How do insurance agents get paid? While there are a number of misconceptions about the life of an insurance agent…this is a question that comes up more times than not. In fact, if you perform a Google Search for “how do insurance agents get paid?” you will see roughly 336,000,000 results.

Every month you have to pay that dreaded insurance premium, and every month you wonder if there is any way to save. Then it hits you… are you paying a middle man for nothing? Does having an insurance agent increase your premium? The short answer is no, but in this article, we will explain:

If you have any other questions, you can Contact Us for answers.

Do I Have To Pay The Insurance Agent A Fee?

Insurance Agents get paid a commission (percentage of your premium) from your insurance carrier.

You do not pay insurance agents directly. Instead, every time you make a premium payment, the insurance carrier pays the set commission rate to the agent or agency.

How Much Do Insurance Agents Get Paid?

How much an insurance agent gets paid varies greatly. So, you must be wondering how much of your premium goes to your agent’s agency. Well, it varies from state to state, carrier to carrier, policy to policy, and sometimes even agent to agent. However, in North Carolina, commission ranges tend to start around 5% and can go up to around 20%. The average commission to an agency is roughly 10%.

For example, if your monthly insurance premium is $100 per month, chances are your agency is receiving about $10 per month as their commission for your policy. Keep in mind, that is their gross pay, which means they still have to pay their agents’ commissions, utilities, rent, and so on. So, as you can see, your agent or agency isn’t getting rich off your policy. They rely more on having many clients rather depending on a few for their monthly net income.  

How Does Having An Insurance Agent Affect Your Premium?

Having an insurance agent does NOT adversely affect your insurance premium.

People often ask, “If I don’t have an insurance agent, can I save 10% off my premium?” Despite what big online insurance companies, like Geico and Progressive, would like you to believe, that 10% is still going elsewhere. Instead of paying agents to discuss options with you, those online insurance companies put that money into advertising. Hence, the endless commercials and online ads you’re bombarded with every day.

Therefore, having an insurance agent does not ultimately affect your premium. The only difference is where the funds are allocated.

Insurance Agent Vs. Big Online Insurance

So, the real question is what has more value: 10% going to an insurance agent that can customize a plan for you and your family, or a standard application on an insurance company’s website you saw an ad on TV for? The big companies focus their money on advertising, whereas the independent insurance agencies focus their money on agents that can help you understand insurance better. Ultimately, an experienced, caring insurance agent is likely to save you more money in the long run than the few dollars an online insurance company saves you.

Does Your Agent Have A Vested Interest In You Filing A Claim?

The answer: sort of. Some agents do make bonus money from their carriers if they have a “profitable year.” What does that mean? Well, the job of the agent is to go out and find insurance clients who are good risk, which means they are less likely to have claims. At the end of a year, if an insurance agent’s claim figures with a carrier are under a certain loss percentage, the carrier shares some of their profits with the agent.

Does that mean an insurance agent doesn’t want you to file a claim, or may even advise you against it? After all, you filing a claim could affect their bonus. Well, there are always bad apples in the bunch but insurance agents are there to look out for your best interest. And the truth is, only really big claims would ever affect that agent’s bonus and no agent would ever recommend you not file a claim for a big loss you experience. Doing so would be blatantly bad advice, not to mention clearly unethical. So, if an agent is advising you not to file a claim, it is almost always because that is their honest, ethical advice for your best interest.

Best Insurance Agency in North Carolina

As you can tell, at ALLCHOICE, we believe in transparency and straight-forward conversations about insurance. If you want to better understand your insurance options, we are here to help. We are a local, North Carolina insurance agency. We have offices in Clemmons, Denton, Greensboro, Hendersonville, and Wilmington, and serve everywhere in between online and over the phone. Contact Us today to talk with a friendly, experienced agent.

4 Responses

  1. I was curious how much my agent made . Eighteen years of home owners , just was refused a claim for water damage from roof failure .costing me over $10,000 of personal expense . Don’t understand how this happened !

    1. We’re truly sorry to hear about your situation. It’s disheartening when claims are denied, especially after so many years of being a homeowner. We recommend reaching out to your agent directly to discuss the specifics of your case. Understanding the details behind claim denials is crucial, and they can guide you on the next steps. If you need further assistance or have questions, feel free to contact us. We’re here to help you navigate through these challenging situations.

    1. Your insurance agent typically doesn’t lose money if you file a homeowners claim. Agents earn commissions from selling insurance policies, and their income is not directly impacted by your claim. However, frequent or large claims can affect the overall risk profile of the insurance company, which might lead to premium adjustments for everyone in that risk pool. It’s always advisable to consult with your agent regarding the specifics of your policy and any potential implications of filing a claim. They can provide personalized guidance based on your situation.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.