What renewal commission are you paying to your producers for P&C business?
Question for Agency Owners.
- Thread starter cottonland
- Start date
You are going to either NOT get an answer or get one that is different per agency owner.
It depends on more than just renewal commissions- what are you providing to the producer and what do they need to provide for themselves?
Which of the following do YOU provide?
E&O (no charge)
phone
office space
computer
leads
account servicing
business cards and office supplies
Mentorship
W-2 Benefits + taxes
Strong carrier access (above the clusters or "entry level" carriers)
For each of those things, take a little bit off the NB and renewal. For all the ones they have to do, pay them for it.
Next, how much does it cost you to keep your producer? What dollar amount, or percentage? What % can you pay the producer to not be in the red at the end of the month? Only you know what expenses there are to keep your producer. If you aren't sure, calculate it from what it costs to keep your doors open and make it proportional to 2-3 people instead of one.
This number varies substantially on the agency.
So keep these things in mind when figuring it out yourself. Treat your producer like they are important and they matter, but this is also a business and you need to make sure the renewals being paid make business sense.
Biggdogg
Expert
I have had various programs, but seem to stick most with 0%. They get a portion of the initial commission, hourly rate, benefits, etc.
Are you ready for a million different answers ?
We allow book ownership for our producers so this means they get renewals.
First Year Producers
New business split = 60% agent/ 40% house
Renewal split = 60%/40%
Second Year after Evaluation
New Business = 70% agent / 30% House
Licensing
Phones
Cards
office space
computers provided
Keep in mind we are very careful on who we choose when we hire but we find most agent dont have the chops for this set up being there is no base. Its 1099 and you have got to afford to be poor for the first year or two. Many cannot do this... however the ones that can end up grossing about 15-40k commissions per month after several years if they are good.
We allow book ownership for our producers so this means they get renewals.
First Year Producers
New business split = 60% agent/ 40% house
Renewal split = 60%/40%
Second Year after Evaluation
New Business = 70% agent / 30% House
Licensing
Phones
Cards
office space
computers provided
Keep in mind we are very careful on who we choose when we hire but we find most agent dont have the chops for this set up being there is no base. Its 1099 and you have got to afford to be poor for the first year or two. Many cannot do this... however the ones that can end up grossing about 15-40k commissions per month after several years if they are good.
- 995
Scottyj said:
Our setup is very similar. When do you offer ownership?
G
Guest
Guest
I would NEVER offer ownership, I include a buyout clause if they want their policies,
"We allow book ownership for our producers so this means they get renewals.
First Year Producers
New business split = 60% agent/ 40% house
Renewal split = 60%/40%
Second Year after Evaluation
New Business = 70% agent / 30% House"
Does the 60/40 on renewals stick after the second year or is renewal business now 70/30? And do you help at all with leads?
First Year Producers
New business split = 60% agent/ 40% house
Renewal split = 60%/40%
Second Year after Evaluation
New Business = 70% agent / 30% House"
Does the 60/40 on renewals stick after the second year or is renewal business now 70/30? And do you help at all with leads?
- 620
So how would you stop a Broker of Record request after the agent leaves. If the client wants to leave, how do you stop them? I have always wondered about this.
It's the problem of "give an inch, take a mile" with the book.
If I have a producer and he has his mom, brother, neighbor, sister-and-law, and pastor insured then I'm pretty much certain they will leave when the producer leaves. That's a given in my book and if I have them for longer then a year I'd be pleasantly surprised OR the producer couldn't get the carrier that I have.
It's when 10-20+% of the book starts leaving quickly that I have a problem, and at that point you start going through extra measures such as contacting the producer and asking to stop, getting legal bodies involved, etc. Direct relationships with the producer are one thing, but that factory he insured or the people he got during conventions or leads you provided don't have a similar relationship. They should have the agency phone number to call.
You'll always lose some clients if a producer worth their salt comes to join, since the clients like that producer. But you shouldn't be losing the entire book at the same time.
The only exception to this I would find is if your producer appeals to a certain community. I don't know how to NOT sound racist when saying this but Middle Eastern people (in my example) will most likely stay with another ME producer regardless of where he goes, and they seem to be very tightly knit in that regards for the community. The same goes for a producer who speaks another language and you don't, such as Korean, Japanese, French, etc.
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what ncpclhnoob said, they will usually go with whoever they feel "comfortable" with and the one who speaks their language.
but i think there is absolutely no way to protect yourself from the producer taking their clients when they leave.
i see buy out clause, non compete etc.. as a deterrent tools only.
people will always see a loop hole and take their own clients back if needed. Over here in most agencies i've seen the producer services their own clients just like in L&H, when the client finds out the producer has moved, i'm sure they will go looking or the producer will have already told them.
for me im doing a kind of a tier system where you can grow and earn your fair share. if the producers are happy they wont have a reason to leave right?
but i think there is absolutely no way to protect yourself from the producer taking their clients when they leave.
i see buy out clause, non compete etc.. as a deterrent tools only.
people will always see a loop hole and take their own clients back if needed. Over here in most agencies i've seen the producer services their own clients just like in L&H, when the client finds out the producer has moved, i'm sure they will go looking or the producer will have already told them.
for me im doing a kind of a tier system where you can grow and earn your fair share. if the producers are happy they wont have a reason to leave right?
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