Personal Lines - Broker Fees

[CaNewAgent]

I'm in the process of opening an independent P&C insurance office. We are discussing broker fees.

1. Should we charge them?
2. If so, what are typical rates?

I'd appreciate any advice from brokers here on the forum.

I know Farmers charges a membership fee, which is the same as a broker fee except for the name.

Thanks

 

[Soaringagent]

I think it depends on what market you are trying to go after? Are you looking for preferred business or non-standard?

 

[JCK818]

You can't charge them on some of the carriers. On the non standard ones, you usually can. If we have the room we usually do 10%. You are going to get lot of people to tell you that you shouldn't and it is unethical, don't listen to them, it is not unethical. Just make sure you disclose it properly.

 

[robb01]

Check with your state first to see how they regulate the fees. Then make sure you disclose the fees, we try to add them as often and for as much as possible.

 

[CaNewAgent]

I think it depends on what market you are trying to go after? Are you looking for preferred business or non-standard?

We plan to go after any and all business.
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You can't charge them on some of the carriers. On the non standard ones, you usually can. If we have the room we usually do 10%. You are going to get lot of people to tell you that you shouldn't and it is unethical, don't listen to them, it is not unethical. Just make sure you disclose it properly.

I appreciate the info. I have a few friends who are producers. They worked for captive agents on a hourly/commission split basis. One is now working for a broker. With this broker, he can charge whatever fee he wants but the broker gets the commission and retains the account. The broker suggested he charge $200.00 for an auto policy. I thought this was on the high side.

I know another guy who was a captive agent. He's with a broker now and they charge fees for new applications, making a payment and endorsements. I'm not sure what the fees are or what his commission split is.

I thought all brokers charged fees as a means of offsetting charge backs.
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Check with your state first to see how they regulate the fees. Then make sure you disclose the fees, we try to add them as often and for as much as possible.

Do you find people react negatively to the fees and the rate? How do you handle this objection?

 

[JCK818]

We plan to go after any and all business.
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I appreciate the info. I have a few friends who are producers. They worked for captive agents on a hourly/commission split basis. One is now working for a broker. With this broker, he can charge whatever fee he wants but the broker gets the commission and retains the account. The broker suggested he charge $200.00 for an auto policy. I thought this was on the high side.

I know another guy who was a captive agent. He's with a broker now and they charge fees for new applications, making a payment and endorsements. I'm not sure what the fees are or what his commission split is.

I thought all brokers charged fees as a means of offsetting charge backs.
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Do you find people react negatively to the fees and the rate? How do you handle this objection?

You are not going to be able to charge 200 on every policy and still be competitive. If anyone complains about the fee I say this. I am giving you the same (if not better) coverage as you have currently. I am saving you 400 dollars (for example). My fees are included in this price, but that is how we make our money.

 

[djs]

I love it when brokers charge fees, especially on standard/preferred business.

I point out how they don't need to pay this and that the broker is simply taking advantage of them and rewrite the policy without the fees involved.

Now, on non-standard or even commercial, fees can make a lot of sense.

Dan

 

[JCK818]

I love it when brokers charge fees, especially on standard/preferred business.

I point out how they don't need to pay this and that the broker is simply taking advantage of them and rewrite the policy without the fees involved.

Now, on non-standard or even commercial, fees can make a lot of sense.

Dan

On most preferred companies you are not eve allowed to charge a fee.

 

[Guest]

I wouldnt charge it just to be competitive, then the client might have money in their pocket to actually pay the friggin premium!

WHat kind of agency can you build off broker fees? Whats the retention rate in something like this?

Instead of making them pay $200, get them to pay the balance in full, does the client a favor and gives you an actualy client and not a fee

 

[robb01]

Do you find people react negatively to the fees and the rate? How do you handle this objection?

Not at all, people understand that my time and expertise isn't free.
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I wouldnt charge it just to be competitive, then the client might have money in their pocket to actually pay the friggin premium!

WHat kind of agency can you build off broker fees? Whats the retention rate in something like this?

Instead of making them pay $200, get them to pay the balance in full, does the client a favor and gives you an actualy client and not a fee

A lot of times when quoting a new prospective client, they will give you the dec pages from thier current insurance. If you can save them ~$200 plus every 6 months or a year, why not charge them a fee. Your still saving them money, and you get a fee as well. Win Win