Attracting and retaining talent remains among the top insurance agency challenges as the industry continues to face a shortage of qualified candidates intending to pursue a long-term career in insurance.
While not the only factor, a strong compensation plan can help agencies attract and retain good producers that help insurance agencies grow and succeed. But it’s important to strike the right balance between offering compensation that is high enough to be competitive but not so high that it’s squeezing profit margins.
In our 2019 edition of Insurance Agency Growth and Performance Standards (GPS) Study: Critical Data for Developing KPIs for Your Agency, we’ve reported key data on producer compensation that can help agencies see how their compensation numbers measure up against industry averages for agencies of the same size.
By comparing their own insurance agency compensation data with our results survey, agencies can evaluate their compensation structures and identify any gaps.
The comparison may also prompt agencies to answer tough questions about their own performance. Are they overstaffed? Are their systems efficient? Is their compensation structure keeping them from retaining top producers?
Some key data and trends reported in our latest GPS study include the following:
- Average compensation for each nonowner producer is $133,008 for all agencies.
- Compensation levels vary widely by agency size.
- For small agencies (less than $500,000 in revenue), the average producer compensation reported is $29,512.
- For the largest agencies ($3 million or more in revenue), average producer compensation was reported at $219,980.
In addition, our overview of key trends reveals an increase in producer compensation levels since the previous 2014 study, particularly among large insurance agencies.
- Average producer compensation for large agencies rose to $182,000, up from $135,000 previously.
- However, medium agencies showed only a slight increase in producer compensation, up from $71,000 to $73,000.
Producer compensation figures include both sales salaries and commissions per person, but not benefits. In addition, variations in compensation levels reflect numerous factors. Larger agencies typically see higher production levels from both personal and commercial lines and are better able to write large commercial accounts. Larger agencies also hire more nonowner producers. Conversely, smaller agencies tend to write smaller commercial accounts. They may also have less access to marketing opportunities.
To stay competitive, it’s critical for agencies to evaluate the way they compensate nonowner producer. Insurance Agency Growth and Performance Standards Study: Critical Data for Developing KPIs for Your Agency provides benchmark data to help agencies evaluate their growth and productivity. Order your book for the complete current survey results, analysis of all key trends, and a step-by-step guide to complete your own comprehensive agency plan.