Auto Insurance Agents: How Are They Paid?

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Topic Author
Kookaburra
Posts: 158
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Auto Insurance Agents: How Are They Paid?

Post by Kookaburra » Thu Jun 25, 2020 4:38 pm

How are auto insurance agents compensated?

I was originally a customer of Progressive with no intermediary agent. I was advised by a friend that having an agent can be helpful to navigate a potential future claim. So I’ve since “hired” a local agent who shopped my coverage needs around with the various insurance companies that he represents, and this resulted in my ending up right back at Progressive with the same annual premium (but with him as my agent).

So how is he paid?

muddgirl
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Re: Auto Insurance Agents: How Are They Paid?

Post by muddgirl » Thu Jun 25, 2020 4:46 pm

I believe he now gets a cut of your premium, according to my life insurance agent.

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ResearchMed
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Re: Auto Insurance Agents: How Are They Paid?

Post by ResearchMed » Thu Jun 25, 2020 7:11 pm

Kookaburra wrote:
Thu Jun 25, 2020 4:38 pm
How are auto insurance agents compensated?

I was originally a customer of Progressive with no intermediary agent. I was advised by a friend that having an agent can be helpful to navigate a potential future claim. So I’ve since “hired” a local agent who shopped my coverage needs around with the various insurance companies that he represents, and this resulted in my ending up right back at Progressive with the same annual premium (but with him as my agent).

So how is he paid?
In effect, in situations like this, the agent gets a commission from the vendor, but the buyer/customer doesn't pay extra.
So if the buyer gets coverage directly from the insurer, the insurer gets paid more in total, but that's all calculated into their figures in terms of estimating revenue.

Travel insurance works the same way.

One advantage of going through an agent (especially given that it doesn't cost you anything extra) is that IF there is any difficulty with a claim, the agent can help run interference for you. (It's often in their interest to help out, to keep you as a client for the future commissions.)
We've had significant help from our auto insurance broker/agent a few years ago, and it helped not only speeding up the process, but we got closer to what *we* wanted, rather than what the other driver's insurer wanted to offer.

RM
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tj
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Re: Auto Insurance Agents: How Are They Paid?

Post by tj » Thu Jun 25, 2020 7:47 pm

That's pretty bizarre to me, that an agent would be able to help during a claim. Every time I've had auto insurance, the insurance card instructed me to call an 800 number for the claims department. Agent has never been involved. Agents sell policies, they don't service them.

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ResearchMed
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Re: Auto Insurance Agents: How Are They Paid?

Post by ResearchMed » Thu Jun 25, 2020 7:52 pm

tj wrote:
Thu Jun 25, 2020 7:47 pm
That's pretty bizarre to me, that an agent would be able to help during a claim. Every time I've had auto insurance, the insurance card instructed me to call an 800 number for the claims department. Agent has never been involved. Agents sell policies, they don't service them.
Our agency has a sales department and a claims department.
And they do know each other and talk with each other, so they are all on top of anything that comes up.
(Their claims department is totally separate from the insurer's claims department.)

RM
This signature is a placebo. You are in the control group.

tj
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Re: Auto Insurance Agents: How Are They Paid?

Post by tj » Thu Jun 25, 2020 8:01 pm

ResearchMed wrote:
Thu Jun 25, 2020 7:52 pm
tj wrote:
Thu Jun 25, 2020 7:47 pm
That's pretty bizarre to me, that an agent would be able to help during a claim. Every time I've had auto insurance, the insurance card instructed me to call an 800 number for the claims department. Agent has never been involved. Agents sell policies, they don't service them.
Our agency has a sales department and a claims department.
And they do know each other and talk with each other, so they are all on top of anything that comes up.
(Their claims department is totally separate from the insurer's claims department.)

RM
Apparently claims are through the agent for my current insurer, haven't had to file one, so I haven't experienced how this differs from the call centers.

https://www.auto-owners.com/claims/report-a-claim

Topic Author
Kookaburra
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Re: Auto Insurance Agents: How Are They Paid?

Post by Kookaburra » Mon Jun 29, 2020 10:44 pm

ResearchMed wrote:
Thu Jun 25, 2020 7:11 pm
In effect, in situations like this, the agent gets a commission from the vendor, but the buyer/customer doesn't pay extra.
So by extension, does this mean that if I stay with the same insurer and insurance policy but I choose to change agents, that my premiums will stay the same? Or is there a risk that the policy could get re-priced and my premiums go up just by changing agents/agencies?

marcopolo
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Re: Auto Insurance Agents: How Are They Paid?

Post by marcopolo » Mon Jun 29, 2020 10:49 pm

Kookaburra wrote:
Mon Jun 29, 2020 10:44 pm
ResearchMed wrote:
Thu Jun 25, 2020 7:11 pm
In effect, in situations like this, the agent gets a commission from the vendor, but the buyer/customer doesn't pay extra.
So by extension, does this mean that if I stay with the same insurer and insurance policy but I choose to change agents, that my premiums will stay the same? Or is there a risk that the policy could get re-priced and my premiums go up just by changing agents/agencies?
No. The pricing is set by the insurer. They also set the commission. It is possible they pay different commission to different agents, but that would also be hidden from the customer.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
Kookaburra
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Re: Auto Insurance Agents: How Are They Paid?

Post by Kookaburra » Mon Jun 29, 2020 11:00 pm

marcopolo wrote:
Mon Jun 29, 2020 10:49 pm
Kookaburra wrote:
Mon Jun 29, 2020 10:44 pm
ResearchMed wrote:
Thu Jun 25, 2020 7:11 pm
In effect, in situations like this, the agent gets a commission from the vendor, but the buyer/customer doesn't pay extra.
So by extension, does this mean that if I stay with the same insurer and insurance policy but I choose to change agents, that my premiums will stay the same? Or is there a risk that the policy could get re-priced and my premiums go up just by changing agents/agencies?
No. The pricing is set by the insurer. They also set the commission. It is possible they pay different commission to different agents, but that would also be hidden from the customer.
If I’m happy with my insurance company but unhappy with my agent, how would you suggest I proceed? I don’t want my premium to go up, so I would only change agents if my policy premium stayed the same.

marcopolo
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Re: Auto Insurance Agents: How Are They Paid?

Post by marcopolo » Mon Jun 29, 2020 11:08 pm

Kookaburra wrote:
Mon Jun 29, 2020 11:00 pm
marcopolo wrote:
Mon Jun 29, 2020 10:49 pm
Kookaburra wrote:
Mon Jun 29, 2020 10:44 pm
ResearchMed wrote:
Thu Jun 25, 2020 7:11 pm
In effect, in situations like this, the agent gets a commission from the vendor, but the buyer/customer doesn't pay extra.
So by extension, does this mean that if I stay with the same insurer and insurance policy but I choose to change agents, that my premiums will stay the same? Or is there a risk that the policy could get re-priced and my premiums go up just by changing agents/agencies?
No. The pricing is set by the insurer. They also set the commission. It is possible they pay different commission to different agents, but that would also be hidden from the customer.
If I’m happy with my insurance company but unhappy with my agent, how would you suggest I proceed? I don’t want my premium to go up, so I would only change agents if my policy premium stayed the same.
I am not sure how that works. I would assume you just call the new agent and tell them you want to switch. If you have an independent agent (that shopped for, and can sell from multiple companies), I would imagine it is easy to do. If it was with a captive agent (e.g., State Farm, Allstate), they may have territories assigned that make it more difficult to switch agents.

A while back some one that worked in the industry told me in that case the agent whose territory you are in retains the commission for some period of time even if you switch, so new agent may not be eager to take you on. I am not sure if that is still the case.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Topic Author
Kookaburra
Posts: 158
Joined: Thu Apr 02, 2020 11:14 pm

Re: Auto Insurance Agents: How Are They Paid?

Post by Kookaburra » Tue Jun 30, 2020 12:05 am

marcopolo wrote:
Mon Jun 29, 2020 11:08 pm
Kookaburra wrote:
Mon Jun 29, 2020 11:00 pm
marcopolo wrote:
Mon Jun 29, 2020 10:49 pm
Kookaburra wrote:
Mon Jun 29, 2020 10:44 pm
ResearchMed wrote:
Thu Jun 25, 2020 7:11 pm
In effect, in situations like this, the agent gets a commission from the vendor, but the buyer/customer doesn't pay extra.
So by extension, does this mean that if I stay with the same insurer and insurance policy but I choose to change agents, that my premiums will stay the same? Or is there a risk that the policy could get re-priced and my premiums go up just by changing agents/agencies?
No. The pricing is set by the insurer. They also set the commission. It is possible they pay different commission to different agents, but that would also be hidden from the customer.
If I’m happy with my insurance company but unhappy with my agent, how would you suggest I proceed? I don’t want my premium to go up, so I would only change agents if my policy premium stayed the same.
I am not sure how that works. I would assume you just call the new agent and tell them you want to switch. If you have an independent agent (that shopped for, and can sell from multiple companies), I would imagine it is easy to do. If it was with a captive agent (e.g., State Farm, Allstate), they may have territories assigned that make it more difficult to switch agents.

A while back some one that worked in the industry told me in that case the agent whose territory you are in retains the commission for some period of time even if you switch, so new agent may not be eager to take you on. I am not sure if that is still the case.
I have an independent agent. But like I said, I wouldn’t want to switch unless and until I knew that my premium wouldn’t go up. You said the premium could change with a different agent. So how do I find out the premium with a new agent before committing to a switch?

tj
Posts: 2943
Joined: Thu Dec 24, 2009 12:10 am

Re: Auto Insurance Agents: How Are They Paid?

Post by tj » Tue Jun 30, 2020 12:12 am

Kookaburra wrote:
Tue Jun 30, 2020 12:05 am
marcopolo wrote:
Mon Jun 29, 2020 11:08 pm
Kookaburra wrote:
Mon Jun 29, 2020 11:00 pm
marcopolo wrote:
Mon Jun 29, 2020 10:49 pm
Kookaburra wrote:
Mon Jun 29, 2020 10:44 pm


So by extension, does this mean that if I stay with the same insurer and insurance policy but I choose to change agents, that my premiums will stay the same? Or is there a risk that the policy could get re-priced and my premiums go up just by changing agents/agencies?
No. The pricing is set by the insurer. They also set the commission. It is possible they pay different commission to different agents, but that would also be hidden from the customer.
If I’m happy with my insurance company but unhappy with my agent, how would you suggest I proceed? I don’t want my premium to go up, so I would only change agents if my policy premium stayed the same.
I am not sure how that works. I would assume you just call the new agent and tell them you want to switch. If you have an independent agent (that shopped for, and can sell from multiple companies), I would imagine it is easy to do. If it was with a captive agent (e.g., State Farm, Allstate), they may have territories assigned that make it more difficult to switch agents.

A while back some one that worked in the industry told me in that case the agent whose territory you are in retains the commission for some period of time even if you switch, so new agent may not be eager to take you on. I am not sure if that is still the case.
I have an independent agent. But like I said, I wouldn’t want to switch unless and until I knew that my premium wouldn’t go up. You said the premium could change with a different agent. So how do I find out the premium with a new agent before committing to a switch?

Why would your premium go up? The agents have absolutely nothing to do with your rates.

I'm sure the new agent would be able to tell you how to switch the agent of record on your policy.

marcopolo
Posts: 3041
Joined: Sat Dec 03, 2016 10:22 am

Re: Auto Insurance Agents: How Are They Paid?

Post by marcopolo » Tue Jun 30, 2020 1:03 am

Kookaburra wrote:
Tue Jun 30, 2020 12:05 am
marcopolo wrote:
Mon Jun 29, 2020 11:08 pm
Kookaburra wrote:
Mon Jun 29, 2020 11:00 pm
marcopolo wrote:
Mon Jun 29, 2020 10:49 pm
Kookaburra wrote:
Mon Jun 29, 2020 10:44 pm


So by extension, does this mean that if I stay with the same insurer and insurance policy but I choose to change agents, that my premiums will stay the same? Or is there a risk that the policy could get re-priced and my premiums go up just by changing agents/agencies?
No. The pricing is set by the insurer. They also set the commission. It is possible they pay different commission to different agents, but that would also be hidden from the customer.
If I’m happy with my insurance company but unhappy with my agent, how would you suggest I proceed? I don’t want my premium to go up, so I would only change agents if my policy premium stayed the same.
I am not sure how that works. I would assume you just call the new agent and tell them you want to switch. If you have an independent agent (that shopped for, and can sell from multiple companies), I would imagine it is easy to do. If it was with a captive agent (e.g., State Farm, Allstate), they may have territories assigned that make it more difficult to switch agents.

A while back some one that worked in the industry told me in that case the agent whose territory you are in retains the commission for some period of time even if you switch, so new agent may not be eager to take you on. I am not sure if that is still the case.
I have an independent agent. But like I said, I wouldn’t want to switch unless and until I knew that my premium wouldn’t go up. You said the premium could change with a different agent. So how do I find out the premium with a new agent before committing to a switch?
No. I said the rate does NOT change with agent, the rate is set by insurer. The insurer may pay different agents different commissions, but that does not change what the customer pays.

To be sure, you could go to a different independent agent and ask him for a quote.

Be aware, it may be slightly different if your policy has aged a bit, and the insurer has increased their rates in the mean time.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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