Real Estate Agent AND Insurance Agent

[Thomas Price]

I run a large Real Estate Agent team and have started to invest in supplemental companies in order to increase income through the same activities. I am beginning to reach out to the insurance agents that I know to hear about how they spend their time, AND would love to hear from others who have added this offering to their RE Agency work.

Estimated Math: I'm not super knowledgeable yet, but I believe 12% is reasonable for my area.  $1,000 yearly premium multiplied by that 12% means $120 each year that it is renewed.  Many people hold that same insurance until they resell their home (5 year avg when rounding down).  If 50 of my yearly clients use us then that adds $30,000 a year in income.

What else should I consider as I research this opportunity?

[John Warren]

@Thomas Price I don't think you get the full 12% when you renew. I believe most agents make more like 3-5% on the renewal. You might look into your own mortgage or title company as well. I would imagine there is more up front value in the title company than any of the other three. 

[Thomas Price]

@John Warren I appreciate that.  We currently have a Title Company and that is going extremely well which has led us to look into other options.  Others that are on the list currently are Mortgage, Property Management, and Bookkeeping services.  Insurance happens to be is the one that I know the least about currently.

That makes sense about the renewal commission, I appreciate your insight.

[T.J. Ferguson]

Hey @Thomas Price. Great thinking to add supplemental income. 12% Commission for Home Insurance is the average. It can get up to 15%+ combining the home and auto and other policies. Depending how much time and money you want to invest, you can look at starting your own agency, buying an established agency, partnering with a small agency or forming a referral partnership with a current agency. 

Besides getting licensed, costs are fairly minimal to get started if you already have an office. Between insurance (liability, bond and Errors & Commissions), licensing, a management system, etc. you may be able to start in the $5k range per year. The toughest tasks are obtaining the carrier appointments and the staff to service the accounts which can be avoided if you purchase/partner in an agency versus starting a new one. 

If my Real Estate or Mortgage referral partners obtain their insurance license I offer a 50% New Business Split (Home policy = $120 commission. They make $60). They simply make the introduction to the client. We handle the quoting, selling, binding and servicing. If they build a large enough referral book over time, then we can discuss a renewal split as well. In your example of 50 home policies, my referral partners would make $3,000 per year, not take any of their time away from their main business and their only cost is obtain the license. 

The real money in insurance commissions is when you have 3+ policies per client. Packaging the home with auto, umbrella, life, etc. Your clients will have a separate auto policy and if you only write the home there's a real good chance you will lose the account within the next 5 years as they will want to bundle the two together to receive discounts.   

Feel free to message me any time. Best of luck on your research! 

[T.J. Ferguson]

And 10% to 12% is average on Home renewals if you have direct carrier appointments

[Thomas Price]

@T.J. Ferguson, Wow, this is a ton of fantastic information.  I really appreciate you taking the time to run me through all this.  I may reach out a little later to talk a bit more if you don't mind.  You obviously know exactly what you're talking about.

[T.J. Ferguson]

No problem! Anything I can do to help. 

[Account Closed]

While I am not familiar with the insurance industry itself, with the list of potential companies you already run, they are all very reliant with one another.  In a down economy, mortgage, title company, and real estate activities would slow down.  Potentially causing a rather quick decrease in revenue as they are all operate in the same stream.  While an insurance company (I presume home owners, renters, and landlord insurance would be your targets) would have more reliable income throughout a downturn due to the premium payments.  This in turn would in turn smooth out your revenue across your whole business a little bit as the insurance premiums should be relatively resistant to an economic downturn.  You would probably see less new policies, but still get solid monthly premiums.  

In addition to insurance, I would recommend finding a revenue stream that would provide consistent revenue while other revenue lines suffer.  Property management and bookkeeping would be others I would consider that meet this criteria.  Again, try and find something that would smooth out your revenue out a little.

[Thomas Price]

@Account Closed, I had a very similar thought when I was compiling the list of possibilities.  The ultimate goal, right now, is for the more consistent revenue generators to cover our monthly fixed costs.  The ones you mentioned were the ones that I put more value on for that exact reason.

Bookkeeping is the current focus because I am revamping our team's systems & hiring virtually to keep costs down.  Most of this is already in place, so the plan is to begin offering the platform to other teams/agents with some level of monthly coaching around their Chart of Accounts & expenditures.