Understanding Contingency and Bonus Requirements with Your Insurance Carriers

Understanding Contingency and Bonus Requirements With Your Insurance Carriers
By: Michael Miller, Smart Choice® State Director

As an insurance agent, your business lives or dies on the amount of new and renewing policies you sign with your carriers. Years ago, how you got paid was fairly straightforward: you got paid a percentage of the premiums you signed. But carriers have changed the way they compensate their agents.

Today, agents earn a complex combination of commissions, contingencies, and bonuses, each calculated a little differently. Understanding the math can be a full-time job, not to mention figuring out how to maximize your earnings.

Contingency Commissions Reward Performance

You’ll always make a little money on each premium you sign, even if you only sign a few dozen a year. But carriers offer sizeable contingency commissions for agents who set and meet goals for production, retention, and profitability. These rewards are contingent on you meeting these goals.

What’s tricky about contingency commissions is that you never know how much more you’ll end up making as you sign on new clients. The contingency is earned after you meet your goals for the year. When you’re writing a policy in January, you won’t know whether you’ll actually meet your contingency requirements at the end of December.

Bonuses Honor Excellence

Insurance carriers often award agents who go above and beyond with bonus income. Sometimes, carriers run special sales contests for agents to compete in. Other times, they’ll allow a loyal agent to charge them interest on any new business the agent brings in for them.

Getting the Most out of Your Appointments

Contingency and bonus income were initially offered only to the largest agencies, which had the staff and book of business large enough to hit production targets. But that’s changed in the last 25 years. Today, small agencies can compete for this extra income if they’re able to meet the requirements.

Joining an agency group can be a way to increase your chances of earning contingency and bonus income. Agency aggregation pools together the resources of multiple small agencies so they can compete with the larger players. That’s why many independent agents choose to join Smart Choice®. To discover why a partnership  is the smart choice, connect with Smart Choice® today.

 Source: Property Casualty 360

If You Don’t Own Your Renewals & Expirations, You Might Get Burned

Financial consultant presents bank investments to a young couple

If You Don’t Own Your Renewals & Expirations, You Might Get Burned
By: Michael Miller, Smart Choice
® State Director

Handling insurance policy renewals and expirations are the bread and butter of insurance agents. But what independent insurance agents may not realize—often until it’s too late—is that though they may own their agency, they may not own the right to renew their clients or requote clients whose policies have expired. Without complete ownership of their books of business, many agents are a lot less independent than they think.

Policies in Force, Renewals, and Expirations

First, some terminology. A “policy in force” is any type of policy—auto, health, disability, life, commercial—that is currently active. If payments are not made on a policy in force, it lapses and becomes expired. Renewing client policies keeps them in force.

As an agent, you’re responsible for the daily management of your policies in force, renewals, and expirations. You market your agency, make the sales pitch, cross sell policies, build the client relationship, send out renewal reminders, and follow up with clients who chose not to renew. After all this effort, you’d expect you’d own your client accounts.

100% Ownership Not Guaranteed

Unfortunately, that’s not always the case. Some carriers and cluster groups retain the rights to renew and follow up with clients whose policies have expired. If you choose to move a client to another carrier or break your relationship with a carrier or cluster group altogether, you may lose dozens—or even hundreds—of clients in the process.

As 100% ownership of your agency’s book of business is not guaranteed, it’s important to do your homework before working with an insurance carrier or cluster group. Ask specifically about who owns the rights to your clients’ policies in force, renewals, and expirations.