Here It Comes Again. Safeco Reducing Commissions

[insurance1822]

The market will dictate. Agents wrote Travelers despite the commission cuts so of course everybody else will follow. Insurance IS a commodity & it's price driven & the agency force is responsible for this more then the carriers.

If I were a carrier, the next step would be giving the option to sell a new product at 8% & let the blood thirsty agent who needs the business sell their soul away. Then, I have my justification after a few years to bump down further.

The only way this works is a massive uniting of the agency force. The leadership at SIAA, Keystone, Iriquos, Superior & the top 100 largest agencies all sitting down & refusing to write these guys & calling it quits. But that won't happen because they're all getting rich off their existing books and wouldn't want to rock the boat (I know I wouldn't.)

For guys like us NYC it's a wake up call & reminder that you always have to be on your toes & have forward thinking. The glory days are unfortunately behind us. There's still tons of money to be made, but we'll need to figure out how to adapt to the adverse environment we're faced it.

I always knew in the back of my mind how absurd it was to make the money I make & there's no way this gravy train can continue. If you take my 20 year earnings in this business...it's clear that number is going to be at least 30% less then if I started in this business about 10 years ago. It's just the reality. I really wish they'd at least recognize the agencies who produce well & leave their commissions alone...but agency's like that are the exception, not the norm.

Today is the day that all doubt is removed...personal lines is a decreasing value proposition to the agency owner.

 

[TwoLabs]

Yes, we rolled our Travelers book after they made their commission announcement...to Safeco.

Two colleagues of mine also rolled their Travelers book...to Nationwide.

I also called it 2 years ago when this happened. If agent continue to write it, the other carriers will catch on and follow suit.

Like you insurance1822, I hope in 5 years we aren't going "Remember the good old days when we got 12% renewals"

 

[insurance1822]

I hope Shawn weighs in on is 12% the new norm or is this the beginning of a downhill trendline w/ no floor

 

[hesse]

Spoke with my Safeco rep today. Said personal auto as an average across the country is running 107% LR

 

[whatyouwantfinally]

I always knew in the back of my mind how absurd it was to make the money I make & there's no way this gravy train can continue.

That's the kicker right there, and I've found most top salespeople find themselves in this exact spot at least a couple times in their careers. Just look at all the fat cats who lost their asses when the real estate bubble popped vs. the ones who adapted or transitioned to something else. The book Who Moved My Cheese sums up a career in sales perfectly. It has happened so many times in so many industries you almost have to be an *** to not have it as a permanent mindset.

 

[gambrinus]

Time to sharpen that pencil and figure out how to run a business on a thinner margin. Some at 10%, others at 12%, 13%... 15% or more.. What's your mix and at the end of 2017 what will your agency average be? Business plans will be rewritten for sure.

 

[insurance1822]

....I have unconfirmed rumors that my group MAY be immune. Fingers crossed.

To be honest, we only really write crap w/ Safeco anyway. Monoline auto that doesn't fit w/ our other markets so that makes me feel better. Just shows the trend...

...waiting for Shawnwalker here!

 

[shawnmwalker]

My two cents:


If Progressive (One of the largest carriers in Auto) can get away with it for the last two/three Decades and still grow they way they do and typically return the results they do........


Your group may be immune but not long term......

Example: Lets say 15/15 was the average for a Mom/Pop and 17/17 was the average for a group.

If there is a slide, the slide happens for all. Now the Mom/Pops are looking at 12/12 and the Group is looking at 15/15.


Before the crash carriers did not care about UW profit because they were making a killing in investment income. Post crash, carriers have been scrambling to learn how to make an UW income again on their products. (Imagine that)

This means hard decisions for them....Hard decisions for us.

Go watch Newsies. (Musical) Pulitzer's newspaper (The World) at the turn of the century squeezes the distribution channel (Child Labor), the distribution channel ends up winning in the end. But the entirety of the channel needed to get together.- Ins1766 is right.



Last topic: This wont make anyone happy, but you brought it up.This is relevant to the dropping commissions.

Is this a commodity? If it is, if we treat it like it is, it is.

If carriers are wise enough to see they can do service centers better and more efficient (Less Cost/ better deliverable) than your office does, why would they not, long term seek to find a way to rub you out?

They are thinking: (If they can run a service center for 10%, Agent's should be able to run an office for 10%- that's not true, but they believe it. Important- Let's all ask our carriers the overhead of running a service center)

Are carriers buying direct companies? Yes.

Are they creating and asking you to sign up for service centers? Yes.

Is your desk always a mess and do you have stacks of files on your floor? Yes.

When you meet with a carrier are you dressed like a bum or in a suit and how many times do you blame price for your inability to produce an AMAZING product? When they leave your office are they asking why that guy represents their carrier? Yes.

Are 90% of them, already competing against you in some way? Yes. (Support the ones that aren't)


Diversify- Commercial.

 

[FL P&C Broker]

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?

They do not write home owners in Florida.

What part of the state?

 

[AZDave]

Since we are talking about getting paid less, here's another thing to consider: the shrinking car insurance premium.

The reduced commissions are going to feel even more reduced with lower auto premiums. Safer cars, smarter cars, less driving public.

Commercial lines, ladies and gentlemen. Let's hope carriers don't get greedy here, but I don't believe they will. Carriers have high expense ratio's on commercial lines and most are making good money in the gl and property. Commercial auto is toughening up, but that too means a more money in the pocket with the anticipated rate increases.

My agency has been giving away monoline home/auto business this year, and once in a while packages too. Kind of different referring this out. Just not worth my time, don't have the resources and just don't want to go that direction. All my efforts go towards commercial.

I said this before: if I could sell my auto and home book, I would.

Just my 2cents.

Dave