Question Regarding Commission

[Nanci]

I currently work as a P & C producer for a small agency. In January I will be opening my own agency and hope to bring all of my existing clients over. It is apparent that I will not start out with all of the carrier appointments that my boss currently has. I am wondering if I bring over a policy to my new agency with an insurance company which I am not appointed with how much commission, if any, am I likely to receive?

Any other words of wisdom for this newbie agency owner are greatly appreciated...thanks!

 

[djs]

Does your existing agreement with the agent allow you to move your clients 'over'? Or do they belong to the agency?

to answer your question though, you have to be appointed to have the policy with the carrier. You can't service the policy if you aren't appointed and therefore you won't get any commission.

Dan

 

[Nanci]

Thanks for your response...although it was not the answer I was hoping for.
As for your question, I am in Calif. and I never signed a "non-compete" as I was told that they were not enforceable here.

 

[Josh]

That doesn't mean moving the clients is ethical. Unless they specifically told you that you could take your clients over, you shouldn't be doing it.

 

[Nanci]

Hmmm, Josh, to be honest with you I never really thought of it that way. I have received no salary ever working at this agency and the commission split was such that the owner typically made more than I did from my clients. He did no advertising on my behalf and I brought in all of my own clients. He did offer CSR support, but due to a long list of circumstances that I won't get into here I typically did most of the CSR work myself. If you were to calculate my earnings on a per hour basis I received far less than minimum wage. I used to be a captive agent earning a 6-figure income. I always figured that since the owner mentioned to me up front of about the non-compete that he always knew I had the option of leaving with my book. Honestly, I saw leaving with my book as the only promising thing about the job and figured that it would be anticipated by an agency owner providing this type of position. Do others agree with Josh that this is unethical?

 

[Newby]

Non compete would limit you from working as an insurance agent within so many miles of your former employer. It has nothing to do with your clients.

You need to open your doors and start fresh. You build your own client base. If you contact any of the old client you will likely get sued and rightfully so.
When you go on your own you build from scratch. It's the only ethical way to do it.

 

[Guest]

sounds like to me, you arent ready to open your own shop.

 

[Josh]

Nanci, those are some fairly valid points, but what's done is done and two wrongs don't necessarily make a right.

That all being said, what does the guy you worked for think about the ethics of you taking the book? If they're cool with it, then that's an entirely different situation.

 

[Bertolinoins]

sounds like to me, you arent ready to open your own shop.

I agree. I don't want to sound harsh but if you don't have the simple stuff figured out then it is highly unlikely you will be successful at starting up in 25 days. Non competes are not enforceable but trade secrets and non piracy agreements do hold up... so be very, very careful not to take agency property (files, clients lists, policy info, etc) You are going to want to get set up with a good MGA for market access and E&O, In CA I suggest you look at WIAA if you don't already have something in place.

Do you have a E&O quote? Do you have an agency management system selected? Do you know how you will get market access? Do you have a bank or trust account set up? Broker Bond? IVANS account? DMV requester code? Are you going to operate as an individual or corp? Has the DOI approved your name? Business license?

You don't want to be battling for accounts when you do not have your ducks in a row.

 

[Scottyj]

I would not be worried about a non compete... you need to take a look at your contract and see where the book ownership is. If your contract says you have ownership then, I would do as bert suggests and get your ducks in a row... appointments, E&O, Agency management software, an office a server...

Honestly thought I highly doubt that his contract grants you the ownership of your book, that type of stuff usually only happens if you are a principal, partner, or family... but who knows he could be a generous man in that sense