4 Revenue Streams Every Independent Insurance Agency Needs

Photo illustration of four eggs, symbolizing 4 potential streams of revenue for your agency.

Still relying only on commissions and volatile profit sharing for your insurance agency revenue?

Every independent insurance agency needs to tap into as many revenue streams as possible in order to grow rapidly and maximize profits. Sticking to just commissions and profit sharing will not maximize your potential earnings.

But what else is there, and how do you unlock those extra revenue streams for your agency?

In this article, we’re going to break down the four essential revenue streams every agency needs in order to grow. Before we dive in head first, let’s take a look at some of the reasons it’s important to diversify income streams.

The Benefits of Multiple Revenue Streams

The truth is, if you’re only earning from commissions and profit sharing, you’re leaving money on the table.

As you know, profit sharing is volatile and not something you can consistently budget for or count on every year. Unlocking multiple revenue streams can boost profits and reduce your reliance on non-guaranteed numbers, reducing volatility in your agency’s growth projections.

Plus, unlocking new revenue streams on its own is an avenue for growth. Simply tapping into these additional streams will increase the total revenue your agency generates. As your revenue increases, so does the value of your agency.

So the question is: what are those revenue streams?

Let’s get into it.

4 Critical Revenue Streams For Independent Agencies

Prioritize these four revenue streams to maximize growth: commissions, profit sharing, fixed overrides, and growth incentives. These generate extra income while your agency conducts its regular business.


1. Commissions

As a successful independent agency, you know commissions are the lifeblood of your organization and the majority of your revenue. And the more new clients you can source, the larger your commissions can become.

But did you know the best commission-earning independent insurance agencies also use an agency network like Renaissance Alliance?

Small independent insurance agencies typically have access to a select group of carriers. When agencies band together under a network, they can access more markets and carriers typically only available to larger agencies. This provides more options for clients, and in turn increases hit ratios, retention, and boosts sales and commissions.

2. Profit Sharing

Profit sharing revenue is variable income based on the specifics of the carrier contract, typically a combination of loss ratios and growth.

Because these factors change every year and often outside your control, your profit sharing likely fluctuates every year. As a result, it’s not something you can budget for or reliably count on. Likely you’ve had some amazing years, and others where you’ve earned significantly less or possibly nothing.

Joining an agency network like Renaissance Alliance can help you to increase your profit-sharing revenue, and reduce year-to-year volatility.

Because of our collective group size, we’re most often at the top of the profit-sharing grids, allowing our members to earn a much higher and more predictable factor than on their own. You can also earn from the first dollar of premium with Renaissance carriers, allowing you to earn on all of your premium, not just the ones you are large enough to qualify for on your own.

3. Fixed Overrides

Overrides are an additional revenue stream not available to most stand-alone agencies. These are fixed or guaranteed factors paid on all new and renewal business, in addition to standard commissions and profit sharing. Most stand-alone agencies are not large enough to negotiate these fixed overrides with their carriers and partners.

Joining an agency network like Renaissance also gives you access to these fixed overrides on all new and renewal premium with more than 20 carrier and wholesale partners. This allows you to add a more reliable revenue stream in addition to commissions and profit sharing. As a result, your revenue and agency value increases, and your volatility decreases.

4. Growth Incentives

Incentives are a common tool used to boost sales, so it’s no surprise that it’s one of the potential revenue streams available for smart insurance agencies.

Negotiating growth incentives based on new business production or overall book growth is a great way to add additional revenue to your agency. Most carriers only do this for agencies who have a certain size or profitability of book with them, so they may or may not be available to you as a stand-alone agency.

You get the best payouts for growth incentives when you work with a partner like Renaissance Alliance that’s able to broadly negotiate with many carriers on your behalf. Size matters!

Wrapping Up

Growth-focused independent insurance agencies need to tap into as many revenue streams as possible in order to maximize profits, and experience less fluctuations in income.

To summarize — you should take advantage of:

  1. Commissions — standard or enhanced.
  2. Profit sharing — volatile revenue based on carrier contract factors, usually loss ratio, growth and size.
  3. Fixed overrides — extra income on all new and renewal business.
  4. Growth incentives — additional bonus revenue earned if you hit certain negotiated growth targets.

If you aren’t earning fixed overrides and growth incentives on most or all of your premium, reach out to the Renaissance team to find out how you can maximize each of these four revenue streams in 2022 and beyond.

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