There is NO Money in PC, Why Bother ?

[AJtheKid]

Very new to the business, so I need some reassurance.

I've interviewed with a few agencies as a new P&C insurance producer. I've found a well run indy agent ready to hire me, offering what I believe a good split.

70% split for new business 15% on renewals for yrs 1 & 2, then a 60% split new business 20% renewals years 3 +... (It is the best I've found.) Also a 35k annual salary, scaling downward as my book grows, plus bonuses if I hit certain productions and retention numbers. With little to no service work.

All this sounds great, but what scares me are the annual premiums I'm expected to write. 100k of new business premiums in my 1st year, then 250k in premiums my 2nd year.

This sounds very low to me! As I'm in the Boston Mass area and insurance is expensive all around.

To keep the lights on, and the bank from foreclosing, I need to write between 300,000 and 500,000 plus a year in premiums.

I have a marketing plan. I'm an above average Realtor with a lot of prospecting experience and contacts in the real estate business. Day one, I planned to target home sales. I'm making the shift for access to cost effective health insurance for my family.

My question is this....

Is it harder to write new business than I think it is? Will I be disappointed? I need 30-50 a month, I thought that sounded easy.... ????

who makes money in this business ?

 

[Theinsuranceguys]

Most agents don't make money right off the bat in p&c. You start making money after a couple of years after building your book of business and renewals begin to kick in.

 

[AJtheKid]

Most agents don't make money right off the bat in p&c. You start making money after a couple of years after building your book of business and renewals begin to kick in.

How do my splits sound ?

 

[djs]

Do the math.....
$100,000 in premiums at $1000 per policy average is 100 policies in the first year, or about 8 a month. This is very, very low for a producer, but, ironically, a lot of agents don't do this due to lack of a good system to get active.

Sounds like you've been a realtor already, so this is much easier for you. You aren't new to sales or to networking to get business. You should blow this out of the water.

The $250K is probably more average production for a serious producer.

$500K is doable, but it takes some hustling.

Now, granted, I don't know the Mass market, so some variances will apply, but gross premium is more consistent than average policy premium.

Going after home sales: This is an excellent source of business for P&C agents. Understand virtually every P&C agent knows this and goes after them as well. You will probably do better than an average P&C agent since you can relate to realtors better. Good luck on this part. A couple of good realtors can really help you make your numbers.

but....

Don't overestimate the number of referrals. You probably know the number of home closings in your area. If you can get 10% of that number (in most areas), you would be doing amazing. In my town, maybe 50 homes close a month, on a good month. If I got 10% of those, it would be 5 towards the 40-50 you are looking for. Worth it, but plan it right in your plan. Make sure you use mortgage brokers as well, since they do refi's and can be a great referral source (better than realtors in some cases).

Dan

 

[AJtheKid]

Dan, thats what I'm talking about!

It's nice to know, if you have the energy, plan, and commitment you can put up those numbers.

I just checked, as a Realtor I serviced about 8 cities (I'm in Boston everything is very condensed). From those 8 cities there was 2200 closings. 10% = 220 new policies, add an auto policy or two and I can see the numbers climbing.

I assume the 80/20 rule applies as a producer too. 20% of the producers write 80% of the business, as a top 20% producer, speaking in units, how many new policies should get written every month?

 

[nyc2phi]

Money doesn't come in the beginning with P&C. As your book grows so does your wallet. You need to look at is a career and not a job. See it 5 years out, not as a year by year income stream.

 

[AJtheKid]

Money doesn't come in the beginning with P&C. As your book grows so does your wallet. You need to look at is a career and not a job. See it 5 years out, not as a year by year income stream.

Nyc2Phi, great point, maybe I should be fighting for a better renewal commission split. Maybe 20% isn't enough to reach my financial goals. He said I would have little to no service work, is 20% fair ?

 

[nyc2phi]

Nyc2Phi, great point, maybe I should be fighting for a better renewal commission split. Maybe 20% isn't enough to reach my financial goals. He said I would have little to no service work, is 20% fair ?

If you are getting salary then yes 20-30% is normal. Once your renewals equal out to your salary I would look to get rid of the salary and go for 50-70% in renewals or start to look to branch off and start your own agency

 

[bobson]

If you are getting salary then yes 20-30% is normal. Once your renewals equal out to your salary I would look to get rid of the salary and go for 50-70% in renewals or start to look to branch off and start your own agency

Do you sell P&C insurance?

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Nyc2Phi, great point, maybe I should be fighting for a better renewal commission split. Maybe 20% isn't enough to reach my financial goals. He said I would have little to no service work, is 20% fair ?

Why would you be paid higher if you don't have to service? That's a huge load off your back.

 

[insurance1822]

The real money in P&C is owning your own agency. As a producer you'll never reach the true level of financial compensation that P&C has to offer. If you plan on being an agency owner I would say your current splits are great (especially because you get a salary) as you can consider it paid training.

After two years open your own agency otherwise you'll peak very quick.