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... Blog Photos Group Connections Reviews IMMS Library Immerse yourself in our stacks. Take some time and browse through our library. We have thousands of articles, checklists, tip sheets, sales letters, and more! Communications Marketing Customer Service Planning Finance/Accounting Risk Management Human Resources Selling Legal and E&O Technology Life/Financial Services Glossaries Management Resources & Links Categories Popular Recent All Back Are Your Producers Subsidized?4/30/2013 12:00:00 AM by CompleteMarkets Editor , Chris Burand This content has not been rated yet. If you don't think you're subsidizing your producers, you might need to think again. The average agency spends between $1.02 and $1.04 for every commission dollar earned (" Growth and Performance Standards," APIS, 2000) . The cost of producer-generated ... . If a producer had an 85% hit ratio on new business, new sales would be almost as profitable as renewals in most agencies. Even with higher profits, a producer's repeat sales (renewals) usually aren't profitable enough to turn an agency's loss into a profit. In fact, our studies have found that some agencies spend as much as $1.70 for every renewal commission dollar earned! HOUSE BUSINESS Because renewal profits alone can't support producer's new sales, another key source of subsidies is house business. House business is usually the most profitable because no one gets a commission on it. It helps to subsidize the entire agency, especially producers with small books. OWNER SUBSIDIES In many agencies, renewals and house business combined still aren't profitable enough to cover losses on producer-generated business. Many owners ...

... to be fair the Life producers might resent the inefficiencies that they see (or think they see) in any part of the P/C operation. If I'm paying part of the overhead, I don't want to see anybody goofing off, ' is the feeling that may result. A good relationship can turn sour for no good reason. Another possible negative effect is that Life producers may be subsidizing the P/C operation indirectly. For example, if a large P/C agency has a relatively small Life producer staff and the allocated expense system described above, the Life people are paying for Life leads they will never use because the agency can produce more Life leads than they can handle. In extreme cases, P/C agencies with $40 million to $50 million in ... fact that the P/C agency already exists rather than the idea of building a P/C agency. The Life producers usually have no share in the P/C profits, no equity in the P/C agency, and perhaps only secondary interest in the inner workings of the agency. More important, Life producers pay' for Life leads by splitting commissions with the P/C house. If it's a fair split, the payment satisfies their obligation to the P/C house for leads. If, in addition, Life producers were also expected to help pay for the cost of producing those leads (i.e., the cost of running the P/C agency), then they would be paying twice for the same leads: once by sharing commissions and again by ...

... build your image — and for that matter, what image are you trying to build? How much name recognition do you really have in the marketplace? Have you branded yourself and your agency? To that end, here are some questions you might ask yourself: How active are you in your community's volunteer associations, with your peers in business (your potential customers)? Do you promote or subsidize membership in such organizations for your producers and service staff? Is there cohesiveness and continuity in your advertising? How involved have you become in the industry associations that support your clients? What sort of value-added resources do you bring to the table for your clients and prospects? Have you shown your clients and prospects that you're more interested in their success than in your own immediate gratification? What sort ... ?4/30/2013 by Jack Burke This content has not been rated yet. What's your name again? ' They can't buy from you if they don't know who you are. Jack Burke offers advice for putting your name in front of those who matter in this document. Recently my good friend David Brady, a television/movie producer from , called to tell me that a publishing house absolutely loved a manuscript of a book that he'd recently finished. Unfortunately they weren't willing to sign a deal because he has no public name recognition, which creates problems in promoting the book. I could go down the list of movies and television shows he's produced, the many awards he has won, but the fact is that he's unknown outside of his industry. As a result, David ...

... an in-house producer initially subsidized by an insurance carrier. Use ...se than if you were to use company-subsidized producers or field representativ...

... important from the perspective of trying to develop a profitable book of business, you cannot expect these people to develop new leads for you. The best that you can hope for is an expansion of existing accounts. If, however, you have some good producers who can generate the leads and who are comfortable working with the company field reps, this approach can be marginally successful. Option Four: Subsidized Producer Agency owners wishing to develop a separate Life and Health Department eventually but who are unwilling or unable to make the $50,000+ outlay to start from scratch can approach their companies for assistance with a producer subsidy. These programs vary widely, but most of them tend to have the producer employed by and housed in the agency. Training, and sometimes compensation, are handled jointly ... the company and agency, with part of the initial producer salary/draw subsidized by the company in the form of a loan or commission overrides. An added benefit in setting up such a program is that the agency might also receive preferred status in its Property/Casualty relationship with that same company. In return for receiving the initial financial assistance, the agency and producer agree to meet company production goals. This is where the arrangement can begin to break down. The company might not have competitive Life and Health products, its goals might be unrealistic, or it might be overly aggressive in encouraging the producer to sell its products rather than what's best for your clients. The company might also expect the producer to sell its Property/Casualty products as well as Life and Health, thus diluting ...