Rate my PL Producer Compensation Plan

[CWood]

Hi all,

My apologies if this has been done before or not welcome here...I just wanted to get your thoughts on my compensation model. Background is: I was hired on as a PL account manager in 07/2018. The agency I work for is 85% CL and 15% PL. They were struggling with PL when they hired me on.
At the time, most of the PL was leads sent in by CL producers. CL producers got 50% first year on those accounts. Since joining, I started pushing for us to go after high net worth clients and partnering with financial advisors and COI's. I started meeting with some myself and started bringing in business. I was just an AM so I didn't see any commissions. As of January this year, they made me a PL producer. This is something we've never had at the agency before. I also created work flows for the other account managers and our retention has increased significantly on the middle markets we were losing.

My compensation model is that I focus on high net worth. We consider anything that brings in $4000 or more revenue to be high net worth/VIP. That being said: I get paid 50% commission on every piece of new business i bring in. I receive 10% on VIP renewals and no renewal commission on anything less than $4k revenue a year. If a CL producer brings me an account, I split first year with them. I know CL producers here get quite a bit more on renewals than I for VIP, but the owner's have said they've looked at "Best Practices" but admit they've never had this position in the agency before. We're a 5 shop agency. 20 producers and i'm the only PL producer. They're good people. I was just curious as I've never been in a sales position before this job. I do get a base salary and once I my commission pay goes above the base salary, we "true up" and i get anything over my base pay until i'm "validated." I also service all high net worth clients.

My main question is on the renewal commission, but please don't hesitate to comment on the rest of it. Is 10% renewal commission for high net worth clients a good pay? So far this year, I've brought in $60,000 in new business revenue. ($300,000 in premium.) I'm in AL so premiums are low here.

Thanks for the help, CU

 

[fed up]

Do you get 10% of the renewal premium or 10% of the agency 10% on renewal? Here is my comment on the Commercial Lines. Are they introducing you to their employees as 'their insurance agent'? If so you and the commercial lines people will benefit from going to see them upon renewal with the implication that 'their insurance agency' will be on site to answer any and all questions from their employees. Have them bring Dec pages. Your agency should at a minimum have the owner/director of the commercial policy as a client. I would only split business with the CL agents if they agree to split their business with you

 

[CWood]

Do you get 10% of the renewal premium or 10% of the agency 10% on renewal? Here is my comment on the Commercial Lines. Are they introducing you to their employees as 'their insurance agent'? If so you and the commercial lines people will benefit from going to see them upon renewal with the implication that 'their insurance agency' will be on site to answer any and all questions from their employees. Have them bring Dec pages. Your agency should at a minimum have the owner/director of the commercial policy as a client. I would only split business with the CL agents if they agree to split their business with you

I get 10% of the agency commission on the renewal. So if a $50,000 PL policy renews and the agency gets 15% ($7500 in revenue), I'd get 10% of that so $750. Again, I'd be servicing this account and having twice a year check ins. I do split commission on any CL referred to the CL producer as well first year. It's mainly that 10% of the agencies commission that I'm questioning.

Thanks again!

 

[fed up]

Where are you going to get a 50K PL policy? I've been in P&C since 2010, most PL policies are 2-3K on property and 3-5K on auto if there are lots of cars in the home. My best customer was a brain surgeon in a state with terrible rates and his total annual premium was 15K and that included his Tesla and 3 kids.
My point is if you are getting 10% of the 15% you are getting 1.5% of the premium at renewal. It is great that you get anything on the renewal but if you truly are bringing in more PL business your agency should take that into consideration on your renewal commissions

 

[CWood]

Where are you going to get a 50K PL policy? I've been in P&C since 2010, most PL policies are 2-3K on property and 3-5K on auto if there are lots of cars in the home. My best customer was a brain surgeon in a state with terrible rates and his total annual premium was 15K and that included his Tesla and 3 kids.
My point is if you are getting 10% of the 15% you are getting 1.5% of the premium at renewal. It is great that you get anything on the renewal but if you truly are bringing in more PL business your agency should take that into consideration on your renewal commissions

I've built and we have had some established centers of influence like financial advisors and existing high net worth insured's who refer clients over to us. These clients will have 2-3 homes at multi-million dollars and sometimes they'll be on the coast and I'll sell them full primary and excess flood policy limits as well. Average is around $20k in premium, but I recently wrote one that was $80k in premium. (Those usually only come around a few times a year.) I've been trying to go the route of "let me partner with you and your financial advisor and get a seat at the table to protect your assets and the wealth you've built."

It's worked well!

 

[Danimal]

It sounds like you are doing a great job and them bringing you on has been a win/win for you and the agency not to mention clients. Another way to ask it is "what do you want?" It sounds like you have a base salary that's providing you with some certainty then you're also getting paid a bonus on a formula. Not a bad place to be!

 

[marindependent]

A couple of notes for you here:

• Its difficult to "rate my PL Producer Compensation Plan" without knowing your base salary relative to the average incomes in your area.
• I am surprised that there is only One PL producer is a 20 Agent Agency. There is a lot of money being left on the table here.
• $4,000 is certainly not what I consider to be HNW - I think of it as often over $10,000 annual. But that is likely a regional difference.
• Id consider, if I were you, asking permission to bring someone in under you to sell "non affluent" policies (sub $4,000) with you as their manager and leveraging the heck out of this relationship.

I'm in AL so premiums are low here.

- I am not sure where you got your data here, but I do not feel its accurate.
According to Insurance.com Alabama has the 13th highest cost for home insurance using a standard coverage amount. Admittedly this is a hugely debatable point, but the southern states are more expensive than most people think.

Best of Luck

 

[tikibarrister]

According to Insurance.com Alabama has the 13th highest cost for home insurance using a standard coverage amount.

Never would have guessed Hawaii is the cheapest.

 

[Mattarono]

Yeah, and they are more than twice the cheapest than California in the 2nd place. The average rate there is $499. Interesting why...

 

[virginuso]

That's really interesting for me!