As you consider options to grow your agency, you’ll find there are plenty of insurance aggregators, clusters, and networks out there. Each has their own approach to commissions.
Firefly has the simplest commission structure out there: Agents get 90% of the commission on new business and renewals. There are no tiers to pay for, nor tiers to qualify for based on production, and no changes on renewals. 90% on everything, all the time.
Most outlets have the ability to get to 90% or even higher, if you qualify. How do you qualify? Usually there are two ways: either you cross a premium threshold to enter a new tier (like 500k or a million), OR you can pay a fee to bump yourself into a higher tier.
These setups may start an agent out as low as 70% with potential to get to 90%.
However, do their commissions apply to your entire book? Sadly, the answer is generally no. The higher commission only applies to carriers where you have a direct appointment. This limits your high commissions to 4 or 5 companies, and only with the companies you write the most business with.
But aggregators have 20+ companies just like Firefly, right? Why would they only give me higher commissions with 4 to 5 of them?
This is one of most important questions you could ask.
Almost always, when an agent gets a direct appointment, there are production requirements that go along with it. So the reality is, the limit for most agents is 4-5 carriers before their agency simply can’t feed more of them – regardless of how many carriers the aggregator has available.
How do agents get more carriers without having to hit production requirements?
Other aggregators solve this problem with a brokering arrangement.
For example, SmartChoice (a company we sincerely respect) has SmartStart. SIAA has Access Plus. In both cases, it is an in-house broker/middleman to help you get access to those carriers without the need for an appointment and production requirement. With brokering arrangements they have staff who are appointed with the carriers. You send the underwriting information to them, they quote it for you, and then send you the quote when they are done. Often the same long process applies to service. Although you have the relationship with the prospect, the middleman is required to do the quoting, binding, and servicing you would normally do.
Well, that middleman has to be paid somehow! So, your commission split has to be lower. Financially, this is fair and it makes sense. But now you’re dealing with lower commissions and a slower turnaround time because you’re waiting on a middleman instead of binding business yourself.
That explains why you’re only getting paid the super high commissions on carriers you have the appointment with – you’re doing all the work! But with the middleman models, they have to pay you less to pay for the program itself. If you are wondering how big of a difference there is, use this tool to calculate it for yourself.
If we had a middleman doing work for you, we’d pay less in commissions, too. But we don’t! And that’s why you get 90% from us on everything, all the time.
Learn more about Firefly by downloading our ebook here.