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When should I start building my agency?

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  • When should I start building my agency?

    This question I get asked a ll the time. Now there is no right answer for this, but you should know the benefits behind it and how you should start.

    There are 2 major benefits to building your agency.

    1. Insurance carriers raise contracts based upon distribution of product so the more product being moved through a channel the more compensation flows. So you can do 1 of 2 things to increase distribution. 1 write more business yourself however you are limited to the amount of time you have in a day and a week, or 2 setup a sales team that is writing policies every week.

    2. Override compensation works like this: The more volume that comes through your channel the more your compensation % increases.

    Ex: You are writing 5 apps a month or 5000.00 in premium (based upon industry avg) and you hire 8 people all writing 3 apps a month or 3000.00 in premium each

    3000x8=24,000 + 5000.00 (personal) that's 29,000 in premium that's coming through you distribution channel monthly.

    Your contract based upon 29,000 in premium would be at a 90% contract based upon that coming through monthly.

    So here is how it looks for you now

    5000 x 90% = 4500.00 in personal production compensation

    24000 x 20% = 4800.00 in override compensation

    The 20% you receive is from the difference in contracts. Your agents writing 3000 a month are at a 70% contract and because you get to utilize their volume towards your distribution channel your contract is 90% so you get the 20% difference in contract levels.

    Based on that scenario you would make (*)100,000+ in income by doing just 29000.00 in volume coming through your channel a month.

    *Now that's based upon the numbers I have played out.

    When did I start building?

    I started day 1. The reason I did was based upon the fact that I could leverage more man power to help me increase my distribution channel. I wanted to get my contract up as high as soon as I could , I wanted to cover my lead expense with overrides so all my personal production was pure profit.

    The question now turns back to you.... When will you start building your agency?

    Look for articles on recruiting coming soon.