Getting P&C License

Nov 12, 2018

  1. moneycage 2018
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    moneycage 2018 Expert

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    I am coming from the Life Insurance side, How do agencies work on the P&C side, are they basically the same or are they run differently. Example do P&C have IMO's that get you contracts, contract %'s, residuals from renewels, buy leads, stuff like that.
     
  2. Mike007
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    Clusters or Aggregators are what is consider an IMO in the P&C world. Unlike Life, where most of the contracts are given out at no cost. It's different on the P&C side.

    There are a few organizations out there that do not cost you any fee but you do not have binding authority and they take a larger override/split from you. They usually take about 24-48 hours to bind a policy. That means if a client needs insurance NOW! You are out of luck.

    Others that have buy in costs, depending on the organization and the commission contract, it can range anywhere from $1500-$10,000 and I have seen some that are asking $60,000 or more. But the mass majority of Clusters are asking somewhere below $10,000. The more it cost, the lesser they'll take a cut from you. These Clusters often allow you to bind a policy.

    Some organizations want you to buy your own Quoting System and your own E&O. Some will bill you monthly. Some will subtract it from your monthly payment. You will be looking around $300-$500. The more agents you have, the more costs it will be for you. Office rental is often times required. Some P&C companies demand that you have an office or they won't appoint you.

    The commissions on New Business and Renewals are on average is 15%. Depending on your contract, that is where you and the Cluster will split the commission. Some organizations do receive bonuses and they do share it with their producers/agents.

    There is no marketing help or buying leads to help you grow your business. For the most part, you are on your own. You can run your agency anyway you see fit. You can hire agents to work for you, hire staffs, hire managers, etc. Just as long as you don't violate insurance rules and regulations.

    They do a lot of training through webinars.
     
    Last edited: Nov 12, 2018
    Mike007, Nov 12, 2018
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  3. moneycage 2018
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    moneycage 2018 Expert

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    Holy Crap! Looks like a ton of overhead. So is this all for Independent Agents.

    Like for example I have had a couple of buddies who have worked on the P&C side they worked for companies like The Hartford, Allstate, then moved on to smaller local companies. They just have an office they had to go to. Is what they were doing a different type of agent then what you are talking about above.
     
  4. Mike007
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    Yes, this is for all Independent Agent who wish to be an agency owner or owns his/her book of business. P&C companies are not interested in bringing people into the business as Independent Agents/Brokers. Unless you want to be a Captive Agent, just representing one company.

    You can find a local agent and work under his agency as a producer but often you don't own the book of business. You are simply just an employee. If you leave their agency, you get nothing. Some agency owners will pay hourly wages, commissions, and bonus. Offers safety but the crappiest way to make a living in sales. Some will just offer straight commissions but higher returns if you are good at what you do. Some will pay for new business only. Some will pay for new business and renewals. Depends on the agency owner.

    Once in a blue moon, you can find an agency owner who will allow you to take your clients with you if you meet certain qualifications like years of services, buy out, etc. But usually its from very small operation and they need the numbers so they are willing to cut you in on a deal. You won't find these kind of deals with established agencies because they don't need you. So look into start up agencies. And make sure you have everything in writing.

    Your friends: They are either captive agents or worst case, just employees. Captive agents when starting out do not start out with their own office. They start out from their local corporate office. Once they survive the training period, they may move out and start paying for things on their own. But Captive Agents do not get the same amount of commissions. Roughly around 5%-8% commission vs Independent Agents that make an average of 15%. When I was with Prudential, I had the option of renting my own office space or use the local corporate office for as long as I was with them.

    The other is, your friends are just employees/producers...Go back and read paragraph 2.

    Understand that P&C in general is for long term, not short term. Especially if you only do Personal and not Commercial. P&C commissions are peanuts compare to Life Insurance. Most Life Agents can not handle the small commissions and the large amount of customer services require to maintain a client base.
     
    Mike007, Nov 13, 2018
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  5. shawnmwalker
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    shawnmwalker Guru

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    Money Cage,

    What specific questions do you have? I'll see if I can answer them....
     
  6. shawnmwalker
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    Well you have a decision tree here. I'll lead you down one path, but it is biased.



    "Begin with the end in mind"- 7 habits of Highly effective people.



    Decision #1:



    What end of the Ins Spectrum do you want? if you answered P&C keep reading. If ''Other" wait for the others to respond



    Decision #2: Captive or Independent.



    Captive:

    Pro: They will teach you a lot but inevitably you will go Indy at some point in your career. Another Pro, they will subsidize your life for a time.

    Con: The District Manager will push too hard or force life on you or cut your commissions or change your contract, or, ext, ext. Your Captive will take rate increases and kill your production and you will have one price point while others dissect your book one policy at a time.



    Independent: :

    Pro: Control expenses. Get higher commission. Higher conversion. Higher retention. All of those factors equal more money.

    Con: Starting out. Getting knowledge. Your personality type could sink yourself.



    Decision #3:



    Once you decide Indy is for you, in the next week or 22 yrs from now. The question will be how to do it. Your options include:



    Buy an agency.

    Join a group.

    Become a producer for an agency.

    Get direct appointments.

    Get an agency that provides the back end service so you can hunt full time.



    You decide which one is best for you.





    Decision #4: What group should I join?



    There are a lot. Consider the following. NOT ALL GROUPS ARE CREATED EQUAL! They range from good, better and best.



    Any group claiming to be best of class should provide the following:

    1. Transparency
    2. Training and support
    3. Carrier Alignment
    4. and a great Contract
    Give me a call, shoot me am IM. Good luck and have fun with your choices.



    I have been in Insurance for 13+ years and the great thing in this industry is you can choose to never stop learning. Your learning curve is never ending. Meaning you will never get bored.
     
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