Commercial Producer Comp

[MRay]

I am considering a transition to commercial insurance and wanted to clarify how commercial lines producer receive compensation.
The Producers commission percentages can obviously vary from 10% to lets say 50% depending on a few variables, but lets just use 25% for example purposes.
Is the 25% commission, the percentage of the clients annual premium or a percentage of what the Agency is being paid by the insurance company?
Ex:
A) $10,000 annual premium x 25% commission = $2500 paid to the Producer or is it
B) $10,000 annual premium x 15% Agency commission = $1500 x 25% commission = $375 paid to the Producer

 

[fed up]

You might want to check your commission percentages

 

[MRay]

If its neither A or B can you please explain the way a commercial producer is compensated?

 

[fed up]

If you are working for an agency it might get 10-20% and you would get whatever your contract stipulates, perhaps 10% of that. If you are out on your own your agency gets the full commission and you pay bills before you pay yourself. Truckers used to say 1/3,1/3,1/3. A third for the driver, a third for the truck, and a third for the owner

 

[Markthebroker]

I am a commercial only p&c agent.

It's option B.

 

[MRay]

Thanks a bunch thats helps tremendously!
I would be going after small to medium businesses working with an Agency. Can you give me a general range of what the annual premiums are for small businesses and for medium businesses?

 

[fed up]

What is your background in commercial? How many clients on the P&C side do you have that also need commercial coverage? Do you have a great mentor for commercial?

 

[MRay]

I am new to commercial with no clients to call on. I would have a mentor if I decided to make the transition?

 

[fed up]

There is so much to learn with commercial vs personal. Go work for someone who can help you learn and avoid the missteps that so many new agents are prone to make. The company you appoint with for commercial may not do workers comp, they may not do the size that you need or the risk that you need covered. You make a great connection but their policy doesn't renew for 8 months and the prorated premium isn't worth the added increase to the business. Corona has thrown a real wrench into commercial right now as well

 

[fed up]

I am not attempting to knock down your enthusiasm for the commercial business but let's take a look at the easiest connection you might have. You have a landscaper/lawn service who is also your next door neighbor. He says he will give you your first policy. He has 3 employees, a trailer , and 1 vehicle to tow the gear around. He tells you that the truck is on his personal lines policy and therefore the trailer is covered so long as it is attached to the truck from a liability standpoint.
You look at his current policy and copy it with a lower premium and he thinks the world of you. You don't look for a commercial auto policy because he said it was covered under his personal policy. He calls you on a Saturday morning to say that his trailer broke free of the truck Friday afternoon and injured one of the employees and he needs to file a claim. He thinks it may have also damaged some of the equipment

You find out that the personal lines policy won't cover the loss because he tells the claims department that his lawn service trailer was involved. You did not write the trailer, the equipment, the truck on a commercial auto policy so there is no coverage. You find out that he should have had a workers comp policy because the state where the business is registered requires ALL businesses, no matter how small, to carry WC. How screwed are YOU?