Insurance agency "fees"

How much is the fee? Maybe that IS his commission?

Chances are they're saving you more than $100 on your premium by being able to shop your business around for you. Pay them for their service and be happy.

I've never had that fee on mine. I don't use a 3rd party insurance agent though...it's easy enough for me to run my own quotes that I don't see value in adding another party that needs to get a cut.

My wife works in commercial insurance and I was shocked to hear this too. The agency will get a percentage commission from the premium and that percentage will vary depending on the underwriter. From that percentage, the individual producer gets a cut with the remaining staying with the agency for overhead and staffing. The original percentage commission is pretty much dictated by the underwriter.

If your account involves a lot of manpower to service (they write offshore supply and crew boat accounts that are always in port and out of port with different goods and seamen aboard them), then they may tack on an agency fee to supplement the commission due to the staff they have to carry to service the account. And these are account managers who make $50-$80k because they know the coverages and know what they’re doing. It’s not paying a clerk $10/hour to switch out your covered vehicle on your Allstate personal auto policy. That’s about the most aboveboard explanation I’ve heard.

She’s also told me of some of the producers just adding an agency fee because they could and the insured just didn’t know better. All depends on your relationship with your agent.

quote:

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If it's tacked onto your personal account, find a new agent.

If it's tacked onto your commercial account for all the certificates of insurance your H-1B roofers need, consider yourself fortunate it's only $100.

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This. I’m a commercial lines broker (specializing in e&o) and while we don’t charge a fee, the industry (e&o) standard is $250.

Yes the agent is getting a % commission from the premium. If it is personal lines like home, flood, Auto etc. then your fee shouldn’t be very big. Most agencies actually only charge it on the first Initial policy. We charge $35. Yes it is another way for the agency to make a few extra $ but when your independent agent is shopping 30 companies for you it’s realky not that bad. Also your agent may be required to go drive to get pictures of your home etc. so this helps cover some of those cost.

For example - if your agent writes you a $2000 homeowners policy then the commission is roughly 10%-14%. Let’s say it’s 12% in this case. The total commission on it is $240. The agent himself is at least splitting that with his agency. So your agent is getting no more than $120. He then may have to drive to your home to take pictures or have other expenses on top of that. $35 one time is really fair in my opinion.

Now commercial is totally different. It depends on a lot of things including type of business, size of business, cost of the policy, and types of policies. Commercial insurance entails a lot more work throughout the year. If your policy is a commercial auto policy then agency has to run MVRs and Clue reports for drivers which all cost the agency and agent each time. The $100 per year fee is to cover some of those cost.

Hope that helps