Commission Split Question

[agentinsouth]

Hey Guys, Needed your input here. I am newly licensed with my P & C license and looking for an agency here in South Florida. The main product I want to offer is property insurance. I have an offer to work with my buddy at Allstate with a commission split of 50/50. I would be finding, quoting and doing all work for these clients. Is this a common deal in the industry or is he being greedy. Thanks,

50% is fair. He is bring to the table the time to teach you, a good carrier, E&O, and he has to keep the lights on. These guys talking about 70% don't have to pay the bills or worry about time management.

 

[cottonland]

^^^^^^^Exactly^^^^^^^

 

[Evan]

Not working or need to work in an office. E&O is $300 a month for agency with or without me.

 

[indienoise]

Regardless of the monthly e&o cost (which sounds atrocious, by the way), bringing on a new producer greatly increases the risk of an e&o claim, simply because of inexperience. Plus, if he is doing it right, he will be spending plenty of time teaching you, answering questions, walking you through processes, etc. Not to sound condescending, but with no experience you will also likely write some bad business, incorrectly rated, or other little things that will suck up staff time and cause a hit to loss ratio. Meanwhile, if you produce any significant amount of business, now additional staff hours are required to service the book, if you are to continue producing. Meanwhile, his fixed costs may increase due to your software or systems, if he provides any leads, or gives you a marketing budget.
Now, if I were to take a chance on a brand new producer, I would certainly be willing to increase their split upon hitting volume and profitability goals.

 

[Schwetty]

does the 50/50 split include renewals?

 

[PhilL]

Hey Guys,

Needed your input here. I am newly licensed with my P & C license and looking for an agency here in South Florida. The main product I want to offer is property insurance.

I have an offer to work with my buddy at Allstate with a commission split of 50/50. I would be finding, quoting and doing all work for these clients. Is this a common deal in the industry or is he being greedy.

Thanks,

Evan, Are you going to have clear ownership of the book of business that you develop through this relationship? From day-one or incrementally owned based on a vesting arrangement? You need to take this into account also.

 

[NEWEN]

I understand that worrying about the commission split is important, but since you're dealing w/ Allstate, a non-compete agreement will take place and that's where you don't wanna be, especially if down the road you're making a killing and realize you could do a lot more being an indie/agency owner. Just careful!

Dan.

 

[Tiesto422]

That doesn't seem like you'll be able to put food on the table, but if you focus on learning and getting better it could work if your finances are in order.

 

[Kingstoninsuran]

Hey Guys,

Needed your input here. I am newly licensed with my P & C license and looking for an agency here in South Florida. The main product I want to offer is property insurance.

I have an offer to work with my buddy at Allstate with a commission split of 50/50. I would be finding, quoting and doing all work for these clients. Is this a common deal in the industry or is he being greedy.

Thanks,

50/50 is fine for new business however you should be getting a higher commission when renewals come up as long as you are servicing the client and do the renewal. Maybe and 80/20 or 90/10 on renewals. Otherwise it will be impossible to make any money long term.

 

[indienoise]

50/50 is fine for new business however you should be getting a higher commission when renewals come up as long as you are servicing the client and do the renewal. Maybe and 80/20 or 90/10 on renewals. Otherwise it will be impossible to make any money long term.

I've got to strongly disagree here, especially in this case. It sounds like the OP is going to be working outside the agent's office. Policy documents sent to the insured will not have the OP's cell number on them, it will have the agency #. Service is going to fall on the agent's staff. If anything, I would offer a higher split to a good producer on FYC, and less on renewals. But for starting out, 50/50 is plenty fair. And if he is getting 50% on renewals, that is a good deal.