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How P&C agency compensation can be improved

The challenges in compensation are becoming more evident as the insurance industry transforms itself into the one-stop financial supermarket for insurance. Read on to learn about emerging compensation practices.

By John Sarich | Updated on September 01, 2015
Property & casualty companies have traditionally paid agents and agencies a simple percentage of premium, by line of business or coverage. This worked well for decades. Property & casualty companies have traditionally paid agents and agencies a simple percentage of premium, by line of business or coverage. This worked well for decades. (Shutterstock)

Property & casualty carriers understand that agencies have control over their business. Correctly compensating these agents in this time of massive industry change may prove one of their greatest challenges.

Most agencies have a pecking order in which insurance companies with the best incentive plans, technology and agent service receive a better slice of the overall business in that agency. The goal of most carriers is to be in the top three in their respective agencies, knowing that along with great products, service and a solid relationship, compensation is very high on the list of must-haves for agency principals. The days of the simple compensation formula, based on percentage of premium, is quickly fading, forcing carriers throughout the industry to rethink agency compensation.

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