Common Contract for P & C

[jerrykramer64fan]

Hi everybody, it's been a while since I have posted and I am sorry I have been absent. I am in the process of obtaining my p & c license.

Right now and for the last 9 years, I have had my health, life, accident license. Although I am doing well in that area, many of my customers have been asking me to insure them with all of their insurances. I also have been passing leads to other P&C agents and making nothing in return. I'm pulling the trigger on this.

whether or not it's a good idea is another debate, but here is my present question. I have searched this site a little and must not be hitting the right key words.

What is a common and fair contract for newbies in p&c? It's my understanding that the commissions on the various products run from 13% to 20%. From what I have seen so far, first year commission splits are 60% agent and 40% agency, then that flip flops for all renewal years. It seems that most of the agencies will pay for your E&O (2-3k) and all of the infrastucture. This sounds like a rip, but I know nothing. I found a 65%/35% and 100% vesting after 10years with a small company that is looking to expand from the northern part of WI to the southern.
Any help/advice would be appreciated. I'm located in SE wisconsin, so if you know of any reputable agencies that I could look into, that would be great.

 

[FL P&C Broker]

Why do you think 60/40 and 40/60 is a rip?

Take a look at the expenses: office space, E&O, internet, phones, marketing, CSR salary, etc.

 

[jerrykramer64fan]

As I said, " I don't know nothing". With my health commissions, if the commission is 20%, I get 20%. Not my ga gets 40% of my 20%. He might get an override, but it's not money out of my pocket. So GA's at P&C agencies make no overrides, or is their spilt the 40%.

E&O- understood, but if an agent sells at all, this is made back.

Office space- I work out of my home and would keep it that way for now. Yes, company csr's have office space so some cost there.

I pay my office and internet costs.

I pay for my marketing, but I do understand that the GA has costs that need to be spread out.

CSR salaries- yes, I do agree that this is a major cost for the agency- but depending on the size of the agency, and how many CSR's (usually not enough, I know, I was a CSR).this cost is spread out.

Like I said, this is very different from what I am used to. In health, the GA is making 5% or so off of my sales. This covers his costs (and some) for the admin work required out of his office. If P&C GA's get no such override, then yes, they must cover their costs another way. Since I don't know how much "service" is required in the P&C industry, I don't know exactlly the value of it compared to the health and life industry.

If the P&C agency is supplying decent leads, then I can understand paying out for their marketing costs.

All input is appreciated.

 

[FL P&C Broker]

Are you talking about just becoming a producer at an existing agency or starting your own agency? The set up for P&C is different than L&H. Some P&C companies do use GAs but not in the way you are thinking. 60/40 is more than fair for a producer, but sucks if you are starting your own agency and absorbing the costs.

 

[Bertolinoins]

60% new and 40% renewal is a very fair deal. There is a lot of overhead involved in training and managing a new producer and green agents suck up resources (csr's time) . Owners are unwilling to take on the risk and the hassle to make 10% per year off of a part time guy dabbling in P&C. Guys like this are my worst nightmare because they take a ton of time and you end up making $5000 per year off of them... then they split as soon as they have any volume at all.

 

[mcampbell220]

I need help. I am new producer negotiating a contract. It has been a 1 year and 3 months (including training and licensing) and I have produced $450,000 in premium. I am 6th in the nation for the company I represent. I insure religious organizations solely. I receieved $30,000 salary no benefits no perks except for a laptop and the software needed to put a quote together. Below is what I want. Is it too much to ask?


I want:
· 50% commissions on new sales
· 50% commissions on renewing sales
· 70% commission on Health and Life Policies for new and renewal business.
· The first right purchase my book of business.
· A statement acknowledging that no party other than the agency owner's spouse will take control of the agency unless purchased/earned in same manner that is expected of me.
· A vesting clause that states that when my book of business reaches 1.2 million. I will have a vesting option of one and a half years of commission, to be distributed in four payments over the course of 3 years if we were to part ways.
· The ability to use my vesting option as a down payment towards the purchase of my book of business. Ownership of the individual account will remain in your procession until my book of business is paid in full. Meaning I will own a portion of all of the book , but if for some reason we go our own ways you will remain sole owner of all accounts, but the money I have put down towards purchasing my book will be reimbursed to me.
· My gas and business expenses to be subsidized by you until my two year validation period is over. When I change over to commissions I DO NOT want any of my expenses paid for me. I would rather negotiate a stronger commission split than having perks.
· If the agency is to receive a contingency bonus at the end of the year, I would like some part of that based on the percent of commissions that I have brought into the company.
· I would like 3 weeks of vacation a year
· I would like 2 weeks of sick/personal leave a year
· I would NOT need medical, dental, or vision insurance
· I do NOT want an office space provided for me.
· I will pay for all of my own licensing fees, dues, membership fees.
· Monthly or bi-month salary
· A thirty days notice of the termination of this contract on both your side and mine
· I would like to maintain my laptop but from the point I am put on a commission structure I will take full reasonability for repairs, replacements, and upgrades. If a new lap top is needed at some point, I will replace it and return the current lap top to you.
· An option for a 401k package
· I will like the continued use of clerical assistance (CSR) and computer software (QQ, ISO, APEX).
What I will give
· I will pay for my E&O insurance after my validation period is over assuming we are able to make a 50/50 contract
· I will pay for all my own expenses when taking business trips to corporate or any other business related trip.
· I will sign a non-compete contract stating that I will not work for another religious insurance company in the state of --- for two years of my employment termination with the agency
· I will sign a contract of your making that outlines the practices and ethics of this company with terms of termination, to be updated annually, or as you see fit.
· I will take full responsibility for any E&O claims including the deductible.
· I will maintain or oversee the maintenance of accounts that I sell.
· I will assist in the training and support of a new agent for a percentage of his/her commissions.

 

[Pangaea]

What an interesting name ^^

 

[Bertolinoins]

I need help. I am new producer negotiating a contract. It has been a 1 year and 3 months (including training and licensing) and I have produced $450,000 in premium. I am 6th in the nation for the company I represent. I insure religious organizations solely. I receieved $30,000 salary no benefits no perks except for a laptop and the software needed to put a quote together. Below is what I want. Is it too much to ask?


I want:
· 50% commissions on new sales
· 50% commissions on renewing sales
· 70% commission on Health and Life Policies for new and renewal business.
· The first right purchase my book of business.
· A statement acknowledging that no party other than the agency owner's spouse will take control of the agency unless purchased/earned in same manner that is expected of me.
· A vesting clause that states that when my book of business reaches 1.2 million. I will have a vesting option of one and a half years of commission, to be distributed in four payments over the course of 3 years if we were to part ways.
· The ability to use my vesting option as a down payment towards the purchase of my book of business. Ownership of the individual account will remain in your procession until my book of business is paid in full. Meaning I will own a portion of all of the book , but if for some reason we go our own ways you will remain sole owner of all accounts, but the money I have put down towards purchasing my book will be reimbursed to me.
· My gas and business expenses to be subsidized by you until my two year validation period is over. When I change over to commissions I DO NOT want any of my expenses paid for me. I would rather negotiate a stronger commission split than having perks.
· If the agency is to receive a contingency bonus at the end of the year, I would like some part of that based on the percent of commissions that I have brought into the company.
· I would like 3 weeks of vacation a year
· I would like 2 weeks of sick/personal leave a year
· I would NOT need medical, dental, or vision insurance
· I do NOT want an office space provided for me.
· I will pay for all of my own licensing fees, dues, membership fees.
· Monthly or bi-month salary
· A thirty days notice of the termination of this contract on both your side and mine
· I would like to maintain my laptop but from the point I am put on a commission structure I will take full reasonability for repairs, replacements, and upgrades. If a new lap top is needed at some point, I will replace it and return the current lap top to you.
· An option for a 401k package
· I will like the continued use of clerical assistance (CSR) and computer software (QQ, ISO, APEX).
What I will give
· I will pay for my E&O insurance after my validation period is over assuming we are able to make a 50/50 contract
· I will pay for all my own expenses when taking business trips to corporate or any other business related trip.
· I will sign a non-compete contract stating that I will not work for another religious insurance company in the state of --- for two years of my employment termination with the agency
· I will sign a contract of your making that outlines the practices and ethics of this company with terms of termination, to be updated annually, or as you see fit.
· I will take full responsibility for any E&O claims including the deductible.
· I will maintain or oversee the maintenance of accounts that I sell.
· I will assist in the training and support of a new agent for a percentage of his/her commissions.

That is pretty aggressive. If a guy with a $70,000 commission book of business for a direct writer specializing on one niche came at me with that offer it would be a very short conversation. If he had strong control over $300K+ in commission written with standard market companies with some diversification, I would feel differently. Don't get offended... just giving my feedback. The current commission levels would not justify the time, risk or CSR payroll and provide any sort of a profit.

 

[RedKite]

That is pretty aggressive. If a guy with a $70,000 commission book of business for a direct writer specializing on one niche came at me with that offer it would be a very short conversation. If he had strong control over $300K+ in commission written with standard market companies with some diversification, I would feel differently. Don't get offended... just giving my feedback. The current commission levels would not justify the time, risk or CSR payroll and provide any sort of a profit.

^^


I would say to you sir if you are confident in your ability, the best company to work for with the sort of things your looking for would likely be yourself.

 

[djs]

I have no idea on your niche market, so I don't know if what you are proposing is reasonable or not. The one thing that jumped (screamed) at me was the 2 year not working for someone else in the same line of business.

Scratch that line. It probably wouldn't hold up in court anyway. You have the right to make a living.

Replace it with a 1 year non-solicit of any agency business. In other words, you can leave, work for someone else, but you can't go after current clients for at least a year.

What prompted this?

Dan