Why Do Insurers Have Premium Requirements?

[kongsmasher]

I understand how they want to appoint agents that will stand the test of time but if they were worried about agent turnover then they should use experience or another variable. Is it competition with other companies within your agency? That is, if a company has a minimum requirement then the agent is more likely to use them instead of a better alternative?..

 

[medsuptage]

Are you referring to Production requirements?

Companies have production requirements for commission levels above average. So they'll give anyone with a pulse- X% commission, but if you Produce X amount, then you can ask for a higher commission. The higher the amount of premium you can prove you produce the higher the commission level you can receive.

I'm not aware of any company that requires you to have production to start writing for them. Although that may be the case on the P&C side, which I know nothing about.

 

[kongsmasher]

P/c. You get appointed based on a number of things. Then once appointed, you have a premium/production requirement to keep the appointment. If you dont give them enough business, they drop you. But when they drop you, they get nothing, so I don't get how this is better.

 

[kongsmasher]

I assume that it has nothing to do with filing fees etc. That can't cost much

 

[car253]

P/c. You get appointed based on a number of things. Then once appointed, you have a premium/production requirement to keep the appointment. If you dont give them enough business, they drop you. But when they drop you, they get nothing, so I don't get how this is better.

You are absolutely correct. The agent is still making money for the company. It makes no sense. The old way was still the best way. It takes time to build the business and as long as the agent is making money production should not be an issue. The old way was the right way.

 

[VolAgent]

I assume that it has nothing to do with filing fees etc. That can't cost much

You're missing the real costs.

Labor and claims.

If you aren't writing much with them, you probably have a poor understanding of their appetite and will need more help from underwriting and other support people. Also, if you aren't writing much, then you probably aren't giving them good and diverse risks. It could be because you don't really understand what they want or you are just using them for bad risks you can't put elsewhere.

 

[lsberrios1]

From my point of view (reinsurance) premium volume requirements are in order to cover administrative costs. Some accounts are not worth the hassle of underwriting. Some exceptions might be done for companies with unbelievably good experience and exceptionally low / good exposure.

I also agree with the comment above. Low premium volume probably means less diversification due to low number of clientele.

 

[BlockO]

It's not worth stressing yourself over, or getting bent out of shape because you don't meet a carrier's production requirements (unless you are captive, then it's a major stress).

But as far as indy agents not meeting their quota, it happens. I got kicked to the curb two years ago by a carrier.

Prior to our divorce, a sales rep called me and said "you're not meeting our company's production requirements.... why?"

My answer: "Because companies A,B,C and D are beating your rates about 90% of the time. Become more competitive, and I'll be delighted to send more policies your way.".

I was upset at the time, but looking back, the worrying was all for nil. I haven't missed them a bit since then.

 

[VolAgent]

If a carrier wants to cut you loose for low production, are you really missing out?

Obviously you weren't using them, so unless something is about to change, you probably won't miss them much.

 

[F150]

just brings to the point, research carriers before you add them, are they competitive in your target area/market?