Keep reading, here are some interesting commission payment facts about insurance agents. If you are thinking about having a career in the insurance market or start a business related to it, keep reading.
Insurance Agents are paid on commission basis
Most professionals who sell insurance, more known as agents, are paid largely on commission basis, meaning than probably around 70% of their income comes from a well-managed compensation plan. Therefore, agents should have great motivation to sell as much as they reasonably can.
But not everything is quite easy for insurance agents, during their first years of work they have to really focus on developing a customer base and that can be particularly challenging. So challenging that only 20%, or even less, of agents last more than four years working in the market.
Insurance industry’s payment model
Understanding insurance industry’s payment model will help customers and people involved in the industry to appreciate why some agents may have bias towards offering certain products over others. Let’s start talking about the basics of how commissions are applied to insurance agents.
An insurance agent will be paid a commission every time he performs a successful sale. Commissions are based upon the size of the policy and the type of product an agent is selling. It is important to point out that the policy size is determined by annual premiums.
Remember the difficulty of creating a customer base? It takes time, that’s the reason financial arrangements exist. These are also ways agents are compensated and assigned during the first couple of years of the agent’s employment.
Financial arrangements provide new agents with stable monthly income until they earn enough from commission on a regular basis.
The exciting part for an insurance agent is that if he works hard, nurtures his relationship with clients and renews policies, he will receive a residual or renewal income as well. Last but not least, according to the Independent Insurance Agents & Brokers of America, life insurance, home insurance and automotive policies are characterized by paying the largest commissions.
Many companies use technology to set and manage commission plans, sometimes they have so many agents that manual processes become impossible to perform. And, of course Blitz is part of those technologic tools for insurance companies.
It is designed to tailor multiple compensation plans, no matter how simple or complex they may be. We adapt to different rules, regulations, data and dynamic changes in the insurance market. Blitz is the perfect tool to calculate insurance agents commissions.