5 Keys to Increase Your Commissions in 2023

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Allen Foster, 39, followed his dad, John, into a lucrative career in insurance.

“He raised three kids on commission-only income, had total independence and control over his time, made a darn good living…I wanted that for my family too,” shares Allen.

In 1996, John was able to retire on his renewal commissions—something unheard of for most career producers today.

New regulations have not only cut into commission payouts, but over-promising brokers, ever-changing commission-structures and rising quotas have led agents to change firms and product lines more often than their predecessors—consequently losing their client base and vested potential in the process.

“To say things have changed since my dad’s days of selling insurance would be an understatement,” says Allen. “Companies aren’t loyal to their agents anymore, and in turn, agents aren’t loyal to their company. Since 1999 I’ve been with three different agencies—and that’s less than most guys! It sounds unbelievable now, but in his entire 27 years, my dad was with two companies!” Allen laughs in disbelief.

Is he experiencing the time flexibility he remembers his dad having?

“Almost non-existent,” Allen states matter-of-factly. “When I’m not busy keeping up on the ever-changing rules and regs of the industry, dealing with underwriting and service work, or in mandated continuing education classes – my time is spent trying to meet with an existing or potential client.”

Technology and the internet has led to prospects rarely answering their phones, calls rolling to voicemail, and sales needing eight to twelve contacts.

Add in legislative and regulatory changes in the health insurance, real estate, mortgage and annuity markets, and agents in every industry have been facing an up-hill battle for some time.

And in the midst of all this turmoil, what are agents and brokers told to do?

Work harder.

Which is exactly what most self-employed producers do when the going gets tough.

Commission sales has always attracted a unique breed of sales professional.

They are driven, competitive, confident, “think-outside-the-box” people who desire to control their own destiny. Many have backgrounds in competitive sports or the military, and tend to be initiative-taking leaders.

But in today’s downright harsh sales environment, even the go-getters are struggling.

“Like my dad, I’m really good at what I do. As the proverbial saying goes, I could ‘sell ice to an Eskimo’ if I wanted to. But to make a decent living in the ‘old school’ way just doesn’t cut it anymore. And I’ve come to terms with the fact that there’s no way I’ll see retirement renewals on any of the insurance business I write today. It’s tough…”

While some commission-based sales careers, like travel agents, have gone the way of the Dodo, others are forced to completely re-evaluate how they do business and get paid.

In Idaho, for example, where insurers began paying flat fees a few years ago, one agent told the Wall Street Journal that he initially suffered a 20 percent drop in income…

Fortunately, due to his “out-of-the-box” thinking, he was able to eventually make this up by diversifying his product portfolio.

In addition to selling his “traditional” insurance services, he partnered with a company to sell voluntary, non-traditional add-on products to his existing clients as well as a door-opener to establish new business. This move enabled him to expand his client base into niche markets that were previously “off his radar.”

Alan Katz, once president of both the National and the California Associations of Health Underwriters, believes this is the approach that every agent needs to take. “I think commissions will be disassociated from premiums and it will be flat fee based…”

To make up the lost income most agents and brokers are used to generating, says Katz, will require that they “take a horizontal approach to change: diversifying your product portfolio so you are selling more products to the same client.”

And by no means does this relate just to health insurance.

In the annuity industry, the low interest rate environment has made business much less profitable for issuers; new regulation has increased costs leading to consolidation. Because fewer companies are competing, products are less competitive in terms of rates, commissions and innovative features.

The overall resounding message is clear: Instead of just embracing the masochistic opinion to work harder for the same or less amount of money, agents must start evaluating portfolio-expanding services that enable them to offer value to their clients, and be adequately compensated for doing so— regardless of the economy, political decisions, or corporate politics.

Let’s examine 5 key distinctions agents should look for when partnering with a voluntary benefits company to fill the gap in their commissions:

1. Small Business Niche Market – With insurance brokers across the United States being told that, due to health reform, their small-group commissions will all but disappear, many producers are abandoning this market.

Instead of running with the herd, the smart move is to evaluate how this deserted market can open up new opportunity for producers to:

• take advantage of less competition

• offer voluntary, niche-focused benefits to smaller market segments

• fill their commission gap

Working with a company and sales support team that focuses on the small business niche can offer huge potential now and into the future.

2. Add-On or Door-Opener Product Line – Some agents will decide to leave the insurance business altogether—but not all. And the truth of the matter is that most other markets aren’t faring much better…

Even though some of the long-term effects of health care reform are yet to be seen, the reality is that many painful compensation changes are already being implemented, affecting an agent’s ability to earn a living.

For most agents, this means the time is now to start looking for quality products to leverage. Look for services that can:

a)    Serve as an appealing door-opener to differentiate agents and naturally attract more new client relationships

b)    Be added-on to existing client’s benefits to enhance service value and, in turn, increase up-front and renewal commissions

3. Flexible Work Environment – In today’s tech-savvy business marketplace, there is little reason why trainings and meetings can’t be done via webinar, email, or iPhone. A sales team that demonstrates this work flexibility is key to a vibrant sales future.

The growing rigidity of the traditional sales environment goes against the very nature of who an independent agent is. Give them reasonable goals, motivation, effective tools, and let them go!  Sales is a results-driven activity. To maximize those results requires a work environment that is as flexible as possible.

4. Innovative Training – Let’s face it, most support organizations are teaching theory and outdated tactics.  When was the last time they sold what they’re training on?  Innovative training involves providing relevant, up-to-date insights on how to communicate more effectively with your niche market.

Training that is cutting-edge enhances already well-established sales skills, saves time, and leverages the expertise of like-minded agents and brokers. Innovative training helps producers not only connect with quality prospects, but also helps drive more revenue and improve sales ratios.

5. Renewal Commissions – For most independent agents, renewal income is like Santa Claus—it existed in one form or another long, long ago, but now, the concept of it has been hyped-up, twisted, corrupted and devalued.

For traditional products, it’s true that commission structures, extreme competition, rising client premiums, and increasingly fickle consumers has made creating a renewal base nearly impossible.

But the reality is that, “Yes, Virginia, renewal income really does exist.” And with commissions in almost every traditional product line being significantly reduced, independent agents must think strategically in regards to short- and long-term financial rewards and partner with a company that does too.

What about you?  Have you experienced or considered implementing any of the 5 keys we recommend?  If so, how is that helping you position yourself for the future?