Compensation Norms

Given the make-up of the respondents (many were senior-level people), reports of compensation in the six-figure range were not surprising; most respondents were salary-only. Those that did receive commission reported rates across the board, from 100 percent of total compensation to 1.25 percent. Of those, just over 50 percent said their salary/commission ratio had stayed about the same over the past 12 months. Slightly over 40 percent said the ratio had decreased somewhat/decreased substantially; nine percent reported increases.

A 40- to 50-hour work week seems to be the norm here in Florida, with deviations on the high end at 70 hours, and the low end at 5 (perhaps the person meant to type in “50″?). Surprisingly, 64.1 percent said their work hours have remained virtually unchanged in the past 12 months. Only 25.8 noted an increase; a handful said their hours had decreased.

Shifting from hours and compensation to workplace issues, 40.6 said their companies allow telecommuting versus 59.4 who said they were strictly office-bound.

The economy has caused a decrease in business for 72 percent of the respondents. However, when asked to rate the employment outlook for the insurance industry in general, 45.8 percent judged it positive, and 72.5 said they would recommend their profession to others.

The Job Market

After reviewing the survey results, we reached out to other industry experts for their views on the job market. GreatInsuranceJobs.com in Orlando is a web-based company that brings together job seekers and interested companies. President Scott Kotroba reported that sales positions have, for the most part, been in consistent demand even through this recession, with the obvious exceptions of those companies that have closed their doors. “If an account manager was able to bring along contacts — or better yet, business — he was welcomed with open arms,” Kotroba said.

“There obviously are many, many job seekers, but they are looking for compensation plans that have a large base salary and nominal commissions as opposed to large production bonuses,” he reported. “However, we find that the job offers are more production driven. Salaries are dropping and commissions are increasing as more companies move toward a pay-for-production plan.”

Additional Reports

Ward Group, a Cincinnati-based consulting firm specializing in the insurance industry, recently released the results of its own survey, compiled with input from 99 diverse P&C companies from 2008 to 2009. We shared some of our data with Ward's President Jeffrey J. Rieder, CPA, CPCU, and he offered comments on how the two studies compared.

“Our study analyzed the carrier, while yours primarily targeted the agency,” Rieder said. “I was not surprised to see that agent commission decreases outweighed increases by a 4 to 1 margin in your study (39.6 percent decrease versus 10.4 percent increase, with 50 percent staying the same). That is very similar to our trend from the carrier side. We saw 40 percent of carriers planning to make changes in 2010 with contingent commission reductions outweighing increases by a 3 to 1 margin (60 percent planned to stay the same).

“An item that appears to be different in our studies is that 74.7 percent of your respondents have seen decreases in revenue due to the economy,” Rieder noted. “We are expecting that only about 30 to 35 percent of the carriers will see a reduction in premium. Of course, the agent commission gets reduced by multiple effect of the decline in policy exposures, competitive market conditions driving down price, and the decrease in company commission payments. It is certainly a tough time out there.

“I would also comment on the negative outlook expressed by a surprisingly large percentage of participants in your survey (35.3 percent),” Rieder said. “I would say that while most companies are not being optimistic for a quick turnaround, they are more neutral to slightly positive in their outlooks. That could be due to the fact that the soft market conditions appear to be stabilizing across the country versus dramatic decrease seen over the past 18 to 24 months, particularly in the commercial markets.”

Yet another new survey, this one from the Insurance Information Institute and various industry groups, showed continuing pessimism among the respondents. Asked if they thought the worst of the financial crisis was behind us, 66 percent said no. In response to another question, half (50 percent) said they expected premium growth to be flat in 2010; 17 percent said it would be positive, 33 percent said negative.

Will 2010 be better? Yes, no, maybe. The only thing we can say with certainty is that we will eventually find out — when we do our 2011 survey.