Producer Commission Splits

Jefflangley

New Member
1
Hello all,

I've been reading for a long time, but this is my first post.

I'm currently in charge of the personal lines for a growing p&c shop in Oklahoma. We're looking to hire two people for personal lines producers to expand our business. We're trying to get a feel for what type of splits would be common so we can recruit high quality agents.

Commission split?
Who owns the book?
Marketing expenses?
What should the producer expect from the agency and what should the agency except from the producer?

Your help is appreciated. Thank you!
 
use the search function, there are numerous threads about this and there is alot more than just what you are asking........
 
I have 3 agents that work in my office that get a salary and a incentive commission (small commission) with no renewal commission. I pay for all their expenses including their lead acquisition cost.

I also have 4 commission only agents that work from home and they pay all their expenses including their own E&O. I pay them 75% of new and 25% of renewal. I do all the servicing of the client after they sell the client and I own the clients. I insist on servicing the clients because I want to insure that the client gets good service since my agency name is still on the policy.

80% of my monthly production comes from my 3 salaried employees since I can set goals and monitor their work daily. I do not have any control over the 3 commission only people but they do not cost me anything so that relationship works as well.

Hope this gives you a good point to start.
 
I have 3 agents that work in my office that get a salary and a incentive commission (small commission) with no renewal commission. I pay for all their expenses including their lead acquisition cost.

I also have 4 commission only agents that work from home and they pay all their expenses including their own E&O. I pay them 75% of new and 25% of renewal. I do all the servicing of the client after they sell the client and I own the clients. I insist on servicing the clients because I want to insure that the client gets good service since my agency name is still on the policy.

80% of my monthly production comes from my 3 salaried employees since I can set goals and monitor their work daily. I do not have any control over the 3 commission only people but they do not cost me anything so that relationship works as well.

Hope this gives you a good point to start.



How did you go about recruiting them?
 
It took me almost three years to recruit and train them all. I always keep my eyes out for a possible new recruit. I let people know that I am hiring and if they know anyone that is honest, cheerful, hard working, competitive and smart that I would be interested in talking to them.

All but one of my producers have been from referrals. I have one commission only producer that responded to a Craigslist ad that I tried once.

If you take your time and hire and train quality people, you will start collecting good producers.

When I first started, I felt more desperate to find help than I do now because I have a great staff.
 
Man that is a nice setup. How do those producers survive though with that kind of set up. Do you think you will run into issues down the road with someone offering a better renewal pay for them and they take the client with them. I know you have a non compete but still could have risk. How do you keep producers happy? Thanks
 
I have been brainstorming for the past year how to recruit and find better producers. I have felt that I have lost out on some good people because the first year income can be so low on the P&C side and they have decided to go another route where there is fast money. On a 50% split they will be lucky to make $2500/month for the first year. For somebody that is new in the industry it is hard for him or her to grasp the long term outlook. We are not in the position to offer a salary, all our producers are commission only.

I have thought about offering a much higher split on the first year so that they can make some money now. Maybe 80% for the first year and not paying renewals until the third year.
 
Here is my opinion on this:

I'm 26 years old with two young kids and started in the industry in April of 09 as commission only when my daughter was 2 months old. I have a BBA in Risk Management and Insurance. What you have to sell to people is that its a hard field to enter but once you get past the first couple of years it flips to your favor. With that being said i was able to get first year commission's at 75 percent and renewal at 35 percent. I have health insurance thru the agency so really on the first year you are just breaking even on the producer maybe losing some money but a producer has to be looked at as a long term investment and not a short term funding option. After the first year is were you start making your money. Don't be affraid to offer first year high commission as its a bonus to produce more business and income you wouldn't have anyway if you make money off of it. It might increase your work load on a csr until you can hire another one but its very minimual at that.
 
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