Your agency sells insurance and the carrier provides insurance. The margin you make depends on
- HOW you CONNECT with carriers,
- WHICH CARRIERS you sell for,
- POLICY TYPES and SIZES you sell and
- Your ratio of NEW vs RENEWAL sales.
The way you access carriers impacts margins: direct access increases commission and profit sharing levels while lowering transaction costs whereas indirect access through wholesalers and most clusters decreases commission and profit sharing levels while increasing transaction costs.
Carriers offering profit sharing tend to offer higher commission levels as well. Broad coverage and excellent claims service increase renewal retention. Ease of transacting and broad underwriting appetites certainly decrease your costs and increase your sales scope. National and large regional carriers help to attract and retain more multi-state accounts.
Your agency’s mix of policy types and premium levels impacts commission and profit sharing immensely. Commission and profit sharing levels are highest for personal lines, small WC and non-WC commercial & farm lines and lowest for larger WC, for example.
A healthy sales culture grows new sales, cross sales and upsells and these all enhance renewal retention. Sell or shrink: this is old news.