Paying my Agents

Discussion in 'P&C Insurance Forum' started by sharon1900, Sep 13, 2017.

  1. sharon1900
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    sharon1900 New Member

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    Hi,
    I have a new agency that I started and I currently have 4 W2 employees who are now coming back asking for a raise.
    I pay between $18-20/hour give a complete benefits package and 35% in commission.
    Can you please share the common structure in P&C in Los Angeles area?
    One of my employees do not get a commission. Instead he gets $700/week and $15 per policy and working only part time (8-2).
    I think that I am over paying and would love to hear your input. TIA
     
  2. BADTROUT
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    BADTROUT Super Genius

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    I overpay, and yours makes me look cheap. Mine is simple...

    YEAR 1: The higher of 75% New and renewal... OR Minimum Wage
    YEAR 2: The higher of 70% New and renewal... OR Minimum Wage +$1.00
    YEAR 3: The higher of 65% New and renewal... OR Minimum Wage +$2.00
    YEAR 4: The higher of 60% New and renewal... OR Minimum Wage +$3.00
    YEAR 5: The higher of 55% New and renewal... OR Minimum Wage +$4.00
    YEAR 6: The higher of 50% New and renewal... OR Minimum Wage +$5.00
    YEAR 7: The higher of 45% New and renewal... OR Minimum Wage +$6.00

    The rest remains at 45% or Min +$6 (they never get paid hourly, its almost always the commission that pays.

    With what you are giving them, I would at least do a higher of the two numbers similar to my structure... But seriously, Give one two weeks off, nice vacation... see how much business you are missing out on because they were not there.

    If you notice... Bring em back...

    If you do not notice a dip... make that vacation permanent.

    I will say you HAVE to treat your producers well, they are building YOUR dream... But let me be very clear as I am with MY producers... They are paid well, yet I take about 99% of the risk in overhead, expenses, E&O etc etc as an agency owner.

    Long story short... IMO you are paying too much.

    *******UPDATE*******
    For the record I am in Colorado, and I am unfamiliar with LA Wages and Expenses. (Please excuse what may be an ignorant answer geographically)
     
  3. Josh
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    Josh Retired Agent, Current List Broker

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    That's a brilliant strategy.
     
  4. adjusterjack
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    adjusterjack Guru

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    Offer to put them on straight commission and then they can make as much money as they want.
     
  5. cruhm1971
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    cruhm1971 Expert

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    Definitely think you're over paying. My last gig in the P&C world, I got 40 new and 30 renewal in Scottsdale.

    I now have partnered with an agency that pays me 50/50 Personal Lines and 30/30 for commercial. I simply refer and they quote, sell and service. They write in 42 states, so it works well for me.

    They better have some hefty goals to get what you're paying, like $50,000 - $100,000 a month.
     
    Last edited: Sep 13, 2017
  6. BADTROUT
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    BADTROUT Super Genius

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    At that commission I think 1 mil written in a nearly limitless city like LA would be minimum expectation.
     
  7. rbadoux
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    rbadoux Expert

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    Commission only. Hourly pay is not enough motivation to exceed expectations.
     
  8. BADTROUT
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    BADTROUT Super Genius

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    Pay some hourly so that you can direct them... Read the DOL rules on the Federal Minimum wage laws, and you'll see that commission only means that your ability to direct them properly could be diminished. Cure that with a little base pay (at least min wage).
     
  9. blue_wynd
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    blue_wynd Guru

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    I think you are over paying them, but I don't know LA job market rate. I would recommend doing some research on the current market rates for a CSR or sales rep. See how much the competition is paying. Indeed.com might be a resource by checking the job posts.
     
  10. todd02
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    todd02 Guru

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    Your not paying renewals? I would pay renewals to the better sales people or you won’t retain them. Then they get a raise every year from them growing “their book” in your book.
     
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