Back agency fee

I'm new in the independent business. I have never charged agency fee since I was captive before. How do you know how much to charge? What's the standard guideline that's acceptable in the industry? Please help. Thanks!

There is no hard and fast rule about fees. The DOI (California)would like us to be reasonable and 10% is typical (In their eyes). If you are willing to tell the client up front that it is a fee and the client doesn't have a problem with it then it's OK. Just provide good service and the fee will be well earned. I have charged as much as $1000 for some comercial products. I usually charge $100 for Non-Standard Auto although I did charge more in the past before I built up my book of business. There are no fees for Agent Appointments.

Great question! I would love to find out too. I started on my own without ever having a mentor to guild me so I would love to know what those who are charging fees are charging for new business and renewals.

Why does anyone think it is great to charge a fee...why do you charge a fee and accept a commission. Only stores such as Sam's and Costco charge a fee to be a customer. If you work hard and expect to get paid based on your knowledge and service you will not need a fee. The only fees we charge is for services that the client could have done without us, ie: bring us cash to make his insurance payment, we write a check and mail it for him...for this we charge a whole $3.00...which goes to a christmas fund not to the agency. Why not be a professional and get paid for your ability...if the companies you represent do not pay commissions, I understand...if they are not paying you enough then you represent the wrong companies or you are not selling enough. Treat your clients the way you want to be treated. The next thing you know the next time you buy a Happy Meal, McDonald's will charge you a fee for their service.

Thank you for your insightful responses. At least now I know we do charge fees, whether it's $3 or $1,000.

These two words don't go together.

As long as you are complying with any statutory/administrative parameters established by the applicable States, charge as much as you want. If you clients don't like it, they'll walk. If they consider you and your services to merit this compensation, they'll stay. If you're peddling insurance like a commodity (i.e. Costco, Sams & McDonalds), your clients probably won't consider you to be worth more than your companies are willing to toss your way. If this is your business model, good luck! Too many in our business "sell insurance". Bad move. You should be selling yourself as an insurance consultant. If you're establishing a solid, professional, consultative relationship (as you should), there is a greter likelihood that clients will have no problem with your compensation arrangement, regardless of it's nature. Remember, this is a capitalist environment and you can charge what the market will bear for your services. While we do indeed provide a great service to the general welfare of the public, we do not do so as a non-profit organization.

Check with your state Big "I" Association. They are up these topics and should have the correct answer for your state. In NY, only a broker can charge a fee, when he is acting as a broker (not an agent). There are more details to this regulation. So make sure you understand your state's reg thoroughly.

Put all fees in writing, have the insured sign and put it in your file. Disclosure is the key, The document eliminates the questions. As for charging fees, McDonalds charges a fee for their product and service. Difference is, they get to price their product and agents don't. I've had clients that take an enormous amount of time to service their accounts. Clients that bind coverage and cancel in 6 weeks, uncollectable NSF checks, etc, etc. Fees help to offset those expenses you will incur. At the end of the day, you add up the amount of money your agency has taken in, subtract the amount you've had to pay out; and hope your in the plus column.

First you need to make sure it's legal in the state your binding coverage for. As an example in FL it is illegal to charge a fee if you are taking a commission. I would recommend setting up a guideline for a minimum earned per policy type sold. If the commission earned does not reach the minimum give them the option of either paying the fee to bring it up or to buy another product (home with auto, auto with home, umbrella, flood, GL, WC, etc) to make it worth your while. As long as you're upfront about it and disclose it to all your customers they will understand.