I talk to lots of insurance agency owners. In OAA we now have about 90 partner insurance agencies so there’s lots of them to talk to and, luckily, after nearly 20 years in this business, I have a lot of friends who own agencies.
When I go to a meeting of insurance agency owners there is always a conversation that goes like this:
“How big is your agency?” “About $4 million dollars. How big is yours?”
Now, when I get in one of these conversations I know we are just BS’ing each other. Because we’re talking about premium and not commission. We generally know that premium is not an accurate gauge of the real size of an agency (Workers’ Comp premium is worth less to an agency than Homeowners for example). And we know we don’t get to spend premium!
Unfortunately, I also meet agents who don’t seem to understand this distinction. They constantly talk premium and not commission and I’m not sure they understand why this is important.
It’s important because an agency owner needs to be constantly focused on the income his agency generates. That’s commission, not premium. Premium is just a by-product.
We grow our agency and pay our bills with commission. Premium really only matters to our insurance company partners.
Well, it does matter to most independent agents, too, because without enough premium they lose their ability to have an insurance company to write for.
But that’s not a problem for OAA members! We’ve got plenty of premium. We just think about what we get to spend. That’s commission!