Agency Producer v. Agency Owner (Poop or get off the pot)

[William76]

Thanks in advance to the friendly folk who will take time to read and respond. I'm with a very ethical agency, for which I'm beyond thankful. I work from home about 90% of the time as a sub-contract (1099) producer. Last year the agency commission on my policies was about $30k. What I'm getting for that is a little filing, maybe 25% of my quotes started for me (when they can keep a CSR), business cards, about $2 postage/month, E&O coverage, access to their carriers, the wisdom of the owner, a little help when I can afford a vacation, and a desk with a computer and phone (again, I'm almost never there).
The office is a shambles. I'm embarrassed to bring clients there, so we mostly do business by phone (primarily P&C) or at their nearest coffee house. The thing is, I know little about the back office, and having run a business in another industry that tanked in the last recession, I have no taste for owning a business again. Is $30k/year realistic for rent, office expenses, outsourced payroll/taxes, back office software, and E&O? Should I consider moving my B.O.B. elsewhere? I own it, btw.
Thanks again.

 

[NCAgent828]

Thanks in advance to the friendly folk who will take time to read and respond. I'm with a very ethical agency, for which I'm beyond thankful. I work from home about 90% of the time as a sub-contract (1099) producer. Last year the agency commission on my policies was about $30k. What I'm getting for that is a little filing, maybe 25% of my quotes started for me (when they can keep a CSR), business cards, about $2 postage/month, E&O coverage, access to their carriers, the wisdom of the owner, a little help when I can afford a vacation, and a desk with a computer and phone (again, I'm almost never there).
The office is a shambles. I'm embarrassed to bring clients there, so we mostly do business by phone (primarily P&C) or at their nearest coffee house. The thing is, I know little about the back office, and having run a business in another industry that tanked in the last recession, I have no taste for owning a business again. Is $30k/year realistic for rent, office expenses, outsourced payroll/taxes, back office software, and E&O? Should I consider moving my B.O.B. elsewhere? I own it, btw.
Thanks again.

If you do not need to make a profit sure. If you were to go out on your own then you would essentially have an increase in commissions because you would be sharing with agency. However, you will still at some point need to hire a CSR. But you can hire under you. Learning from that experience may make you a better agent. But it also may not be fitting. Tough to say.

 

[NCAgent828]

What state are you in. I may have a suggestion for an agent in that state who is not like the one you work for.

 

[NWPCDude]

30k in revenue I wouldn’t give you access to my csr. If this is a full time gig for you then you need to write more business and stop complaining. If they don’t have sufficient markets for you to be successful find a different agency.

 

[William76]

30k in revenue I wouldn’t give you access to my csr. If this is a full time gig for you then you need to write more business and stop complaining. If they don’t have sufficient markets for you to be successful find a different agency.

Thought this seemed clear, but perhaps I should've been more specific. The post isn't about what you wouldn't do for $30k. I didn't propose producing under another agent elsewhere. I wouldn't consider another agency, unless it was MY agency (see thread heading). My commission from my policies was about $48k, the agency's was about $30k, for a total of $78k. Meager to some, but doing pretty okay with the challenges I face. I'll probably do $60k (again, MY commission) this year, which probably puts the agency's commission close to $40k.

So, how realistic is it to start an agency for under $30k, so I don't take a cut from my $48k? Worth it?

 

[RichardCO]

Great Job so far, looks like you're ready to launch. So much office cost revolves around your location , labor and real estate, that you'll have to compute that based on your local knowledge. Find inexpensive location plus 1/2 day staff cost and you have your basic office, don't forget about utilities, office prep, furniture,etc. Before you do any of that research companies that offer you access to carriers and include a management system. These come in a huge variety, take your time and do deep research into their contracts. Commission and renewal scale, bonus participation, non-compete clauses and exit fees are what I consider the big points. Office and staff will change thru the years, your Insurance "aggregator" shouldn't. Do the research.

 

[William76]

Great Job so far, looks like you're ready to launch. So much office cost revolves around your location , labor and real estate, that you'll have to compute that based on your local knowledge. Find inexpensive location plus 1/2 day staff cost and you have your basic office, don't forget about utilities, office prep, furniture,etc. Before you do any of that research companies that offer you access to carriers and include a management system. These come in a huge variety, take your time and do deep research into their contracts. Commission and renewal scale, bonus participation, non-compete clauses and exit fees are what I consider the big points. Office and staff will change thru the years, your Insurance "aggregator" shouldn't. Do the research.

See? Now that's helpful. Thanks!

 

[BADTROUT]

Hello William,

SO if your total is 78K (48/30) and you "own" your book of business it looks like you have hit the point of wondering why you are giving up 40% (roughly for the math wizards out there). On a 60/40 split, you should be getting FULL back office support so I don't blame you for wanting to explore your options.

It's never as easy as it will look on paper, but it's a journey I don't believe I've heard many people say "You know, that was a huge mistake, I should have just stayed a producer working for someone else"...

If you get real with your expenses, not fall into the trap of "delusions of grandeur" thinking you need the best office or equipment to start, and if you have a little savings, you should be just fine. You will need carriers and systems etc to produce at the same level you are used to with the same carriers. That's the one part many people forget, and they just assume since they own their book, they own the carrier relationship... Make no mistake you can "own" your book of business but the relationship with the carriers is something I would do a good bit of research on before bouncing... but, you should bounce.

Use everyone who tells you that you can't as fuel to push you.

 

[NCAgent828]

You can do it for sure. Just keep this in mind...these are my expenses as a 1 yr agent. Lots of these are bargain options but they work great anyway.

Management system $70/mo
Esign conpany $20/mo
Fax service $20/mo
Office $50 (address mostly)
E and O $100/mo
Phone service $16/mo (you can opt out of)
Email $10/mo

This is not including the fees for aggregator or cluster you may have. These are bare minimum stuff here. I believe in even missing some things. Some of the split you have with an agent is actually close to what you probably would have paying for everything on your own.

 

[William76]

Badtrout and NCAgent828, that's very helpful. I may hold out one more year to save up, but I think you've confirmed my suspicion. Thank you.