So, how exactly do insurance agencies make money? Here are a few ways:

• Commission: One of the main ways that insurance agencies make money is by earning a commission on the policies that they sell. When an insurance agency sells a policy to a customer, the insurer will pay the agency a percentage of the premium as a commission. For example, if an insurance agency sells a policy with a $1,000 annual premium, the insurer may pay the agency a 5% commission, or $50.
  For this, the agency finds the best carrier and coverage for the client, fights for the client if needed, manages the renewal, and provides advice and guidance.
• Overrides: In addition to the commission that they earn on the policies that they sell, insurance agencies may also earn overrides on the policies that are sold by the agents that they recruit. For example, if an insurance agency recruits an agent who sells a policy with a $1,000 annual premium, the agency may earn an additional 2% override, or $20.
• Service fees: Insurance agencies may also charge their customers a service fee for the services that they provide. For example, an agency may charge a fee for processing a policy change or assisting with a claim. These fees can add up and provide a significant source of income for the agency.
• Investment income: Some insurance agencies also generate income by investing the funds that they receive from insurers and policyholders. For example, an agency may invest premiums in a money market fund or other investment vehicle that generates interest income.
• Non-insurance products: In addition to selling insurance policies, insurance agencies may also sell non-insurance products, such as annuities or investment products. These products can provide another source of income for the agency.

These are some of the key revenue drivers for agencies. The primary value the agency provides for this is advice, management, and helping clients minimize their total cost of risk.

Having a good agency in your corner gives you a little more confidence to face the trials and tribulations in life. Thanks for reading.