Something you need to review with compliance. In Florida, that sort of thing is frowned up by the Department of Financial Services. However, I am allowed to take someone out to a nice lunch or dinner at a great restaurant. Personally,
I give lots of referrals with no quid pro quo. My only consideration is that the person I'm referring to does a good job for my clients.
It depends on who is making the referral. If it is coming from another insurance professional (i.e. P&C agent), you may consider 10%-25% based on the frequency of the referrals and the arrangement with the agent. It is also possible to establish a business relationship with certain professionals (i.e. CPAs) who can receive a referral fee under certain conditions (one of those conditions is that the individual must be licensed). In this case, a referral fee could be between 10% and 50% depending on how much a role the professional plays in closing the case.
I am a web presence consultant. I earn my living from referrals. The "commissions" vary from 10 to 25%. And, in my business, that can be for as long as the client gets billed by my referral or it can be a one time deal.
When I was in the insurance business (way long time ago), we were not allowed to share a fee with anyone outside the insurance business. So, our incentives had to be in some other form, which was interesting to see how ingenious some sales agents became.
Business from Overland Park, KS
Answered on Aug 1st, 2018
I heard people making arguments against referral fees and saying that a gift card or a lunch with your referral source on a somewhat regular basis would be preferable. However, there are folks out there who pay pre-agreed referral fees in hard dollars and everyone involved is fine with it. The amount can be anything you want it to be but it also depends on the size of your sales and commissions you receive as a result. If your commission is $400 paying $50 referral fee sounds quite generous. If your commission size if $50,000, you may feel like paying $500 referral fee is probably not enough. Therefore, in the end you should be the one to decide what is reasonable.
Another way to go about it is to assign a percentage of commission as a fee (for example 5% or 10%).
Referral fees don't work like a real referral system.
Consider these negatives to paying a fee:
-you have closed the conversation with the person referring. They gave you a name, you paid, transaction over.
-if the person referred finds out there was a fee paid, they feel like they were sold by their 'friend'.
-the only ongoing communication is a relationship like this is 'got any more leads for me', a poor way to conduct business (except for drug dealers...)
Since there are other legal issues which many people are implying, you should consider a system that is repeatable with repeated results. A referral system beats almost every other marketing plan.
Well Jay, upon reading your question, my mind quickly flitted through several scenarios! First off, I've historically relied on reciprocal referral relationships, so no fees were involved. Second, I thought "hmm. about one month premium would be good". Next, it was the same concern raised by several others: if this referral source isn't a licensed agent, rebating could be an issue! Years ago, I used to skirt that problem for auto referrals by offering a handful of lotto scratch-cards... $5 worth of those wouldn't trigger a rebate question. And the actual "reward" is the fun of scratching with the tiny hope of a big windfall!
I don't look for referral fees when I refer business out. I am more interested in reciprocating relationships. In other words I refer to people who also send me referrals.
Hi. I'm not sure what you are meaning "referral fee". You, as the agent, would write the business and the commission on that business would be paid to you. You would, of course, be required to be contacted with the insurance carrier that you want to present to your client. We, as a General/Managing Agency work with hundreds of agents but our income is generated by overrides from the carriers. You, the agent, will receive 100% of the commission. To earn our override we work with you to make a proposal, enrollment and submission. If I have missed the mark on what you are asking, please let me know. Or, give me a call. Thanks. Ivina Oveson
Answers (1-10)
Something you need to review with compliance. In Florida, that sort of thing is frowned up by the Department of Financial Services. However, I am allowed to take someone out to a nice lunch or dinner at a great restaurant. Personally, I give lots of referrals with no quid pro quo. My only consideration is that the person I'm referring to does a good job for my clients.
We are not allowed to give referral fees. We will give gifts. Like dinner cards, etc.
It depends on who is making the referral. If it is coming from another insurance professional (i.e. P&C agent), you may consider 10%-25% based on the frequency of the referrals and the arrangement with the agent. It is also possible to establish a business relationship with certain professionals (i.e. CPAs) who can receive a referral fee under certain conditions (one of those conditions is that the individual must be licensed). In this case, a referral fee could be between 10% and 50% depending on how much a role the professional plays in closing the case.
I am a web presence consultant. I earn my living from referrals. The "commissions" vary from 10 to 25%. And, in my business, that can be for as long as the client gets billed by my referral or it can be a one time deal.
When I was in the insurance business (way long time ago), we were not allowed to share a fee with anyone outside the insurance business. So, our incentives had to be in some other form, which was interesting to see how ingenious some sales agents became.
I heard people making arguments against referral fees and saying that a gift card or a lunch with your referral source on a somewhat regular basis would be preferable. However, there are folks out there who pay pre-agreed referral fees in hard dollars and everyone involved is fine with it. The amount can be anything you want it to be but it also depends on the size of your sales and commissions you receive as a result. If your commission is $400 paying $50 referral fee sounds quite generous. If your commission size if $50,000, you may feel like paying $500 referral fee is probably not enough. Therefore, in the end you should be the one to decide what is reasonable.
Another way to go about it is to assign a percentage of commission as a fee (for example 5% or 10%).
Referral fees don't work like a real referral system.
Consider these negatives to paying a fee:
-you have closed the conversation with the person referring. They gave you a name, you paid, transaction over.
-if the person referred finds out there was a fee paid, they feel like they were sold by their 'friend'.
-the only ongoing communication is a relationship like this is 'got any more leads for me', a poor way to conduct business (except for drug dealers...)
Since there are other legal issues which many people are implying, you should consider a system that is repeatable with repeated results. A referral system beats almost every other marketing plan.
Well Jay, upon reading your question, my mind quickly flitted through several scenarios! First off, I've historically relied on reciprocal referral relationships, so no fees were involved. Second, I thought "hmm. about one month premium would be good". Next, it was the same concern raised by several others: if this referral source isn't a licensed agent, rebating could be an issue! Years ago, I used to skirt that problem for auto referrals by offering a handful of lotto scratch-cards... $5 worth of those wouldn't trigger a rebate question. And the actual "reward" is the fun of scratching with the tiny hope of a big windfall!
I don't look for referral fees when I refer business out. I am more interested in reciprocating relationships. In other words I refer to people who also send me referrals.
B
Hi. I'm not sure what you are meaning "referral fee". You, as the agent, would write the business and the commission on that business would be paid to you. You would, of course, be required to be contacted with the insurance carrier that you want to present to your client. We, as a General/Managing Agency work with hundreds of agents but our income is generated by overrides from the carriers. You, the agent, will receive 100% of the commission. To earn our override we work with you to make a proposal, enrollment and submission. If I have missed the mark on what you are asking, please let me know. Or, give me a call. Thanks. Ivina Oveson
If you licensed to sell life insurance you cannot pay referral fees to any unlicensed person maybe buy a gift no money