Independent insurance agencies are in a tough spot. Never has it been more difficult to run a successful, profitable agency. Clients are more demanding, 4th quarter is a nightmare, additional investments have to be made, and, on top of all that, bonuses/commissions are getting cut.
The rich, financial rewards of the industry have never been more at risk. Agencies have never felt greater pressure to take control of their agencies and run them as the businesses they truly are.
However, instead of doing the hard work that it takes to take control of your business, the control that is necessary to get you out of this precarious position, some of you are demanding that someone else bail you out. You are making demands of your legislators, NAHU, or anyone with perceived influence to step in and save your rear end. You are demanding they somehow get you back to your previous levels of commission.
Legality and practicality aside, these arguments are misdirected. Think about what you are actually demanding. You are demanding that one third party tell another third party (private business) how to run their business, how much they have to pay you. Doesn’t that go against the spirit of the “free market” we keep demanding?
Face reality, the commission genie is out of the bottle and she ain’t going back in. The ACA simply gave the carriers a permission slip to reduce commissions. And, if you truly believe in the free market you keep demanding, you know that same market will ultimately determine appropriate commission levels.
Oh, I get the demands at a certain level. I hear the argument, “Our clients are more demanding than ever, they need help, advice and guidance in ways they never have. We need to be paid more to provide the level of service and resources our clients need.”
That’s absolutely true, I couldn’t agree more. But the question we need to ask ourselves is, “Who should be paying for what?”
You deliver value in two ways, which means you need to expect to be paid in two different ways. You have always helped, and been paid for, delivering insurance solutions. But, now you know that helping with insurance solutions isn’t enough. It’s why you’ve invested so heavily in “value-added services” (or non-insurance solutions, as we prefer to call them).
However, instead of seeing the ROI potential of your new investments and charging fees for the additional value you are now able to deliver, most of you give these services away for free!
And, therein lies my problem with this “give us more commission” demand.
What’s the money really about?
Commissions are not about value you deliver the clients, it’s payment for the value you deliver the carriers. It is payment for the job you do to help distribute and service their product. Yes, they have a responsibility to pay you fairly for performing that job, but that’s where their responsibility ends – PERIOD.
It is not their responsibility to pay such rich compensation that you can go buy products from other companies and then give them away for free, effectively on the carrier's dime.
Carriers pay you for distributing insurance.
Clients should pay you for the additional value they receive from your non-insurance solutions.
And, I know some of you are in states where you aren’t able to charge fees and that needs to change. If you are going to demand help with anything, demand help getting the ability to charge fees for the various ways in which you deliver value to your clients.
But when it comes to taking control of your business, that, my friend, is on you.
Photo by Aleksander N