Auto and Home Insurance Careers

There is a tremendous opportunity to sell both types of insurance to the same client

What Is Auto and Home Insurance?

Agents are usually licensed to sell both auto and home insurance; therefore this section will cover both types of insurance careers. Auto and home insurance policies protect the insured from financial losses due to damages to their cars and homes. Auto policies protect against damages from accidents, theft, bodily injury and medical claims. Home policies protect against damages that arise from accidents and acts of nature. An agent with an insurance career in auto and home insurance must also be aware of additional coverage that pertains to each policy, such as, adding glass coverage to an auto policy or adding personal articles coverage to a homeowner’s policy.

People who want an insurance career selling auto and home insurance will need to decide if they want to be a “captive” agent who can only sell one company or work through an insurance “broker” who can offer policies under many different companies.

Why Choose an Insurance Career in Auto and Home Insurance?

The auto and home insurance industry is booming. The Bureau of Labor Statistics anticipated a 13% increase in jobs for insurance sales agents between 2006-2016. Most states require drivers to have auto insurance policies to be able to operate a vehicle. When starting an insurance career in auto and home insurance getting your Property and Casualty License allows you to sell both policies, so there is a tremendous opportunity to sell both types of insurance to the same client. Also, most carriers offer discounts to clients for purchasing both policies together.

With this insurance career, agents can either be paid on commission or salary depending on the arrangement with the agency. According to PayScale.com, salaries can range between $20,000 and $90,000 annually.

Who Would Excel at an Insurance Career in Auto and Home Insurance?

Those interested in an insurance career in auto and home insurance need to be able to sell insurance and possess strong customer service skills. To be successful in an auto and home insurance job, an agent needs to learn the ins and outs of the policies they are selling and work to understand and listen to the specific needs of their clients.

The auto and home insurance industry is a reactive industry; therefore this career is not as sales and marketing oriented as a life or annuities insurance career.

However, with this job, it is service intensive. As an agent in this career you are required to assist clients with claims and service their account on a regular basis.

There is usually no requirement that those looking for an insurance career in auto and home insurance need to hold a college degree to obtain a license. However, an agent must prepare for and pass a state Property and Casualty license exam to obtain a license to sell insurance before he or she can start writing business. In some states you may need to register your fingerprints. The section below outlines how to get started in an insurance career selling auto and home insurance.

How to Start an Insurance Career as an Auto and Home Insurance Agent

An agent in an auto and home insurance career is required to obtain a Property and Casualty License from the state that he or she wishes to sell policies in. The following is a short list of the basic process of starting an insurance job in auto and home insurance.

1/ Complete Pre-Licensing Education: Learn the rules and regulations of your state’s insurance industry. You may be required to attend classes, but some states allow you to study at your own convenience. You will be issued a certificate for completing these state certifications and at that point you are permitted to take the state exam to become licensed as an auto and home insurance agent.

2/ Take the State Property and Casualty Exam: Contact your state’s insurance department to find contact information for your local testing center. In addition to the self-study option, there are in-person and online schools/courses that you can attend. Once completed, you will bring the course completion certificate to the testing center on the day of your exam. After you have successfully completed the state Property and Casualty exam and paid the licensing fees, you are then issued your Property and Casualty license.

3/ Buy Errors and Omissions Coverage: As an individual insurance agent, most carriers require you to have Errors & Omissions insurance. This liability policy protects you and your career against financial loss related to your involvement in the sale or service of an individual insurance policy.

4/ Get Contracted: To start your insurance career and begin selling auto and home insurance, you can work directly for a carrier or decide to work through an established agency or brokerage firm. Working for an insurance company provides more structure for someone new to the industry. Working for an established agency or brokerage firm typically provides more income potential as you are basically working for yourself with the support and training of a brokerage firm. Additionally as an independent broker agent, you can offer multiple carriers’ plans to your clients, which is an advantage if you have a client who may not meet a specific company’s criteria or who may need a lower monthly rate.

5/ Get Started: Your insurance career starts NOW! Contact us to launch your career as an Auto and Home Insurance agent today.

http://www.insurancecareer.com/auto-and-home-insurance-careers/

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Agents Versus Brokers and How They Make Money

Image courtesy of [enter89] / Getty Images

By Marianne Bonner Updated February 03, 2017

Like most small business owners, you probably purchase your insurance policies through an insurance agent or broker. The functions performed by insurance agents are similar, but not identical, to those performed by brokers. This article will explain how they differ. It will also explain how agents and brokers make money from the premiums you pay your insurers. Except where noted, the following discussion applies to agents and brokers selling property/casualty insurance.

Agent Versus Broker

Agents and brokers act as intermediaries between you (the insurance buyer) and your insurers. Each has a legal duty to help you obtain appropriate coverage at a reasonable price. Each must have a license to distribute the type of insurance he or she is selling. An agent or broker must also adhere to the regulations enforced by your state insurance department.

The main difference between a broker and an agent has to do with whom they represent. An agent represents one or more insurance companies. He or she acts as an extension of the insurer. A broker, on the other hand, represents the insurance buyer.

Agents

Agents are either captive or independent. A captive agent represents a single insurer. Agents that represent Allstate or State Farm are captive agents. An independent agent represents multiple insurers.

To sell insurance products on behalf of a particular insurer, an agency must have an appointment with that insurer.

An appointment is a contractual agreement that outlines the specific products the agency may sell. It also specifies the commissions the insurer will pay for each product. The contract usually describes the agency's binding authority, meaning its authority to initiate a policy on the insurer’s behalf.

The agent may have permission to bind some types of coverage but not others.

Brokers are not appointed by insurers. They solicit insurance quotes and/or policies from insurers by submitting completed applications on behalf of buyers. Brokers don't have the authority to bind coverage. To initiate a policy, a broker must obtain a binder from the insurer. A binder is a legal document that serves as a temporary insurance policy. It usually applies for a short period, such as 30 or 60 days. A binder is not valid unless it has been signed by a representative of the insurer. A binder is replaced by a policy.

Brokers may be either retail or wholesale. A retail broker interacts directly with insurance buyers. If you visited a broker, who then obtained insurance coverages on your behalf, he or she is a retail broker. In some cases, your agent or broker may be unable to obtain insurance coverage on your behalf from a standard insurer. In that event, he or she may contact a wholesale broker. Wholesale brokers specialize in certain types of coverage.

Many are surplus lines brokers, who arrange coverages for risks that are unusual or hazardous. Examples are product liability insurance for a motorcycle manufacturer, and auto liability coverage for a long-haul trucker.

Commissions

While some captive agents are salaried, most agents and brokers rely on commissions for income. Commissions are paid out of premiums charged to policyholders by insurers. These may include base commissions and contingent commissions.

Base commission is the “normal” commission earned on insurance policies. Base commission is expressed in terms of a percentage of premium, and varies by type of coverage. For instance, an agent might earn say, a 10% commission on workers compensation policies and 15% on general liability policies. Suppose that you purchase a liability policy from the Elite Insurance Company through the Jones Agency, an independent agent. Jones earns a 15% commission on general liability policies. If your annual liability premium is $2000, Jones collects $2000 from you and retains $300 in commission. Jones sends the remaining $1700 to the insurer.

To encourage agents to write new business, some insurers pay a higher commission for new policies than for renewals. For instance, an insurer that pays 10% for a new workers compensation policy might pay only 9% when the policy is renewed.

Contingent or incentive commissions reward agents and brokers for achieving volume, profitability, growth or retention goals established by the insurer. For example, Elite Insurance promises to pay the Jones Agency an extra 3% commission if Jones writes $10 million in new property policies within a certain time frame. If Jones renews 90% of those policies when they expire, Elite will pay Jones an addition 2% commission.

Contingent commissions are controversial. For one thing, brokers represent insurance buyers. Some people contend that brokers shouldn't accept contingent commissions. Moreover, some brokers have collected contingent commissions without the knowledge of their clients. Another problem is that contingent commissions may give brokers (and agents) an incentive to steer insurance buyers into policies that are particularly lucrative for the broker. If agents and brokers accept contingent commissions, they should disclose this fact to policyholders. Some brokers now refuse such commissions.

Your agent or broker should provide you with a compensation disclosure statement that outlines the types of commissions the agency or brokerage receives from its insurers. This document should state whether the agency or brokerage receives base commissions only, or if it also receives contingent commissions.

Direct Writers

Some insurers sell policies directly to insurance buyers without using agents or brokers as intermediaries. These insurers are called direct writers. Many direct writers focus on personal coverages like homeowners and personal auto policies. However, some also offer commercial coverages to small businesses

Life Insurance

Agents and brokers that sell life insurance also earn commissions. However, a life agent earns most of the commission he or she makes during the first year of the policy. The commission may be 70 to 120% of the premium in the first year, but 4 to 6% of the premium for a renewal.

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Becoming An Insurance Agent

By Ken Clark | Updated December 28, 2015 — 2:04 PM EST

Few industries outside of the financial services industry offer the potential for relatively inexperienced professionals to make significant income within their first year of employment. Within the financial services industry itself, few careers match the opportunity for as quick and large a paycheck as does being a life insurance agent. In fact, a hard-working insurance agent can easily earn more than $100,000 in his or her first year of sales.

But, success as an insurance agent doesn't come without a cost. Insurance agents hear "no" far more than they hear "yes". It's not uncommon for the "no" to come mixed with a fair amount of obscenities and the proverbial door in the face. Additionally, many people hold insurance agents in low regard, with some people equating them to glorified con men. But, for those who can stomach the potential rejection, the paycheck and flexibility are worth the effort.

Overview of the Insurance Field

While there are many kinds of insurance (ranging from auto insurance to health insurance), the best money in the insurance field is for those selling life insurance. Agents focusing on this end of the insurance market help families, businesses, employers, and other parties to protect against a financial loss that occurs when someone dies. (To learn more about insurance, see our Insurance 101 feature.)

Insurance agents selling this type of coverage are either "captive" agents, which means they only sell insurance from one company, or "non-captive", meaning they represent multiple insurance carriers. Either way, the typical insurance agent is going to spend the bulk of his or her time engaging in some type of marketing activities to identify people who might be in need of new or additional insurance coverage, providing them with quotes from the companies they represent and then persuading them to sign the new insurance contract.

Typically, a life insurance agent receives anywhere from 30-90% of the amount paid (also known as the premium) by the client in the first year. In later years, the agent may receive anywhere from 3-10% of each year's premium, also known as "renewals" or "trailing commissions".

Let's look at an example:

Example - Insurance Sales Commissions

Bob the insurance agent sells Sally a whole life insurance policy that covers her for the rest of her life, as long as she continues to make her premium payments. Bob\'s insurance company pays a 90/5% commission on whole life policies, which means the selling agent receives 90% of the first year premium and 5% of future renewals.

The policy costs Sally $100 per month, or $1,200 per year. Thus, in the first year, Bob will make a $1,080 commission on selling this life insurance policy ($1,200 x 90%). In all subsequent years, Bob will make $60 in renewals as long as Sally continues to pay the premiums ($1,200 x 5%). An agent selling one or two policies per week at this level could make $50,000 to $100,000 in his or her first year as an agent.

Insurance Agent Qualifications

As mentioned before, life insurance is not a profession for the thin-skinned or faint-at-heart. In fact, more than any other factor, including education and experience, life insurance agents must possess a fighting spirit. They must be people who love the thrill of the hunt, the rush of a sale and see rejection as a stepping-stone to eventual success. A career in life insurance sales is not ideal for those who view themselves as introverted, soft-spoken, or afraid of conflict.

The vast majority of life insurance companies have no formal education requirements for becoming an agent. While many prefer college graduates, this general rule is constantly overlooked in favor of the "right" candidates. Previous experience in the insurance industry is not required because most medium and large insurance carriers have internal programs to train their salespeople about the products they're going to sell.

While it may prove easy for a tenacious go-getter to get hired at a reputable insurance company, there is one non-negotiable hurdle that stands between a potential insurance agent and his or her commissions: state licensing. Insurance agents are currently licensed by the individual state or states in which they'll be selling insurance. This generally requires passing a state-administered licensing exam as well as taking a licensing class that typically runs between 25-50 hours.

Getting Hired

If you feel like a career in life insurance sales is for you, there are a couple steps to take in finding your first job. First and foremost, you'll need to put together a resume that highlights your entrepreneurial spirit. You'll want to include anything that shows you taking initiative to make things happen, whether it was starting your own business or taking someone else's business to the next level. Life insurance agents have to be driven and have the ability to be self-starters. Resumes that show a track record of that kind of behavior will help you get your foot in the door.

Once you've got your resume polished, you'll want to begin finding positions and applying. It's really important that you don't feel pressured to take the first position that comes along, as working for the wrong company can both burn you out and haunt you for the rest of your insurance career. Ideally, you want to work for a well-known company that has a good reputation among consumers, other agents and the insurance rating agencies.

Perhaps the best place to start in deciding where to apply is to visit the insurance company rating websites for A.M. Best, Moody's, or Standard & Poor's. From here, you'll be able to build a list of companies that have ratings of "A" or higher in your state. These companies will typically offer the most secure products at reasonable prices, with an emphasis on compensating and keeping quality agents.

Keep Plugging Away 

Once you've created this list, you should visit your favorite internet search engine and begin looking up each one of these companies. Due to the high turnover rate of insurance agents, most companies prominently post their job listings by geographical area, which makes them easily searchable for you. When you find a company in your area that seems to fit your personality, go ahead and apply for the position as the company instructs on its site.

But don't stop there. Be sure to follow up with regular phone calls on a weekly basis until you hear an answer either way. Many insurance company recruiters won't even interview a potential agent who doesn't first make a follow up call, because this is a strong indicator of a potential agent's tenacity. During your interview, continue to communicate your entrepreneurial and "never say quit" personality, because most managers will hire someone based on these factors over all the others combined.

If you're lucky enough to land the job, you can expect your first 12 months to be spent handing out a lot of business cards and making a lot of phone calls. Your sales manager will be the first to remind you that your only purpose in life is to find potential clients. In fact, they'll be far more interested in how many contacts you're making each week than how well you know their product line. (To learn how to cold call clients, see Cold Call Without Getting The Cold Shoulder and Alternatives To The Cold Call.)

Do expect to struggle financially for the first few months until your first sales and their commissions start rolling in. While some companies offer a salary to keep newbies from starving, this is becoming more and more rare. Many agents are now lucky to be compensated for one to two months of training before being put on a "commission-only" basis.

A Few Warnings

While the life insurance industry promises great rewards for those who are willing to work hard and put up with a good amount of rejection, there are two other pitfalls you need to be aware of. First, you will most likely be expected to market to your friends and family. While that might be tempting and seem like a great idea to get you started, it can also burn a lot of bridges with people you care about.

Second, you should visit your state insurance commissioner's website and check out the complaint history against companies that you're considering working for. What you'll typically find is that insurance companies that maintain less than an "A" rating, as well as those that sell insurance using multilevel marketing, have a much higher incidence of complaints than the larger, more established companies.

The Bottom Line

In both of these situations, accepting a job with the wrong insurance company will go a long way toward burning you out and ruining your dreams of a promising career. If a career in life insurance sales is something you truly desire, take your time and wait for the right opportunity at the right company. Doing so will maximize your chances of long-term success.

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