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Re: Travelers reducing commissions
Posted: Wed Oct 16, 2013 1:46 pm
by Wildwillie
The thing that always gets me is "who" at the company took an 8% cut in pay? Seems like the government - only the guys at the bottom deserve the cuts. Like to know if the President or any other officers took a cut in pay like that.
Many other companies will follow on that same line if the agents do not bolt from Travelers. To many other companies would give a bonus for that business.
Progressive had to have an addendum contract to give back some of their cut in commissions.
![Wink :wink:](./images/smilies/icon_wink.gif)
Re: Travelers reducing commissions
Posted: Fri Oct 18, 2013 10:29 am
by ins-atty
It's not an 8% cut, it's actually a 20% cut: 15% x .80 = 12%. Despite the cut, many agents will think it's great for awhile. Travelers will be highly competitive and get us to write our new business and force us to move many of our existing customers there with their new, lower rates. Then they'll go up.
Don't fall for it. Our philosophy is to write with companies offering cut rate commissions (i.e. Progressive, Foremost, and now Travelers) only when we absolutely have to.
Re: Travelers reducing commissions
Posted: Tue Oct 29, 2013 9:01 am
by Pathwayinsurance
ins-atty wrote:It's not an 8% cut, it's actually a 20% cut: 15% x .80 = 12%. Despite the cut, many agents will think it's great for awhile. Travelers will be highly competitive and get us to write our new business and force us to move many of our existing customers there with their new, lower rates. Then they'll go up.
Don't fall for it. Our philosophy is to write with companies offering cut rate commissions (i.e. Progressive, Foremost, and now Travelers) only when we absolutely have to.
Absolutely agree, same thing we do in our agency. Why take a pay cut if you have to?
Re: Travelers reducing commissions
Posted: Wed Oct 30, 2013 11:29 am
by gforaker
Pathwayinsurance wrote:ins-atty wrote:It's not an 8% cut, it's actually a 20% cut: 15% x .80 = 12%. Despite the cut, many agents will think it's great for awhile. Travelers will be highly competitive and get us to write our new business and force us to move many of our existing customers there with their new, lower rates. Then they'll go up.
Don't fall for it. Our philosophy is to write with companies offering cut rate commissions (i.e. Progressive, Foremost, and now Travelers) only when we absolutely have to.
Absolutely agree, same thing we do in our agency. Why take a pay cut if you have to?
It is not just a matter of giving up money if you don't have to. These given up commissions are essential for a healthy agency system, even if the companies don't realize it. This is not just profit for the agent's pocket, but necessary to finance growth of the agency through hiring and training new producers, buying other agencies, and updating automation.
Re: Travelers reducing commissions
Posted: Sun Nov 03, 2013 10:25 am
by OldIndyAgent
Look around...
I know of one company with realtime electronic submission with bound/underwritten quotes paying 17% NB in P&C. ...And they are getting ALL THE BUSINESS they want, all day long. Why keep sending business to companies like Progressive if they are going to eat your book???
Re: Travelers reducing commissions
Posted: Thu Nov 07, 2013 12:12 pm
by ForumReader
Has anyone given any consideration as to what is best for the policyholder, or do you make your decisions based upon what is best and easiest and most profitable for your agency>
Re: Travelers reducing commissions
Posted: Thu Nov 07, 2013 12:55 pm
by lonestar
Forum Reader, good question.
I wonder what answer you would get, if you posed the same question, to a Gecio call center rep or a State Farm agent. Are they doing what is best for the consumer when they knowingly present a very high insurance quote? For example, State Farm's homeowner's rates are on average, double everyone else in Texas. If a State Farm agent knows his/her home rate is double the market, does that prevent the State Farm agent from presenting the quote? Or, does the State Farm agent suggest the client not buy the State Farm policy, because it would not be in the consumer's best interest?
Or are they letting the free market system work, by letting the consumer obtain the information the consumer is asking for, and letting the consumer make the decision as to whether they will buy or not?
An independent agent, can choose to support or not support a particular carrier. That is the beauty about having choices. IA's do not have to sell only on price. Although the rates are an advantage that the IA can offer over the captives. There are other factors to consider from the agents and the clients POV. It is, after all, a business still.
I would think that if a client from Allstate, State Farm or Farmers came to an IA for a home / auto quote, and the IA was able to save the client $2,000 a year with several of the IA companies, the IA, if smart, will not place the business with a company that is trying to hurt his/her livelihood. (ie, Travelers.)
What's best for the customer
Posted: Fri Nov 08, 2013 1:07 pm
by ins-atty
Forum Reader,
A fellow agent and I had the same discussion about always doing what's best for the customer when Progressive took a big commision cut several years ago. The other agent argued that an agent is always obliged to go with the lowest company, even if that company had a significantly lower commission rate.
My response was, "What if the cheap company takes it one step further, and pays 2% commission and is $25 lower than a company that pays a standard 15%? Would you still sell the cheap policy? Even if a 2% commission rate would put you out of business?"
Re: Travelers reducing commissions
Posted: Mon Nov 11, 2013 11:37 am
by d's insurance store
I've always felt that the independent agent has the obligation to offer what is best for a specific prospect at a specific point in time. Not necessarily what shows up as the cheapest on the comparative rater.
There have been many times in my career where I don't suggest the cheapest. The prospect may have a history of cash flow problems and potential late pays. Under that circumstance, I suggest a carrier that has a liberal reinstatement policy. There may be potential undeclared drivers in a household that is fluid with occupants. Under those circumstances I suggest a carrier without a very strict permissive driver clause. There may be dwelling attributes that might conflict with very strict claim interpretation from one carrier over another. I suggest the more appropriate carrier.
If the prospect wants my suggestions and services for a policy that will work without apology in the unexpected event of a claim, then they choose to do business with me. If not, well, I've got no heavenly right to stay in business and if enough prospects find little value in my offerings, then I guess I'll be greeting shoppers at WalMart.
And on the issue of commission rates, if the carrier makes commission low enough, then it's time for me to find another carrier that can satisfy my marketplace and pay me enough to service the account and put dinner on my table.
Re: Travelers reducing commissions
Posted: Tue Nov 12, 2013 1:27 pm
by Long Island agent
I can remember when national companies treated their agents like the regionals do now. Back then they really acted like they valued the business that their agents sent them. Now they act as though their agents are a burden.
And it appears to be happening not just to independent agents. Parent company Zurich has withdrawn Farmers from independent agents in downstate New York, to be replaced by higher rates (and lower commissions) from Foremost. Farmers will only be using captive agents, as they do in other parts of the country. BUT, Zurich also owns and advertises 21st Century, which has lower rates than Farmers, so Zurich is sticking it to their captive agents.
Allstate is sticking it to THEIR loyal agents with e-surance, a direct company with lower rates than Allstate.
I was just told that insureds can go direct to Philadelphia; Philly won't discourage that.
Just as airlines put 95% of travel agents out of business by refusing to pay fees so as to encourage the traveling public to do it all themselves, thus giving more income and profits to the airlines, insurance companies' goals are to eventually squeeze out agents and brokers as much as they can.
Re: Travelers reducing commissions
Posted: Fri Nov 15, 2013 11:30 am
by Cecily
Re: Travelers reducing commissions
Posted: Fri Jan 17, 2014 12:26 pm
by lonestar
Well, I had a meeting with my Travelers rep recently. They are spouting the company line, such as “The new auto product WILL be successfull…” and the impression the reps are being told to communicate to the agents is: “YOU WILL sell it regardless of commission or else…”
Hmmm. Let me correct you Mr./ Mrs. Travelers rep. I DON’T HAVE TO SELL your product at all, for lower commission. Travelers will have to be the lowest rate by $200 or more / 6 months before I will offer your product. Jay Fishman and company got too greedy. I am ready to roll my book if I have to. Threaten to pull my contract all you want. All Travelers has accomplished by reducing commissions is that they are sending the message that they now think agents are worth 20% less than they did before.. Now, when I run my comparative rater, I will have a third criteria to evalulate prior to choosing which company I will present to the client.
1. Which companies are in the top three.
2. Of these top three companies, which ones think my compensation is worth the market rate?
3. Lastly, which companies compete directly against me via call center distribution.
Not to mention the business that they actually win with me, don't they understand that I will be looking to move that piece of business at each renewal to get back to my normal commission? I have spoken to several other independent agents. The common opinion of Travelers nowadays is "Travelers just does not know what they are doing."
Now, come back and visit me again once you pay a market rate of commission again, then we’ll talk about presenting your product to the public again.
Re: Travelers reducing commissions
Posted: Wed Jan 22, 2014 11:38 am
by ocbroker
Lonestar, I'm sure the recent article about Travelers tripling their 4th quarter profit just fueled your frustration, no?
Re: Travelers reducing commissions
Posted: Thu Jan 23, 2014 12:38 pm
by lonestar
oc, what really fuels my frustration is how any agent could be ambivalent.
Re: Travelers reducing commissions
Posted: Sat Mar 08, 2014 2:49 pm
by lonestar
Well, how is the new Travelers auto product working out for everyone? Is it the Holy Grail that will turn the insurance industry on it's head, as Travelers suggests? Are all of you agents forcing as much auto as possible their direction, to help hasten reduced commissions across the board from other carriers too?