Stay as employee at independent agency or start my own?

Aug 5, 2019

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  1. ForeMike321
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    ForeMike321 New Member

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    THere is a question but I think the following info is relevant to get the best answers:
    I spent 2 years as a captive producer and then went to an independent agency where I have the following arrangement:
    Book ownership is split 50-50
    Commission split is 50-50 and goes to 60(me)-40(agency) starting in 2020
    I also collect a 25k salary in 2019 and 20k in 2020 and no salary after 2020.

    I produced 250k in premium, 50-50 PL & CL in my first year and I know I can do more in the same environment as there was quite a lot to learn getting started this year.

    I ask as someone approached me and said they would like me to run an agency for them. Where I would be able to have better splits on commission and even retain 100% ownership of the book produced by me. The person who wants me to run the agency does not have any insurance experience but is a highly successful business owner in about 5 other ventures.

    Am I crazy to consider going down this road? what is the average take that clusters get from agencies and how do most profit sharing or loss ratio bonus's work? What is the cost of new agency e&o an CRM software like vertafore? THese are the costs and compensations that I am having trouble finding answers too and are necessary for seeing if moving is a good idea.
     
  2. Mike007
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    Mike007 Expert

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    Here are some of the basics....but it ranges from cluster to cluster.

    Commission splits with clusters range from clusters to clusters and it also depends on how much the buy-in fees. The higher the buy-in fees, the more commission split favors you. The lower the buy-in fees, the fewer commissions you will get.

    Commission and Bonus pay can range anywhere from 40/60. 30/70, 20/80, and 10/90. (Your split is always the larger share). Fees for E&O and CRM can range between $300-$400+ a month. You'll also go to need to add in other expenses like office space, internet, phone line, insurance, etc.

    Some clusters let you bind policies, some won't let you and it can take up to 24-48 hours to bind.
     
    Mike007, Aug 6, 2019
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  3. JWP
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    JWP New Member

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    If you're long term goal is to manage a bunch of people (producers/csr) then you might want to open an agency.
    But if you would prefer to just keep it simple and focus on your own book then I'd probably stick with an established agency, provided they have good carriers. It'll be less headaches. Your pay and split sound fine, provided there is a service team which frees you up to focus on selling.
     
    JWP, Aug 7, 2019
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  4. ForeMike321
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    ForeMike321 New Member

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    Thanks for the feedback. I decided to stay put and your answers on the cluster data lead me to believe its the right move for me now.
     
    ForeMike321, Aug 20, 2019 at 12:30 AM
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