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Hi everyone,

I am currently a producer for a firm in California. My agreement with the firm is as a independent contractor. I have a couple questions regarding producer marketing/shopping responsibilities as well as commission splits.

First, what is the producer and CSR's typical responsibility when marketing/shopping a piece of business to the marketplace, new and renewal? I currently gather all of the underwriting information (loss runs, carrier supplementals, etc.), forward to all carrier we are interested in obtaing a quote from, follow-up with any carrier questions and obtain all of the quotes; I generate the proposal, present it to the customer and collect payment. Once that is complete it finally leaves my hands and is given to accounting for processing (check to carrier, financing, etc.). If you could, please provide details on your workflow for the same situation in your firm.

Secondly, what is the typical commission split between the broker and the producer in your firm? I feel that I am extremely underpaid, especially for all of the work I do to earn a commission.

Your help and opinions are greatly appreciated. Thank you.

I too used to do the same exact thing you are doing. I did all the upfront work from Prospecting to apps to the sale. Once it was sold, then the CSR would get the file. My split at the time was 20% of the 10% the agency received so out of a 10,000 premium the agency got 1000 +broker fee of 5% I got 200. Nevertheless, I am still owed about 10,000 in commission and no longer work there. And even worse, I had no equity in any of the accounts that I sold and they stayed with the agency with my 10K.

I know a few people who work as independent contractors handling all of the initial work until the policy is written. They receive 50% of the agencies commission (new & renewal). They are responsible for re-marketing accounts if needed and receive no other benefits such as insurance, 401K, car allowance, education, etc.)

yourinsuranceagent: Wow, ten grand in commission (how infuriating!!)...my splits are a bit better but not much. The more people I talk to explain that the agent tells the CSR where he/she would like to market the account, the CSR obtains/completes underwriting data (loss runs, supplementals, etc.), sends to markets, generates the proposal for the agent and then the agent presents it to the customer. Doing all of the legwork kind of defeats the purpose of being a PRODUCER! I have no real time to go after new business.

mrmreff: Man, I would have been thrilled to get 50% on new and renewal (since I didn't know any better); it would have at least pacified me for a while. I currently get 30% new/renewal and no fee...absurd!! I don't get any extra perks either (car allowance, cell, health benefits, etc.)

It was my fault not calling around to find out what other agencies paid there agents...I wasn't in the industry prior to becoming an agent and had no knowledge of the insurance industry. Unfortunately the guy I work for is, soon to be was, nice, encouraging and appeared trustworthy only later to find out that I was being screwed in pay and support with my accounts. I have to say that good did come out of this, I gained quite a bit of knowledge of markets and marketing and generated several valuable relationships with people in the industry.

For people viewing this post, please keep the reponses coming, it is very helpful to me and for others that are in the same position.

Thank you everyone for your help and input.

Welcome to the world of greed by agency owners. I too was promised the moon, i.e., a full time support person when I came on board. Instead, I am doing all of the marketing, binding, diligent search reports, opening files, handling claims and everything in between. I am managing a $3M book of business and could do more if I had competent help. I even came on board here for less commission than I was making before because I was told that I would have support help. Go figure. In any case, I have learned to NEVER believe an agency owner again ... I want it in writing.

I own a sizable independent agency downstate New York and also
am one of 5 producers. You folks have no idea what it takes financially to operate this business today. I can't speak for other agency owners, but I can tell you that staff salaries are going through the roof, employee benefits are soaring, and related expenses are increasing rapidly as well. All this while premiums are holding steady or reducing (comml lines commissions are being reduced as well). A fair split would be 35-40% new and 30% renewal. The agency owner is working on a few points and the POSSIBILITY of some profit sharing at year end.

I must say that compensation varies greatly by geographic region, and so does agency commission. If you are new to the industry you will not get and do not deserve 50% of the agencies commission. You can figure out that I am an agency owner and have no problem paying what people are worth. If I have to take the time to train you in everything you must do to process a piece of business, this is time that you are not yet generating money for the agency. Once you are trained, and this will not be a 2 day process, more like a minimum of 30-60 days, we will see what you are worth. After 6 months if you have generated at least twice as much commission as you think you can live on we may have a shot at something. If the agency provides the markets, existing clients, marketing tools, office, phones, computers, advertising and pays the rest of the bills, then the agency deserves to have a producer that does not waste time. No producer should expect to make 50% if they do not have at least 5 years in the business and a proven track record. You should get any contract negotiations in writing, if you did not get the agreement in writing, my first impression is that a good producer you are not. Everything that really happened is in writing especially when dealing with an underwriter or a company. If a producer is handling $3 million with NO support, than the agency has a problem or this represents only several large accounts. That is an excessive amount of premium to handle for 1 person and represents a major E&O risk if this is average size accounts. We have an agency in my town that runs a news paper ad 365 days a year, advertising $45,000 for a CSR and $75,000 for an agent. The production requirements that this agency has in order to get these salaries is nearly unattainable, but the poor saps that go work there think that when they get let go because they could not produce enough, are still worth the salaries they thought they were going to get. I find it humourous that most staff members never stop to calculate what it costs to keep the doors open in an agency, but still think they should make as much as the owner. Go ask your agency principal what he pays for E&O coverage and utilities, and software, and electricity and phone bills and advertising, and postage and office supplies and see if you can pay your expenses plus your share of the agency expenses out of the commission you produce; when you can, it is time to ask for an assistant, because you deserve it. It is not unusual to see a commission cut, if an assistant is brought on to help you, it lightens your load and should allow for more prospecting of new business, this should be seen as an equal share if you do in fact produce more with an assistant, and don't just use them as a servant. If that happens then they deserve to have your salary. CSR's are the most under paid people in most agencies. It is harder for me to find good CSR's so we pay them well to keep them. Everyone thinks they are a good producer but we seems to find dozens that are looking for jobs that pay more than the last. The final thought is that you are really only worth what you can produce, make it count if you still don't get the recognition you should, maybe it is time to move on. Are you really giving your agency all that it deserves from you.
I have agents in my office that do make 50% plus a few perks and bonuses, I also have slackers that want salary and don't ask for commission, because they would make less, they don't last long if they don't show drive to do more. If you were making only 25% of a $3 million book that is still $75,000, this is low if you live in Chicago but nice dough for alot of other areas. I dont know many agents that are qualified to handle $3 million alone with no support that would only be earning 25%.

THIS IN RESPONSE TO LCIS --

I handle anywhere between 20 and 40 accounts a month and am working a minimum of 12 hours a day -- usually more like 14 or 16 hours a day and I am tired of the owner of the agency CONSTANTLY being on vacation. I brought my book of business with me and have grown (attracted new business by referrals from insurance company underwriters and other clients). The owner has not trained me to do anything ... I came with my knowledge and continue to expand my own working knowledge of the industry and markets. I can't even get the owner to complete producer agreements with carriers that I need, which in turn causes me to lose business because the markets won't work with me without the producer agreement. An the kicker is that the owner thinks he owns all of the new business/clients that I write. And this would be based upon what I ask you?? He certainly did not assist me in obtaining them and has not incurred any expense in my getting the client. My new clients are not referred to the Agency but to me by very satisfied clients. I am now having difficulty with carriers due to non-payment even though I know we have the money. I spend at least 30 to 40 minutes a day dealing with notice of intents to cancel when we have the money.

As far as his overhead for me, how much does it cost him for my portion of the phone/and rent, etc. We email 95% of our business into the markets and out to the recipient. The owner does not believe in advertising so the advertising that is done is done by me at my own expense. So, my portion of the true overhead would be his E&O (of which he gets a credit on his E&O due to a designation that I brought to the agency) and predominantly paper ... I generate a lot of paper on my accounts.

I could not agree with you more as far as the E&O exposure that he is incurring due to my exhaustion. I have never missed a day of work and only take one vacation a year (for one week). While I am gone, none of my accounts are handled or marketed or anything.

The owner also does not pay for my continuing education or any other expenses outside of parking ... which is only the standard parking and not reserved. But alas, I realize the error of my ways and am working on rectifying it as soon as possible as I am tired of not getting any support and having the entire rest of the staff come to me with their questions and for assistance in marketing their accounts ... for which I don't even get a thank you, let alone any compensation.

Cheryl,
It sounds like you may have some valid points, this first is that you work for an agency owner that has decided he is not an active producer if he is gone on vacation most of the time. That is his choice as the boss. Have you approached him about your concerns and has he offered any options? If you have not talked with him, and I mean a private sit down behind closed doors, DO IT. If he is an absentee owner he may not pay attention to what you are doing, or he may figure I got a good one and I'll let her go till she drops dead. Don't complain unless he has failed to address your concerns, and if he makes no concessions, then I would start looking elsewhere if you really are as good as you say you are. As far as who owns the book of business, that is pretty clear. If the company contracts are with the agency they usually stipulate that the book of business is his, unless you have some written agreement with him that says you have some vesting or ownership of the book. This is normally NOT allowed by the carriers, because they don't want to get in the middle of a pissing match when producers leave an agency. Remember that if you did not have his connnections to the markets you would not be placing the business. As far as DNOC's for non pay that is a totally different PROBLEM. Let me know if you ever move south. :rolleyes:
I wont allow my agents to work 14 hours a day, they get cranky.

Cheryl your boss sounds like the loser I used to work for. I left about a month ago. I had the same problem with the late pays & intent to cancel notices. He was ruining the agency's reputation with our companies. He gave himself such a huge payraise over the summer, that paying the bills became a serious problem for him.
I started looking for another job last fall when he did not renew his license and went for 6 months without a license. All the time binding coverage, signing apps, certificates...it was ridiculous. I brought alot of good customers in & basically all of my new business was through word of mouth. I was the manager & not necessarily a producer, but I brought in and wrote more business then the producers did. After witnessing the license fiasco as well as several instances of comingling of funds, getting screwed on my bonus(guaranteed when I started) & basically trying to clean up all of his messes in order to keep my accounts, I decided to leave.
It's been slow going here as he is badmouthing me to all of my clients(he told them that I walked out without notice). However, I have confidence in my abilities & plan to put his ass out of business!
You sound like a real go-getter. I wish you all of the luck in the world from someone who's been there.

In reply to agency owners, I have been in the insurance industry since 1986. I think higher commissions are deserved. And yes I had an absentee perpetually drunk boss who had his liquid lunch by 11 am. Meanwhile, back at the ranch I was not only getting the business in but also covering his tail because he left himself wide open for E & O.. Did I mention there were no benefits?????

I have an agency in Houston, TX. My concept regarding my employees is that you have to provide them in order for them to provide you.
I work harder than they do, after all is my business no one will take care of my business as well as i do.
Agency owners should not over-work their CSR's or producers as this only slows down business and creates a lot of E&O exposure.
I pay 50% commission when they bring the business, and 30%-40% when the agency brings the business.
I think is fair enough after all they are producing the business for me.

Treat them well and you will have a lot of success!!! FACT!!!

If you ever come to Houston let me know.

Back to the original question, as an agency owner, what is the producers responsibility when writing and renewing a piece of business? If the producer has more responsibilites, do you pay them more; and vice versa? Your responses are appreciated.

The producer is responssible for the business he writes only and new business that comes that is provided to him.
My CSR'S re for CUSTOMER SERVICE, they take calls, reived the customer in the office and route to however takes care of the insured's needs. What they can do for the policy they will do it if not it will be the responsibility of the PRODUCER.
This is how i see it; If my PRODUCERS want renewal they have to earn it! I will not pay them renewal only for writing the business and then do nothing with the business. If they dont want renewal, fine i will tranfer the file to another Producer or CSR to handle it. But this option is never been in effect, since producer can make a lot of money with the renewal, but they have to work for it.
Just go back to the time you open your agency; you work hard with new and renewals because you need it. Well i think it works the same way. I also agree in providing them with they own CSR but will make some changes in the comission for the new business, but again not my case, I have a Life producer, very good, produces a LOT and he hires his own CSR.
Just an example for a policy he writes for let say $2000 premium; depending on the polivy type i can make up to 120% so it come to be $2400 then i pay him $1200, that policy alone can almost pay for a CSR for a month!! Plus then i get my production bonus and divided with my producers acording with their production.

Hope this is good for you, it works for me and my producers are very happy and never complain, and most importantly they PRODUCE.

Thanks

there really should be a nationwide association or "union" for commissioned producers. we make it all happen, yet do not get the respect or guarantees that agency owners or even csr's get.

many owners complain that "they cannot afford" to pay a producer more than 30-35%. i do not agree with this. i have read many publications that state owners should pay these commissions "to keep the producers hungry for writing new business." i never see any suggestions for keeping other employees of an agency "hungry".

how about paying csr's a pittance per hour, or pay them on a piecework basis-they would then have to work twice as many hours, or twice as fast, to make a living-let's keep them hungry, right? any agency owner that tried that would lose his/her help rather quickly, and there is nothing to stop them from leaving.

why don't producers leave then? many owners work very hard to keep them captive to their agencies. they force producers to sign non-compete agreements, and are quick to sue any producer who attempts to move with his/her book(generated by hard work and ingenuity on the part of the producer). keep in mind that the customers in that producer's book WANT to move with that producer-doesn't that count for something in our "free" society? if the agency that the producer wants to leave is so great, the customers in question would not want to leave with the producer anyway, right?most consumers have no idea that when a producer they know(or even may be related to) and have come to trust, feels he/she must leave an agency(not always for money, but also for better market access and service) they may be blocked from working with their freely chosen professional forever, or at least for years.

marriage used to be this way. it used to be very difficult to get a divorce unless the husband wanted to allow it, and if the wife initiated it, she frequently did not wind up well off financially or socially. thank goodness this changed.

cell phone service used to be this way. if you wanted to switch in the middle of a contract, you had to pay a penalty, and lose your phone number too. thank goodness this has changed, at least the part about keeping your phone number. why can't an insured change his/her agent, and keep his/her producer?

many owners also attempt to keep producers from getting to know insurance company personnel who may be able to help with an appointment, or placement in another agency. most companies have no idea who really produces the business. companies may be afraid to help a producer for fear of being sued by the old agent, or he/she retaliating in some other manner.

the lavish company trips, the profit sharing checks and the accolades go to the agency owner, not the producers who generated the volume.

i know a lot of very wealthy agency owners. i do not know a lot of very wealthy producers. i hope someday i can say "thank goodness this has changed."

i am not bashing agency owners-there are many really fine, honest, humane and righteous ones out there. if they look to the origins of their respective organizations, however, they will find that their founders(which may be themselves or their parents) were producers who were able to freely ply their trade.


just some food for thought for my fellow brother and sister producers out there. this is a commission driven industry, and you generate those. stand up and be proud. maybe if we band together we can change some of this, or at least help each other in some manner, even if only emotionally.


goodproducer