Last year was not a big year for raises in independent insurance agencies as salaries in many agencies across the county stayed right where they were in 2004. Producer commission rates stayed the same also.
More than 1,000 insurance agency owners from across the country responded to an Insurance Journal online survey on agency compensation practices, providing these insights and more into who’s worth what in the independent agency system.
Overall, 57% of the total 1,052 respondents said that salaries in their agencies stayed the same in 2005 compared to 2004.
More than a quarter (27%) gave no salary increases to managers in 2005, but 18% gave a 3% salary increase. About 20% of sales staff received 3% salary increases in 2005, while another 20% received salary increases of 5%. One-quarter (25%) gave their support staff 3% salary increases, but 19% gave no salary increases to support staff in 2005.
Most survey respondents said their agency incentive plans were based on agency profits (42%), productivity (39%) and revenue growth (35%).
And nearly all (91%) of all survey respondents said their agencies offered group health insurance as an employee benefit. More than two-thirds (65%) of the survey respondents offered a 401(k) retirement plan and more than one-quarter (27%) of respondents offered their employees profit sharing.
Management
President and CEO salary averages ranged from $93,468 in agencies with less than $1 million in property/casualty premium volume to $480,000 for agencies with more than $100 million in premium volume.
Sales managers were the next highest paid employee, according to the results. Sales manager salary averages ranged from $57,438 in agencies with less than $1 million in P/C premium volume to $178,222 for agencies with $50 million to $100 million in premium.
Personal lines managers were paid an average of $33,887 to $112,500, while commercial lines managers were paid an average of $41,250 to $134,316, according to the survey results.
Sales producers
A sizable share of sales producers (43%) were paid commission only, the results show. At the same time, 36% of producers were paid salary plus commission, but only 13% were paid just a salary. Some 8% were paid through other methods or a combination of salary, commission and contingency sharing.
The majority of respondents reported paying new policy commission rates from 11% to 15% for personal lines, small commercial and large commercial. The majority also reported paying renewal policy commission rates from 6% to 15% for personal lines, small commercial and large commercial.
More than three-quarters (76%) said producer commission rates stayed the same in 2005 compared to 2004.
Customer service representatives
Personal lines CSR salary averages ranged from a low $21,173 in agencies with less than $1 million in P/C premium volume to a high $46,879 for agencies with $50 million to $100 million in premium volume. Most personal lines CSRs had more than five years of experience, according to the survey.
Commercial lines CSR salary averages ranged from a low $31,202 in agencies with $1 million to $5 million in P/C premium volume to a high $60,746 for agencies with $50 million to $100 million in premium volume. Most commercial lines CSRs had more than eight years of experience.
More than one-quarter (27%) offered additional compensation to personal lines CSRs on new business, but 39% said they offered no additional compensation. Half of all respondents did not offer additional compensation to commercial lines CSRs, but 25% did offer additional compensation on new policies.
Demographic profile
While more than half of all respondents (50.1%) were from six states-California, Texas, Virginia, Florida, New York and Illinois-agency owners in all 50 states chimed in on this issue. A total of 1,052 survey responses were received via the online survey throughout December 2005 and early January 2006.
More than a quarter (26.2%) of all respondents were from cities with a population of more than one million, while 12.5% were from cities with populations between 500,000 to one million, and 24% resided in towns with populations of 100,000 to 500,000.
Nearly one-third of all survey respondents generated total P/C premium volume in 2005 ranging between $1 million to $5 million (29%); 16.9% generated $10 million to $25 million; 15.9% generated $5 million to $10 million; 11.6% generated $26 million to $50 million; 9.7% generated less than $1 million; 9.2 percent generated more than $100 million; and 7.8% generated $50 million to $100 million in premium.
The average total revenue for 2005 varied from $367,373 for firms with less than $1 million in P/C premium to $50.5 million for firms with more than $100 million in P/C premium.
Owners and employees
Close to half (44.5%) of all survey respondents reported having just one agency principal in their agency; 23.2% reported having two; 10.9% reported having three; 6% had four; 3.5% said their agencies had five principals, while 11.9% reported having more than five.
More than one-third (37%) of respondents had just one full time manager on staff, but the majority (60%) reported having one to five full time sales producers. Nearly half (44%) reported having one to five full time support staff.
Topics Agencies Talent Property Casualty
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