I already know this post is NOT going to be well received by many of you, but it is written as a wake-up call to turn our collective focus in a healthier, more productive, more realistic direction.

Of all the challenges being faced by brokers over the past few years, perhaps the most challenging is the reduction of commissions/bonuses. While many blame the ACA, the ACA merely accelerated the inevitable, it simply gave a “permission slip” to the carriers.


I can’t even begin to count the number of rants I have witnessed from brokers demanding that the National Association of Health Underwriters, legislators, or anyone else with perceived influence, step in on their behalf to save/reinstate their previous commission schedule.

Legality and practicality aside, these arguments are misdirected. You are asking (demanding) that someone step in on your behalf and tell a third party company how much they have to pay you. Doesn’t that go against the grain of the “free market” we demanded when first threatened by the ACA?


Oh, I get it at a certain level. I hear the argument, “We need to be paid more to provide the level of service our clients need.” 

Whether it’s to create market differentiation or out of genuine recognition that clients need more help than ever before, agencies are being forced to make significant new investments. Resources such as compliance, technology, communication, etc., are critical for clients and this spend is coming at a time when compensation is going down. 

However, instead of believing enough in the value delivered through these new services and charging clients fairly for the additional service and value, agencies are throwing these services in for free!!! And then bitching because profit margins are eroding! Which then triggers a rant about the “unfairness” being heaped upon by the carriers and legislators.

And, THEREIN lies my problem with this “give us more commission” argument.


I know producers/agencies genuinely feel they are paid to serve the needs of their clients. But, that is a Pollyanna-ish view of your world. At least in terms of what the commission/bonuses are intended to pay for.

Your commission schedule isn’t there to pay for the overall service and value you provide to your clients (beyond some front-line service of the insurance product). It’s simply compensation for distributing the carrier’s products. 


And, just like any business, the carriers are going to keep their expenses, including distribution, as low as possible.

And I suspect you recognize this compensation is reasonable; maybe you even see it as excessive. It’s the only reason I can come up as to why so many of you are afraid to discuss your level of compensation with clients.

The carriers need to pay you fairly to distribute and help service their product, but that’s where their obligation ends.



The problem for most agencies is that going out and getting quotes and providing service for the insurance product is no longer enough for a complete business model. That simple world is long gone. But you know this, which is why you’ve invested so heavily in new resources.

Back to the industry rant of “We need to be paid more to provide the level of service our clients need.” I agree. But, the real question is, “WHO should be paying you?”

While carriers have a responsibility to compensate you fairly for the distribution/front-line service of their product, they DO NOT have an obligation to provide rich-enough compensation for you to go out and acquire resources and services from other vendors and then give them away for free! 

If you believe that a new service (technology, compliance, etc.) is worthy of your investment, then don’t tell me your clients won’t see it as worthy of their investment. And, don’t give me the BS excuse that others are giving it away, so you have to as well. Those who are giving it away are either not providing effective implementation of the service, or they are on their way to going out of business.

The most successful agencies we work with already charge fees for additional services and are strengthening their “advisor/consultant” role with their clients as a result. If you’re going to be a consultant, you need to be comfortable offering advice and having difficult conversations. Otherwise, you’re simply another vendor.


If you want to expand your value proposition and be more strategic and consultative (and you have to), then it’s on you to do so in a way where you are paid via fees direct from the client who benefits from those additional services.

I understand that in some states you are not allowed to charge additional fees. This is what needs to change. 

Instead of arguing for commissions to be reinstated, let’s start educating the market on the role today’s broker is playing for their clients. 

  • Do you think the legislators understand your role in helping clients deal with compliance issues? 
  • Do you think those legislators understand the operational efficiencies you bring to your clients via technology solutions? 
  • Do you think they have any idea of the value proposition and strategy you craft to help them attract/retain talent? 
  • Do you think they have any idea of the cost control strategies you put in place that protect the bottom line of clients and help keep them in business?!
  • I’m going to guess the answer is not just no, but HELL NO!!

They need to understand that commissions pay for such a small part of your value proposition and, like any business, you need to be able to charge fairly for ALL your services. Independent insurance agencies need to be able to compete in the free market, set their own fees, and be allowed to earn a living based on their own worth and value to their client base. 


Demands focused on you and your need/desire for commissions to be reinstated are going to fall on deaf ears. 

Instead, emphasize the new complexities being faced by today’s business owners and your ability to help – if allowed to charge fairly for that additional assistance – and I believe you will find a more interested ear.

Photo by sipa

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