‘In their efforts to capture new business, “they’ve got to pay more in commissions.”’ Commissions have been going down for years, remember the days of 15% and over? Not happening now as I suspect the large brokerage firms can demand such, but the small independent agent forget it! This is why you can’t keep young talented agents in the business as it is no longer worth it having to broker everything at 7% or less share of commission. The become discouraged by the horrendous rate of return and then at 7% have to split with the agency, barely get you gas expense paid.
jestr, I think you must not have a good lineup of companies to work with. Is it just Excess/Surplus Lines business you have. Any standard market will pay 15% on many lines of business.
This article points out that the Captive Companies that use exclusive agents will be hurting. Independents that know what they are doing will benefit.
If the agency owner invests in becoming a member of some sort of agency aggregator, such as a cluster, network or alliance then they would reap the benefits of a large agency with higher commissions. Sure they have to pay a small percentage of their commissions or a flat monthly fee to these groups, but keep in mind large agencies pay salaries for executive to manage their carrier relations. Also an small agency cannot get all the appointments on their own as well as profit sharing. Becoming a part of a group is a strategic decision that delivers an ROI for nearly every established agencies that joins a group because of being able to place more business and the profit sharing factor. Also if agencies want to play are guarantee their relevance, they need to start being professionals and not quoting engines. An agent has no value to the consumer and no long term relationship can transpire from a sale that was sold on price., This is already available on the internet and agents make themselves a commodity.
Why is everyone so focused on commissions? There are two ways an agent can receive compensation. Commissions or a fee for services. When I would negotiate with an agent, on behalf of a client, I required that they disclose what their commission would be. I also required that they disclose any other income that they might receive. I never asked about “profit sharing” because I knew that was a shell game controlled by the carrier. But if there was a TPA or other third party involved, the agent was probably expecting some compensation. I would then ask what flat fee they would be happy with. Then the negotiations would start. Agents that charge a flat fee have an advantage over the commission agents. They are viewed as more professional. Their advice is not tainted by that nagging thought, is he/she saying I need this because of the commission. And just forget the rebating comments. The agent is selling the coverage at net, and receiving a fee. Legal in Texas. In some circumstances, the agent can get a commission and a fee, but they better disclose everything to the client. Professionals, of all types, base their services on a fee. CPA’s, attorneys, Doctors etc. But, I have friends that have successfully told a client that the commission amount is not enough. They would offer billing the client at net for the coverage, and a separate fee. Worked more often than I would have thought. Act like a professional whose knowledge is worth something, and you’ll be treated like a professional.
‘In their efforts to capture new business, “they’ve got to pay more in commissions.”’ Commissions have been going down for years, remember the days of 15% and over? Not happening now as I suspect the large brokerage firms can demand such, but the small independent agent forget it! This is why you can’t keep young talented agents in the business as it is no longer worth it having to broker everything at 7% or less share of commission. The become discouraged by the horrendous rate of return and then at 7% have to split with the agency, barely get you gas expense paid.
jestr, I think you must not have a good lineup of companies to work with. Is it just Excess/Surplus Lines business you have. Any standard market will pay 15% on many lines of business.
This article points out that the Captive Companies that use exclusive agents will be hurting. Independents that know what they are doing will benefit.
If the agency owner invests in becoming a member of some sort of agency aggregator, such as a cluster, network or alliance then they would reap the benefits of a large agency with higher commissions. Sure they have to pay a small percentage of their commissions or a flat monthly fee to these groups, but keep in mind large agencies pay salaries for executive to manage their carrier relations. Also an small agency cannot get all the appointments on their own as well as profit sharing. Becoming a part of a group is a strategic decision that delivers an ROI for nearly every established agencies that joins a group because of being able to place more business and the profit sharing factor. Also if agencies want to play are guarantee their relevance, they need to start being professionals and not quoting engines. An agent has no value to the consumer and no long term relationship can transpire from a sale that was sold on price., This is already available on the internet and agents make themselves a commodity.
Why is everyone so focused on commissions? There are two ways an agent can receive compensation. Commissions or a fee for services. When I would negotiate with an agent, on behalf of a client, I required that they disclose what their commission would be. I also required that they disclose any other income that they might receive. I never asked about “profit sharing” because I knew that was a shell game controlled by the carrier. But if there was a TPA or other third party involved, the agent was probably expecting some compensation. I would then ask what flat fee they would be happy with. Then the negotiations would start. Agents that charge a flat fee have an advantage over the commission agents. They are viewed as more professional. Their advice is not tainted by that nagging thought, is he/she saying I need this because of the commission. And just forget the rebating comments. The agent is selling the coverage at net, and receiving a fee. Legal in Texas. In some circumstances, the agent can get a commission and a fee, but they better disclose everything to the client. Professionals, of all types, base their services on a fee. CPA’s, attorneys, Doctors etc. But, I have friends that have successfully told a client that the commission amount is not enough. They would offer billing the client at net for the coverage, and a separate fee. Worked more often than I would have thought. Act like a professional whose knowledge is worth something, and you’ll be treated like a professional.