Profit Sharing ?

[InsuranceAgent411]

For agency owners do you "share" any profit sharing with your producers? If so can you share how you distribute or calculate the amount to the producer. Being a single producer for a carrier and then qualifying for profit sharing for the agency I am curious how other offices operate.
Thanks!

 

[EugeneM]

I think commission salary bonus covers most compensation. Most psa have some other commitment that qualifies them for it like equity, expertise or whatever some kind of extra value add. Otherwise no point in profit sharing with them as they don’t add any value outside of a producer role. From a hiring perspective I would be open provided they had something to add on a partner level. Typically when you ask that question the convo is short.

 

[marindependent]

Are you talking about an agency that focuses on Life/Health or P&C?

 

[InsuranceAgent411]

The bread and butter of the agency is commercial insurance; its about an 80% 20% split. I am the only producer/ servicer for the personal lines portion.

 

[Allen Trent]

if you are talking about sharing the loss ratio profitability bonus from carriers, I would say to really decide if that is a good idea. I saw agents do that, only to have their staff/producers get used to the check after 2 or 3 years & then leave when it wasnt earned because they felt like it was a pay cut.

I think you would want to design something that focuses more on a portion of new premium & mostly on premium growth. Also, need to adjust if carriers reduce compensation

most complicated way & how other industries handle profit sharing of a business is to total up revenue & expenses each year & then distribute a portion of the net profit to producers/employees based on either their relative income to total. but his can require some transparency you may not want to give in terms of total revenues

 

[Matthew Labb]

You can give a piece of overall revenue growth to each of your employees, especially during great years. I wouldn't isolate profit sharing specifically, but rather recommend you look at the total revenue vs expenses and then see where you're at.

 

[Allen Trent]

You can give a piece of overall revenue growth to each of your employees, especially during great years. I wouldn't isolate profit sharing specifically, but rather recommend you look at the total revenue vs expenses and then see where you're at.

WNBA gives revenue sharing to it's players & nets a loss of tens of millions.

You have to be a bit careful of gross revenues as they can be slower than expense growth, especially during hyper inflation of labor/rents/healthcare/tech costs

 

[Ryan Matthison]

I'm a big fan of profit sharing plans.