Splitting Business

Published by Eric Hemati on December 13, 2016December 13, 2016

We often have agents who work as a team to work on accounts. Perhaps one of them has an “in” with a particular prospect, but needs a more experienced agent to help the prospect make a decision. Maybe one agent is a terrific prospector and can open conversations, but needs help with selecting and presenting the right product. The scenarios are literally endless.

What’s the best way to split that business? Should they split it evenly? If not, what’s the proper percentage?

This is a very common problem in the insurance industry, and thankfully one that has been addressed by the deep-thinkers at the Million Dollar Round Table (or MDRT for short).

The MDRT most commonly works with agents who sell life insurance. Their best practice on how to split the commission works like this:

They recommend splitting 100% of the commission available to the writing agent into five parcels of 20%:

1. 20% for the Prospect – Prospecting is a critical piece of the sales process. Without a prospect no sale can be made. It’s about the relationship. The person who establishes the contact (lead) and sets the appointment on a favorable basis with a potential client or client is entitled to 20% of the total commission when the case is settled.
2. 20% for the Data Gathering – The foundation for a sale is uncovered during the fact-finding and data gathering segment (the opening and prospect interview). 20 % of the compensation is allocated to this component of the sale when the case is settled.
3. 20% for Case Design – analyzing the data and facts to create possible solutions is both a science and an art. Evaluating potential sales ideas and creating presentation material (computer work) is worth 20% of the commission split when the case is settled.
4. 20% for the Sale – In today’s world of compliance and paperwork (presentation and close), it is no easy task to complete sales applications correctly and provide vendors with other supportive information to make sure that the case is properly sold and “put on the books” in good order. 20% of the sales commission is allocated to this component of the sale when the case is settled.
5. 20% for Post-Sale Service Work – Whoever is responsible for future service is entitled to 20% of the total commissions. Maintaining good communications and delivering on promises that were made during the sales process are critical to client retention and retention of the business.

Following this model could end up in splits of 80/20 or 60/40 between two agents, 60/20/20 or 40/40/20 among three agents, 40/20/20/20 among four agents, or even 20/20/20/20/20 among five agents.

While our agents are in business for themselves and can decide to split business however they see fit, following these recommended split levels is not only more fair over time – rewarding more accurately the amount of work being put in to write the business – but also reduces confusion by clearly delineating the participating agents’ responsibilities going forward. We highly recommend following them wherever possible.