Insurance Brokers Commissions and Residual incomes?
July 14, 2008 – 11:02 amSir Riley Hansen asked:
I already know that insurance brokers for auto and home make an initial commisison averaging $150 depending on the policy.
I already know that insurance brokers for auto and home make an initial commisison averaging $150 depending on the policy.
I want to see if anybody know about the residual income that a broker makes of each client. I knew someone that was a Allstate broker a while back that mentioned he made a percentage of each clients payment each month.
Does anybody know how it works and how much on average a broker makes on residuals after the inital commission?
Edward
2 Responses to “Insurance Brokers Commissions and Residual incomes?”
Insurance agents make (at least independents, don’t know about captives) 10%-20% commission on each policy depending on the line of business (auto, home, commercial) and company. This is usually paid by the insurance company at policy inception (& renewal) in full. If the policy is paid, the agent keeps the commission, if it cancels midterm, the agent has to pay back a % of the commission. This all shows on the monthly commission statement for each company. There is no additional commission per policy payment.
Now, depending on the agency contract, the agency MAY received a contingency check which is essentially profit sharing from the company. The agent will qualify for this by meeting certain goals including retention % (percent of policies kept over the year), loss ratio (claims paid divided by premiums) better than 50%, growth % & total premium written. CSRs and producers (which are all licensed) do not know how much this is, if we qualify for it for sure (if we have a couple of big losses with one company we are sure we DIDN’T qualify that year) & do not get a cut of it, at least in my current agency or the other 2 I worked for. Only the agency principals are privy to that information.
By Sue on Jul 14, 2008
LOL on what planet?? If the average auto premium is $800, then you’ll get about 12% straight commission - if you’re an agent in someone else’s agency, you keep HALF of it. Ditto on the homeowners, depending on where you live, the average homeowners premium is probably around $500 a year, commission is a bit higher - maybe 20%.
If you DON’T work for someone else, you’re paying office expenses (like postage and phones), rent, and insurance for YOUR business.
Residuals are the SAME with property/casualty. But you have to RENEW the policy in order to get paid. And all those “monthly payment surcharges” are NOT included in residuals.
By mbrcatz17 on Jul 15, 2008