Fair Deal for New Producers?

Jan 17, 2016

  1. Event horizon
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    Event horizon New Member

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    So I am a newly licensed agent who is going to get into the business and I have a couple of options..

    1. Farmers or country financial as a captive agent. This seems like it could be a good way to get experience and knowledge of the business.. I'm sure many of you already know the structure of the deal they offer. Even if I go this route I think it would just be for the experience. I think being an independent agent is more fitting of my personal goals..

    2. Working for a local independent to gain experience and hopefully a mentor.. This seems to be the path that makes the most sense, going to work and learn directly from a guy who is doing exactly what I want to be in the future.. However, I'd like to know what people think of the deal offered to me as a new producer for him.

    Outline of the terms are a 50/50 commission split on sale and renewal although I won't get any renewal for first year. Also a small monthly salary that would increase every 6 months if I perform. Any policies I sign belong to his company... Is this a standard deal, above average, rip off??

    For me personally I'm already fairly financially stable and I don't really need the small salary, I'm much more interested in retaining the clients I bring in on my book.. Is that uncommon to offer a new agent?
     
  2. agentinsouth
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    agentinsouth Guru

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    W/ no experience, no carriers (they are not easy to get), and you did not put up the investment to start the agency, you are not paying for the overhead, that is a good deal. Also,it is standard practice to require a noncompete keeping you from poaching clients. Your appointments will be on the Insurance commissioner's website, so it is very easy to track you and see if you are taking clients. Basically, your the employee, it is his business and clients unless you have an agreement in writing regarding a buyout agreement for what you sell if you leave. Lastly, it is much harder than you think to move a client from one agency to another, they are not as loyal to "you" as you think.

    Sounds like you should go captive, it is a little easier to move a client from a captive carrier and they are less likely to notice if you break your noncompete.
     
  3. Event horizon
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    Event horizon New Member

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    You mention a buyout agreement for clients I bring on.. Is that a common agreement? Are they bought at full retail price for what a normal book sale would go for or discounted since we are both getting 50% at the time...

    If I don't get to buy the clients when I'm ready to start my own business will the insurance carriers look at the work I've done for another making it more likely to add me as a broker even though I'd no longer have those clients?
     
  4. HCCIA
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    HCCIA Expert

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    I would go the IA route. The 50/50 split is very fair. The agency is gambling on you so it is fair that they own the expirations. Here is what you can ask for though... The ability to earn equity in your book. At $100,000-10%; $200-20%...$500-50%. Have them put this into your contract. It shows you are willing to bust your butt to get there and it will give you some equity in your book.
     
    HCCIA, Jan 17, 2016
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  5. Event horizon
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    Event horizon New Member

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    Are these kind of equity deals fairly common? I really like the idea so thank you for that. Is an option to buy the difference in equity out from him when/if I do decide to go on my own also a common negotiation?

    I feel like I need a little protection for myself.. I don't mind the 50/50..he is taking me on giving me access to carriers, and giving me training and experience so I get it. Is the not giving me 50% of the renewal commission in first year common also?
     
  6. HCCIA
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    I pay my producers 50/25. Your renewal commission won't come until 2nd year anyway. If you do well, will he consider renewal comms?

    ----------

    Sorry forgot to answer your question. I'm not sure how common it is. It allows you the option to buy it out in the future. Send me your email and I will send you our contract so you can compare. :)
     
    HCCIA, Jan 19, 2016
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  7. Schwetty
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    Schwetty Super Genius

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    As a former Captive agent I would go for option 1 if Country or Farmers are competitive in your area. (be prepared to write a lot of life insurance with Country) They will train you and you will get the much needed experience for when you are ready to switch to an IA.

    I think the switch to IA would be easier this route because it would be easier to show your personal track record to the companies you are tying to appoint with. (I have spoken with some experienced L/H agents here who could not gain P&C appointments due to lack of experience...even with a cluster)

    Either of your options will have you sign a non-compete so make sure you read it carefully and follow it once you move on.

    Now with your option 2 does he have a plan for when he decides to retire? You might ask about that as you could become the heir apparent to take over the agency in time.
     
    Schwetty, Jan 21, 2016
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  8. vacowtipper
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    vacowtipper New Member

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    Hey there,
    I am an agency owner looking to offer opportunities like this in VA.
    Under this agreement, do you have to do your own customer service or will the agency take care of that for you?
    I was planning on offering no salary, but 80 percent commish and direct appointments plus we take care of phone customer service. May need to rethink my strategy and lower commish a bit based on reading your 50/50. Could you pm me your salary if you don't mind too? Thanks!
     
  9. dorado
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    dorado Super Genius

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    HCCIA,
    I sent you a PM... Would you mind sending me a copy too please?:)
     
    dorado, Jan 31, 2016
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  10. faizy
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    faizy New Member

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    I need to focus on process of when a new client/prospect calls my office, how the data is input, to after the sale making sure they like Facebook page, opt into email list, etc. My goal is to have a systematic process that takes some of this off my plate.
     
    faizy, Feb 1, 2016
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