Captive Agency Life Commission

[Roll_Tide]

Hey everyone! I’m needing some help to come up with a comp plan for my agency. I own a captive multi-lines agency and to get higher P&C commission, we need more life production. Our life commission is tiered based on 24 month persistency and growth. Average commission on our life is 45-50%. It can go higher depending on growth, but right now I’m in the 45-50% range. I’m fine with breaking even since it will help me get anywhere from 1-3% extra on my P&C side.

Term, whole life, IUL on company paper. FE, Gerber, UL, disability, and LTC with our brokerage (my agency receives 75% of street level on these products).

I’m thinking draw against commission with 5% less that agency receives to producer with an additional $50 per “paid” app if on company paper (If I’m at 50% paid to agency, producer would get 45% plus $50). 75% of what agency receives if brokered. My agency pays for group life, dental, vision, LTD, and STD for staff. Will also be setting up a SIMPLE IRA in the near future.

Thoughts?

 

[myinsurebiz]

Hey everyone! I’m needing some help to come up with a comp plan for my agency. I own a captive multi-lines agency and to get higher P&C commission, we need more life production. Our life commission is tiered based on 24 month persistency and growth. Average commission on our life is 45-50%. It can go higher depending on growth, but right now I’m in the 45-50% range. I’m fine with breaking even since it will help me get anywhere from 1-3% extra on my P&C side.

Term, whole life, IUL on company paper. FE, Gerber, UL, disability, and LTC with our brokerage (my agency receives 75% of street level on these products).

I’m thinking draw against commission with 5% less that agency receives to producer with an additional $50 per “paid” app if on company paper (If I’m at 50% paid to agency, producer would get 45% plus $50). 75% of what agency receives if brokered. My agency pays for group life, dental, vision, LTD, and STD for staff. Will also be setting up a SIMPLE IRA in the near future.

Thoughts?

Why work for less? You can get over 120% commission on Life products.

 

[Roll_Tide]

Why work for less? You can get over 120% commission on Life products.

Most multi-lines captives agencies make in this range. I can make up to 80% but new business has to be $100k+ growth in the past 12 months.

I mostly deal with AG and commercial insurance. Not much life as I struggle myself to sell it.

 

[DHK]

Commissions without training and mentality behind the sale... is worthless.

While compensation does drive behavior, if you are struggling with these sales, how can you lead your team and integrate life sales into their processes?

This is Van Mueller, one of the top life agents in the US. This is a 6-year old video that has timeless principles (but you'll need to adjust the tax rates, etc.). You may find it useful.

 

[myinsurebiz]

Most multi-lines captives agencies make in this range. I can make up to 80% but new business has to be $100k+ growth in the past 12 months.

I mostly deal with AG and commercial insurance. Not much life as I struggle myself to sell it.

Refer it out . . .

 

[Roll_Tide]

Refer it out . . .

$1.3m P&C book of business. 2% bump on my P&C commission for just getting more life growth is an extra $26k in commission. (Just $35k in additional life premium growth). Gotta have life to make more and if I don’t sell life (refer it out) then my contract gets terminated.

Commissions without training and mentality behind the sale... is worthless.

While compensation does drive behavior, if you are struggling with these sales, how can you lead your team and integrate life sales into their processes?

This is Van Mueller, one of the top life agents in the US. This is a 6-year old video that has timeless principles (but you'll need to adjust the tax rates, etc.). You may find it useful.

DHK, thank you for this! I appreciate the video. I will watch it in a moment.

I shouldn’t say “struggle”. More of not enough time to focus on it. I mostly focus on farm and commercial lines. The premiums are higher as well as higher retention versus personal lines. Our commission being tied to growth is new for the company.

I’m averaging $20k in life premium a year from cross selling new and existing clients. Plus annuity sales.

 

[DonP]

$1.3m P&C book of business. 2% bump on my P&C commission for just getting more life growth is an extra $26k in commission. (Just $35k in additional life premium growth). Gotta have life to make more and if I don’t sell life (refer it out) then my contract gets terminated.


DHK, thank you for this! I appreciate the video. I will watch it in a moment.

I shouldn’t say “struggle”. More of not enough time to focus on it. I mostly focus on farm and commercial lines. The premiums are higher as well as higher retention versus personal lines. Our commission being tied to growth is new for the company.

I’m averaging $20k in life premium a year from cross selling new and existing clients. Plus annuity sales.

I think what you’re saying is you can’t get your own independent life contracts . It seems you have captive p&c and have to do your life sales with the agency ? I guess 45% is doable as long as your giving them warm type leads . Sure the agent can cross sell your book but he’ll more than that to make a living . No 1/2 good selling agent is going to work for less than $50 k net a yr .

 

[LostDollar]

Commissions without training and mentality behind the sale... is worthless.

While compensation does drive behavior, if you are struggling with these sales, how can you lead your team and integrate life sales into their processes?

This is Van Mueller, one of the top life agents in the US. This is a 6-year old video that has timeless principles (but you'll need to adjust the tax rates, etc.). You may find it useful.

I listened to the first 20-30 mins of this.

Re certainty: aren't insurance companies just as dependent upon the stability of the financial system as the rest of us?

 

[DHK]

Re certainty: aren't insurance companies just as dependent upon the stability of the financial system as the rest of us?

Life insurance companies provide much of the stability needed for the financial system as well as for consumers.

BOLI (Bank Owned Life Insurance) is one such evidence of this as banks utilize cash value life insurance as a Tier-1 asset class.

The way that insurance companies structure themselves and policy pricing is based on actuarial tables to ensure that they can pay claims in a timely manner. They are 100% legal reserve companies (as opposed to banks being fractional reserve companies).

Yes, life insurance companies are dependent on the overall investment portfolio long-term, but they don't invest the way consumers do. They're investing as an institution with the lifespan of the institution in mind (ie. never dying) as opposed to us as consumers who invest per our life-cycle and lifespan.

One other aspect is credit ratings. Once the S&P lowered the credit rating of the United States, it also affected the ratings of every insurance company domiciled in the country. Why? You can't have a higher rating than the country you're in. That's why there are NO 'AAA' rated companies anymore.

The insurance industry does a LOT for the investment back into the overall economy.

Life Insurers Fact Book

www.acli.com