SIAA Alliance for Independent Insurance Agents
- Thread starter pzerarka
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This group in not for everyone if you are a low producer DO NOT JOIN...because they hit you with monthly minimum fees. But you have a way to terminate your contract..its not the end of the world.
Not true, SIAA is great for a low producing agency. Once you hit 1.5 million or higher, doesn't make sense. Why would anyone want to pay 2k+ a month in "membership fees". What a joke!
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You are not taking into account that if you are starting out, you would not be able to get close to that premium if you are not with them.
There are other ways...Like partnering up with an existing agency. Ok, let say what you are saying is true... You telling me because the master agency set you up, you should reward them with over 300k in fees over a 10 or 15 year contract?
Are you talking about buying an agency, or partnering with them? If you partner with them, you will be paying them a lot more commission split than with a cluster.
If someone were to pay that much in fees over 10 years, you would be averaging over 300k in commission per year...that's pretty good if you are starting out...and the extra bonuses, perks, etc would probably almost pay for the fees.
300K a year is only 25K a month of new business each month. that's pretty nornaml growth, I would think?
Are you talking about premium or commission? Sure, $25k/month premium is normal, not commission...unless I'm doing something wrong!
25K in premium a month. if you did 25K a month in commission the first few years, you would agent of the decade!. I think I will hit 25K a month, end of my 5th or 6th year.
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I should add... This is gross, not net. I'm sure people that are not familiar with being a business owner will think 25k a month is rich. By the time you add your overhead, salary for staff, taxes....nothing close to 25k.
Back when I started as a CSR in the P&C business (pre-internet) in 1994 opening a P&C agency was a breeze. All one needed to do was to get licensed, rent an office, call a few carriers to get appointed, put an ad on the Yellow Pages and walla – off you went.
Over the years the barriers of entry in the P&C industry have become harder and harder. Today it is right next to impossible for a new agency to become appointed with a national carrier. Doesn't matter how much money you have or how talented you are. Carriers are not interested in what you are going to do or how good your business plan is or the fact that you think you are going to sell 1 million dollars per month and set the P&C world on fire. The cold reality is the carriers want to know what you have already done.
Last week I was having lunch with a marketing rep and she told me on average she gets 15 calls per day from agents looking to get appointed. And she told me and I quote her "... most agents calling have the same story how they are going to sell a ton of policies but historically most fail so I just ignore 99% of the calls...".
Don't you just love posts like this that give you the problem but never the solution? In other words, say for example I came here and said that SIAA was the "kingpin or mobster" of the P&C industry and how terrible they are but then never gave you any alternatives - that would be just venting and not be of much help now would it?
My agency is almost 2.5 years old nearing 2 million in premium and can categorically say that without the SIAA carriers my BOB would probably be half of what it is today. Signing up with SIAA was the single best business decision I have made thus far. Is SIAA cheap? NO, but that's how they weed out the amateurs from the pros. And the carriers love this concept as well because it allows the carriers to study the agent before appointing the agent directly.
Do I wish I didn't have to pay up SIAA to get appointed with carriers such as Nationwide and Liberty Mutual, of course! But that's not an option. And trust me, in today's P&C environment an agency that does not have access to the top hitters will struggle for sure.
So if one is opening a P&C agency today, the options I see available are:
1) Sign up with a cluster or aggregator such as SIAA and pay their fee.
2) Sign up with a local agency that is willing to let you use their carriers and pay their fee via shared commission.
3) Buy into an agency which depending on the book and the appointments the agency has can cost quite a bit. But this is a very risky transaction in many aspects especially for someone that is new to the industry.
4) Struggle for years and years without the major carriers hoping you will make it past your third year.
So friends, unfortunately if you choose options 1, 2, or 3 you will have to pay someone something. There is no free lunch. In other words, you will have to pay a "kingpin or mobster" their "dues" or shall we call it the "fee to play in the game". Or of course going with option 4 is an option but trust me when I tell because I've been there, without the major carriers it will be a very tough going.
SIAA is not a cluster. SIAA is an aggregator. There is a difference there. And I couldn't be happier with my SIAA setup. Now there are a bunch of other aggregators and clusters out there. A friend of mine who also frequents this forum (Underwriter2agent) is setup with Global Green and he is happy so like most everything else, you have to pick what suits you best.
As far as getting out of the SIAA contracts, unless you have grown your agency to 20+ million dollars why would you want out of the contract and lose all the profit sharing and bonuses? That would be crazy!
My experience has been the opposite of what you are describing here. Now that I am approaching 2 million in premium it is making MORE sense than ever joining SIAA because now my profit sharing and bonuses from the carriers are kicking into high gear. And to be brutally honest, your post is completely incorrect. When my agency was just 1 million in size it cost me more to have SIAA than it does now. Because the bigger the BOB is the less money you will pay SIAA.
Also consider this, if you are paying $2,000 per month in fees to SIAA that would mean that your agency's gross revenue would be $20,000 monthly putting your total BOB at 2.4 million in premium. I will soon be at that 2.4 million in premium and can say I don't mind at all paying $2,000 to SIAA. Especially when you consider after paying the SIAA fee and the agency's expenses, I will probably be netting about $10k+ monthly NET into my pocket. And taking into consideration my agency is less than three years old, I think I can scratch out a living on that income.
Is SIAA right for everyone, no, of course not. But then again it goes back to the foundational question, if someone is not willing to:
1) Pay an aggregator or cluster to use their carriers,
2) Share commissions with a local agent to get access to his or her carriers or,
3) Buy up an existing agency
What are the other options?
Well, let's look at these numbers. If you partnered up with a local agency I am assuming you do know that that agent more likely will want a piece of your business too correct? Put it this way, if another agent came to me today and asked to use my carriers I would say no. Because why would I? I am already established. Plus, why add on the additional E&O risk you would bring me, doesn't make a lot of sense. But for argument's sake, let's just say that I played along and agreed to it, I would want AT THE VERY LEAST 25% of your commissions to cover my costs for E&O and etc.
Using this backdrop, let's just say you wrote a policy in the amount of $10,000 in premium through my agency and the commission the carrier paid out was 15%:
$10,000 Premium
15% Commission paid by the carrier
$1,500 Commission paid to my agency
Now take out my cut of 25% ($375) and that would leave you with $1,125 net. And even though you and I would have a written agreement that the business is yours, guess who really owns the business, you got it, me.
Now take these same parameters and use them assuming that you were signed up with SIAA. I can't give you the specifics but can say you would make more than $1,125. And guess who would truly own the business? Correct, you. So which option is better?
And to closeout, let's not forget that if you work the system right, very soon you would have direct appointments with the big hitters and how much value are those direct appointments worth? Well, priceless.
Hope this helps someone out there trying to decide the best path for their success!
Good luck.
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