How Insurance Agents Can Improve Their Profit-Sharing Results

An insurance agent reviews her monthly profit statements.

How Does Profit Sharing Work for Independent Insurance Agents?

Profit-sharing agreements with insurance carriers are a potentially lucrative source of additional revenue for independent insurance agents. These agreements enable agents to earn more on their book of business based on the profitability of their book with the respective carriers.

The details of carriers’ profit-sharing agreements vary, but include performance-based compensation incentives based in part on the yearly loss history of the agency’s clients as well as the agency’s year-over-year growth. Many carriers have minimum premium thresholds for these agreements, making it more difficult for smaller agents to participate in the profit-sharing plans.

Prior to 2020 the performance of carrier profit-sharing plans had been relatively steady, and agents with the scale to meet premium minimums on these plans could count on a meaningful boost in revenue as carriers distributed profit-share payments, usually in the first quarter of each year for prior year performance. Depending on the financial risk appetite of the agency principal, these funds could represent a meaningful source of working capital for the business – or at a minimum, represent a welcome windfall to kick off the new year.

Why profit sharing has become volatile for independent agents

The past several years, however, have been a roller coaster ride for independent insurance agents when it comes to profit-sharing results, particularly in the personal lines space. There has been an unprecedented boom/bust cycle in profit share, primarily driven by policies related to the COVID response.

The U.S. property & casualty industry recorded a $32.2 billion net underwriting loss in the first nine months of 2023, with losses in personal lines primarily responsible for the P&C industry’s 103.4 combined ratio for that period.

AM Best reports that private passenger auto liability and physical damage account for about two-thirds of those personal lines results, and combined with losses recorded in homeowners – fueled by above-average cat losses in the first half of 2023, inflationary pressures, and elevated reinsurance costs – personal lines insurers are in an uphill battle to achieve rate adequacy.

Additionally, social inflation – the amount of costly jury-awarded verdicts against insurers, and the return of those proceedings to courtrooms as the pandemic has eased – continue to adversely affect carriers’ results.

All lines, meanwhile, are subject to the one thing impacting everyone: economic inflation. Price increases have been notably high for goods and services that drive personal insurance claims.

For an independent insurance agent, this volatility is difficult to manage and creates an environment of uncertainty going forward. Is the storm over, or is this the new normal for profit-sharing results?

How agents can improve their profit sharing

Independent agencies truly looking to mitigate the effects of profit-sharing volatility know that performance-based compensation is just one part of the wider solution. There are multiple steps to be taken to establish financial stability independent of the fluctuations of the P&C market, the most important of which are continued revenue growth and disciplined expense management to create a solid foundation that can withstand the impact of profit-share volatility. This is easy to say, but hard to do in practice; joining a member network could be an attractive option.

Independent agents have become increasingly aware of the bargaining power represented by networks. Of the 40,000 independent agencies in the U.S. estimated by the Big “I,” 22,000 of them currently are members of agency networks, according to the Insurance Networks Alliance. Of the approximately $138 billion in premium controlled by networks and agencies, networks control $66 billion.

As part of a network, you remove the barriers presented by carrier premium thresholds and expand the number of carriers with which you’re eligible for profit sharing, thus reducing the volatility of payouts while benefiting from the higher compensation levels networks can often negotiate.

However, you need to look beyond carrier contracts. These are table stakes for an agency network. A more impactful network relationship will enable you to grow your business by offering technology solutions, resources, and expertise to take you to the next level of agency management.

This includes assistance with billing and invoicing, to save time and money on administrative tasks; access to a wide range of carriers, which increases your options to serve clients; placement teams that work with you to secure coverage for commercial lines risks; specialists dedicated to growing your agency; vendor discounts on agency management systems; and user-friendly, intuitive technology tools that make your agency money.

Even in a challenging P&C landscape, independent agents have been and will continue to be the most critical members of the insurance value chain. The past three years have tested all business owners, and the typically stable insurance distribution space has not been immune. Although there is no reason to panic, those searching for an edge should look to leverage every possible resource available to help them succeed.

About Renaissance

Powered by a differentiated suite of technology products and services, Renaissance drives organic, profitable revenue growth for your insurance agency.

Keep Reading



These Non-Disclosure Terms and Conditions (“Agreement”) govern the provision of information by Renaissance Alliance Insurance Services, LLC (“Renaissance”) to a prospective agency member (“Recipient”). Renaissance and Recipient Renaissance and Recipient are hereinafter referred to together as the “Parties,” and each may be referred to separately as a “Party.”

The Parties acknowledge that Renaissance may disclose to Recipient certain of Renaissance’s confidential, sensitive and/or proprietary information including, but not limited to, business, financial or technical information, in connection with the potential establishment and/or conduct of a business relationship or transaction between the Parties (the “Transaction”). In connection therewith, for good and valuable consideration, the receipt and sufficiency of which consideration are hereby acknowledged by Recipient, and as a condition of the provision of Confidential Information (as defined below) to Recipient, Recipient hereby agrees as follows:

  1. Confidential Information.Confidential Information” means any and all information provided by Renaissance to Recipient in any form, and at any time (including prior to or following the execution of this Agreement), including but not limited to any such information that (a) is related to Renaissance’s business, finances, financial information, pricing, business plans, profitability, projections, business or financial opportunities, investment strategies, other strategies, data, products, services, concepts, contacts, personnel, customers, vendors, prospects, intentions, formulas, methods, processes, practices, models, tools, computer programs, software, discoveries, inventions, know-how, negative know-how, business relationships, agreements (including this Agreement), intellectual property, trade secrets (whether or not patentable or copyrightable), trade secrets, or other confidential or proprietary information, (b) contains or is related to any communications, negotiations or proposals regarding the Transaction; (c) Recipient has either been informed, or reasonably should know, is confidential in nature; or (d) consists of or contains names, addresses or other information of any description relating to any of Renaissance’ member agencies or any of such member agencies’ customers or clients. Confidential Information shall also include any analyses, compilations, studies or other documents or materials prepared by Recipient or by any of its Representatives, that contain, rely upon, are derivative of or otherwise reflect any Confidential Information as described in the preceding sentence. The foregoing notwithstanding, Confidential Information shall not include any information which, at the time it is provided to Recipient; (i) is already known to Recipient, (ii) is then or later becomes available to the general public without violation of any requirement of confidentiality.
  1. Providing of Confidential Information. Renaissance may provide to Recipient any Confidential Information, in such manner and at such times as Renaissance may determine, to assist Recipient in evaluating, negotiating and carrying out the Transaction, but shall have no obligation to provide any, or any particular, Confidential Information to Recipient. Renaissance makes no, and disclaims any, representations or warranties regarding any Confidential Information it may provide, except as may be provided in any definitive documentation relating to a Transaction.
  1. Non-Use and Non-Disclosure; Representatives. Recipient agrees not to use any of Renaissance’s Confidential Information for any purpose other than for or in connection with the evaluation, negotiation, entering into or carrying out of a Transaction. Recipient agrees not to disclose any of Renaissance’s Confidential Information to any third party other than Recipient’s directors, officers, employees, affiliates, counsel, consultants, advisers, representatives and agents (collectively, “Representatives”) who have a reasonable need for the same in connection with the uses thereof permitted under this Agreement. Any such Representatives who are provided with any Confidential Information shall be instructed to maintain the same in confidence, and not to make any use or disclosure of the same other than as permitted under this Agreement. Recipient shall be responsible for any breach of this Agreement by any of its Representatives, to the same extent as though Recipient had committed such breach personally. Recipient agrees to use the same level of care in protecting the Confidential Information from unauthorized disclosure as it uses to protect its own confidential or proprietary information, and in any case will use no less than a commercially reasonable level of care in protecting all Confidential Information from unauthorized disclosure. The foregoing notwithstanding, Recipient shall be permitted to disclose so much of the Confidential Information as has been authorized for release by Renaissance in writing, to the persons and upon the conditions so authorized by Renaissance, in connection with the carrying out of the Transaction. Recipient shall not circumvent or seek to circumvent Renaissance’s negotiations with any third party, either by entering into discussions directly with such third party otherwise than on behalf of Renaissance, or otherwise. For purposes of this Section, each Party shall act in good faith and deal fairly with the other Party.
  1. No License; Return of Confidential Information. Recipient will not acquire any license or other rights whatsoever with respect to any of the Confidential Information by virtue of its disclosure to Recipient pursuant to this Agreement, or by virtue of any use thereof permitted hereunder. Recipient agrees to destroy or to return all Confidential Information to Renaissance, including both originals and all copies thereof (other than copies created as part of the routine backup of Recipient’s servers, or copies retained pursuant to a requirement of a governmental or regulatory authority, all of which retained copies shall be held confidential for so long as such materials are so retained), and to confirm the completion of such return or destruction to Renaissance in writing, promptly upon demand by Renaissance within the term of this Agreement. The term of this Agreement shall be for a period of five (5) years, commencing on the Effective Date set forth above. Either Party may terminate this Agreement at any time, upon written notice to the other Party, provided that the obligations of Recipient hereunder shall nevertheless survive for the period above stated, with respect to all Confidential Information provided prior to such termination.
  1. Orders Requiring Production. In the event Recipient receives a court subpoena, request for production of documents, court order or other requirement of a governmental agency to disclose any Confidential Information (a “Disclosure Requirement”), Recipient shall (unless prohibited by law) give prompt written notice to Renaissance thereof so that Renaissance may seek to challenge or limit the Disclosure Requirement. Recipient agrees to cooperate reasonably in any effort of Renaissance to limit or prevent any required disclosure of Confidential Information, provided that Recipient shall: (i) not be required to incur any expense in connection with such cooperation, and (ii) not be required to disobey any Disclosure Requirement. Recipient shall not be deemed in violation of this Agreement if it complies with any such Disclosure Requirement either after having provided Renaissance with notice thereof and a reasonable opportunity to contest the same, or if such notice is not permitted. Recipient agrees to (a) exercise reasonable efforts to disclose only the minimum amount of Confidential Information that Recipient is compelled to disclose, in the opinion of its legal counsel, and (b) request that confidential treatment (if legally permissible) will be accorded to the Confidential Information being disclosed.
  1. Injunctive Relief. Recipient acknowledges that the Confidential Information is confidential, and that disclosure or use of said information in violation of the terms of this Agreement would result in substantial and irreparable harm to Renaissance, the actual dollar amount of which damage would be impossible to determine. Accordingly, Recipient agrees that, in addition to any other remedies that may be available, in law, in equity or otherwise, Renaissance shall be entitled to seek injunctive relief against the actual or threatened breach of this Agreement or the continuation of any such breach by Recipient, without the necessity of proving actual damages and without posting bond. This provision shall not limit the right of Renaissance to seek actual damages or any other legal or equitable remedy for any breach hereof.
  1. Miscellaneous. This Agreement shall be construed in accordance with and governed by the laws of the State of Illinois, without regard to its conflicts of laws principles. Any action or proceeding against either Party relating in any way to this Agreement shall be brought and enforced only in the Federal (to the extent appropriate jurisdiction exists) and State courts located in Cook County in the State of Illinois, and the Parties irrevocably submit to the jurisdiction of such courts in respect of any such action or proceeding, and irrevocably waive any objection to venue in such courts, including but not limited to any objection that such venue is inconvenient. This Agreement embodies the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, oral or written. No amendment to this Agreement and no waiver of any provision hereunder shall be effective unless it is in writing and signed by an authorized officer of the Party against whom such amendment or waiver is asserted. No invalidity or unenforceability of any provision of this Agreement shall affect the validity or enforceability of the remaining portions hereof. This Agreement shall be binding upon, and shall inure to the benefit of, each of the Parties and their respective successors and assigns. There are no intended third-party beneficiaries of this Agreement. This Agreement does not in any way bind either Party to enter into or continue any type of business relationship with the other. Nothing in this Agreement shall prevent Renaissance from at any time disclosing any of its Confidential Information to others or negotiating with others for any purpose whatsoever. Nothing contained in this Agreement shall be construed to constitute the Parties as partners, joint venturers, co-owners or otherwise as participants in a joint or common undertaking. Recipient’s indication of assent to this Agreement via electronic means shall be equally binding and effective as an original signature hereon, and shall be deemed duly and effectively delivered if so transmitted or provided.