Am I getting ripped off?! Or is this commonplace?

[Catastropher]

Background info: I'm a commercial P&C producer at a small-mid sized independent agency. It almost exclusively focuses on commercial lines, but we do offer personal lines (home & auto) to our business owner clients. I've been there 5+ years and have built a decent sized book of business ($350+k) consisting of mid-sized (regional) businesses. Until recently, I have had a pretty good relationship with my boss - who's also the agency's sole owner.

Situation: I closed a large deal consisting of Key-man (30 yr term) and Disability Income with astronomical limits for one of my largest clients earlier this year. The commissions, needless to say were substantial - like more than a whole years' normal salary-type substantial.

This was my first non-P&C deal and didn't know exactly how much the commissions were going to be for until after it closed as the limits kept needing to be raised to satisfy a bank req. I know, this was my bad for not asking - but I'm more of a get-the-deal-done and ask questions later type of guy. I've learned.

Although we went through a broker, it was my first time selling a life/DI policy, so I brought my boss in on it - thinking it'd help get it done. I was told the commissions were going to be split 50/50. However, when it came to pay me my split - I only received 25% and was told it was 50/50 after the agency received its cut (50%).

The issue: I'm being told that, although the agency received its cut - the deal will not count towards my production quota/goals/bonuses because it isn't a P&C commercial policy and doesn't renew.

The commissions on this deal alone represent more than 1/4 of the whole agency's yearly production goal (we have 6 other producers). The revenue generated on this deal are close to double my yearly quota and would qualify me for a nice yearly bonus. Without being given credit on the deal - I not only miss out on my bonus, but will also be penalized 5% of my renewal commissions next year for falling short of quota.

I've tried to reason with my boss by requesting that if I won't be given production credit then the agency shouldn't take a cut. Conversely, if the agency gets a cut then I should be given production credit. I was flatly rejected.

I don't know many other agents who do what I do and don't really know who else to ask. It feels like I'm getting f-@cked. I feel like I'm being robbed.

Am I crazy for thinking this way, or is this commonplace? I don't know what to do and I'd hate to lose my book (have a 2 yr non-compete agreement) and have to start all over somewhere else. This whole situation is really eating me up.

Any insights will be much appreciated.

 

[fed up]

It seems no different than if one of your customers dropped a huge annuity on you. It would not count to production but you still get to spend the commission it generated. You should have been advised about how it would be factored prior to the close and issue, that way no surprises. Work hard to close enough business by year end and have a good start for next year.

 

[benneaf]

Wow...that sucks. While as the other poster says it may be something you walked into I don't see that it really matters. All of us have small and large deals that just come to us through referrals or an existing client that says, "hey can you help with xyz."

The owner of the place gets to make the rules and most owners don't put stuff like that to pen and paper...so they can change it at their whim.

At any point in your career you have to look at what is best for you. Is being a member of this firm actually doing anything for you at this point in your career? If you left how long would it take you to build up your income? Do you have a non-compete? Or is life pretty good there with this one exception? If it's pretty good then it's pretty good. Bad shit happens everywhere...even if you are out on your own.

 

[adjusterjack]

Am I crazy for thinking this way, or is this commonplace? I don't know what to do and I'd hate to lose my book (have a 2 yr non-compete agreement) and have to start all over somewhere else. This whole situation is really eating me up.

Do you have a contract with other terms besides the non-compete?

If so you might want to have it reviewed by an attorney.

 

[scagnt83]

A 25% cut (of total agent comp) is pretty standard for Captive P&C agents from what Ive seen.

If you dont have a written comp agreement then you should ask for one. Any decent agency will have a written contract showing what comp is.

At the end of the day you are an employee. Your income will always be limited in that situation, no matter what product line you sell. Do you think the agency is not taking the same off the top from your P&C sales? I guarantee you they are. But they are also likely picking up a substantial amount of your overhead. And possibly funneling clients/leads/etc to you?? Those costs are a good bit more than you might think, especially if they are giving you office space for free or reduced amount.


Give up on the whole production credit thing. You signed up to do P&C as your main thing, thats what is expected of you. P&C agencies survive on renewals from P&C sales. They are also required to hit certain production requirements to keep those P&C contracts active... that is why you get production credit on P&C sales and not life/health.... because there is more to the P&C production for an agency than just the comp. I get your side of things, and it does show who your boss really is as a person, but you agreed to the contract... and its the norm for P&C industry in my experience. (im a life agent, but Ive worked with and interacted with lots of P&C guys over the years)


What you didnt mention is who got the other 25%. The broker you mentioned?? Is this just an agent? Or an actual Agency/IMO that facilitated the contracting and backroom paperwork?

Or are you saying your boss got the other 25% after the/his agency got 50%? If this is the case, then he should have done the same amount of work you did to close the sale... or played some vital part in making sure the sale closed. Im not talking about getting the case issued/approved, Im talking about sales process. There is very little for an agent to do on the life/di side to get a case approved... and having your boss in on the deal certainly did nothing on the UW side of things. So if that was the intent, then lesson learned on your part.


But it is totally normal for the P&C agency to take a 40%-50% cut right off the top of non P&C sales when that agency is not an agency for life/di. And it is common for that production not to count towards production quotas/credits/etc.


If you dont have a non-compete for life/di, stop involving your P&C agency and you will quadrupole your income from those sales.

 

[Markthebroker]

I know, this was my bad for not asking

Correct.

It feels like I'm getting f-@cked. I feel like I'm being robbed.

Probably also correct.

I've been there 5+ years and have built a decent sized book of business ($350+k) consisting of mid-sized (regional) businesses. Until recently, I have had a pretty good relationship with my boss - who's also the agency's sole owner.

Ok, so this may have a lot to do with it. If your book is commercial p&c, and it's $350k, that's not too good. You should be at least double that. You may be on friendly terms with the boss, but if those are your numbers, your relationship may not be as great as you think, and may have a lot more to do with why this happened. This may have a lot to do with why you didn't get the $$ on this deal. If your numbers were closer to $1mil, there is a lot better chance this would have gone differently. I know this isn't what you wanted to hear.