Bring book to large MGA as a producer

[Cindiana Jones]

Looking for some insight on a recent offer. I have small book - under $200k in commissions - property and casualty. I have been approached to bring my book and receive "increased" commissions for 3 years as an 1099 producer then move to w2. The reason for this is the book is too small for them to buy but they would like me as a producer. I would love to have access to more carriers, service and marketing support. I have no staff and cannot find anyone to replace my csr in over a year. Tried the VA route with no success. I see no growth in my current scenario and I want to continue working.

My question is if the agency is paid as a 1099 - how does the e&o, agency management etc work. I have have asked and waiting for their reply but I wanted to better anticipate the value of their offer. How does it work when you bring a book to an agency or MGA? I would like to have a ownership of the book that would equate to what they have not acquired through the installment commissions, for example after year 1 I would still own 66% of book.

 

[TechyCPCU]

Sounds like you are giving up your Independence to become an employee with a book you earned the hard way. I wouldn't do it unless you are struggling mightily.. even then you could probably sell you book... depending on the quality. As a 1099 I would wager you need to purchase your own E&O.. they probably cover when you are w2.. I do not think you will retain ownership of your book.. especially when you become a w2. The devil here is in the details... ask tough questions.. and make sure you have a lawyer involved in reviewing the terms.

 

[Central Coast Agent]

Hi Cindiana Jones,

I'm an independent agent with a small book also. When I started my agency over a decade ago, I started by signing up with a couple of MGA's as a 1099 producer. I never went W-2 and because I'm 1099 I own 100% of my book. This is the set up I still have. There are no fees, I own my own book, I get about 10-15% commission on commercial and 5-12% on Workers Comp. I've never seen a reason to go W-2. Why would I sign over my book? I think if you look out there you will find plenty of major MGA's that will simply "appoint" you with them and you get access to their markets. I write business with like 3 or 4 MGA's which allows me to pretty much cover any market. None have production quota's because again, I'm a 1099. They are happy to write the business I bring them.

Suggestion: Look at just signing up as a regular 1099 and avoid the hassle of moving your book, becoming a W-9, etc.

Best of luck,

 

[Cindiana Jones]

My overriding issue is service. I cannot get out of the service to produce.

Hi Cindiana Jones,

I'm an independent agent with a small book also. When I started my agency over a decade ago, I started by signing up with a couple of MGA's as a 1099 producer. I never went W-2 and because I'm 1099 I own 100% of my book. This is the set up I still have. There are no fees, I own my own book, I get about 10-15% commission on commercial and 5-12% on Workers Comp. I've never seen a reason to go W-2. Why would I sign over my book? I think if you look out there you will find plenty of major MGA's that will simply "appoint" you with them and you get access to their markets. I write business with like 3 or 4 MGA's which allows me to pretty much cover any market. None have production quota's because again, I'm a 1099. They are happy to write the business I bring them.

Suggestion: Look at just signing up as a regular 1099 and avoid the hassle of moving your book, becoming a W-9, etc.

Best of luck,

The decision to sell or merge has to do with service. I spend too much time on it and not enough time selling or managing. How do you service your book? Finding a CSR these days is tough.

I have access to lots of markets through MGAs but making 5-10% is a bit of a hassle with the accords and other factors when if you write directly you can earn 20%! Often MGAs are surplus lines and not competitive for the risks I am writing.

 

[Central Coast Agent]

I see. I think we might write different business. I only write commercial (GL, PL, EPL, DO, WC). So, once written there is little service until renewal, so I don't really need a CSR. I can devote a couple of hours a day to cold calling/emailing/messaging and the rest for service as needed. If you are writing personal lines like HO and Auto, I can see your point.

 

[AZDave]

Looking for some insight on a recent offer. I have small book - under $200k in commissions - property and casualty. I have been approached to bring my book and receive "increased" commissions for 3 years as an 1099 producer then move to w2. The reason for this is the book is too small for them to buy but they would like me as a producer. I would love to have access to more carriers, service and marketing support. I have no staff and cannot find anyone to replace my csr in over a year. Tried the VA route with no success. I see no growth in my current scenario and I want to continue working.

My question is if the agency is paid as a 1099 - how does the e&o, agency management etc work. I have have asked and waiting for their reply but I wanted to better anticipate the value of their offer. How does it work when you bring a book to an agency or MGA? I would like to have a ownership of the book that would equate to what they have not acquired through the installment commissions, for example after year 1 I would still own 66% of book.

I think you should seek to find a buyer of your existing book that will also offer you a producer contract for your future business. I would separate the two transactions. As a producer, the house would take care of the E&O. Personally, I would prefer a W2, but depends on the House that acquires you. This is desirable to the both parties - you get to sell and the buyer gets you to assist in the transition.

I know some agents that have sold to Assured Partners, got paid in full and continue on as W2 employees to sell. After 2 years, they get extra bonus if the book hits certain growth goals. The service part, not sure. May be worth checking into them and they seem to be national and hungry.

The service part of P&C sucks, for sure. I even pay Travelers 3 points for the 'customer care service' and I still get stuck servicing. It can bring you down quickly if your doing all the BS yourself.

I hate personal lines.....

Good Selling!

Dave