How often do insurance agents get paid? While there are many misconceptions about the life of an insurance agent, this is one that is frequently asked. In fact, a Google search for “How do insurance agents get paid?” yields approximately 336,000,000 results.
Every month, you must pay that dreaded insurance premium, and you wonder if there is any way to save. Then you realize… are you paying a middleman for nothing? Is it true that having an insurance agent raises your premium?
Do I Have To Pay A Fee To The Insurance Agent?
Your insurance carrier pays an insurance agent a commission (a percentage of your premium).
Insurance agents are not paid directly. Instead, the insurance carrier pays the set commission rate to the agent or agency with each premium payment.
How Much Money Do Insurance Agents Make?
The pay for an insurance agent varies greatly. So, you’re probably wondering how much of your premium is paid to your agent’s agency.
First things first, there really isn’t “an average agent salary”. A State Farm Agent may earn more than an Allstate Agent on average, but less than a Nationwide Insurance Agent.
It differs from state to state, carrier to carrier, policy to policy, and, in some cases, agent to agent. However, commission rates in North Carolina typically begin around 5% and can range up to 20%. An agency’s average commission is around 10%.
Let’s take a look at how often insurance agents get paid.
If your monthly insurance premium is $100, your agency will most likely receive about $10 in commission for your policy.
Remember, that is their gross pay; they must still pay their agents’ commissions, utilities, rent (unless they sell insurance from home), and so on.
As you can see, your agent or agency isn’t making a fortune off your policy. They rely on a large number of clients rather than a few for their monthly net income.
What Effect Does Having An Insurance Agent Have On Your Premium?
The presence of an insurance agent has no negative impact on your insurance premium.
People frequently inquire, “Can I save 10% off my premium if I don’t have an insurance agent?” Despite what major online insurance companies like Geico and Progressive would have you believe, that 10% is still being spent elsewhere.
Instead of paying agents to discuss your options, those online insurance companies invest in advertising. As a result, you’re constantly bombarded with commercials and online ads.
As a result, having an insurance agent has no effect on your premium. The only difference is in how the funds are distributed.
Insurance Agent vs. Large Online Insurance Provider
So, which is more valuable: 10% going to an insurance agent who can customize a plan for you and your family or a standard application on an insurance company’s website for which you saw an ad on TV?
State Farm and Geico Insurance spend their money on advertising, whereas independent insurance agencies spend their money on agents who can help you understand insurance better.
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In the end, an experienced, caring insurance agent will save you more money in the long run than a few dollars saved by an online insurance company.
Is it in your agent’s best interests for you to file a claim?
The answer is, well, sort of. Some carriers pay bonuses to their agents if they have a “profitable year.” What does this imply?
The agent’s job is to go out and find insurance clients who are low-risk, meaning they are less likely to file claims.
If an insurance agent’s claim figures with a carrier are less than a certain loss percentage at the end of the year, the carrier shares some of its profits with the agent.
Does this imply that an insurance agent does not want you to file a claim and may even advise you not to? After all, filing a claim could have an impact on their bonus.
There are always a few bad apples in the bunch, but insurance agents are there to protect your interests. And the truth is that only extremely large claims would ever have an impact on that agent’s bonus, and no agent would ever advise you not to file a claim for a significant loss.
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That would be obviously bad advice, not to mention unethical. So, if an agent advises you not to file a claim, it is almost always because it is in your best interests.