How We Get Paid: The Honest Answer to the Question Nobody Asks Out Loud

By The NMH Agency Team, Licensed Agent

Every so often a customer works up to it, usually at the end of a
call that went well: “So… what does this cost me? How do you actually
make money?” It’s a great question, the kind that deserves a plain
answer rather than a brochure, and since most people wonder without
asking, here’s the whole model, in public, from an agency that would
rather explain it than have you guess.

The short version

Insurance carriers pay us a commission, a percentage of the premium,
for policies we place with them. You pay the same premium you’d pay
buying that carrier’s policy any other way; the commission comes out of
the carrier’s side, not stacked on top of yours. There’s no fee for
quotes, no fee for advice, no fee for calling us nineteen times during a
claim. That’s the model. The rest of this article is the fine print,
offered voluntarily.

The fine print, voluntarily

Typical commissions on personal lines (auto, home,
and similar) run roughly 8 to 15 percent of premium, varying by carrier
and line, paid on new policies and, usually at similar or slightly lower
rates, on renewals. The renewal commission matters more than it sounds:
it means our income depends on you staying insured with us,
year after year, which aligns us with your long-term satisfaction rather
than a one-time sale. Agencies built on churn don’t last; ours is built
on renewals, which is a structural reason to treat you well, on top of
the ordinary human ones.

“Doesn’t that mean pricier carriers pay you more?”
Arithmetically, a percentage of a bigger premium is more dollars, yes.
Two forces push the other way, hard. First, commission rates
are broadly similar across our carriers, so the difference on any single
household’s policy is small money. Second, and decisive: if we place you
expensively and you discover it, we lose the renewal, the household, the
referrals, and the review, which is the actual economics of an agency.
Our incentive, mechanically, is to place you where you’ll stay, and
people stay where the value is. When we say we get paid roughly the same
either way, that’s not a slogan; it’s why the model works.

Contingent bonuses exist and you should know about
them. Many carriers pay agencies annual performance bonuses
tied to volume, retention, and the profitability of the agency’s whole
book with that carrier. These are industry-standard, they’re not tied to
any individual customer’s placement, and the profitability component
actually rewards us for putting risks with carriers that fit
them, since mismatched placements generate losses. Still, you deserved
to know they exist, and now you do.

What we’re not paid for: steering you to a carrier
that’s wrong for you (that costs us the renewal), selling you coverage
you don’t need (same), or claims outcomes (we advocate in claims because
that’s the job and the reputation, not because anyone pays us per
claim). And when the honest answer to a quote request is “your current
policy is the best deal, keep it,” we say so and earn nothing that day
except the reason you’ll call back next year. It happens weekly and we
consider those calls advertising.

“Would I pay less going
direct?”

The natural follow-up. Buying directly from a carrier doesn’t remove
the distribution cost; direct carriers spend their equivalent (heavily)
on advertising and call centers, and their pricing reflects their whole
cost structure, commissions or otherwise. Sometimes a direct carrier is
genuinely cheapest for a profile; when one is, that’s a market fact
we’ll tell you about, since pretending otherwise gets us nothing. What
going direct does remove is the person: someone who quotes
across 20+ companies instead of one, notices the gap in your coverage
before the claim does, re-shops your renewal when it jumps, and picks up
the phone when the adjuster stops returning calls. That layer costs you
zero extra with us. Whether it’s valuable is your call to make; our
1,800+ reviews suggest how our customers vote.

Why we published this

Because the question deserves better than mystery, and because trust
is the entire inventory of an agency. You now know our incentives as
well as we do: paid by carriers, at similar rates, mostly on renewals,
aligned with you staying happily insured for decades. Judge our advice
accordingly, ask us anything else you’re wondering, and know that “how
do you get paid?” will never be an awkward question here. It’s the one
we answered before you asked.

Got other questions you’ve been sitting on? Call 800.388.6780 or
start a quote. Plain answers are the house
specialty.