What Splits to Give P&C Producers??

[insurance1822]

Hey Everybody,

If im bringing on a producer and paying them commission only for P&C (most likely personal lines with some small commercial) what kind of splits should I give them on the new / renewal?

They will have had a few months experience as a producer and will know insurance enough to sell it. Obviously I will have to show them the quoting software and how to bind w/ each carrier.

I will also supply all her leads.

I was thinking AT LEAST 10/5 which would be about 50% on the new and 25% of our agencies renewal -

Thoughts?

 

[FL P&C Broker]

1099 or W2? What else are you providing her?

 

[insurance1822]

We provide office, computer, phones, endless leads. 1099

 

[FL P&C Broker]

That seems fair. Set her expectations though. Assume 12% commission, she has to write 40k a month to make $2500. Definitely doable, but not every producer can grind it out every month.

 

[jmr30183]

By 10/5 do you mean 10% and 5% of the policy premium? Forgive my ignorance, but I'm not familiar paying commissions on that basis. Most agencies pay a percentage split of the actual commission paid on each policy. I'm not saying that one way is right or wrong, but I am curious to learn why you would choose one over the other...

Five months ago, I started to work for an independent agency (P&C) as a producer for Personal and Commercial Lines. I had no experience in the industry and had just passed my licensing exam the week before I started. The agency owner was willing to give me a 90-day trial period to see how good of a fit I was for the agency and for insurance sales in general.

I had to pursue my own training with the other agency employees and with each company that we represent- six on the personal side, thirteen on the commercial side! The first month was spent 'shadowing' other agents, reading underwriting manuals, taking webinars, doing one-on-one training with marketing reps and visiting the regional/branch offices of as many of our carriers as possible. It was the most difficult (and frustrating) experience of my professional life (I'm 36), but somehow I made it work.

A key difference between my situation and your new producer is that you are providing her with leads. When I signed up for my pre-licensing class, I started working on my own list of prospects. By the time I interviewed with the agency, I had 230+ personal and 60+ commercial prospects to pursue. That was one of the main reasons I landed the job, despite being brand new to the industry. Overall, I have been more successful in the first five months than I or my employer were expecting! But I'm still concerned about what will happen when I exhaust my prospect list....will referrals, networking and cold-calling be sufficient to keep up the momentum???

As for my pay structure, I am solely paid on commission and on a 1099-basis. I negotiated a 50% commission split across the board- new business and renewals alike. But I also service my own policies, so I act as CSR, Account Manager and Producer at the same time. Depending on the extent of your new producer's responsibilities (if any) for servicing the accounts, a higher renewal commision split could have a direct impact on your customer retention rate. If the renewal commission split is 40-50% rather than 25-30%, the incentive to make existing customers happy is much greater! =)

 

[insurance1822]

Very good input, thank you. VERY good points.

 

[JimmyUt]

I dabble a little in P&C for my clients and get paid 80% first year and renewals. I also use their office, quoting system, and am covered under their E&O. That being said, it is too much for an agent starting out.I got lucky and filled a void at the right time. I only spend 5 hours a week at it. I do think however that 50 to 60% first year and renewals makes sense. If they are servicing their own book, they should get paid the same on renewals.

 

[infoe]

if you are supplying her ALL her leads why pay renewal commission? heck why pay commissions at all. Seems like an order taker to me. If you have someone that is new to the industry and is used to making commissions I would pay them on new commissions...but why give them trailing if all they did was quote,follow up and write that business?

you're better off hiring CSR'S (hourly,salary) personnel to just do service in the long run you are better off..

don't try to reinvent the wheel this is how large agencies do it.

 

[Bertolinoins]

if you are supplying her ALL her leads why pay renewal commission? heck why pay commissions at all. Seems like an order taker to me. If you have someone that is new to the industry and is used to making commissions I would pay them on new commissions...but why give them trailing if all they did was quote,follow up and write that business?

you're better off hiring CSR'S (hourly,salary) personnel to just do service in the long run you are better off..

don't try to reinvent the wheel this is how large agencies do it.

Agreed. If you are paying to make the phone ring then you should not pay on renewals. You want to give them incentive to close new business but there is no need to over compensate a order taker.