my point was that insureds should know what their insurance broker earns on their insurance business.
If I want to shop around for the best deal on an washing machine, that is my perrogative. When I buy a new car, I know what I the dealers cost is, maybe, and I’ll negotiate a price that I think is fair over the dealer’s cost.
And if a broker or agent complains about telling me what their commish is, I think about looking for a new broker.
Why the secret? Most brokers and agents earn their commish-on the other hand, many do not and those are the guys who are crying loudest. I rest my case.
Mr. Inquisitive I agree, you do have the right to ask how much your broker makes from the insurance companies. If your broker doesn’t tell you, I agree again with you, find another broker. The majority of us brokers have no problem telling our clients how much we get from carriers. What we have a problem with is more jumping through paper wasting, time consuming hoopes from DOI and less time we have answering your phone calls.
That is my point-now at least the client knows what he is paying his broker.
What he does with that knowledge is his concern; maybe the client will offer a “fee” to the broker because he feels the commission amount is in adequate.
But at least the client knows.
That’s it. Have a nice weekend.
Say it loud! The greed of the “big boys” is putting a bad face on all insurance professionals. Why should we all suffer for that.
Publiclly traded brokers don’t work. They can’t serve two masters. The clients must be the primary concern for all agents and brokers.
Adding to Shakespeare, let’s toss the “big boys” as well.
I’ll start disclosing when my best friend must disclose to he must disclose to his industrial belt/motor/pulley clients that today he chooses to sell at 25% profit margin instead of a 10% profit margin because he must keep hp his $150,000 a year income……or that car sales guy must tell you what he is making……or that refrigerator salesperson…..or the window installer or on and on. I’ll start when the elected officials in our government disclose (not in obscure filed papers) to the public who are giving them the their largest donations.
Exactly what is and has been going on in this country is a slow march to some type of communist / socialist controlled citizen State. You now need to file forms to do the most minor changes to your home. Government law says that you can not on your own, fix that goose neck under your bathroom sink. By law you must have a plumber change it. You can not, on your own, even run a wire for a new receptacle in your own home.
Look at the life insurance industry. 23 years ago it took 4 pages to write a term policy. Now my printer must print 23 pages of applications. Even though the client signed the form allowing APS records to be released, more and more I am finding when an APS is ordered, each doctor has their own HIPPA form. Before the doctor will release the records, the proprietary form must be signed by the client and isn’t available until after an APS is ordered so there is no way to have that proprietary form during the initial application process. All this commands a separate visit to a client. The separate visit isn’t due to my mistake but has been created by the HIPPA laws. Does anyone think that records are more safe or less safe since HIPPA? If you do I have a bridge to sell you. You sign the HIPPA form and then it is business as usual was before they passed HIPPA.
For 15 years I had a Series 7 license. Want to talk about redundant requirements and the Securities industry is full of them. There was a time that we considered the reason that government entities moved at a snails pace was due to papers needed to be filed in triplicates. Government has been slowly passing that inefficient method of business on us.
I FOR ONE AM TIRED OF IT!!!!!!! I am ethical to a fault and all the redundant rules in the world will not stop the unethical from doing their misdeeds. I refuse to be a sheep and you should not be one. Stand up, make your voice be heard!
Mr. Inquisitive. When you bring up attorneys and the like you are not comparing apples to apples. An attorney has a clock that ticks the entire time you talk with them and that determines your invoice. When paying that attorney invoice the entire 100 percent goes to that attorney’s practice. If the attorney decides he needs higher profit margins the firm can on their own start raise their hourly rates. Your payment to the attorney doesn’t go to some third party and then that third party gives the attorney their part of the pie. The same holds true for CPA’s, Real Estate firms, etc.
When a client pays a premium they are giving it to an insurance company and then that company determines how much to give us. We have no way to increase profit margins by deciding to charge a premium that is higher than the insurance company offers. Most businesses can decide on their own to charge a higher or lower profit margin.
jsjag:
Your point is well taken; however,when my client pays his insurance broker $350,000+ in annual premiums I think it is reasonable for the client to know how much in commissions the broker earns. The increased paper work is a problem-why can’t the policy show what the commission is?
By the way I have no problem with profit-sharing contingenices unless the broker moves business from one carrier to another to take advantage of a better contingency plan.
I appreciate your comments.
The same should hold true for “consultants” or insurance (risk management)advisers who have relationships with certain individuals at the big firms; larger insurance firms are often given higher recommendations over the local agent by some consultants. If I were a 350,000 premium payer I would want to know full disclosure on what other business is being conducted between my “consultant” and the bigger agency with “more clout”, including referral business. The door swings both ways. I would think RIMS would be more outspoken than they have on this issue as well…
As a consultant my only source of income is the fee paid to me by my clients.
NO conflicts of interest- this is one of the key reasons I left the brokerage business after 23+ years to consult- NO conflicts of interest.
Simply saying something with a reason why is often the politicians tool of communication. OK so you tell your $350,000 premium client what the commission is….now what? To what end will knowing change anything? You seem to be stating that somehow that makes someone or something more ethical. Is that your point? Should you disclose to that $350,000 client your person expenses, your company expenses, the insurance company expenses, what the insurance company CEO earns?
The bottom line is (always has been) the buyer either considers it a fair price, can afford the price, likes you / trusts you enough to place business with your or they don’t.
I know people that go to various places in Russia. What they tell me is sad. Russia is now a growing capitalist country with what sounds like more freedoms and less bureaucratic rules than we are in the USA. It sounds like what the USA once was in the world.
This is what we get … when we set back and don’t police ourselves.
You know bid rigging has been going on for years, yet the compensation thing has nothing to do with bid riggingg.
Make the agents quoting give a comprehensive plain talk quote to the customer for every market he supposedly is quoting.
that’ll aslo stop the creeps with the big houses from “locking down” the markets so little agents can’t come in …and show them for what they are… a bunch of damn crooks.
I don’t like this, but we deserve what we’re getting.
Now do we fix it, or let the big houses continue ruining our businesses?
Most agents do not have a problem disclosing commissions they earn. One of the earlier respondents said they average 11% commission on their accounts. That number closely represents our average commission compensation percentage to our agency.
Commission compensation earned by agents is based on the sale of the carrier’s products. Today, the independent agent is forced to provide a higher level of client service than is available through most insurance carriers.
Today, your agent has to be your advocate to get claims paid promptly, policies issues correctly, premium audits amended, certificate language amended to meet contractual agreements, provide safety consulting that benefits your business instead of just the insurance carrier, provide classification and rate reviews, complete a loss analysis for your business, property valuations, etc…
Today, the value of service your independent agent provides goes beyond just the sale of the insurance product. Since we believe it is necessary to provide this level of service, we are not shy about sharing with our clients what we would make on their account.
The earlier writers are correct in the fact agents will incur additional expenses getting signed compensation/acknowledgement forms from our clients. To create, print, monitor, and follow up will add incremental costs to the process. It creates extra steps, hurdles, and potential legal risk to our business.
It is very unfortunate the illegal activities by a select few, and the comments of Mr. Spitzer, have created a public perception that all agents have, and are engaged in these activities.
I have been an insurance agent for 32 years and whenever I tell my clients what I earn on the sale of a policy they can’t believe that I can run my business on that amount. The gross profit for most businesses is significantly greater per sale than in our business. Volume has always been an important component in the profitability of an insurance agency. If you suffer a severe loss and the proceeds of your insurance program make you whole again and keep your head above water while you are rebuilding your business, your agent has truely earned every cent of his commission. If you are interested in what everyone makes when they sell you an item then you better be prepared to disclose that information to your buyers. Good Luck Inquisitive.
Are there any brokers or agents out there who object to disclosing to their insureds the amount or percentage of commission they receive on each policy they write or place?
As an insurance buyer both commerical and personal, I weant to know what my broker earns on my account. Am I being unreasonable?
Good for PIA National! It is time all of us get together and stand up for our profession, not sit back and wait for the regulators to tell us how bad we are and how “they” are going to fix it!
Surely insurance agents do not need to add 4 of 5 more steps to the already complicated process of getting a policy ordered and issued. We are doing most of the company’s work, now they want us to do the regulator’s work, too.
I for one had never heard of the fantastic placement incentives paid to some of the national brokers like Marsh & Aon ands the like. I have never had the ability to rig a bid, but, at least according to the Attorney General of NY, they did. So why should I, as a little independent agent be penalized and burdened with more reporting because these big guys got greedy?
Maybe the solution is to eliminate the big brokers! Put the insurance needs of the country in the hands of local agents.
Won’t happen, but it would increase the honesty factor a little bit, maybe.
Personally, if you were my client I wouldn’t have a problem with disclosure if you asked me; our staff works hard for our clients. Most clients know it and appreciate it. Mandate disclosure – I suspect a few clients would try to negotiate, including my commish, if they thought it was too much… some clients have very short memories or fail to realize just how hard we work…the old “what have you done for me today” line. It costs a fortune to run a professional agency but some clients just want cheap insurance… I guess the same concept could hold true with other professions and businesses. Before I get my loan from the bank I should ask the banker how much he stands to make on my loan if he turns around and sells it which will give me poorer service and who else gets a little piece of the action along the way. Maybe a law should be written for the big box stores such as Home Depot or WalMart to disclose how much they really make on the Washer Machine I was planning to buy (not). I suppose I should call up my pharmacist and ask him what his margin is on the new $350 “a pop” medicine my Mom has to take to keep her “regular”. Agents are mostly small business people trying make a go at the American dream. It’s ludicrous to lump every insurance person who sells insurance in the same coral. Brokers in the alphabet houses have their own deals and are truly experts at sweetening their revenue streams. They have to appease stockholders; I have to appease my daughter’s college tuition bills. My agency struggles and (more often lately) fails to make profit sharing with most carriers unless the stars and moons of five planets line up perfectly; for which I won’t even know the actual amount until the generous insurance companies mail me a check 6 months after the fact. Please tell me how I should disclose that to my clients, Mr. Inquisitive. By the way, my agency comission across all lines averages about 11%, with not a great fluctuation between policies. You can use that as your bench mark. Good Luck on negotiating your renewals.
I just think insureds have a right to know what their broker/agent is being paid to service their insurance account. We know what we pay our lawyer, we know what we pay our accountant-why not know what we pay our insurance broker?
When an insured’s premium account is over $100,000, I might suggest negotiating a fee rather than straight commish. But that wasn’t my point, my point was that insureds should know what their insurance broker earns on their insurance business.
If I want to shop around for the best deal on an washing machine, that is my perrogative. When I buy a new car, I know what I the dealers cost is, maybe, and I’ll negotiate a price that I think is fair over the dealer’s cost.
And if a broker or agent complains about telling me what their commish is, I think about looking for a new broker.
Why the secret? Most brokers and agents earn their commish-on the other hand, many do not and those are the guys who are crying loudest. I rest my case.
Mr. Inquisitive I agree, you do have the right to ask how much your broker makes from the insurance companies. If your broker doesn’t tell you, I agree again with you, find another broker. The majority of us brokers have no problem telling our clients how much we get from carriers. What we have a problem with is more jumping through paper wasting, time consuming hoopes from DOI and less time we have answering your phone calls.
That is my point-now at least the client knows what he is paying his broker.
What he does with that knowledge is his concern; maybe the client will offer a “fee” to the broker because he feels the commission amount is in adequate.
But at least the client knows.
That’s it. Have a nice weekend.
Say it loud! The greed of the “big boys” is putting a bad face on all insurance professionals. Why should we all suffer for that.
Publiclly traded brokers don’t work. They can’t serve two masters. The clients must be the primary concern for all agents and brokers.
Adding to Shakespeare, let’s toss the “big boys” as well.
I’ll start disclosing when my best friend must disclose to he must disclose to his industrial belt/motor/pulley clients that today he chooses to sell at 25% profit margin instead of a 10% profit margin because he must keep hp his $150,000 a year income……or that car sales guy must tell you what he is making……or that refrigerator salesperson…..or the window installer or on and on. I’ll start when the elected officials in our government disclose (not in obscure filed papers) to the public who are giving them the their largest donations.
Exactly what is and has been going on in this country is a slow march to some type of communist / socialist controlled citizen State. You now need to file forms to do the most minor changes to your home. Government law says that you can not on your own, fix that goose neck under your bathroom sink. By law you must have a plumber change it. You can not, on your own, even run a wire for a new receptacle in your own home.
Look at the life insurance industry. 23 years ago it took 4 pages to write a term policy. Now my printer must print 23 pages of applications. Even though the client signed the form allowing APS records to be released, more and more I am finding when an APS is ordered, each doctor has their own HIPPA form. Before the doctor will release the records, the proprietary form must be signed by the client and isn’t available until after an APS is ordered so there is no way to have that proprietary form during the initial application process. All this commands a separate visit to a client. The separate visit isn’t due to my mistake but has been created by the HIPPA laws. Does anyone think that records are more safe or less safe since HIPPA? If you do I have a bridge to sell you. You sign the HIPPA form and then it is business as usual was before they passed HIPPA.
For 15 years I had a Series 7 license. Want to talk about redundant requirements and the Securities industry is full of them. There was a time that we considered the reason that government entities moved at a snails pace was due to papers needed to be filed in triplicates. Government has been slowly passing that inefficient method of business on us.
I FOR ONE AM TIRED OF IT!!!!!!! I am ethical to a fault and all the redundant rules in the world will not stop the unethical from doing their misdeeds. I refuse to be a sheep and you should not be one. Stand up, make your voice be heard!
Rant over!
Mr. Inquisitive. When you bring up attorneys and the like you are not comparing apples to apples. An attorney has a clock that ticks the entire time you talk with them and that determines your invoice. When paying that attorney invoice the entire 100 percent goes to that attorney’s practice. If the attorney decides he needs higher profit margins the firm can on their own start raise their hourly rates. Your payment to the attorney doesn’t go to some third party and then that third party gives the attorney their part of the pie. The same holds true for CPA’s, Real Estate firms, etc.
When a client pays a premium they are giving it to an insurance company and then that company determines how much to give us. We have no way to increase profit margins by deciding to charge a premium that is higher than the insurance company offers. Most businesses can decide on their own to charge a higher or lower profit margin.
jsjag:
Your point is well taken; however,when my client pays his insurance broker $350,000+ in annual premiums I think it is reasonable for the client to know how much in commissions the broker earns. The increased paper work is a problem-why can’t the policy show what the commission is?
By the way I have no problem with profit-sharing contingenices unless the broker moves business from one carrier to another to take advantage of a better contingency plan.
I appreciate your comments.
The same should hold true for “consultants” or insurance (risk management)advisers who have relationships with certain individuals at the big firms; larger insurance firms are often given higher recommendations over the local agent by some consultants. If I were a 350,000 premium payer I would want to know full disclosure on what other business is being conducted between my “consultant” and the bigger agency with “more clout”, including referral business. The door swings both ways. I would think RIMS would be more outspoken than they have on this issue as well…
As a consultant my only source of income is the fee paid to me by my clients.
NO conflicts of interest- this is one of the key reasons I left the brokerage business after 23+ years to consult- NO conflicts of interest.
Simply saying something with a reason why is often the politicians tool of communication. OK so you tell your $350,000 premium client what the commission is….now what? To what end will knowing change anything? You seem to be stating that somehow that makes someone or something more ethical. Is that your point? Should you disclose to that $350,000 client your person expenses, your company expenses, the insurance company expenses, what the insurance company CEO earns?
The bottom line is (always has been) the buyer either considers it a fair price, can afford the price, likes you / trusts you enough to place business with your or they don’t.
I know people that go to various places in Russia. What they tell me is sad. Russia is now a growing capitalist country with what sounds like more freedoms and less bureaucratic rules than we are in the USA. It sounds like what the USA once was in the world.
That previous post was supposed to read ……without a reason why.
This is what we get … when we set back and don’t police ourselves.
You know bid rigging has been going on for years, yet the compensation thing has nothing to do with bid riggingg.
Make the agents quoting give a comprehensive plain talk quote to the customer for every market he supposedly is quoting.
that’ll aslo stop the creeps with the big houses from “locking down” the markets so little agents can’t come in …and show them for what they are… a bunch of damn crooks.
I don’t like this, but we deserve what we’re getting.
Now do we fix it, or let the big houses continue ruining our businesses?