Commissions

[Angio333]

I have just started studying for my P&C and have 2 questions about commissions.

How exactly is is broken down. For example, if you sale a Home Insurance Plan. The customer's premium is $85 a month or $1020 for the year (one year term). Pretend your commission is 50%.

Would the 50% commission be based upon the total premium for the term ($1020), which would be $510.?

The book does not cover anything, but the legal aspects of commissions. I made up the above numbers for the example.

My other question is what is the average range of commissions for a captive and an independent agent?

Thanks in advance.

 

[David C]

I don't know squat about the P&C business, but I'm pretty sure the commission is nowhere near 50%.

 

[tkirk97]

P&C commissions are either based on a 12 month policy or 6 month policy. Homeowners is 12 month. Also, 50% commissions do not exist try 10-18%, I am an independent agency principle and the highest contract we have is 18%.

Also being new in the business if you work for someone else expect to get paid around 40-60% of what the agency contract is. That would roughly be 5%-7%.

 

[tkirk97]

In regards to my above post I was referencing Independent agent commissions.

Not 100% sure of captive commissions but I had a couple after me and i want to say it was around 7-9% for the agency owner.

 

[Angio333]

Thanks for the info.

The agent would make about $51 in the above example for selling the policy with a 5% commission!

Wow! You would have to sell about 80 similiar policies a month to make $50,000!

 

[David C]

And would that agent have to drive out and take photos of the house? For $50-100???

But what about over time cross selling that same client with life, DI, and mutual funds.

 

[djs]

Wow, I'm glad my contract gets me paid a bit better than this!!!!
P&C is all about renewal commissions, enough $50-$100 renewal commissions a month, you have a decent living. Cross selling is key, not just to make a bit better money, but also to help with retention.

$100-$150 for a homeowners policy is about right. You do have to take pictures. If your working for an agent, that has to be split somehow.

It's not a get rich quick scheme, more like a get rich slow plan.

Dan

 

[tkirk97]

None of our agents take pictures, really all our agents do is prospect the business, we have a staff that does all of the quoting, servicing, etc. Really wants the agent gets the prospect he/she has no leg work accept selling the policy wants it is all quoted etc. Also, we pay someone else to go take pictures, our agents do nothing but sell. That is why we pay 50% of the commission to the agent which 50% of 15% is 7.5% which is similar to what most captive agents get paid and have all of their own expense, our agents have 0 expense.

 

[tkirk97]

djs, i am curious what your current contract is and how it is structured, i have consulted our compensation package with numerous other agents most of whom there book of business is upwards of 30-50 Million of premium and our compensation model is as good or better than theirs.

Also, someone posted about DI, LIfe, Etc. I addressed this in a previous post but we pay out 75% of agency FYC and renewals to the agents on that business, most all of our life contracts are between 100-125% so the minimum and agent would make on a life policy would be 75% FYC. No captive agency system would pay this amount, and once again our agents have no out of pocket expense, we cover all.