Premier Agency Owners,
This is a bit of a long email. Nonetheless, it is important and concerns extra agency compensation through Premier on your behalf. Please take the time to read it.
We are very excited to announce that across our many carriers we were able to fill the order in 2019 with Premier agencies receiving more than 50 extra compensation programs in 2019, with hundreds of agencies participating and qualifying! In addition Premier and Premier agencies received several award trips and recognition for outstanding performance. And on top of all that a great number of carriers helped to sponsor the 2020 Vision conference that so many of you attended last October. While the trips certainly won’t be the same for 2020 given the Coronavirus situation, we have a lot in store for you on the same fronts for agency compensation. Be sure to see the 2020 listing at www.PGIagents.com. That information is for Premier Agency Owners only and is Proprietary and Confidential.
Please review this notice in depth. At the end we will cover the 2019 Q4 and Year End Agency Compensation from Carriers to Premier, and from Premier to the agencies that qualify. First, a quick overview: Your respective agency contract w Premier governs your insurance carrier compensation at Premier. Ultimately, at the carrier level the compensations programs are governed by the respective carrier contracts that Premier has with each carrier and can be product line specific, have differing eligibility parameters, length of term, and other qualifying, eligibility, and exclusion terminology and generally require the agency be in good standing with the carrier. In addition the agreements can and do often change from year to year… Any information herein or on the website is subordinate to the contractual terms in the respective carrier agreements with Premier. Please see below for a quick summary of the various revenue streams available to you as they are many!
- Base P&C Commissions – Your largest revenue stream. This is the gross commission Premier receives for New Business and Renewal Business. All active agency owners and agency codes qualify and are eligible provided the business is entered into the agency management system at the onset so commissions can be identified as yours and paid accordingly. Payouts are monthly to you. Premier remains the only outfit in the country to pay out commissions in the same month as received if received from the carrier by the 10th of the month.
- Commission Overrides – Premier negotiates on behalf of the hundreds of agencies in the group for exclusive and increased compensation each year. Our growth and profit results, and spread of risk, notwithstanding Mother Nature’s occasional intervention with catastrophes, place us in a solid and handsome position to optimize win-win negotiations. All active agency owners and all agency codes qualify and are eligible provided the business is entered into the agency management system at the onset so commissions can be identified as yours and paid accordingly. Increased compensation payouts for both New Business and even Renewal Business are often built into the Base Commissions, or may be paid quarterly, semi-annually, or annually.
- Commission Overrides based on Past Growth and/or Past Profit Performance – Agency owners qualify individually based on the parameters of the program, e.g., Travelers New Business Personal Lines (specific Line of Business [LOBs]) New Business Override.
- Commission Overrides based on Future Growth and/or Future Profit Performance - Agency owners qualify individually based on the parameters of the program, e.g., Safeco’s New Business Personal Lines (specific LOBs) goal based partial-2019 New Business Override.
- Commission Overrides based on insurance carrier individual meetings w you – Agencies qualify in consideration of your potential with that specific carrier and even factors such as agency carrier shelf space, e.g., Dairyland Insurance.
- New Agency Compensation Programs – Many agencies are new to Premier and have a sound business plan and an impressive location. Accordingly, some carriers wish to make a strong impression with you and endear you to them right away. As such they run specific programs for a limited time period to build and nurture the relationship and flow of business, e.g., Safeco Insurance. Agencies qualify individually based on the parameters of the individual carrier program(s).
- Coop – Nationwide has an incredibly strong program for this. A plethora of programs are available to generate new business and retain business as per the Nationwide Coop Program. Agencies must pay in full for the eligible and qualifying Coop program up front and then can submit through Premier, original receipts and a request for reimbursement of up to 50% at the program end. Agencies qualify individually based on the parameters of the program and as governed by Premier.
- Various Contests and Spin & Win, etc. – Such programs are governed by respective carrier and/or Premier rules. They can be in the form of cash for apps, or gift cards, or deposits from Premier, and may be related to a trip for an overall set of top performers as well. If these programs do not run through Premier there can be a tax liability to you generated directly from the carriers. If paid to you directly by the insurance carrier, the contract commission split is not applied but you may incur a 1099 directly from the carrier.
- Reward and Recognition Trips – are also governed by respective carrier rules. Generally, top performing agencies or Premier executives attend these trips, the latter undertaken to further forge relationships at the highest levels of organizations for further win-win outcomes. That, in part, is how we were able to have the Presidents of both Nationwide and Safeco be keynote speakers at our 2020 Vision Conference which several hundred of you attended in October, 2019.
- Profit Sharing – Premier, for your benefit, has many profit sharing agreements in place, even with insurance carriers who normally would not undertake them. This is part of the power of Premier – Creating financial programs where Agencies and Carriers alike win. To qualify you must meet the terms of your Premier Agreement, which for overview purposes includes having a premium level, growth rate, and loss ratio in accordance with the terms of your agreement, at the agency level, for your exclusive carrier sub-code(s), carrier by carrier. If Premier qualifies with a carrier and you qualify per your agreement with Premier, then payouts are made as per the terms of your Premier agreement. If you don’t qualify in a given year, or the group as a whole did not qualify, analysis is jointly undertaken by Premier and the respective carrier to identify the issues. Sometimes, the disqualifier can be premium shrinkage. When the disqualifier is related to loss ratio for Premier at large, it may be based on catastrophes or shock losses, and/or a pricing deficiency by the carrier or even product line conditions driving up frequency and/or severity faster than the carrier or industry projected. We have seen all of the aforementioned… Other times concerns may be state or product line specific.And ultimately they can be agency specific.
What you can do to Improved your loss ratio with a given carrier?
This answer to this begins broadly and then gets into further detail. Shawn Walker, Premier’s Vice President, just last week launched the 1st of a 3 part series to address this. Please take a deep dive into the information from Shawn. The answers ultimately gets to the behavior and sophistication of the carrier to select, price, and vet the business, the agent to frontline underwrite, vet through questioning, and place the business, and the insured to be forthcoming and provide accurate information and full exposure information about all members of the household, the property, and/or business… If any component across these 3 key stakeholders is off base, then the “rate adequacy” for the insured’s exposure(s) can be off, and in turn drive up the actual loss ratio higher than forecasted for which the price was determined… The more accounts falling into these rate inadequate buckets the higher an agency’s loss ratio. Shawn’s 3 piece series goes from INFORMATIONAL to AWARENESS to ACTION, which in some cases may result in specific “by when” action being required by you to improve the loss ratio, or you risk losing the carrier, if the loss ratio results are not turned around.
How to maintain your carrier access? This is job #1 – a MUST DO. Premier, under Shawn’s prowess, has done an excellent job to maintain carrier access broadly across the group for agencies who are in the P&C space as a full time endeavor, and where insurance carriers have taken responsible action to maintain and manage their business and distribution.
- In the case of new agencies, for both PL and CL you can get quick access before having your own exclusive agency sub-code. . But please know that quick access is intended to be only temporary for you for carrier access, to enable you to meet general production standards, which are well below those normally required. The aim is to obtain for you, your exclusive own sub-code, carrier by carrier, by achieving vastly lowered minimum production standards. For PL, this generally means 2-3 packaged accounts (both Auto & Home policies per account) in New Business per month per standard market carrier. For CL, this generally means having $35k-$50k NB WP annually per standard market carrier. Both production standards are exponentially reduced from what agencies outside of Premier must do. Plus you gain the benefit of the increased compensations as per above with carriers for nominal production. This is a huge advantage for all Premier agencies.
- In the case of existing agencies, sometimes agencies through no fault of their own do not meet the above production standards. It may be the carrier is not a fit for you or vice versa, or it may be that the carrier is not right priced to be competitive in your area… Shawn has time and time again worked to have candid conversations about carrier marketplace competitiveness, to be in the ballpark, and often is able to obtain additional time to when the carrier is back in the market, for you to hit the general minimum production standards… He as done the same with the sometimes E&O situations that would surely have turned unfavorable if not for the Premier carrier relationship, and for the infrequent moments of agent verbal spirited dialogue in dealing with insurance carriers that can sometimes happen by an agency, so long as it is not a pattern. The point being that Premier has your back for insurance carrier access…, but please know there are limits…
- Finally, loss ratios enter the equation, which leads us back to Shawn’s series of improving your loss ratios. Growth & Profit are the pillars of Carriers and Agencies alike. Growth without profit for a carrier cannot last. Such carrier situations become scrutinized by regulators and shareholders. Accordingly, the same is true with agencies. So, please take the deep dive in the Shawn’s three part series. Note, also included in Shawn’s campaign will be a “how to guide” to pull your own reports carrier by carrier for Premier’s large carriers so you can track monthly your loss ratios, and related production and mix of business attributes.
- Coming in Q2 will be agency analytics and other outlier reports at the agency level for key carriers that pertain to loss ratio development, i.e., premium leakage.
How does an agency make more net margin? Unless you are a non-profit agency, this is a critical section for you. One that Premier has a high degree of information to share w you.
- Fact – a well run agency has EBITA (earnings before interest, taxes and amortization) of 25-30%. The top agencies have margins in the 40%s.
- Fact – Average P&C revenue per producer across the universe of top agencies in the United States is $177,000.
- Fact – Newly P&C licensed employees can handle up to 500 clients, 2-4 years’ experience up to 750, and more experienced over 1,000 clients – selling and servicing. Note > clients = multiple policies per client…
The above gets to Operational Effectiveness in Customer Experience, Retention, Productivity and Expense Management.
- This week April 13th, Premier launches a New Agency Digital Marketing Toolkit training platform to help you enhance your agency’s Customer Experience.
- Throughout Q2 we will have additional modules and consultation available for you to dive deep in the other areas of Retention, Productivity and Expense Management,
- As well as Agency Acquisitions, with Premier able to help you to analyze acquisition opportunities and in many situations co-finance them with you as well, if you have achieved a 5-figure per month commission flow.
AGENCY COMPENSATION 2019 OVERVIEW SUMMARY for Q4 2019 and YE 2019.
Premier’s Big 4 Insurance Carriers (alpha order):
- Nationwide Base Commission 2019– Renewal Commissions paid out 2 points Higher for all agencies for being part of Premier, due to our volume in 2019.
- Nationwide Coop Reimbursement 2019 – Paid out to agencies in Q4 2019 & Q1 2020 for 2019 Eligible Coop Expenses.
- Nationwide New Business Override 2019 – Paid out to agencies throughout 2019.
- Nationwide Profit Sharing 2019 – Paid out in the renewal commissions piece throughout 2019 about the aforementioned 2 point volume increase. (Note Nationwide changed this for 2020. It is not included in the renewal piece. Instead Premier has a 1.5 factor for PL Nationwide business guaranteed for any qualifying agency in 2020, with a liberalized LR that must be below 60. Payout will be in 2021.)
- Nationwide Beak the Bank PL Volume Based New Business Bonus 2019 – Premier liberalized the NB production requirements and will generate payouts with the April commissions deposits.
- Nationwide All-Start Presidents Award Trip 2019
- Nationwide Commercial Lines Profit Sharing for 2019 – Will generate payouts with the May commission deposits.
- Progressive Platinum Program 2019 – Many Premier agencies were afforded the high commission of 15/12 w Progressive, a program going to a minority of agencies across the United States.
- Progressive PL Profit Sharing 2019 – Paid out with the March deposit. Note – Premier received the fund in March and the same month Premier processed and deposited the funds to agencies. In addition we liberalized the profit sharing LR in several situations to qualify agencies.
- Progressive Bundle Bonus 2019- Paid out with the March deposit. Note – Premier received the funds in March and the same month Premier processed and deposited the funds to agencies.
- Progressive CA PL Profit Sharing 2019 – Will generate payouts with the May commission deposits.
- Safeco/Liberty Personal Lines New Business 6 month Growth Incentive for 2019 - Paid out in December before the holidays in 2019 with funds received the same month.
- Safeco/Liberty Presidents Award Trip 2019
- Liberty Commercial Lines New Business Commission Override 2019 - Paid out by qualifying quarter throughout 2019 and continues into 2020 for select agencies.
- Liberty Commercial Lines Profit Sharing 2019 – Paid out with the April commission deposits to qualifying agencies.
- Travelers Personal Lines NB LOB Commission Override 2019 – Paid out by quarter throughout 2019 and continues into 2020 for select agencies.
- Travelers Championship Awards Trip 2019
- Travelers Commercial Lines Select New Business Commission Override 2019 - Paid out by qualifying quarter throughout 2019 and continues into 2020 for select agencies.
Premier’s Other Important Carrier Partner Payouts and Rewards and Recognition (alpha order):
- Adventure Mexico 2019 – New Business override paid in the base commissions in 2019.
- Anchor Insurance 2019 – Profit Sharing will paid out with the May commission deposits to qualifying agencies.
- Auto-Owners Award Trip 2019 – Premier Agency Owner Attended
- BTIS (commercial) 2019 – New Business override paid in the base commission in 2019.
- Burns & Wilcox 2019 – New Business override paid in the base commissions in 2019.
- CNA (commercial) 2019 – Profit Sharing will be paid out with May commission deposits to qualifying agencies.
- Dairyland Insurance 2019 – New Business override paid in the base commission in 2019 to select agencies.
- Dairyland Insurance 2019 – Renewal business override paid in the base commissions in 2019 to select agencies.
- Dairyland Awards Trip 2019 – Premier Agency Owner Attended.
- Employers (commercial) 2019 - New Business override paid in the base commissions in 2019.
- Encompass Awards Trip 2019 – Premier Agency Owner Attended
- Federated National 2019 – Profit Sharing will paid out with the May commission deposits to qualifying agencies.
- Foremost Auto 2019 – New Business Auto Override paid in the base commissions in 2019.
- Foremost Auto 2019 – Renewal Business Auto Override paid in the base commissions in 2019.
- Foremost Hall of Fame Awards Trip 2019
- Foremost Specialty 2019 - Profit Sharing will paid out with the May commission deposits to qualifying agencies.
- Guard (Commercial) 2019 – Profit Sharing Funds not yet received.
- Hartford (Commercial) 2019 - New Business override paid in the base commissions in 2019
- Hartford (Commercial) 2019 - Profit Sharing will paid out with the May commission deposits to qualifying agencies.
- Kemper Specialty 2019 – New Business override paid in the base commissions in 2019
- Kemper Specialty 2019 – Renewal Business override paid in the base commissions in 2019.
- Kemper Specialty 2019 – Profit Sharing Fund not yet received. Expect to pay out in May.
- Legacy 2019 – New Business override paid in the base commissions in 2019.
- Legacy 2019 – Renewal Business override paid in the base commissions in 2019.
- Legacy - Profit Sharing paid out with the April commission deposits to qualifying agencies.
- Markel (Commercial) 2019 - Profit Sharing will paid out with the May commission deposits to qualifying agencies.
- Mendota 2019 – New Business override paid in the base commissions in 2019
- Mendota 2019 – Renewal Business override paid in the base commissions in 2019.
- Mercury Georgia 2019 - Profit Sharing will paid out with the May commission deposits to qualifying agencies.
- Mercury Texas 2019 - Profit Sharing will paid out with the May commission deposits to qualifying agencies.
- Met Auto & Home 2019 LOB Volume Based New Override - Will be paid out with the May commission deposits to qualifying agencies.
- Safeway 2019 – New Business override paid in the base commissions in 2019
- Safeway 2019 – Renewal Business override paid in the base commissions in 2019.
- The General 2019 - New Business Auto Override paid in the base commissions in 2019.
- The General 2019 – Renewal Business Auto Override paid in the base commissions in 2019.
- The General Awards Trip 2019
- USLI 2019 - Profit Sharing will paid out with the May commission deposits to qualifying agencies.
- Zurich Classic Awards Trip 2019
In summary, 2019 was a record year for Premier and Premier agencies in the area of extra compensation. Along with the Data Analytics mentioned above to come in Q2, we will bring you additional commission detail to show you the amount of extra compensation you are receiving for your agency throughout the year.
Onward and Upward on the ladder of Your Success and Profitable Growth!
Rex, Young, and Shawn
Rex Hickling, President
Cell: (303) 818-6218
600 17th St. Suite 1425N
Denver, CO 80202