Actually, my income
is not dependent on my loss ratio AND my agency does not recieve any type of bonus's. What you refer to is called a contingency bonus and it was a reward to agents that had a low loss ratio. Those have been done away with in most of the insurance business a number of years ago.
As an independent agent we do in fact try to keep out loss ratios low. (Loss ratio is the amount paid in claims versus the amount collected in premiums.) We work
to educate our clients about things they can do to help reduce the number of claims. This actually works to the clients benefit because as mentioned before we have a number of companies we represent. Clients with no losses are rewarded with lower rates because it enables us to shop around then place them with companies that have lower rates.
Most people don't realize that all companies have guidelines with regards to what type of customer they'll accept. If you don't have any claims you qualify for companies with lower rates. Some companies even offer to pay a claim and not raise your rates if you can go for a period of time without any claims. As I stated before, these are just some of the advantages of dealing with an independent agent. Our large list of companies allows us to shop around for better rates as you qualify and we spend time educating our clients about ways they can limit losses in order to qualify for better rates.
Now I'm want to address your last comment. Yes, just like Captive or Company Agents, there are Independent agents that really work
their client list to presuade them to buy additional coverages. My agency does not do that and we never will. We do make an effort to educate our customers about the types of things we can help them with but we NEVER try to pressure a client into anything. Believe it or not this puts us into somewhat of a liability situation. In the last 5 to 10 years agencies have had to pay out in court cases because they didn't pressure a client to buy a certain type of insurance. In one case a new client came into an agent and bought auto insurance. The client was in a hurry and wouldn't take the time to discuss the rest of their insurance needs with the agent. On the way home the client was killed in an auto accident
. The family
successfully litigated and got a multi million dollar judgement against the agency because the agent didn't try to sell the client life insurance. It was a product the agency offered but because the client was in a hurry the agent decided to wait until a later time to discuss this with the insured. Believe it or not there are a number of examples of this type of litigation against insurance agents.
I realize that just like a lot of other professions there are some real slime ball insurance agents out there. I am not one of them and the agency that has been in my family
for 3 generations will not become one of them. I could spend a LOT of time "blowing my own horn" about things we've done to help people but that's not the way I do business either. You're absolutely right if you're guessing that I'm not optimizing my income
. I'm probably at the lower end of the income scale for insurance agents. In fact, at this time I'm not even getting a paycheck from my agency because times are really tough here and I want my employees to keep their jobs so I've opted to fall back on other income to make ends meet while we weather
the storm. Yes, my family is doing without some things for now but we'll get by and be just fine. Yeah, I would REALLY like to give up life on land and live on my boat but that's just not reality for now. However, god is very much blessing us in other ways. I just got back from a 10 day transit to deliver a boat for a friend from Stuart, Florida
to Galveston, Texas
and it didn't cost me much of anything.
Sorry, I'll get off my soap box again I just felt compelled to stand up for some of us slime balls out here that really try hard to do the right thing even when it has a tendency to make our lives a little bit harder than we would like.
to all and God Bless!