Let’s talk about something most independent agents wish for, but don’t ask for: a lot more profit sharing.
Years ago when I was running a successful commercial insurance agency, we got profit sharing bonuses some of the time, you know, “when the weather was good”, but profit-sharing was a bit hit or miss. We did believe that we knew everything that we needed to know about profit-sharing, and we were doing as well as we could.
So it was a huge revelation to me when we became a master agency for Strategic Insurance Agency Alliance, and our retail agency's profit-sharing income exploded by 300% over three years. Can you imagine that? It is possible! And the beginning point for existing agencies is to negotiate better profit-sharing deals.
Many insurance agents and agency owners say to me: “Do you mean you can actually negotiate the deal you want with a carrier?” The answer is YES. But to do that, and to do it effectively, there are some things that you'll need.
How do profit-sharing programs differ?
Carriers don't tell you, for example, that they have multiple contracts. They pay commission rates differently to different sized agencies. They have different kinds of profit sharing and regions, and they will offer an agency a profit-sharing rate depending upon the agency, how much business that agency is producing for them, and a whole raft of other factors such as loss ratio, book of business size and underwriting profits.
When negotiating profit sharing, you can really focus where you put the business, and based on what you're doing in your agency, you can negotiate with carriers by delivering what they want, while you get what you want out of your agency.
Are you getting the best profit-sharing deal available?
One of the questions I'm frequently asked is, “How do you know you're getting the best deal from a carrier?” and it’s a legitimate question, because after all, this is sort of something that they don't talk about.
One of the ways in which you can be sure that you're getting the best deal possible for your agency is by working with an insurance agency coach, someone who sees lots and lots of insurance agency deals.
Another really easy way to know that you're maximizing profit sharing is to belong to One Agency Alliance or another SIAA master agency - everyone agrees SIAA (and we) get the best profit-sharing deals in the industry at a regional and national level.
Another question I'm also asked a lot is: “Can an insurance agency coach really help me evaluate my profit sharing status, and whether or not I'm making the most possible out of my business?” And I think the answer is an unequivocal “Yes!” A coach who's seen it all before (multiple times!) brings perspective, experience, and focus to the entire profit sharing picture. And after all, since profit-sharing often really does represent the main profit of an insurance agency, an insurance agency coach is a profit generator. Just a few things to think about.