Experienced Agent in Limbo ??

[cosanostra]

I have three huge career move questions. I am 32 years old, licensed in P&C, Life & Health, bi-lingual and have a bachelors and MBA in Finance. I have worked for my current indy agency (approx. 2.5 million in total P&C premium) off and on for five years now, i am in my 14th consecutive month and now seeing my first year renewals.

1) Am I getting fair commission splits? I don't feel that with my insurance and education experience that I should split 50/50 FYC and renewals with anyone. I estimate our agency's efficency ratio after bonuses to be 70-75%. I am having to service all of my accounts (only 1.5 CSRs in office).... including follow-ups, billing, claims, endorsements, etc. I have hired all-star agents on my own (no cut of his commissions) and have contracted on my own with multiple carriers. I am highly confident in my plan and diligence in owning my own shop from revenue/cost/tax projections to speaking with my own reps and other insurance leaders in the community.

2) It gets more complicated. My boss (female, 55 years old, 30 years in biz) has promised me ownership of the business but is hard to track down and is hardly ever at the office. Her son is my best friend and also works there. He contends that he would like to partner with me in the biz. Sometimes I feel that this ownership promise is a familiar ploy of many agency owners. I am growing a bit of distrust in my LT prospects there as an owner. How hard is it to partner into a family business? My instinct tells me that I will never get a fair shake, if I get one at all.

3) Last, but definitely not least....I am on the brink of a whale account this year ($1,500,000 P&C Account = $225,000 commission + $30,000 year commission group health), should I leave my $18,000 renewal commissions, my best friend and my boss behind?

My tentative plan is to focus only on this one account (knowledge, retention) for a few years and then specialize with more accounts a few years down the road. To me this might seem like putting all my eggs in one basket but my 100% share -expenses would more than compensate for the $18,000 I made last year. Assuming 100% rentention, it would take $250,000/year production, for seven years, or until 2016 under my commission split to eventually earn $250K/year. This seems like a no-brainer, right? If I get the signatures and payment on the account, I am thinking of partnering with a wholesale broker and having my E&O and contracting ready in the event I am able to get the account. How can I logistically accomplish this Y1 while I am under contract with my current agency? Is this one possible?

 

[CHUMPS FROM OXFORD]

Wow! That's one impressive first post!

A good rule of thumb regarding ownership...Get it in writing. Otherwise, it may not materialize.

Re staying or leaving...I'll leave that to one of the P&C experts in the Forum.

Spellcheck was used in this post.
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[xrac]

1. As Chumps has said, if it isn't in writing it probably ain't going to happen.

2. Trust your gut. If you feel uncomfortable and are growing a bit of distrust there is a reason why. Follow your instinct.

3. You might as well make your plans to leave now. Based upon your post it is probably only a matter of time.

4. I would be wary of counting on the whale. So many things can happen on big accounts. You also need to realize that you could be faced with legal action from your current employer. Never put all of your eggs in one basket.

 

[somarco]

Two things.

What kind of contractual arrangement do you have with your employer?

If you land this "whale", your employer has a right to say you did so on their time and take legal action.

 

[kimari01]

You have a few choices. you can either stay and still wonder if you're going to one day own the agency, you can venture out on your own b/c it sounds like you will do well or you can re-negotiate your commission w/ the owner w/ this possible whale. Your basically doing all of the work. You should definitely re-negotiate.

 

[cosanostra]

Two things.

What kind of contractual arrangement do you have with your employer?

If you land this "whale", your employer has a right to say you did so on their time and take legal action.

What is everyone's experience with competing with the large brokers like AON, Marsh and Willis? This is what I will be going up against in August.

I know my hometown company would like to keep the money (commission) local and have a friend as their broker. I am not concerned with the amount of dedication just worried that I may not be able to provide the professional services e.g. loss control and audit.

How should I approach this shortcoming?

 

[1manshow]

Sounds like your mind is already made up. Your resume says "agency owner" not sales associate. You know the next step.

If you've got an ear on the inside on this big acct., I'd make sure there aren't vol.commission reductions on the existing broker deal if you're going to BOR the account. Could be a serious deterrent to the first year comm. plan. good luck

 

[ABC]

What is everyone's experience with competing with the large brokers like AON, Marsh and Willis? This is what I will be going up against in August.

I know my hometown company would like to keep the money (commission) local and have a friend as their broker. I am not concerned with the amount of dedication just worried that I may not be able to provide the professional services e.g. loss control and audit.

How should I approach this shortcoming?

AON, MARSH & MCLENNAN, & WILLIS are whores but they walk in with one hell of sales pitch.

There is no way a small shop can really offer all the services that a publicly traded broker house can. Your agency does not sound like it can service their current clients.

So you have to be able to go broker out all those services that you can't offer. Those broker houses are going to charge for those services one way or the other.

To compete against those whores you need to bring the same plan in for less. I know very little about the PC side but on the health side there should be areas where you could reduce cost. Those big broker houses will not work as cheap as you can.

With your experience your first year out on your own you should clear $36,000. Now I am assuming you able to get contracted with all the carriers.

 

[cosanostra]

AON, MARSH & MCLENNAN, & WILLIS are whores but they walk in with one hell of sales pitch.

There is no way a small shop can really offer all the services that a publicly traded broker house can. Your agency does not sound like it can service their current clients.

So you have to be able to go broker out all those services that you can't offer. Those broker houses are going to charge for those services one way or the other.

To compete against those whores you need to bring the same plan in for less. I know very little about the PC side but on the health side there should be areas where you could reduce cost. Those big broker houses will not work as cheap as you can.

With your experience your first year out on your own you should clear $36,000. Now I am assuming you able to get contracted with all the carriers.

yes, i intend on reducing my commission on the group health in order to get the account.

also, where do you get $36,000/year from? Is that just a basic assumption for motivated first year owners?

 

[somarco]

competing with the large brokers like AON, Marsh and Willis?

At least two of the above, and possibly all 3, have offices in Nashville along with quite a few other shops.

Which one has the case now?

Are you and/or the case, near Nashville?

worried that I may not be able to provide the professional services e.g. loss control and audit.

They have you smoked on resources. You will have to rely on your winning smile and personal service.

I know very little about the PC side but on the health side there should be areas where you could reduce cost. Those big broker houses will not work as cheap as you can.

Not necessarily.

They will look at this account in total, weighing all the revenue, not just from one or two lines of coverage. They may also offer administrative services that are handled in house including COBRA admin. On the P&C side they have access to risk management & loss control expertise.

If they handle the WC you can bet it is self funded as part of a larger pool. I can't imagine an independent broker can compete with that.

If the medical is self funded you can also run up against that as well.

If the big guns are shooting for this you better have compromising pictures of the officers.

I can understand why you are not revealing many details on this account, but the little you have posted seems to indicate you are way in over your head and totally outgunned.