Setting Goals In The Insurance Business

[mj771300]

I am probably going to sign a contract with Kentucky Farm Bureau this week. They will pay me a "supplement" for the first 4 years while I build my book.

My goal is to get to 100K in reccurring income as fast as possible. I have 2 questions:

1) What size book will I need to spin off 100K of income as a captive agent? and....($1M? $2M? $3M?)

2) What should I expect to make on each premium dollar that is coming in the door? (ie, wil I make $.10 on every dollar? $.05 on every dollar?)

Thanks in advance for your help -

 

[moonlightandmargaritas]

My goal is to get to 100K in reccurring income as fast as possible. I have 2 questions:

1) What size book will I need to spin off 100K of income as a captive agent? and....($1M? $2M? $3M?)

Color me simple, but how can you set a "goal" of 100K in "recurring income" without knowing what you'll have to accomplish to get there?

Go back to the drawing board man.

You're from Kentucky? Do yourself a favor, and do everything you can to support Dr. Rand Paul for US Senate.

 

[insuranceexec]

Color me simple, but how can you set a "goal" of 100K in "recurring income" without knowing what you'll have to accomplish to get there?

Go back to the drawing board man.

You're from Kentucky? Do yourself a favor, and do everything you can to support Dr. Rand Paul for US Senate.

Moon, spot on!

If only we still had those dang 'ole rep points.............LOL

 

[mj771300]

Color me simple, but how can you set a "goal" of 100K in "recurring income" without knowing what you'll have to accomplish to get there?

Go back to the drawing board man.

You're from Kentucky? Do yourself a favor, and do everything you can to support Dr. Rand Paul for US Senate.

OK, Stupid post. I guess I could have just asked the 2nd question. What is a good estimate for what I'll make on each dollar that comes through the door?

 

[moonlightandmargaritas]

OK, Stupid post. I guess I could have just asked the 2nd question. What is a good estimate for what I'll make on each dollar that comes through the door?

No no, not stupid at all.

The question to ask is what sort of income can I make from a million, two million dollar book, then figure out if it's reasonable...

If you have to attract two new households per week, that seems reasonable to me. If you have to attract six new households per week...

 

[insuranceexec]

To solve any equation you must have 2 of the 3 variables.

You have given us one; 100K. What else can you give us?


X/100K= Y. The answer to your question is both plus or minus infinity.

Hopefully this helps.

 

[VolAgent]

Once again Paul hit it on the head. After all, only you or someone else at Farm Bureau in KY know your commission schedule.

How can you begin to figure out the answer to #1 without knowing the answer to #2? I'll give you a hint, your commission schedule is the answer to #2.

Once you know that, then you can talk to nearby Farm Bureau agents and competing P&C agents to see what their product mix and average premium is to project the size book and number of policies you'll need to generate 100k.

 

[Justin Bilyj]

VOTE FOR RAND PAUL IF YOU HAVE ANY LAST IDEA OF SAVING THIS COUNTRY!!!!
p.s. Paul you rose a tiny inch up my book for that remark lol

 

[djs]

Hmm, not really a tough question, as long as you understand the answer is only a ballpark.... you can do better, worse, whatever.

Obviously, there are some variables, such as does Kentucky Farm Bureau have competitive premiums? Will they write the house out in the woods that doesn't have water except for a cistern? What about the house down the street that needs some repairs (I lived in Kentucky for a while, there are great houses, and then there are some great outhouses).

General rule of thumb, you will make $100 for every policy you have. If you have a 1000 policies, you will make $100,000. If you have 500 policies, you will make $50,000.
In new business, you might make slightly higher, but I wouldn't sweat this to much, I would just use the same rule of thumb.

In case you are wondering, a policy is considered an item, so a home, 2 cars, and a boat would be 4 policies (different carriers use slightly different terminology here). In this case, you would make $400 a year from this family, maybe. If the 2 cars are old and they only carry liability, you'll make more like $300, since the premium will be lower.

So, in short, you'll need a $1M book of business to spin off recurring revenue around $100K. Using 10% is a safe number, though some lines may be higher, some lower.

Here's the catch. Getting recurring revenue of $100K doesn't mean you pocket anywhere close to this. Start subtracting.....
- E&O insurance (you are talking P&C, not health, it adds up)
- Rent for the office
- Computers & Furniture
- Staff (oh, didn't calculate this, you better!)
- Phones
- Office supplies
- Business license, CE credits, insurance license renewals
- Postage
- Marketing (this can be your biggest expense)
- on and on.....

Now, you need to decide what you mean by $100K in recurring revenue. I know agents that this wouldn't even cover their overhead. I also know others who would double their income with this.

Dan

 

[mj771300]

Once again Paul hit it on the head. After all, only you or someone else at Farm Bureau in KY know your commission schedule.

How can you begin to figure out the answer to #1 without knowing the answer to #2? I'll give you a hint, your commission schedule is the answer to #2.

Once you know that, then you can talk to nearby Farm Bureau agents and competing P&C agents to see what their product mix and average premium is to project the size book and number of policies you'll need to generate 100k.

The real question is: is this the year that Kentucky beats Tennessee in football???? Sadly, I think the answer is still no.