I'm Not Sure this is Fair..

[whatsa]

I hadn't thought about it in those terms, but with all the marketing involved, acquisition costs, etc., it does make some sense to offer a higher percentage for renewals - one year wonder, you get some money, a renewal (that statistically speaking also means you stand a greater chance of keeping it for 3~5 years) means you get a larger slice of the commissions for as long as you keep the account.

IF I were the producer, I would balk at it as first year compensation, but if I were dedicated and willing to tough it out for the long run, and could afford it, it could translate into a heck of a recurring revenue stream.

At the end of the day, if you can live with it, may be the best income generating option for the long run.

 

[itsjustrachel]

I hadn't thought about it in those terms, but with all the marketing involved, acquisition costs, etc., it does make some sense to offer a higher percentage for renewals - one year wonder, you get some money, a renewal (that statistically speaking also means you stand a greater chance of keeping it for 3~5 years) means you get a larger slice of the commissions for as long as you keep the account.

IF I were the producer, I would balk at it as first year compensation, but if I were dedicated and willing to tough it out for the long run, and could afford it, it could translate into a heck of a recurring revenue stream.

At the end of the day, if you can live with it, may be the best income generating option for the long run.

If I were in the financial position to tough it out trust me I would. I am a very hard worker and determined but I also have to eat and pay my bills. Then again, I knew going in that the first year would be the hardest..I think..so maybe you are right. I'll look for my big girl panties and maybe try to get a part time evening job to supplement my severe lack of pay. Thanks for your thoughts..I really appreciate it.

 

[benk622]

Is he paying you 50% of the actual renewal commission or 50% less than what you made new? I'm not sure I've ever seen someone paid more on renewal versus new business.

If its 50% of the actual renewal commission that isn't terrible but understand you will be making no money for a few years.

Lets say avg comission is 15% (which is generous) 25% of that is 3.75%. To break $10k in revenue you would need to do ~$260,000 in premium in your first year. That would be amazing for someone new to the business. If you only wrote $100k(much more likely) that would be $3750, I hope thats a lucrative part time job!

25% might make sense for a producer with a support staff chasing big opportunities. It sounds like you will be working for a small agency with a csr who may or may not help you out. 50% makes more sense and I would absolutely not take less than 40%

 

[b61mack]

As long as you don't have to sign a non-compete contract. Go for it. Get your license, and also get your life/health license. After a couple of months, when you proved yourself, you can then approach him for more commission. or a base pay. By then you will know if you like it. If he says no. Then you can look else where.

 

[VolAgent]

That 50% sounds very tempting, but you have to survive to get it.

I would look for ways to hit the ground running and perhaps speak with him about a draw to help out for the first year. Repay it back once renewals start coming in.

Just realize, a draw is debt and unless he forgives it you will owe it.

 

[itsjustrachel]

From what I can tell with only two days in so far..I will be servicing my own accounts, I get training from carrier reps, some leads, and use of an office. I approached him the first day and asked when we would be going over the contract and he said in the next week or two. Today I asked him to help me come up with a weekly goal/number that would generate $2,000 take home, for me monthly. I also asked him if that was a realistic number to go for and he said yes. I guess I will wait and see what he puts in writing.

 

[houcoogster]

That pay rate is a joke you would be better off working at local grocery store. He is gonna give you 50% on renewals because he knows he wont have to pay it out. He should have just offered you 100% on renewals because either way you wont be around to collect it.

 

[VolAgent]

From what I can tell with only two days in so far..I will be servicing my own accounts, I get training from carrier reps, some leads, and use of an office. I approached him the first day and asked when we would be going over the contract and he said in the next week or two. Today I asked him to help me come up with a weekly goal/number that would generate $2,000 take home, for me monthly. I also asked him if that was a realistic number to go for and he said yes. I guess I will wait and see what he puts in writing.

To generate $2000 gross, not take home but gross, you would need to generate $8000 in commission. Assuming 20% commission, that means you need to sell $40,000 in premium. Average premium per policy of $1,000 that is 40 policies a month. If the average is $2,000 it drops to 20 policies. If the commission rate is lower then the number of policies needed goes up.

Of course, that also assumes advanced commissions. If it is paid as earned, then it gets worse. The nice thing is, if all that business stays on the books next year you get $4000 gross in addition to any new business.

To achieve that you will need a good marketing plan, competitive carriers and some sales knowledge. I say doing that in the first few months is near impossible.

You really should see about a draw or base for at least a few months to get your feet under you.

 

[itsjustrachel]

To generate $2000 gross, not take home but gross, you would need to generate $8000 in commission. Assuming 20% commission, that means you need to sell $40,000 in premium. Average premium per policy of $1,000 that is 40 policies a month. If the average is $2,000 it drops to 20 policies. If the commission rate is lower then the number of policies needed goes up.

Of course, that also assumes advanced commissions. If it is paid as earned, then it gets worse. The nice thing is, if all that business stays on the books next year you get $4000 gross in addition to any new business.

To achieve that you will need a good marketing plan, competitive carriers and some sales knowledge. I say doing that in the first few months is near impossible.

You really should see about a draw or base for at least a few months to get your feet under you.

I need to figure something out to survive. Are there any insurance related jobs I could go for part-time that would not create a conflict of interest?

 

[Josh]

I think you're also assuming it's personal lines vs commercial. Have we figured out which it is yet?