Here It Comes Again. Safeco Reducing Commissions

[indienoise]

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.

The existing book written prior to 1/1/17 remains at 15/15. New commission structure takes effect then, and only applies to business written after this date.

Yes, it sucks that renewals drop a little for enhanced/superior, but honestly if you're writing essential with Safeco, you're doing it wrong. I don't even offer it. I hate that they are cutting renewals, but they are still paying better than Travelers and Allied, so there's that. Most of my book is with regionals anyway, who are all still paying 15/15 or better.

 

[insurance1822]

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.

Can you compare your email to the copy/pasted email the OP posted? I'm hoping that you're correct...

 

[FL P&C Broker]

Enhanced in Florida gives you practically nothing. I think you get accident forgiveness after 9 years.

 

[Pannagpamp]

Can you compare your email to the copy/pasted email the OP posted? I'm hoping that you're correct...

This is what I read from the original email, which i received as well, and made me want to contact my rep.

"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"

The rep is the one that said if we had 24 new biz policies we would remain at 15/15 for everything. I will likely get on the conference call and see what they say there to have further verification, as well as the upcoming meeting with my rep.

 

[bobson]

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

Same in the Northwest. I do like they are requiring storefronts to sell 24 policies though. We have too many Safeco agents in my area and some hardly produce anything.

 

[shawnmwalker]

By my count: That's five now in the last 3 month......

 

[insurance1822]

Shawn is right. This IS HAPPENING FAST. The domino effect is in full motion & this is the direction (many of us knew..) it was going. The real question is....are we seeing 12% as the new normal OR...is this the beginning of a perpetual sinkhole of our commissions?

Based off my conversations with leadership...this is the beginning of a new comp environment. And if you think "it's on business moving FWD so who cares?" well...our books recycle themselves & eventually we'll all be remarketing into the new eroded commission levels.

I CUT OFF TRAVELERS but how many agents just kept writing the lowest price?

Price rules. The glory days of the IA channel are OVER. One thing I've learned is seeing the other sides point of view & if I were a carrier (after watching Travelers results..) I'd do the SAME THING. And guess what? most of the weak @$$ agents who rely solely on price are the main force keeping this alive.

Ladies & Gents...PL is f*cked. Either triple down & outgrow the commission erosion or get out.

The writing is on the wall here & just as I got into the IA channel because I saw the captive writing on the wall? You can't be complacent in this environment. It's time to start focusing on consolidating carriers to maximize profit sharing as a means of compensation for the butt f***ing we're taking on renewals & being ahead of the curve.

Godspeed gents

 

[insurancemansam]

Pretty amazing how fast shyte is hitting the fan. Travelers, allied/nationwide, safeco all reducing commissions. Aaa emailed us today they are changing profit sharing to be more in line with industry which means reduction in bonuses. They say they want to be in line with direct writers. Direct writers have all the advertising done for them.

 

[lhpgators]

Does Safeco write Home AND Auto in Florida?

If you were to pick your top 3 Home and top 3 Auto carriers in Fl, who would you keep?

 

[nyc2phi]

Since I've started in insurance I've always got 10 on auto and 15 on home and I've been just fine. I assume it's because that's what I've always expected to get. I am sure that being use to something and then having it dropped can be annoying but I do just fine on this type of setup.

With that being said, who knows how far this trend will go. Is anyone doing anything to hedge against it? I.E. adding additional lines of insurance such as med supps or more life. I've even thought about adding real estate to my agency in the future. Thoughts?