How Much Do Insurance Agency Owners Make | Statistical Guide

How much do insurance agency owners make? In the U.S, the average annual pay for the CEO of an agency owner is $103,144. Others say the typical compensation for an agency owner in the U.S. is $115,299 per year, plus a commission of $74,500.

Anyone starting with $50,000 in funding should consider the effort of a start-up operation. The owner must make a significant personal investment to develop a customer base. Starting from scratch requires tenacity and a long-term vision.

What is the Salary of an Insurance Agency Owner?

How Much Do Insurance Agency Owners Make

The median annual compensation for an insurance agency owner in the United States is $72,499 per year.

The earnings are about $34.86 per hour. That equates to $1,394 per week or $6,042 per month.

In the United States, most insurance agency owners earn between $43,000 and $100,000, with the highest earners earning $110,000 per year.

The median salary range for an insurance agency owner is quite wide (up to $57,000), indicating that there may be numerous prospects for growth and higher compensation depending on experience, skill and location.

In your location, an insurance firm owner earns makes a median of $72,499 per year, identical to the regular median annual salary of $72,499. Insurance agency owner salaries are the highest in all 50 states.

Best Cities to Work in as an Insurance Agency Owner

We identified ten cities with median pay for insurance agency owners that are significantly higher than the national average. The Great Lakes, Alaska tops the list, followed by San Francisco, CA, and Santa Clara, CA.

The Santa Clara locality exceeds the national average by $10,530 (14.5%), and Lakes, AK, exceeds the national average by another $11,846 (16.3%).

In particular, Lakes, AK has a modestly active job market for insurance agency owners, with only a few organizations hiring for this position.

With median salaries above the national average in these ten cities, the chances of economic success as an insurance business owner appear to be very profitable.

Finally, the median salary in these top ten cities differs very little, 5%, between Lakes, Alaska, and San Jose, California, reinforcing the limited opportunities for salary advancement. Reducing the cost of living can be one aspect to consider when deciding on location and paying for a career as an insurance agency owner.

How Much Did Insurance Agents make last year?

How Much Did Insurance Agents make last year

For 2018 purposes, the U.S. Bureau of Labor Statistics, reports that an insurance salesperson earns an average of $50,600 per year. The pay for this occupation varies significantly, with the bottom 10% earning less than $27,500 and the top 10% earning more than $125,610.

Insurance agents earn their annual income in various ways, depending on the company they work for and the type of insurance they offer. They may be compensated with a salary only, a salary and commission, or a salary plus a bonus.

What Factors Determine an Insurance Agent’s Salary?

The average salary of an insurance agent may not reflect the income of all members of this occupation. Insurance agents earn salaries ranging from less than the national average to six figures. Several different criteria determine their pay.

Type of Agent

Your earnings will vary based on whether you are a captive or independent agent. Captive agents are affiliated exclusively with the products of a single insurance provider.

Captive agents benefit from having the insurance company generate leads and working with other agents in a formal office environment. However, a captive agent is restricted to selling only one insurance company’s products, making it more challenging to close a sale.

Independent agents have their jobs. While they do not benefit from an insurance company marketing their products, they have an unlimited opportunity to build their business and the option to sell a variety of plans from multiple insurance providers.

Type of Insurance

The type of insurance you offer affects your income. Each type of insurance provides different opportunities to attract new customers and sell more to existing customers to increase revenue.

When an insurance agent sells home and auto insurance, he can expect to earn a percentage of the policy premium and a portion of the policy renewal. This means that having a steadily growing network of consumers has the potential to increase your profits massively.

Health and life insurance policies have a slightly different payout structure. When a consumer initially purchases insurance, the agent earns a significant commission. In addition, the agent makes money on policy renewals but at a much lower rate. Many agents stop earning a commission on policy renewals after the third year.

Location

Location is another crucial factor in determining salary. The cost of living, crime rates, public health conditions, claims, and other local statistics can significantly impact insurance costs. Finally, these geographic characteristics influence the number of premiums and, consequently, the commission earned by the insurance agent.

While a densely populated area may bring in more new consumer prospects, it may also have a higher concentration of agents, creating a more competitive market.

Commission Structure

You can typically earn a substantially higher commission rate as an independent agent.

If you work for a captive insurance company, you will get a lower percentage of the policy price. The average insurance company pays captive agents a 5–10% commission on all policies sold, while the average independent agent earns approximately 15%.

Capital Needed to Start

Capital requirements range from $5,000 to $50,000, with the most expensive insurance companies charging between $100,000 and $1,000,000.

This depends on many circumstances, such as location and mode of operation. Of course, you can apply for a business loan, but you will need a solid credit history, work experience, and a well-written business plan.

Another possibility is to investigate grants or crowdsourcing.

Rent, bond, first month’s rent, office equipment, agency management system, licensing and legal fees, and insurance are considered start-up costs.

What Type of Licensing is required to Sell Insurance?

What Type of Licensing is required to Sell Insurance

A license is required to sell insurance. The type of license required varies by country and state in which services are provided.

Depending on the state in which you live, you may need to obtain different licenses depending on the type of insurance you intend to sell. Determine the insurance licensing requirements in your state. Applicants need to take specific courses and training. So, you may also have to pass a state exam.

If there are licensing courses, enroll in and complete them. Enrollment and payment of the state licensing examination fees are required.

Frequently Asked Questions

Should I Join a Cluster, or Do I Stay Solo?

A cluster group is a collection of independent insurance brokers working together. One of the reasons some insurance brokers join a group rather than continue on their own is to meet sales goals. Some insurers will not allow you to offer their products unless you meet a specific minimum or quota.

When did Will My Insurance Agency start to See a Profit?

It is difficult to predict when your insurance company will make a profit.

Instead, profitability can come from sales projections, gross profit estimates, and the cost of providing services and other expenses.

How much does it cost to buy an Allstate agency?

A minimum investment of $100,000 is required to obtain an Allstate insurance franchise. Allstate does not require you to give up equity. Allstate agents are compensated on a commission basis, and their benefits are not capped.

What are the minimum requirements for an appointment as an agency owner?

  • Property and casualty, life, and health insurance licenses.
  • Series 6 and 63 licenses or the potential to obtain them.
  • Satisfactory background checks results.
  • A business plan and a track record of success are desirable.

Can I build my agency or buy an existing one?

Farmers ® looks for the best and brightest to become agency owners. The Seed Program allows an eligible individual to open a farmers’ agency while retaining service and commission rights to the existing business.

What is the Agency Owner’s salary at State Farm Insurance?

State Farm Insurance pays an agency owner $250,000 per year.

Bottom line

Establishing a profitable insurance business is a demanding endeavor. However, it becomes significantly more straightforward thanks to the collaboration between an industry expert and an opinion leader. Insurance agents who already have a business portfolio must play defense and devote significant effort to retention through means.

However, agents who do not yet have a business portfolio can focus 100% of their attention on offense and generate money through prospecting. Another element contributing to this favorable climate for agency start-ups is that insurance companies face revenue problems and are interested in combating organic development.

An agency owner must compensate himself (or herself) precisely what it would cost to hire someone to perform the same responsibilities with the same degree of success as the owner. If you are the top producer, compensate yourself precisely as a producer would for the same level of production and retention.

So, if you are a manager, reimburse yourself at the exact amount you would pay us or someone else qualified to run your agency and perform the same functions as you. If you do both, compensate yourself for production on a commission basis. Also, management considers the percentage of a regular week spent on management (versus production).

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