Why Choose PIIB?
Why Choose PIIB?
ELIMINATE INSURER PRESSURE FOR PRODUCTION. Most insurers regularly put pressure on agencies for increased production. This pressure comes through production incentives for higher production and through threat of agency termination for lack of production. Often lack of production is the result of underwriting or pricing policies of the insurer and doesn’t relate to the lack of effort or effectiveness on the part of the agency. When an agency joins a cluster this pressure is reduced or eliminated because the production of the combined agencies typically is more than sufficient to meet the requirements of the insurer.
INCREASE PROFIT SHARING (see below). Insurers have minimum levels of production to qualify for profit sharing. Smaller agencies and those with limited production with particular insurers do not receive profit sharing on business produced with such insurers. However, by joining PIIB, agencies share in profits paid by all member insurers on a prorate basis of their production with that insurer to the total production with that insurer. Furthermore, because there is a larger total than an individual agency would have, often the percentage paid is greater than an individual agency would qualify to receive. Lastly, because there is more business with that insurer, the law of law numbers works to make the payments more predictable.
ACCESS ADDITIONAL MARKETS. Smaller independent agencies are often at a significant disadvantage to larger agencies due to having fewer markets available to them. This disadvantage applies both with respect to pricing and to availability. This disadvantage is particularly pronounced when a large agency opens an office in a small community. The long time local agent may find he loses market share in his community very quickly. By being part of a cluster smaller agencies can compete head to head with larger agencies with respect to price and availability.
PLACE COVERAGE WITH MARKETS BEST SUITED TO INSUREDS. A small independent agency has few insurers to place business that comes to him. As a result there is the tendency to try to force business through, somewhat like trying to put a square peg in a round hole. Insurers know this and as a result often scrutinize the business submitted by smaller agencies more closely than that submitted by larger brokers. By having a wide range of markets available through the PIIB cluster, member agencies can place business with the most appropriate market. This has the added advantage of not having to move that business, as often when the insurer finds out it isn’t the type of business they wanted.
PROTECT YOURSELF FROM ACTIONS OF INSURERS. Anyone one that has owned an independent agency for any significant period of time likely has several stories about how this or that person at an insurer didn’t like them and either refused to write business for them or saw that their agency was terminated. Membership in PIIB reduces the likelihood of such capricious action because it can become very expensive for the insurer to terminate all the agencies in a cluster and because the executive director of the cluster can serve as an advocate for the member agency with the insurer.
GET HELP FROM FELLOW AGENTS ON MARKET & MANAGEMENT ISSUES. An independent agent may rightly feel reluctant to talk about the difficulties he is experiencing with his local competitors. But since members of the cluster don’t compete with one another and they come from communities spread across the state, PIIB members are happy to share what has worked for them in solving market and management issues. This shared experience is invaluable because while books or continuing ed courses can help, fellow members often have specific experience in dealing with the problem related to the same insurers, agency management systems, etc.
How are your profit sharing opportunities enhanced?
- 90% of profit sharing dollars are passed through to members
- Pooling results with other agents creates sufficient volume to meet carrier’s minimum premium requirements for profit sharing
- Pooling premium increases the threshold for absorbing large losses
- Profit sharing payment percentages generally increase as volume increases
- You are rewarded for profitability within PIIB's distribution methodology
- Combining carrier payments into one pool before distribution reduces the potential impact on your payment from carriers who either do not pay or pay poorly in a particular year.
- Larger premium volume often allows access to more favorable profit sharing agreements
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Pacific Interstate Insurance Brokers
5072 Hillsdale Circle, Suite 110
P.O. Box 4529
El Dorado Hills, CA 95762-0021
phone: 916.941.0518 * fax: 916.941.0547 * e-mail us