How are insurance agents paid? While there are a number of misconceptions about the life of an insurance agent… this is a question that comes up more often than not. In fact, if you do a google search for “how do insurance agents get paid?” you’ll see approximately 336,000,000 results.
Every month you have to pay that dreaded insurance premium, and every month you wonder if there’s a way to save. then you realize… are you paying an intermediary for nothing? Does having an insurance agent increase your premium? The short answer is no, but in this article we’ll explain:
- Do I have to pay a fee to the insurance agent?
- How much do insurance agents charge?
- How does having an insurance agent affect your premium?
- Insurance Agent vs. Big Insurance Online: Which Is the Best Value?
- Does your agent have a vested interest in you filing a claim?
If you have any other questions, you can contact us for answers.
Do I have to pay a fee to the insurance agent?
Insurance agents are paid a commission (percentage of your premium) from their insurance company.
does not pay insurance agents directly. instead, each time you make a premium payment, the insurance company pays the stated commission rate to the agent or agency.
how much do insurance agents charge?
The amount an insurance agent is paid varies widely. So, you must be wondering how much of your premium goes to your agent’s agency. Well, it varies from state to state, provider to provider, policy to policy, and sometimes even agent to agent. However, in North Carolina, commission ranges tend to start around 5% and can go up to around 20%. the average commission for an agency is approximately 10%.
For example, if your insurance premium is $100 per month, your agency will likely receive about $10 per month as a commission on your policy. Note that this is their gross salary, which means they still have to pay commissions, utilities, rent, etc. of their agents. So, as you can see, your agent or agency is not getting rich off your policy. they rely more on having many clients than a few for their monthly net income.
how does having an insurance agent affect your premium?
Having an insurance agent does not negatively affect your insurance premium.
People often ask, “If I don’t have an insurance agent, can I save 10% on my premium?” Despite what the big online insurance companies like Geico and Progressive would have you believe, that 10% still goes elsewhere. Instead of paying agents to discuss options with you, those online insurance companies spend that money on advertising. hence the endless commercials and online advertisements you are bombarded with every day.
so having an insurance agent does not ultimately affect your premium. the only difference is where the funds are allocated.
insurance agent vs. great online insurance
So the real question is which is worth more: 10% to an insurance agent who can customize a plan for you and your family, or a standard application on the website of an insurance company you saw an ad on television? Big companies focus their money on advertising, while independent insurance agencies focus their money on agents who can help you better understand insurance. Ultimately, a caring and experienced insurance agent is likely to save you more money in the long run than the few dollars an online insurance company saves you.
Does your agent have a vested interest in you filing a claim?
the answer: more or less. some agents get bonus money from their operators if they have a “profitable year”. what does that mean? Well, the agent’s job is to go out and find insurance clients who have a good risk, which means they are less likely to have claims. At the end of a year, if an insurance agent’s claims figures with an insurance company fall below a certain loss percentage, the insurance company shares part of its profits with the agent.
Does that mean an insurance agent doesn’t want you to file a claim, or may even discourage you? after all, filing a claim could affect your bonus. Well, there are always bad apples in the bunch, but insurance agents are there to look out for your best interests. And the truth is that only really big claims would affect that agent’s bonus and no agent would advise you not to file a claim for a big loss you experience. doing so would be blatantly bad advice, not to mention clearly unethical. therefore, if an agent advises you not to file a claim, it is almost always because that is their honest and ethical advice in their best interest.
best insurance agency in north carolina
As you can see, at our discretion, we believe in transparency and direct conversations about insurance. If you want to better understand your insurance options, we’re here to help. we are a local north carolina insurance agency. We have offices in Clemmons, Denton, Greensboro, Hendersonville, and Wilmington, and we serve everywhere, both online and by phone. Contact us today to speak with a friendly and experienced agent.
