Insurance Journal Forums

badger wrote:Rick, what state are you in, I may have some market ideas
best of luck, just take it one day at a time

Arizona, i'd appreciate any ideas you'd like to volunteer!

Thanks!

rick

You can also email me on my yahoo account: spool32@yahoo.com

LadyBroker wrote:In the beginning of this thread, someone mentions they may let their Life and Variable annuity licenses expire. While I understand you may not be focused on writing Life right now, you may as well renew the licenses. It's a bigger problem to need them and not have them, don't you think?

Definitely a good point. Those licenses were hard to get and thats not even including the difficulty level of the tests. The good news about it is after becomming detatched from a broker/dealer you have two years to home it with another one. The license renewal costs like $320 every december as i remember so I can skip a couple years of that while i'm getting re-established then I can just pick back up with it again. I recently renewed my P&C and L&H licenses and the DOI told me that when i re-establish with a new broker/dealer i can just go back in and pay the $120 fee + $100 late fee and get it re-upped.

I think I will pick back up with those in early 2008, for now i'll just let em sit dormant.

Hey, Slim...

The biggest problem you will have when you become an IA will be finding a pair of pants with enough pockets to store all the extra cash you'll make as an IA!

Honestly, I don't think a hard-working, well trained, knowlegable agent with a decent business plan could fail at this business.

Emphysis on all the above attributes. If you are a newly licensed agent with little experience, fat chance.

As I mentioned before, team-up with a small indy agency that offers potential for full ownership and then work toward that goal. There are lots of 60-year old agency owners that would love to have a solid perpetuation plan in place, but don't. Check around.

Swymmer

Thanks to everyone for giving me some detailed suggestions. I have to make a decision shortly, so all the info is appreciated. It basically comes down to a comfortable income with a captive agency, with a guaranteed option to buy-in down the road, or starting an independent at $0 and having a much higher possible income in the future. I will make it work either way.

OK, I know this is two in a row, but I have a few more questions. Many people here have suggested approaching an established IA as a producer with the option of purchasing the book later. This has been difficult to find in my area and moving is not an option.

I have seen some posters who have said that they worked for an IA for a few years as a producer, but after a certian length of time they were able to buy the renewals that they had brought in to the book and start their own IA. My question is what is a fair commission figure for new business and renewals as a producer in this scenario. Also, if the purchase price is set at the time of the contract agreement (for how much the producer will pay in a few years when he buys his own renewals from the IA) what is a fair price. ie. 1 X book, .75 X book, etc.

Under a different scenario; what is fair compensation through commission percentage for a contract producer for an IA without any future ownership if:
a. You maintain your own office/staff/files/bookkeeping
b. The IA handles all of your service work and manages your paperwork and overhead, while the producer handles sales only.

Thanks in advance. I am trying to get some hard numbers together here so that I do not get into a bad deal.

[quote="slim"]OK, I know this is two in a row, but I have a few more questions. Many people here have suggested approaching an established IA as a producer with the option of purchasing the book later. This has been difficult to find in my area and moving is not an option.

I have seen some posters who have said that they worked for an IA for a few years as a producer, but after a certian length of time they were able to buy the renewals that they had brought in to the book and start their own IA. My question is what is a fair commission figure for new business and renewals as a producer in this scenario. Also, if the purchase price is set at the time of the contract agreement (for how much the producer will pay in a few years when he buys his own renewals from the IA) what is a fair price. ie. 1 X book, .75 X book, etc.

Under a different scenario; what is fair compensation through commission percentage for a contract producer for an IA without any future ownership if:
a. You maintain your own office/staff/files/bookkeeping
b. The IA handles all of your service work and manages your paperwork and overhead, while the producer handles sales only.

Thanks in advance. I am trying to get some hard numbers together here so that I do not get into a bad deal.[/quote]

I can only tell you the deal at my agency. 40% new 30% renewal unless you hit $1 mil in commission then it is 45/35. They handle service work and provide great back office support. If you want to leave, you are paying 1X book value.

Hey Slim I am open to throwing some ideas around with you. Our corporation is licensed in Arizona/California/ Texas. If your in these states send me an email and we can perhaps discuss some opportunities. We pay very generously and allow you to keep your book. Of course we do have some conditions but I am willing to discuss if you are located in these states. My direct email is jp@realestateeno.com. I look forward to talking with you.

Slim our splits our 60% new and 50% renewal.

[quote="jtabosida"]Slim our splits our 60% new and 50% renewal. :shock:[/quote]

Must be personal lines with all of it going into service centers.

I don't see how the agency could afford that split for commercial lines.

Sounds like the 60 / 50 split is for an agency that also covers all of the on-going expenses. Slim specifically wants a relationship where the agency he works at handles all the busy work... If he only gets 60 /50 but has to cover the rent, lights, equipment, E & O, etc... it's a poor offer!

There are several agency clusters that do the same type of arrangements as this... offering markets to the newbie, but pay about 90% of the commissions and a fair share of the contingents, too! Look around!

Swymmer

Thanks for the reply JTAB. I just sent you an email.

Also thanks to Volstrike it is good to get a range of what is normal compensation.

Name one.......... I am curious. some markets barely pay that I would be intersted to see how they are able to offer that and stay in business. In addition, we would cover his E&O, files, policy issuance etc... Anyone paying 9% to a non partner would have no advantage to the relationship, we too our in the business to make money. I'm not saying your lying.......more or less I find that hard to believe. Help me out here by naming a company doing this, and let me do my homework.

All carriers pay different commissions based on many factors like size of book, Loss ratio (accounts you insure provide a profitable business), commitment etc. If the carrier is paying 20% and your paying 9% that would be profitable from a business point of view. However, if your only getting 12% why would yo u pay 9% out? That makes no sense.

I'm curious if your talking about wholesalers honestly. If so then your statement is true. Today's wholesale markets are designed for newbies (forgive the term). I don't know of any IA paying that. Let me know.

volstrike3 wrote:

jtabosida wrote:Slim our splits our 60% new and 50% renewal.

Must be personal lines with all of it going into service centers.

I don't see how the agency could afford that split for commercial lines.

Actually we write 100% commercial lines. There are certain ways we have structured our company "LEGALLY" to lower the cost of our overhead. We write 100% Professional Liability (Doctors, Lawyers, Real Estate, etc.) In addition I am not a greedy man and want to see the next person(s) succeed in their ventures, why not pay a man or women what their worth. I'd rather you be happy and content in your position than have you look for a rhyme or reason to leave.

I'd be happier in life trying to help others reach their financial dreams rather than get them for what I can. We profit just fine from our splits the way they are. I'm just looking for someone to bring an insurance line they specialize in to the table to help us diversify our book and grow. you have the email address I posted previously, feel free to write.[/quote]

jtabodida, I was thinking of wholesalers like "AgentSecure" and the noodle when I said the pay-outs are more. My point is that IF I'M GOING TO BE PAYING ALL OF MY OWN EXPENSES SUCH AS E & O, RENT, LIGHTS, EMPLOYEE SALARIES, YOU NAME IT... then 60 / 50 is a bad deal.

If I contract to an agency that pays the salaries, lights, E & O (including the 6 & 63 coverage), does the busy work while I produce... then the 60 / 50 is by far the best I've ever seen! If you can do this, not saddle the producer with too much business expense, then you offer an excellent commission.

My producers get a base salary, 50% of the new and 30% of the renewal commissions as well as a full set of benefits... medical, life, STD, LTD & 401-k with a 6% employer match. I also pay the E & O for all in the office as well as all CE costs and association membership fees.

But, they are employees, not owners, so if they ever leave the book stays here. I must pay OK, as in 30+ years in business I have only had people retire, not quit to work for a different agency.

Anyway, this is a long winded apology. If you can cover business expenses and pay at 60/50... that's great!

Swymmer

wlunday, I'm a producer, and your payment and benefit structure is exactly the same as I receive from my employer. Life is good, I have no complaints, although I could use a little more CSR support, but that will come as my book grows. I also share in 5% of any contingency income from our companies.

I also agree with your attitude on the Series 6 & 63. I recently let those lapse. You can't be an expert in everything. My bread & butter is commercial P&C and I'm very happy with that.