Thinking about getting P&C license.

[JoeWolf2020]

Hey guys, I am thinking about getting a property and casualty license. Was curious how the business model worked. Is it like Life where you can be independent and do your own thing, are there commission levels?

I am completely new to this side of the insurance world. Thanks.

 

[Mike007]

Similar to Life, you can chose to be independent or captive. Captive is much easier to get appointed. Find the company you want to work with and submit your resume and application for a job interview. Captive commission range between 5%-10%.

Some states may require you to get a bond and submit it to Dept of Insurance before you can start producing.

But before the bond, you need to do research and find which clusters are available to you. Meaning they do business in your state. Clusters are like IMO. As an independent agent, commission range between 10-15%. There will be commission split between you and the cluster.

Most clusters require you to buy in. Pay a Fee. Fees can range from $1,000 to $60,000. But most will be in under $10,000. The more buy in fee, the larger your commission split. The less buy in fee, the lesser your commission split. There are also clusters that are free to join but they also offer the lowest commission split and lesser authority, meaning you can not bind the policy. The policy will get bind by their corporate office 24-48 hours later.

If there is no buy in. Your split will be 50% or lower for New and Renewal. If you buy in, expect 60-90% commission split in your favor. The higher the commissions, they more expensive it is.

Once you signed on with a cluster, you are a sub-agency under their agency so you do not have to worry about sales numbers and quotas. Some will even share bonuses with you as well. Ask that cluster how much authority you have with them and see if they have any restriction of what you can and can not do. Everyone operates differently. The more power you have, the better. Especially, book of business, binding authority, and your ability to hire whoever you want. Good training is also important.

Personal policy is much easier to understand and learn. Commercial on the other hand, much more complicated to learn. Turn over will be much higher on the Personal side.

In general, it is very hard to get contracts on your own. Most require a cluster to get started. It can be done on your own but that path is much, much harder route to go. With that said, even Clusters require you to have 1-3 years prior experience before they bring you on board. Your commission will be based on who you contract with and how much your buy in fee is. Most P&C insurance companies require you to have an office outside of your home, especially personal side.

 

[RichardCO]

Mike007 certainly has the general outline correct but the cost incurred with different aggregators or clusters have little relationship to commission split or other favorable aspects of the contracts. Counter intuitive but that's the current marketplace. P & C market can certainly be a great business but operation is different than Life & health. To scale up the business you'll want staff for servicing and to write majority of business. Really different business models but can certainly work off each other. Finding a cluster requires some research, besides startup costs and commission splits be aware of restrictions regarding non-competes, buyout fees and required contract terms of service. Good plan, add P&C.

 

[JoeWolf2020]

Mike007 certainly has the general outline correct but the cost incurred with different aggregators or clusters have little relationship to commission split or other favorable aspects of the contracts. Counter intuitive but that's the current marketplace. P & C market can certainly be a great business but operation is different than Life & health. To scale up the business you'll want staff for servicing and to write majority of business. Really different business models but can certainly work off each other. Finding a cluster requires some research, besides startup costs and commission splits be aware of restrictions regarding non-competes, buyout fees and required contract terms of service. Good plan, add P&C.

I am glad I asked. This seems like it is more complexed then the L&H side of insurance. If your just looking to make money in a simple way this might night be the answer.

 

[marindependent]

I think the short answer is the setup is not at all similar to getting set up as an independent life insurance producer.
It is:

• A lot more expensive
• Far more complex
• And the business is more recurring with the same clients

Mike007 did a great overview!