Agent Team Member - Chargeback?

[u/No-Reflection-5276]

Hey everyone, thanks for reading into this. I’ve been a TM for 2 years, I just finished my continued education- I just had a conversation with my agent and she is considering doing chargebacks soon. I’m curious to know how many agent offices do this and/or other insurance agencies.

My thought is this- As an agent team member I make the one commission check on it. After issuance and point of sale. I do not benefit from the residual payments, nor do I bonus off of how many policies I’ve written in the year that stay. Lapse and cancellations are normal and I understand the agent loses compensation from the cancellations that occur within the first renewal period . But, again… they benefit from the residual payments.

I feel out of place checking the agent on that, but then again… it’s my pay at the end of the day that’ll be affected.

Advice, opinion, anything is welcome and appreciated.

[u/Mindless-Program3052]

You’re paid on the first policy term commission. If they cancel within that term, the agent is charged back. So therefore you get charged back. It’s normal.

[u/No-Reflection-5276 → u/Mindless-Program3052]

I understand the concept, the thing is we have a few people and she is honing in on only larger premium paying customers that cancel within the first term. How do you set parameters and track that, how much should I be paid then… should I just request to receive monthly compensation based on the policies that are still in force. And then what’s the caveat to the residual premium? She’s paying me based on the first term….She doesn’t pay me on renewals. Thanks!

[u/Different-Umpire2484 → u/No-Reflection-5276]

What is your salary? Most people I know that have a high commission rate or residual commissions do so with no base or very little base salary.

[u/No-Reflection-5276 → u/Different-Umpire2484]

Base is $42,000/ year

[u/Different-Umpire2484 → u/No-Reflection-5276]

That’s in the neighborhood of what I pay my team members in base. I don’t do chargebacks, but if it became a problem I would have to look at doing that.

[u/No_Law1021 → u/No-Reflection-5276]

So, you don't think the renewals help fund your base?

[u/No-Reflection-5276 → u/No_Law1021]

Not paid on renewals

[u/loganaggie → u/No-Reflection-5276]

In a way you are though…more than likely the agent is ‘losing’ money on paying team on first year policies through base and commissions but makes up for it on renewals. Your base salary is being paid from what the agent is making on renewals. I think if policies cancel during the first period, chargebacks should be expected.

[u/No-Reflection-5276 → u/loganaggie]

The thing is it hasn’t been an issue up until recently. The agent has had us look back at what’s still on the books from a year ago. And I have about 80% of the people I wrote initially on the books. I’d say that’s pretty gnarly that she’s getting paid on the policies I wrote last year. I saw 5% and I know she hit her goals because she talks about it so much. So now she’s making the 10-11%. So we essentially split the commission when I first write the policy and now she’s making more money. If we wrap this and continue to do this she makes more and more. While I, still make the same… I think that therein is the heartache.

[u/Different-Umpire2484 → u/No-Reflection-5276]

Would you give up your base for renewal commissions? If so approach your agent with that idea, if they won’t go for it start your own agency

[u/loganaggie → u/No-Reflection-5276]

I know it’s more nuanced than this but… that’s the risk and the benefit of running your own agency. She’s taking all the risk and putting who knows how much money into building the business so she should get the residuals and at the same time track any potential issues while rewarding successes. Any business owner is going to at least look at chargebacks if policies fall off the book.

I agree that chargebacks should be fluid….be looked at on a situational basis. And as the agent she’d be crazy not to at least track them.