Commercial Agent Question

[JJ8102]

I will start this by saying this is post 1 and no I'm not an agent. Im just trying to do some research on becoming a commercial Agent for an Independent company an old friend has.

1st I understand why he's approaching me with my background. I'm in outside sales in the construction equipment industry for 5 years and have done very well. Started from scratch not knowing anyone and now one of the top in sales for my company I work for. I have a long list of clients who own construction companies large and small.

I'm in the beginning stages of looking into this opportunity of becoming a commercial Agent for him. I make good $ where I'm at now $175k-$200+. But every month is a start from scratch back at 0 and that gets tiresome at times. I'm a hustler, make no doubt about it. That said just would like some feed back as to if this position first could get me to where I'm at monetarily (if so what's a good timeline to get there) and second what's some of the good/ bad of CL? Appreciate any and all feedback.

 

[JJ8102]

Shameless bump

 

[VolAgent]

Realistically, it will take a few years to get back to that income level, if ever.

A lot is going to depend on what niches you focus on in CL, what your comp plan is with his agency, what connections you already have to those niches, and what kind of premiums are typical in those areas.

Plenty of CL guys make big money, and plenty get by, and plenty more are looking for a new job in a year or two.

 

[JJ8102]

Realistically, it will take a few years to get back to that income level, if ever.

A lot is going to depend on what niches you focus on in CL, what your comp plan is with his agency, what connections you already have to those niches, and what kind of premiums are typical in those areas.

Plenty of CL guys make big money, and plenty get by, and plenty more are looking for a new job in a year or two.

From a couple of conversations it's 50% is what he told me on commish. Not sure on renewals or the finer details yet. In all honesty I'm just trying to see if this is really worth me looking into. The industry I'm in is definitely effected by economy and has been getting tougher by the year. I have improved sales every year and the last 3 years made a little less than the year before, which is the only reason I'm even looking into his proposition.

I've told him I won't take a step back in pay if it's not eveident that I can reach my current pay within a couple of years. He thinks that with a salary and commission I should be there. He asked me what it would take to get me to work there, and to think on that. After thinking about it I'm not going to negotiate with myself. He is the one who has reached out to me twice already. I have lunch with him next week, since I'm not interested in negotiating against myself I'm going to just ask him to put together his best offer. After all I don't need the job, and I'm doing well at my current career.

Obviously I think my niche would be the construction industry as I have thousands of connections in this industry. His agency can write everything from Equipment, Workers comp, to Bonding. Thanks for the response. I'm trying to just get as much info as I can to make the best decision possible

 

[VolAgent]

Obviously I think my niche would be the construction industry as I have thousands of connections in this industry. His agency can write everything from Equipment, Workers comp, to Bonding. Thanks for the response. I'm trying to just get as much info as I can to make the best decision possible

I thought that might be the case with your background and that is probably why he has been after you. Generally good premium on the larger businesses in that industry.

Were it me, I'd have him break down how much premium he thinks I could write in a month, a year, next year, etc. And then break down what you'll have to do to get there and what it will make you.

 

[EugeneM]

lol try to double dip? Get % of close or something like that - Looks like its what he really wants anyway - wether you work the lead or another agent.

 

[Markthebroker]

I am one of the few people on here that is 100% commercial p&c. Personally, I stay away from contractors because they are high maintenance, and very sensitive to the economy. As you know they do really well when things are good, and really bad when things are bad, but this shouldn't be news to you.

Normally, 30-70% new split, and 30-50% renewal split is typical for a p&c independent agent. Normally the higher your new split, the lower your renewal. Typically in commercial p&c it's going to take about 7 years until you can pay your bills if you are straight commission. At least that's what it is around here where a 1br condo is $700,000 and a starter home is $1.2mil

Personally I was in a similar situation. I was selling advertitsing for 10yrs, and I was just done. I got into commercial insurance about 7 yrs ago, and glad I did. However, be aware, most people fail.

Honestly, with the income you are making, I would keep doing what you are doing, and learn how to invest. The kind of money you are making, you should have at least a few income properties by now.

I will be very comfortable and relaxed when I get to my 40's because of good long term decisions I made in my 20's and 30's

 

[JJ8102]

I am one of the few people on here that is 100% commercial p&c. Personally, I stay away from contractors because they are high maintenance, and very sensitive to the economy. As you know they do really well when things are good, and really bad when things are bad, but this shouldn't be news to you.

Normally, 30-70% new split, and 30-50% renewal split is typical for a p&c independent agent. Normally the higher your new split, the lower your renewal. Typically in commercial p&c it's going to take about 7 years until you can pay your bills if you are straight commission. At least that's what it is around here where a 1br condo is $700,000 and a starter home is $1.2mil

Personally I was in a similar situation. I was selling advertitsing for 10yrs, and I was just done. I got into commercial insurance about 7 yrs ago, and glad I did. However, be aware, most people fail.

Honestly, with the income you are making, I would keep doing what you are doing, and learn how to invest. The kind of money you are making, you should have at least a few income properties by now.

I will be very comfortable and relaxed when I get to my 40's because of good long term decisions I made in my 20's and 30's

I've got the investment properties going. Have 1 Rental and 2 acres of commercial land recently acquired. It's in Oklahoma and the cost of living is insanely low compared to what you're describing. Hell I built a 3400 sq ft custom house 2 years ago for less than $300k and it's not a base house.

 

[EugeneM]

at the same time your contacts are valuable - Has to be a way to capitalize on that passively. There are agents that would dance on their head for those referals.

 

[Markthebroker]

Imagine your finances and career are a horse race. Currently you have a great horse that's consistently out front, far better than most horses. Let's say, in the top 4% which is probably a pretty accurate representation of your career/income.

Now, let's say some friend of yours is trying to convince you to ditch your horse, the one that is consistently winning races, with another one, which is a very finicky breed. This finicky horse has some advantages, but for the most part is a breed that consistently fails. This "finicky horse" is an accurate representation of most peoples experience with insurance, representing the 90% failure rate.

So, would you keep the winning horse you have, or ditch it for the one that is likely to fail?