Here It Comes Again. Safeco Reducing Commissions

Sep 28, 2016

  1. TwoLabs
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    TwoLabs Super Genius

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    Sigh.

    Like sheep, once one makes the decision, the rest will follow.

    *edited*

    I had initially posted the whole email but there is no need for that. To summarize, they are only sticking with 15% / 15% for their most expensive Safeco auto product line (Ultra) which is not competitive.

    Every other one is now 15 / 12 except for Essential which is 12 /10.

    Homeowners is unchanged:

    Home with auto is 15 / 15
    Home w/out auto is 15 / 12

    They are increasing their minimum policies written to 24 per year per store front, which shouldn't be a problem.

    The reduction in commissions domino effect is very troubling, especially for someone in their early 30's hoping this is still a 20 year business.
     
    Last edited: Sep 28, 2016
    TwoLabs, Sep 28, 2016
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  2. insurance1822
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    insurance1822 Guru

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    Do you have a direct appointment? Are you part of an aggregator?
     
  3. TwoLabs
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    TwoLabs Super Genius

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    We are appointed directly with Safeco.
     
    TwoLabs, Sep 28, 2016
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  4. insurance1822
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    according to my schedule that's only for agencies w/ <350 auto policies in force......when did you get the email? are they referencing a PIF count?
     
  5. TwoLabs
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    TwoLabs Super Genius

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    Here is the full email, forgive the sloppy copy/paste. You are correct, this was my understanding of the current commission schedule for less than 350 PIF. However, as it is stated below, the 350 PIF count doesn't apply in 2017.

    Dear Safeco agent,

    As market trends continue to shift, we need to respond. Over the past two years, we've worked extensively with key agency partners to evaluate Safeco's agency compensation program. Our objectives were to maintain a competitive compensation program, simplify the plan, continue to reward committed agency partners, and provide you more control over the commissions you earn. Knowing any adjustments we make will impact your agency, it's been very important to us to take a thoughtful approach.


    Complete details are below. Here are some highlights:

    We're maintaining prior commission rates on existing business*
    We're keeping options to earn 15% on new business and renewals for both auto and homeowners
    Commissions are aligned with the value of coverage you sell
    PIF tiers to determine auto commission won't apply to policies incepted in 2017, providing all agents more control and flexibility in the commissions you earn
    Higher compensation is provided for agents partnering and actively placing new business with Safeco
    Safeco agency compensation structure details

    Policies in force (PIF) auto commission tiers will be eliminated for policies with inception dates starting in 2017. Effective Jan. 1, 2017, the following best commission rates will apply. Changes are in bold.

    Auto New business rate Renewal rate
    Safeco Ultra™ 15% 15% (New)
    Safeco Superior™, Safeco Enhanced™ and other Auto 15% 12% (New)
    Safeco Essential™ 12% 10%
    Non-standard and Monoline Youthful 8% (New) 8% (New)
    Homeowners New business rate Renewal rate
    Homeowners with Auto 15% 15%
    Homeowners without Auto 15% 12%

    In-force auto policies* with inception dates prior to Jan. 1, 2017 will renew at commission levels that applied prior to Jan. 1, 2017. Because we're maintaining prior commission levels on these auto policies, there will be a final PIF measurement that will occur as of Dec. 31, 2016. Any renewal rate changes based on the final 2016 PIF measurement will go into effect on April 1, 2017.

    Increased annual policy count for new business

    The current requirement of 12 new policies remains in effect through Dec. 31, 2016.

    In the 2017 calendar year, each customer-facing agency location where personal lines policies are actively sold (storefronts) will be required to issue 24 new Safeco Auto and/or Home policies to qualify for our best commission rates. Storefronts that don't meet this minimum requirement will receive a 12% new business commission rate and a 10% renewal commission rate (with the exception of Earthquake, Non-Standard and Monoline Youthful Auto). As in the past, this measurement will occur as of Dec. 31 of each year, and your corresponding rate will be in effect beginning April 1 of the next year through March 31 of the following year.
    Most agencies are already meeting this requirement. For those who are not, your territory manager or agency specialist will continue to work with you and provide resources such as digital marketing support, relationship marketing tools and training that will help you grow with Safeco and strengthen your overall business.

    We believe our compensation program remains very competitive and continues to recognize and reward you for the business you place with Safeco. It is also important to note that commissions are only part of a comprehensive compensation package that includes agency profit sharing and additional rewards and recognition such as President's and Chairman's Award.

    I know that together, we can continue to win in the marketplace and position our partnership for long-term success.

    Thank you for your partnership,


    Myrna Estrada
     
    TwoLabs, Sep 28, 2016
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  6. insurance1822
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    Just emailed my rep & here's what I got..


    "2016 Auto Commissions are 15/15 with the exception of Essential & Youthful Operators"

    Maybe your state is dif OR my group helps. Sucks man
     
  7. TwoLabs
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    TwoLabs Super Genius

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    Yep, must be our state. Lucky you, but I wouldn't be surprised if all the other states start to follow too.

    :no:

    *Edited*

    I just reread your message, "2016 Auto Commissions...". We're talking about 2017 commissions, and I just got off the phone with my TM and she said it's nationwide. Even with Clusters, so be prepared.
     
    Last edited: Sep 28, 2016
    TwoLabs, Sep 28, 2016
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  8. Pannagpamp
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    Pannagpamp New Member

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    Which state are you in TwoLabs? I received the same email, but my rep said our commission won't be reduced because we have enough production. I do have 11 producers working for us, so that helps.
    I do have a meeting with the rep coming up early next month, so i'll find out more then.
     
  9. TwoLabs
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    We are in Texas, but my TM expressed that it is nationwide. He/she said that not all TM's have communicated it yet as they were only able to this week and that they all were in California (every TM in the country) when this was announced.

    You are right, it won't affect your existing BOB, only new business after 1/1/17.

    From what I understand, it has no difference how big of a book you have. The 350 policy in force count is thrown out.

    All new business after 1/1 is 15/12 on auto (except for Ultra). Existing book is what it currently is being paid on.
     
    TwoLabs, Sep 28, 2016
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  10. Pannagpamp
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    Pannagpamp New Member

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    Reading my email from my rep, it says: the Enhanced and Superior would remain at 15% renewals, as long as the 24 NB per location is met.
    As I said, I will be meeting with him in early October so I will make sure there is no miscommunication.
    This lowering of commission is a trend I do not like to see! It is helpful that we are a growing agency and add enough producers and production every year to stay at the top tiers.
     
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