Cluster Bonuses-How Do They Work?

[Roenick27]

I know each cluster and each situation is different. Does anyone have experience with Insurance Pro Agencies? I have spoken to them a bunch of times but am not really getting the exact answer on how the bonuses work. I know there are growth bonuses (I assume by carrier) and profit sharing. Does anyone have an example that they can share (I don't care if you put real numbers, but moreso how it works)?

 

[shawnmwalker]

Bonuses are paid out all different ways. Most often a bonus or Profit share agreement is based off of a Matrix of three factors. (BUT NOT ALWAYS)

Size of Book
Profitability or LR
Growth of book.

 

[Roenick27]

Thanks Shawn. Any more insight? Im trying to project without any bonus, but, I think one of the major keys to going independent is the bonus aspect.

 

[Roenick27]

Thanks I'm trying not to assume that there will be one. It makes it tough to make money without one though.

^ Trust me...do not ever assume a bonus. Pretend they don't exist. If you get a bonus year end, well then go spend $35,000 on a class 3 factory original select fire Colt M16 & sell it to your wife as an investment.

that was my weekend.

and...if you go IA (while some groups give you profit sharing right away..) your books will be small for awhile w/ any one given carrier so your loss ratio is 1 bad accident away from .

Pretend they dont exist.

 

[Roenick27]

I wasn't factoring a large bonus but any little bit helps. But this is almost leading me to believe to just write anything and not worry about loss ratio, lol

^ I mean you won't get much year 1 anyway so it's not like that bonus should make or break you. It's typically a % of your WP which...with multiple company's...you won't have much after year 1 & that's assuming you start writing business January 1st. Sure, some company's may have a growth multiplier but it's nothing major.

This is also assuming that your group is profitable because if they aren't, it doesn't matter what you do anyway. SIAA has guaranteed bonuses w/ some core companies that are like 2% this year regardless of loss ratio.

 

[Derrick]

I wasn't factoring a large bonus but any little bit helps. But this is almost leading me to believe to just write anything and not worry about loss ratio, lol

Get appointed directly with your non standard carriers which should be pretty easy. Put all the junk on those books because they eat that stuff up, and it won't hold your standard and preferred business (and fat bonus) hostage.

 

[myfakename]

^ Trust me...do not ever assume a bonus. Pretend they don't exist. If you get a bonus year end, well then go spend $35,000 on a class 3 factory original select fire Colt M16 & sell it to your wife as an investment.

.

You can but a A1 Colt lots cheaper than that 25k or so, and some conversions for 16-18k currently.