Many people question how much their insurance agent earns.
With the high cost of insurance, it is common to question how much of your insurance payment goes to the agent. Commissions paid out vary by policy type, and are the proprietary information of insurance companies; however, there are parameters that are known by people in the industry. According to the Bureau of Labor Statistics, in 2008 the median income for insurance agents was $45,430.
Auto Insurance
Auto insurance typically pays a commission of between 5 and 10 percent. Sales made on the Internet pay less than direct sales. Renewals can be lower than the first year or term. The commission per sale is lower for auto insurance, with the expectation being that the agent can sell a higher volume that adds up to higher pay. New agents typically need extra pay from the insurance company or a second job to subsidize their pay, until the renewal payments build up. It takes 2 to 5 years for this to become a steady payment.
Home Insurance
Home insurance typically pays around a 10 to 20 percent commission, with the average being 15 percent. The commission is higher because it is more work intensive. Home insurance agents do inspections of the house, calculate the value of the property and work closely with the realtor and mortgage company to get the proof of insurance paperwork done for the closing.
Life Insurance
Life insurance commission has the greatest variance. It depends on the company and type of policy. Life insurance companies and investment companies typically pay higher commissions than auto and home insurance companies. Also, term life insurance pays lower commissions than permanent life insurance--whole life and universal life. The commissions can vary from 15 to 80 percent. The first year pays the most, and a renewal commission usually drops to less than 15 percent. Some agents work on a fee basis instead of commission.
Health Insurance
Health insurance agents earn between 5 and 20 percent commission. Short-term policies pay less and agents earn more the first year than in renewal years. There is some flexibility with larger group policies in terms of commissions and renewals.
Business Insurance
Business insurance commission is between 5 and 20 percent, depending on the company and type of policy. Workers' compensation pays less than package policies and general liability. Sometimes agents have to use managing general agencies to place more complicated accounts, which results in reduced commissions. Some business agents can work on a fee basis rather than commission; these are called insurance consultants.
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