If one company is willing to pay twice the bonus for the same results, the same book, the same ease of doing business, and the same benefits to your customers, why not place more accounts with that company? Chris Burand demystifies company contracts and bonuses in this document.

For the past 12 years, I've asked thousands of agents why they don't place more accounts with companies that pay higher bonuses — and few ever answer correctly. Typical responses include:

“The company paying the low bonuses must pay higher commissions.”

Reality: This is seldom the case.

 

“The company paying low bonuses is easier to do business with.”

Reality: This is rarely the case; and even if it is, is the ease worth a 67% pay cut?

 

“It's hard-to-place business.”

Reality: We're discussing companies that will pay more for the same book.

The true answers are:

• Ignorance. Most agency owners never read their contracts to learn which companies pay more.
• Reluctance. Agents' aversion to negotiating contingencies with companies is strange — because they'll usually negotiate everything else. Companies expect agents to negotiate; some of them have reportedly prepared written scripts for their employees to use. The key is to negotiate in a positive manner.

WHY NOT THE BEST?

Make sure that you have your companies' best contracts, which often pay two to four times more than standard contracts. Some of these better contracts don't require extra volume — and, even when they do, the amount is often negotiable. Because companies do not automatically award the best contracts to their top agencies, you have to ask for them.

Don't get trapped in semantics, either. Although many companies have only one contract, they have far different addendums that can make a huge difference!

You can employ other tools to increase your bonuses: Using stop-loss options more effectively (most agents choose the least profitable); making sure that you achieve the thresholds outlined in the contract (both obvious ones and hidden ones); and managing your claim reserves/closed claims more effectively.

Taking advantage of these opportunities is difficult without automation. We offer our clients a Contingency Contract Analysis® service that includes computer models of most contingency contracts for the past 10 years. Clients who use our recommendations and data to make intelligent choices have doubled their contingency bonuses, without alienating their companies or adversely affecting their customers.

Negotiating better contingency contracts is the best way to make more money without additional work.