Commercial Producer Compensation/Salary

[dndmn92010]

I am currently an Accounts Manager for a top tier brokerage company, but I am possibly looking into pursuing a career in a Commercial Producer position. If I may ask, How much can a Commercial Producer make (salary and commission) in their first year and potentially in their first couple of years?

 

[alcs1120]

If you are working for a big broker firm then you should know that there is no salary, its a draw and it usually starts at 40-50K per year again you will have to produce 40 to 50K to start hitting commissions at a 40% new business and 25% Renewals. with that said your second year usually your target will be 1.5 your draw so in this case your book and new sells have to be 60 or 75K to start hitting commission, third year will 2 times your draw, so between your renewal book and new sales will have to have more than 80-100 to start making commission, and your fourth year you will be straight commission so your book at that point needs to be at 200K x 255 = to make 50k per year

 

[Todd Preston]

If you are working for a big broker firm then you should know that there is no salary, its a draw and it usually starts at 40-50K per year again you will have to produce 40 to 50K to start hitting commissions at a 40% new business and 25% Renewals. with that said your second year usually your target will be 1.5 your draw so in this case your book and new sells have to be 60 or 75K to start hitting commission, third year will 2 times your draw, so between your renewal book and new sales will have to have more than 80-100 to start making commission, and your fourth year you will be straight commission so your book at that point needs to be at 200K x 255 = to make 50k per year

1. 25% on renewals?
2. What type of insurance are we talking about....WC, PC for comm., ?

 

[alcs1120]

1. 25% on renewals?
2. What type of insurance are we talking about....WC, PC for comm., ?

Please don't confuse the % of commission on a policy with the split of commission paid by an agency... they are 2 different things

 

[TonyC]

Please don't confuse the % of commission on a policy with the split of commission paid by an agency... they are 2 different things

Good thread.
25% would be the agents cut....correct?
Can you give us an example?

 

[alcs1120]

Good thread.
25% would be the agents cut....correct?
Can you give us an example?

Sure:

* Renewals 2nd year and every year there after( 25% ) Split
* New Business Only the 1st year ( 40% ) Split

Example if you have a 200K book and you sell 80K of new business you will earn 25% of 200K and 40% of 80K= 82k total income

Now if you have a draw as I explain to you earlier it will be different...

as a good a example lets stick to a 40K draw

First Year: your target to start making commission will be 40k, so anything that you sell over 40K you will earn a 40% split ( example: if you sell 90K- draw 40= 50k@40%= 20k) so you that year will earn 40k of your draw and 20K of commissions

Second year usually your target as a draw is 1x1.50 so in this case for you to start makin commission you will have to sell or renew 60k in commissions to start making the 40% split. ( Following the example above you are now renewing 90k so 90k - 60K= 30K@40% split you are making 12K on commission all ready plus your draw @ 40K, Plus what ever your sell of new business that year...

Third year your target hit will be 2xtimes your draw so it will be 80K and you can follow the math just like the one on the second year

 

[AZDave]

Sure:

Now if you have a draw as I explain to you earlier it will be different...

as a good a example lets stick to a 40K draw

First Year: your target to start making commission will be 40k, so anything that you sell over 40K you will earn a 40% split ( example: if you sell 90K- draw 40= 50k@40%= 20k) so you that year will earn 40k of your draw and 20K of commissions

Second year usually your target as a draw is 1x1.50 so in this case for you to start makin commission you will have to sell or renew 60k in commissions to start making the 40% split. ( Following the example above you are now renewing 90k so 90k - 60K= 30K@40% split you are making 12K on commission all ready plus your draw @ 40K, Plus what ever your sell of new business that year...

Third year your target hit will be 2xtimes your draw so it will be 80K and you can follow the math just like the one on the second year

Seems 60K to 80K premium per month to sustain that draw? Is this a reasonable premium requirement for a new producer?
Maybe my numbers are off.

Just curious. Thanks,

 

[VolAgent]

Seems 60K to 80K premium per month to sustain that draw? Is this a reasonable premium requirement for a new producer?
Maybe my numbers are off.

Just curious. Thanks,

It depends on what waters you are fishing in. Some agencies won't pay commission on small accounts, 10k, even 50k. So that might just be one account. Of course, they are also going to have to carry the agent for awhile so he can start landing those accounts.

I was told this by a friend who use to work for a regional firm. I forgot what the cutoff what where they wouldn't pay commission, it was a decent sized account. Really, he was only supposed to be targeting accounts in excess of 50k premium.

 

[TonyC]

It depends on what waters you are fishing in. Some agencies won't pay commission on small accounts, 10k, even 50k. So that might just be one account. Of course, they are also going to have to carry the agent for awhile so he can start landing those accounts.

I was told this by a friend who use to work for a regional firm. I forgot what the cutoff what where they wouldn't pay commission, it was a decent sized account. Really, he was only supposed to be targeting accounts in excess of 50k premium.

Jeez...so i guess he was discouraged to even TALK to anyone who needed a policy that was under 50k. A lot of bread and butter left on the table...

 

[VolAgent]

Jeez...so i guess he was discouraged to even TALK to anyone who needed a policy that was under 50k. A lot of bread and butter left on the table...

It just wasn't what the agency was about. They knew where they wanted to be in the market and were focused on it. From what I understand, they did very well with multiple offices across several states.

Just to give you an idea how focused they were.

He was working in an area with a lot of motels and tourist attractions. Somehow he and his manager talked to a carrier that would be perfect for his market. A VP came in and squashed it like a bug. The carrier was going to be expecting so much production as they knew of the agency and its size. He didn't have a snowball's chance of even touching that amount of premium.