How Much Do You Earn for a Policy?

[AndrewT1993]

My Agency Owner refuses to give me a straight answer. Before I signed on he said I get 40% of total premium sold. I was under the impression that if I sell a policy that is $1,000 I get $400.

But today I find out from him that each carrier we carry pays a different commission rate. I found a spreadsheet in my company shared drive that lists the commission split for all companies we write with.

So for example I sold a 6 month auto policy today for $531 with Victoria/Titan Insurance. I saw on the spreadsheet that new commission is 16.00%. My Agency Owner says that the company I work for (Brghtway) takes half which means I am left with 8.00% which is $42.48. Then the Agency Owner Takes 10% and I take 40% which means I am left with $16.99.

Am I understanding this right? I am in Florida btw. It took me an 2 hours to write the quote from start to finish sell which means I pretty much made $8.50 an hour? I made more than that while working part time in college. Help what should I do?

 

[DHK]

I have no P&C experience, but this looks similar to a broker/dealer payout grid.

For example, if I sold a $100,000 variable annuity, the GDC (commission) generated would be 7% or $7,000. However, it is paid to the brokerage firm, not to me.

The brokerage firm would pay out monthly based on a sliding scale of total production for the month. Let's just assume it was 35%.

$7,000 x 35% = $2,450 (for that sale).

But I was in a partnership with a senior advisor. While I did have a base salary, I also got a 15% split of the total commissions generated. So 15% of $2,450 = $367.50... for my $7,000 commission sale.

Yes, my checks were higher than that because we were generating much more business each month... but that was how it worked out.

Is it a ripoff? I can't answer that for you. I felt that way with this scenario, but I'm not familiar enough with the P&C world to make a true comparison.

I doubt that 40% of a $1,000 auto policy is common. I think commissions are MUCH lower for auto insurance.

What should you do? I can't give you advice on that.

 

[Wrebert]

That is generally how it works. I think your math is off though. The 16% would be split with $42.48 to Brightway, $8.50 to your agency owner and then $33.98 to you. So you are correct that you didn't make great money for your two hours work. Your hope / objective is to have them renew in 6 months and you make another $33.98 for doing nothing, maybe calling the customer just to make sure things are okay. Being an Independent Agent is a process but if you can sell roughly $25,000 in premium each month, you are looking at 6 figures in 3.5 to 4 years, and it should just keep growing from there.

 

[agentinsouth]

My Agency Owner refuses to give me a straight answer. Before I signed on he said I get 40% of total premium sold. I was under the impression that if I sell a policy that is $1,000 I get $400. But today I find out from him that each carrier we carry pays a different commission rate. I found a spreadsheet in my company shared drive that lists the commission split for all companies we write with. So for example I sold a 6 month auto policy today for $531 with Victoria/Titan Insurance. I saw on the spreadsheet that new commission is 16.00%. My Agency Owner says that the company I work for (Brghtway) takes half which means I am left with 8.00% which is $42.48. Then the Agency Owner Takes 10% and I take 40% which means I am left with $16.99. Am I understanding this right? I am in Florida btw. It took me an 2 hours to write the quote from start to finish sell which means I pretty much made $8.50 an hour? I made more than that while working part time in college. Help what should I do?

Oh Andrew... Oh Andrew.

My first word of advice is start selling year policies vs. 6 month policy. Average auto & home commission is 15%, give or take a few points. Some carriers renewals might drop a couple of points.

If it were me, I would go work for an independent agency. They should give you 50%-70% on the front end and 40%-50% on renewals. So,if you worked for my agency, you would have very few 6 month policies.
$531x2=$1062
$1062x16%=$169.42
$169.42x70%=$118.94
118.94x250 policies = $29,735 year one.. This does not include cross selling home or life.
Year 2 at 50% split+ new business = $50k ish
Year 3 = about $70k ish
Year 5 w/ 80% retention = $100k.

My goal is to have all my people making $100k+ by year 4-5.

 

[AndrewT1993]

That is generally how it works. I think your math is off though. The 16% would be split with $42.48 to Brightway, $8.50 to your agency owner and then $33.98 to you. So you are correct that you didn't make great money for your two hours work. Your hope / objective is to have them renew in 6 months and you make another $33.98 for doing nothing, maybe calling the customer just to make sure things are okay. Being an Independent Agent is a process but if you can sell roughly $25,000 in premium each month, you are looking at 6 figures in 3.5 to 4 years, and it should just keep growing from there.

If only renewals were that easy, the stated renewal commission is only 8%.

----------

Oh Andrew... Oh Andrew.

My first word of advice is start selling year policies vs. 6 month policy. Average auto & home commission is 15%, give or take a few points. Some carriers renewals might drop a couple of points.

If it were me, I would go work for an independent agency. They should give you 50%-70% on the front end and 40%-50% on renewals. So,if you worked for my agency, you would have very few 6 month policies.
$531x2=$1062
$1062x16%=$169.42
$169.42x70%=$118.94
118.94x250 policies = $29,735 year one.. This does not include cross selling home or life.
Year 2 at 50% split+ new business = $50k ish
Year 3 = about $70k ish
Year 5 w/ 80% retention = $100k.

My goal is to have all my people making $100k+ by year 4-5.

Actually this is an Independent agency. I have been writing year policies. This was just the policy that I sold today and I found all this out today as well. Only been on the job for 3 weeks. For this particular situation, the stated commission split is New = 16% and Renewal = 8%. Obviously these numbers greatly differ from your stated.

 

[agentinsouth]

Yea... Those numbers you are using suck.
If your agency was near my offices, I'd be recruiting everyone I could from them

 

[indienoise]

2 hours? Is this a normal amount of time? Or do you not have binding authority and had to wait on a brokerage or something?

 

[AndrewT1993]

2 hours? Is this a normal amount of time? Or do you not have binding authority and had to wait on a brokerage or something?

I have binding authority, I just meant 2 hours in that it took 2 hours from when the client called in and gave me the information to them signing the paying for the policy.

 

[moonlightandmargaritas]

It took me an 2 hours to write the quote from start to finish sell which means I pretty much made $8.50 an hour? I made more than that while working part time in college. Help what should I do?

Are they hiring at the local Walmart or Publix?

 

[AndrewT1993]

Are they hiring at the local Walmart or Publix?

Exactly my point. What do you guys think I should do? Make a run for it?