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How much commision does an insurance agent earn?

When I first published this article on Ohio Insurance Forum I ended the article with the comment:  ” My advice: if you want to work in sales, find a more lucrative profession ” .

This comment raised the ire of several established insurance agents.  Tomorrow I will publish their response to my opinion. 

Q – How much commission do Insurance Agents make? How do I start an agency?

A – First things first, you’ll need to get licensed in your state and other states you want to do business in(not too hard) you’ll need appointment with good companies that sell marketable policies (a little harder) then they’ll require you to sign a producers agreement (better look both ways before crossing that street). Life policies usually pay between 30 and 100% of first year premium, so let’s say a policy is $40 / month =  $480/year then first year commission = $144 to $480. Some companies pay renewal commission but it’s usually a smaller %. P&C pays around 15% for new and renewal business. Some more, some less, others have smaller renewals, whatever, but let’s use 15% for computations. Then how much you make depends on how much premium you write. Say you write a medium sized trucking company for $2M / year then 15% = $300K/ year – a soft living. If you sell personal lines, and say average HO in your state = $600/year and average auto = $1,800/year then to get to $300K you’ll need 833 1/3 customers paying and renewing every year. Since either of these are going to work you to death, you’ll need to hire some help, pay for an office, buy supplies, marketing, E&O insurance and so on.

You’ll also be on your own for health insurance, retirement savings and other employer benefits. After a few years in the biz, companies can pay other bonuses: profitability (keep your claims down) retention (keep your customers) and growth (keep them coming to us!!) this can add maybe another 5-10% commission to your bottom line. Needless to say, unless your dad owns an established insurance agency, this won’t be easy. You’ll work years and your success is not entirely in your hands, you’re partners with your insurance companies.

9 Comments on How much commision does an insurance agent earn?

Jay ... 1

Typically, what is the commission structure the agency principle pays to the agent? I have heard 60%-70% (of the 15% you mentioned), but is that for renewal business as well? Also, what is fair when it comes to the the agents book of business? I have heard some can walkaway with 50%. I am in Texas. Thanks for your help!

Posted date April 22nd, 2011 at 4:28 pm
Long Island New York Insurance ... 2

Structures vary depending on the line of insurance business you are writing, the carrier, and the agency you are partnered with.

The best way to find out this information is to call around different independent agencies and health insurance General Agents to find out what’s typical. So much I can get into here but I’d be writing for a week. 🙂

Posted date May 13th, 2011 at 12:17 pm
marcus ... 3

why cant anyone just come up with a “about” figure. lets say ,
i have progressive auto insurance, its 100 per month. how much does the insurance agency get? 85% of 1st yr and 15% of residual?

Posted date April 2nd, 2012 at 4:11 pm
Ernesto ... 4

Progressive pays a little low on the commission scale. Around 10% if I remember.

So $100 premium; agent gets $10 up front and $10 on renewal. Most auto policies are 6 month term so renewal premium gets paid every 6 months.

Posted date April 2nd, 2012 at 4:28 pm
Nick ... 5

What does it matter what the commission your agent is paid. It does not matter, state depending, if you go through the agent or their online sales website you still pay the commission.
Since you are paying for an agent if you get one or not you kind as well get their service.

Posted date August 14th, 2012 at 7:53 pm
kristina ... 6

i am a new producung agent that just finished over a year in service in personal lines , i have obtained my 440 and my 215 i am currently writing business under an agent owner and he is paying me 15.00 for N/B and 10.00 for R/W i dont think this is write and not knowing exactly the commission he is getting paid off these premiums i feel im being under paid and not only that he has not even got my license appointed yet. any suggestions????

Posted date February 3rd, 2014 at 11:52 pm
Ty ... 7

Go down the street and ask his competitor if he needs a new producer. As an agency owner and former producer if you are not getting above 20% on both new and renewal you will starve to death in this industry. With this being said if you are getting a nice salary in top of the commission then you should ask for higher commissions and a lower salary. How much security you need is your call and will most likely dictate your commission.

Posted date April 17th, 2014 at 10:33 am
Tanya ... 8

I am working as a producer writing business under an agent owner in VA. She does not want to give me commission for renewals nor re writing. She pays me with 1099. I have P&C AND LIFE AND HEALTH license and I have been saving a lot of business fkr her.their customer service was awful before I got there.I feel like I am being under paid. My commision is 12.5% and If I don’t keep the customer for a least a year She charge me back. I am bilingual too.

Posted date March 15th, 2015 at 11:29 am
Tanya ... 9


Posted date March 15th, 2015 at 11:31 am

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