I’ve often said insurance contracts are like sex in prison: What you want, you can’t get, and what you get..you don’t want. That said, one of the more common questions I receive is: What should I look for in a contract?
Keep in mind, this article is intended for experienced agents with a verifiable sales history. If you’re new to insurance sales and are looking into your first agency experience, try this link. After you’ve paid some dues and been
screwed by exposed to the captive agency business model you’ll probably approach a general agency to write business as an independent agent. This will allow you to:
- Get larger commissions and better bonus structure.
- Write through more companies.
- Have access to commercial policies with a larger variety of coverages.
- Establish ownership of the book you write.
Since most general agencies are looking to expand, approach some agents in your area and see what their interest is in bringing you on board. Some will have already established a new agent program. Some of the things you need to discuss:
- Work expectations and duties.
- Compensation model.
- Office hours and interaction with existing staff.
- Split of office expenses and E&O
- Outside appointments
- Budget for advertising.
- Health benefits and non-commission income.
Once you’ve discussed these and agree on expectations, WRITE THEM DOWN. This will help alleviate heartburn in the future.
For the commission split (all money coming in due to your activity: new business, renewals, bonuses received).
Book Size / Split
$0-New 50/50 (no expenses)
100,000 25% + exp
250,000 20% + exp
500,000 15% + exp
1,000,000 10% + exp
2,000,000+ Negotiable franchise fee 5%
Depending on what your intentions are beyond a certain size or time period, it’s negotiable. Make sure when you write business of your own, you get Agent of Record forms signed with your name so your book will travel with you. Good luck.