We are often asked “how do insurance agents get paid”? Insurance agents generally work on commission but before we get to the pay structure lets review the different options you have to purchase insurance.
You can purchase insurance directly from the insurance company. Examples of direct companies are Geico, Elephant, The General and Esurance. The advantage to this option is it’s quick and easy. The disadvantage is direct policies are very basic and you may not have the coverage you need. Contrary to what you see on TV or hear on the radio, buying direct is often more expensive, especially if you don’t know all the discounts that are available.
You can purchase insurance from a captive agent. A captive agent is an agent who represents one insurance company. Examples of captive agents are State Farm, Allstate, Farmers and Nationwide. These agents can only offer products and services from their respective company.
Independent Agent (aka: Insurance Broker)
You can purchase insurance from an independent agent (aka: insurance broker). An independent agent represents several companies and will compare different plans to find the best solution. Independents agents work for you, not the insurance company.
How Do Insurance Agents Get Paid?
Now to answer the question, “how do insurance agents get paid”? Insurance agents generally work on commission. The company you select will paid the agent a commission based on the premium. For example, if your car insurance costs $300 every 6 months your agent will receive $30 or 10%.
If you buy direct from the insurance company, the company will pock the commission and use it for profits or to run another commercial. Geico alone spent over 1 billion (yes, Billion!) on advertising in 2014.
Contact The Andrew Agency
The Andrew Agency is an independent agency serving clients in Richmond, Glen Allen, Chesterfield, Midlothian and Mechanicsville. If you have questions about insurance or would like to compare insurance plans, contact The Andrew Agency at (804) 320-2886 or fill out our short proposal request online.