Insurance companies hire sales agents to generate new business and service current clients. According to the U.S. Bureau of Labor Statistics, the 2012 median pay for insurance agents was $48,150 a year. Agents generate a portion of their income through sales commissions. The amount of the commission varies based on policy type, employer and the amount of insurance sold.
Insurance agents earn commissions as a percentage of the premiums paid by their clients. Commissions on auto liability and physical damage insurance tend to be 15 percent to 20 percent of annual premiums, according to a 2012 Wall Street Journal story. However, some companies, such as the Chubb Group of Insurance Companies, pay higher commissions for some policies. On its website, the Chubb Group says it pays standard commissions of up to 30 percent for auto policies as of July 2014. Homeowners insurance commissions are typically 10 percent to 30 percent of premiums at the Chubb Group, but require more work. BankRate.com reports that life insurance commissions can be as low as 15 percent and as high as 80 percent for the first year and as much as 7.5 percent for renewal years. For health insurance policies, agents earn commissions as low as 4 percent, according to SFGate.com. On its website, UnitedHealthcare says base commission rates for premiums run between 4 percent and 7 percent for groups with 50 or fewer employees.
Some companies pay monthly, quarterly or annual bonuses to insurance agents who reach sales goals, according to the U.S. Bureau of Labor Statistics. At some companies, these bonuses are paid in addition to commissions. At other companies, the bonuses are paid in lieu of commissions.
- U.S. Bureau of Labor Statistics: Insurance Sales Agents
- BankRate: How Much Does a Life Insurance Agent Make?
- Chubb Group of Insurance Companies: Standard Commission Ranges
- SFGate: New Insurance Law: Long Hours, Low Commissions for Agents
- UnitedHealthcare: Overview of Producer Compensation
- The Wall Street Journal: Insurance Fees Revealed
- Photo Credit AndreyPopov/iStock/Getty Images
How Do Insurance Agents Make Money?
Insurance agents are not restricted to only one method of making profit. There are different types of insurance agents, and different ways...
- Definition of a Commission Agent
Tax Treatment of Insurance Sales Associates Commissions
The majority of insurance sales agents work either on a combination of salary and commission or as independent contractors who earn "straight"...
How Do Life Insurance Agents Get Paid?
Life insurance companies typically use a broker system to sell their products. Life insurance is almost always a commission-based product, which means...
- How to Calculate Insurance Agent Commission
- The Salary of a Life Insurance Agent
How Much Do Brokers Get for Variable Annuities?
People who buy variable annuity contracts must pay a commission fee whenever they make premium payments. The commission fee, or at least...
- The Average Salary of a Health Insurance Agent
- The Average Commissions for an Independent Insurance Agent
- Insurance Commissions Structure
- The Average Percentage for Commission Based Pay
- Rules on Insurance Agents Who Split Commissions