Insurance Journal Forums

Hey Community,

This is a super newbie question. We are a small agency out in Riverside with 1 employee, so that makes it the agency principal and me plus the employee. We are hiring a new person and i am looking for advice to see how to compensate him. He will be primarily a sales person but i also want him to be a customer service rep. I have read that how you pay your employees is a reflection of their role in the agency. I have been advised by others to pay a flat almost "minimum wage salary" and then to pay the person 25 percent after the broker fees are matched to the minium. So if he makes 1200 base salary, once his broker fee exceeds the 1200 mark, then you start to pay him that 25.

I am a personal lines agency with a little bit of commercial, very little.

Any compensation ideas that you have for me would be greatly appreciated.

Please be mindful that we are small and i have NO outside experience whatsoever.. that includes on how insurance agents should be paid.

Your advice is greatly appreciated.

Meytai

We offer two options to our personal lines producers, 100% commission with no renewal or a small base salary ($2000 in Northern California) with 40% commission and no renewals. Most start with the base + 40% and move to the 100% within a year when they have a built up their contacts/referral sources. If your going to pay new and renewal commission to a PL producer, I think 50% new and 25% renewal would be fair.

I also have a small multiline agency. Our newest personal lines in-house producer / CSR person started out at $12 per hour base plus 30% of any new commissions. No renewal split. After 6 months the base was set at $14, and after 1 year it went to $15, plus he was now eligible for the 401-k matching funds. He writes about 20 to 30 new policies each month, so his comp runs about 3K including the commissions. Actually, he earned about $41,000 in '07, his second year. This isn't making him rich, but in SW Washington it's not a bad living.

You need to be as fair to the employee as you can, but also keep in mind that you are responsible to your bottom line, too!

Swymmer

Meytai,
This is a difficult question to answer because there is no set equation. My recommendation is to design the compensation based on what you want this employee to. The servicing you mentioned, the compenstion would be different if he serviced his clients only or agency clients as well. The more tasks a producer is responsible for, the higher the commission split. For example, who markets the accounts, who creates the proposals, who types applications, who OWNS the accounts, do you provide leads, service center type accounts, etc. These are issues you need to resolve.
Paying a salary plus commission gives you the ability to provide benefits to this employee. This cost also needs to be considered. As you can see, their is no straight answer. Discuss it with your employee to see what they seem is fair. If it works for both sides, it is a good offer.
Contact me at rlevine@alliedna.com is you have any specic questions.

Hey guys,

I appreciate your replies.. i have already hired this guy and set this guy up on a compensation plan that someone has mentioned

Thank you for the help!

Uni