Commission Split Renegotiation

[Championpatriot]

Hello All. I was hoping for some thoughts from the community. I have been a 1099 agent for a semi-captive agent 8 years. All years 100% commission. I will try not make this initial post to long as to turn off those with ADD like myself..My current splits are 70/50. Here is my quick question.

I work autonomously from our agency, no access to leads, service a vast majority of my own clients (agency has no CSR) . I want to grow faster, however at the splits I find it hard to go all in when 50% of my renewal business is gone without any marketing and also no CSR work done on my back end. I proposed recently to the owner a win win for him, no risk. Simply if I hit a certain amount of DWP per month then he pay half of my marketing expenses up to a reasonable amount. Instead he decided to make it complicated by saying he wanted it based on household relationships so he could get his relationship bonus.

So back to the drawing board, my thoughts for my next proposal were simple, create a new producer number for me in the system, as it can be done. All of my previous written policies remain at the 50% commission split but all future business I write will go to the new producer number paid at 80/80.

Any thoughts? Snide, helpful, insightful, skeptical, reasonable any and all are welcomed with open mind!

 

[Josh]

One of two things is the case: Either you're better off with him at 70/50 or it's time to walk. At 80/80 the guy is taking risk and does have overhead to cover without much of a margin. Why not go out on your own and get the 100%?

I only know what you put here, but at 70/50 that seems pretty fair.

 

[Jbbarea]

One of two things is the case: Either you're better off with him at 70/50 or it's time to walk. At 80/80 the guy is taking risk and does have overhead to cover without much of a margin. Why not go out on your own and get the 100%?

I only know what you put here, but at 70/50 that seems pretty fair.

He's got a point. IMHO if you've got the brains why work for someone else? It me a while to figure that out myself, but once I got out of "other peoples" agencies life was much better.

 

[Championpatriot]

Great response! My first thought on walking away. I am having a hard time with that decision due to all the clients I would be walking from. And it really is not a win win for both of us. A win win is for me to stay. His expenses for me are nil and always have been. keep in mind I walked in the door and said 100% commission at 1099 status from the get go..he had others ..all whom flamed out on some sort of draw and w-2.

I think 70/50 is reasonable if you have CSRs or on the last have some bones thrown your way, i.e. some leads, bonus opportunities etc. Regarding margins, that's why I am suggesting keeping the current book at 50%.
Also regarding the Margins, if I produce like I used to he will have a pretty good amount of new DWP and also the households in which both will provide him with bonuses in which I am not looking to ask for.

What I am essentially doing is instead of walking away, saying why don't I continue to make you money and create my own sub agency from within. Again no resources are used on me from the current situation.

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For any responding here that are agency owners maybe another way to ask this question would be if, if you had an experienced agent come to you and say they would like to work with you, their is no training needed, all underwriting guidelines are well known, all systems for quoting, binding, client management etc. are well known what would you offer as compensation?

When considering how you would tailor the compensation take into account you obtain bonuses from the company you are appointed with including DWP growth on last quarter of previous year, household count bonuses and a few others.

Also taking into account there is no CSR so all my emails from current clients are handled only by me and many calls for my clients are routed my way to service in addition to no provided leads or marketing on my behalf.

In addition I plan on using my own funds for marketing purposes in which in turn will make both of us money.

 

[Josh]

What I am essentially doing is instead of walking away, saying why don't I continue to make you money and create my own sub agency from within. Again no resources are used on me from the current situation.

If you're already eyeing the door, walk through it.

Have you looked at the costs of going independent and getting access to carriers? You don't have to commit to anything to look, but it might help you give you some perspective on how that agency is helping you.

Yes, you are taking resources. Maybe not much, but you're romanticizing how little you require. There is also the E&O and other liability they have for having a producer out there. If you screw up they might go after you individually, but they will go after the agency. It's rarely a good idea to take on more risk than you're being compensated for and you wouldn't have to make a big mistake for it to potentially cost a fortune to deal with.

I don't know your boss so I don't know the specifics about their world view, what I do know is that most of the time you might be able to get a little bit better of a deal, but the jump you're talking about is huge. Getting greedy has killed a lot of agents relationships with the agencies they work for.

If you don't want to leave, but you want a higher cut, why don't you ask how much higher the agency is willing to pay you? If you've been there for years and are doing a good job you could probably get something of a bump, but if you won't settle for less than 80/80 then go on your own.

Let's also look back in history. Right now you're not using much of the resources, but how much time and money did they invest in getting you up and running? Nothing? Or did they get you some leads to get started and spend time training you? This might not be the case in your situation, but it's amazing how fast agents can forget the investments that were made in them getting started.

 

[Jbbarea]

Great response! My first thought on walking away. I am having a hard time with that decision due to all the clients I would be walking from. And it really is not a win win for both of us. A win win is for me to stay. His expenses for me are nil and always have been. keep in mind I walked in the door and said 100% commission at 1099 status from the get go..he had others ..all whom flamed out on some sort of draw and w-2. I think 70/50 is reasonable if you have CSRs or on the last have some bones thrown your way, i.e. some leads, bonus opportunities etc. Regarding margins, that's why I am suggesting keeping the current book at 50%. Also regarding the Margins, if I produce like I used to he will have a pretty good amount of new DWP and also the households in which both will provide him with bonuses in which I am not looking to ask for. What I am essentially doing is instead of walking away, saying why don't I continue to make you money and create my own sub agency from within. Again no resources are used on me from the current situation. ---------- For any responding here that are agency owners maybe another way to ask this question would be if, if you had an experienced agent come to you and say they would like to work with you, their is no training needed, all underwriting guidelines are well known, all systems for quoting, binding, client management etc. are well known what would you offer as compensation? When considering how you would tailor the compensation take into account you obtain bonuses from the company you are appointed with including DWP growth on last quarter of previous year, household count bonuses and a few others. Also taking into account there is no CSR so all my emails from current clients are handled only by me and many calls for my clients are routed my way to service in addition to no provided leads or marketing on my behalf. In addition I plan on using my own funds for marketing purposes in which in turn will make both of us money.

As much as I respect your opinion. If I was the owner you came to I would say no working with you. The reason is that it is MY agency not a partnership. Essentially you are asking them to partner with you and the Agency owners make much more money by staffing inexperience but talented agents at lower splits. I still think as capable as you are that you go independent. And frankly, poach all your clients away from him. That's not unethical. That's just good business.

 

[Championpatriot]

Two great perspectives, thanks. To the first about the important question you asked on the history, the initial investment on me. My splits where less when was green, I think 50/30 and no salary/draw. I never asked for one, never wanted one. This may or may not matter on how you sway your perspective but the agency was started just 6-8 months before I walked in the door. The agency was started by 100% of a forgivable loan after three years of hitting a certain amount of dwp by year 3, also a budget provided separately by the insurer for 15K each year for marketing.

Regarding the forgivable loan, I was a big part on why the percentage of the loan was forgiven. I am certainly not saying I wanted a piece of the loan, simply saying I helped the agency in many ways as well and the direct investment in me was nil in comparison. Let me put it this way.

To touch on the E&O and additional perceived risk. Our E&O is a blanket policy and is place for exactly that, the liability. The best way to avoid the liability is to have an agent that treats the agency as his own does the right thing to maintain that trust. Newer "inexperienced" yet "talented" cannot offer this. So hence my value is higher than theirs. Let alone it is extremely difficult to recruit these inexperienced yet talented agents without your full ability to properly train, keep motivated and eventually lead them to full automation in your agency while also making sure their compensation carrot keeps their cart moving! In this case he cannot, he takes calls and writes policies. And to your point Jbbarea of hiring the mentioned inexperienced, I would have to ask myself. Then why has he not done this already..well I guess he has tried..but again..all flamed out.

I am the exact opposite of the "inexperienced" and the "talent" has already been established in my 8 years, otherwise I would have flamed out like the other 25 I never saw again! So my value is there. hence my attempt here with your perspectives to work on developing how to maximize that value and make both the agency owner and I more.

With all that said going back to my goal here, Josh I note I could maybe get a better deal here, or there or anywhere. That is not my goal. My goal is simply to have confidence in my agreement that I can focus on building from where we are and not needing the perspective to ever leave or consider going out on my own. We have an established agency, I helped build it, why leave it. Why not make it better. Thats me in a nutshell.

If either of you are agency owners, are you telling me you simply pay 1099 no salary, no benefits, no leads, no csr etc a 50/50 split and everyone in your agency takes it tot he house? I am not being disrespectful, just trying to elicit the thought of where my middle ground is.

In other words, what splits do you pay your agents, are they 1099 ..W-2..? Do you get bonuses from the companies you represent? Do you offer your current agents bonus opportunities if they help you hit your bonuses etc..

The fact is any agency owner cannot without a reasonable investment of their time to train, follow, provide leads, etc for a "inexperienced" be it "talented" agent. I am the opposite of this, I know how to make you money without you even seeing my face (I myself have not seen the agency owner in over 1 1/2 years and only talked to him twice in the six months)

Throw me a bone here fellas and ladies if there are any! If you knew me personally you would know that my loyalties are strong and i will go down with the ship (and all my fellow Americans! Go U.S.A.).

 

[Theinsuranceguys]

As an agency owner I would not give you an 80/80 split. Remember the agency has a lot of overhead costs and to be honest you are already getting a great commission split. If the agent were to give you the 80/80 split he would not be making much money if any off of you. The only thing I can suggest that we do give our agents is some type of production bonus. We usually give our agents a semi-annual production based bonus.

 

[Championpatriot]

Noted the overhead costs, I guess it is also hard to quantify how to take someone like me that was there from the beginning and helped build it in the first place. If this matters to how you analyze the situation. I can tell you I am a little in awe why The clients under my producer make up at least 30 % , maybe closer to 40% and just using the last 90 days as an example 90 days I account for 40% of new policies written in the agency. These are not mock figures but pulled from the system.

Going back to overhead, this is why I want to propose the current clients stay at the 50% renewal level, this pays for the operating expenses above and well beyond.

Then with a new negotiated agreement for future policies he will still get a slice of the pie with doing little work on my behalf as is the scenario now. This will allow me to develop my own system to increase growth even further. I say this because I now have a big need to have someone else handle the initial contacts from current clients, their emails to me, setting up the discussion for renewals etc so I can focus on sales. Our office has none of this so I know my idea of renegotiation based on these facts is not far fetched.

TheInsuranceguys you are heading in the direction I am looking for. Again I am not trying to take this person to the cleaners. At this point the 80/80 was just a starting point in discussions here to establish where the best medium is so I can propose in a professional manner.

So with that said, you mention semi annual bonuses, how do you yourself structure them..total dwp? Or what do you use to determine and what percentages etc?

Oh one last thing insurance guy, not trying to insult your thought but rather understand how you figure it. You said "If the agent were to give you the 80/80 split he would not be making much money if any off of you" ....If you are an agency owner, which I now presume you are you are essentially telling me that if you sat down one day with an experienced agent with zero training needed came to you, agreed on an 80/80 split and that agent the next day wrote just 1 policy you would not money?

Let me put it this way, the relationship I have with the agency is essentially the same as a general agency, however appointing with a general agency I would have the 80/80 split I am talking about plus some.

 

[scooter33]

Noted the overhead costs, I guess it is also hard to quantify how to take someone like me that was there from the beginning and helped build it in the first place. If this matters to how you analyze the situation. I can tell you I am a little in awe why The clients under my producer make up at least 30 % , maybe closer to 40% and just using the last 90 days as an example 90 days I account for 40% of new policies written in the agency. These are not mock figures but pulled from the system. Going back to overhead, this is why I want to propose the current clients stay at the 50% renewal level, this pays for the operating expenses above and well beyond. Then with a new negotiated agreement for future policies he will still get a slice of the pie with doing little work on my behalf as is the scenario now. This will allow me to develop my own system to increase growth even further. I say this because I now have a big need to have someone else handle the initial contacts from current clients, their emails to me, setting up the discussion for renewals etc so I can focus on sales. Our office has none of this so I know my idea of renegotiation based on these facts is not far fetched. TheInsuranceguys you are heading in the direction I am looking for. Again I am not trying to take this person to the cleaners. At this point the 80/80 was just a starting point in discussions here to establish where the best medium is so I can propose in a professional manner. So with that said, you mention semi annual bonuses, how do you yourself structure them..total dwp? Or what do you use to determine and what percentages etc? Oh one last thing insurance guy, not trying to insult your thought but rather understand how you figure it. You said "If the agent were to give you the 80/80 split he would not be making much money if any off of you" ....If you are an agency owner, which I now presume you are you are essentially telling me that if you sat down one day with an experienced agent with zero training needed came to you, agreed on an 80/80 split and that agent the next day wrote just 1 policy you would not money? Let me put it this way, the relationship I have with the agency is essentially the same as a general agency, however appointing with a general agency I would have the 80/80 split I am talking about plus some.

No one is going to give you 80/80. I would never even do 70/50. If you want a better split, go out on your own.