New England Insurance Agent Blog

Producer Compensation Roundup
/ Categories: Agency Management

Producer Compensation Roundup

The carrot or the stick? Commissions, bonuses, or both? How do your peers compensate producers? We've gathered some recent articles that talk about what other agencies are doing, as well as some links to compensation surveys.

3 Ways to Compensate Personal Lines Producers
 Jacquelyn Connelly, Independent Agent Magazine

Typical payroll for personal lines producers amounts to about 30% of their book regardless of agency size, according to the 2014 Best Practices Study. But firms arrive at that 30% in a variety of ways. The Reagan Producer Recruiting & Development Study outlines three examples:

-Commission with draw based on percent of prior year's pay
-Base salary plus incentive for new business written
-Salary plus discretionary bonus based on achievement 

Motivating Producers: Carrot or Stick?
Jacquelyn Connelly, Independent Agent Magazine

How do you motivate your salespeople to succeed?
For many independent agencies, the answer comes down to a simple conflict: carrot vs. stick.

Playing the Producer Compensation Game
Morgan Smith, Independent Agent Magazine

According to the 2014 Future One Agency Universe Study, 42% of small agencies' expenditures go toward producer and owner compensation. It’s a large chunk that both helps and hurts the bottom line—and it is inextricably tied to how the agency prioritizes new versus renewal business.

The article talks about various ways that agencies compensate to strike the right new/renewal balance, and how bonuses are used.

Compensation Surveys

Why Are Agency Employees Unhappy?
Andrea Wells, Insurance Journal - March 2015

Despite increases in salaries and total compensation, many employees continue to be unsatisfied when it comes to overall compensation, according to Insurance Journal‘s annual Agency Salary Survey 2015.

Compensation satisfaction declined in 2014 compared with 2013, according to the survey’s “Compensation Satisfaction Index.” While agency staff reported increases in both salary and total income for 2014, their happiness for overall compensation fell in all three categories of personnel surveyed.

How commercial lines agents get paid, and common traits of top producers
Insurance Business America - January 2015

In our poll, 37% of respondents said they are compensated via “salary plus commission,” which aligns closely with the 34% in the Producer Benchmark Analysis. The next most common form of producer compensation was “straight commission,” chosen by 34% of our respondents and 30% of the Producer Benchmark Analysis respondents. “Draw against commission” garnered 13% in our poll and 21% in their poll, followed by “salary only” at 6% and 11%.

2015 Property/Casualty Compensation Survey
NAMIC and Ward Group

Producer Profile: Compensation, Production, and Responsibilities (5th edition, 2016 - available for a fee)
The National Alliance Research Academy

The Producer Profile is based on a survey of over 600 P&C producers from independent insurance agencies to determine how producers are performing with respect to compensation, sales production, responsibilities, qualifications, education, and training. Complementing the survey results is an expert panel summary with tips and suggestions for hiring, training, and managing producers.

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