Can an independent agent in Texas charge more money for a homeowner's policy than the insurance company charges for the policy like a commission?

Answer 1

Generally a homeowners policy is set up on a direct bill arrangement where the company sends the bills to the policyholders and then the company pays a commission directly to the agent. The independent agency is not allowed to charge any additional fees or commissions to the policyholders. The independent agency will perform all service to the clients such as writing new policies, making changes, answering questions, etc.

Agency Fees in TexasYes, Agency Fees are allowed in Texas. Commissions however are set by the insurer issuing the policy and will vary company by company.

In Texas you have many choices of professionals for your Insurance needs. You can use the services of a Standard Insurance Agent, an Independent Insurance Agent, an Insurance Broker or even a Risk Manager as well as that of an Independent Insurance Claims Adjuster. You may decline to pay Agent, Broker or Adjuster Fees, However, these professionals may also decline to accept you as a client or may decline to offer you representation or service.

Best practices for Independent Agents is to maintain a single master one page "Fees Disclosure Schedule" indicating what services and any assigned fees disclosed with all originating service offerings. This practice provides for an informed insured customer and promotes fair and consistent application within the agency. Any custom risks subject to hourly rates should be included in a signed addendum to the agents fees schedule and should be reviewed and provided with applications and service offerings.

Whether or not you incur an agency fee can depend on many things. 1.Who handles the billing and payments for your insurance policy. 2. Who is responsible for the production, printing and mailing of your insurance policy. 3. Is the carrier local, foreign or an alien (international) insurer. 4. The complexity of your risk or the time consumed in finding an appropriate market. 5. The type of insurance policy you purchased. 6, Insurance regulations in your state and the established agency fees schedule of your producing agents.

Agency fees are typically not allowed on policies placed through government sponsored assigned risk programs such as the Texas Windstorm Association and the National Flood Insurance Program. Due to low commissions some agents simply can not afford to participate and do not offer these government insured programs. Some standard line direct bill offerings the company underwriting rules may not allow an agency fee. So some policy offerings and services may have agent fees while others may not. Your agent should be able to provide you with a Fees schedule.

Most Standard lines Insurance agents represent only 1 primary carrier, Some may have 1, 2 or 3 backup markets in place. So most policies are direct bill and issued by the insurer and usually require no agent fees as all servicing costs are built into the premium.

Independent Agents typically have a dozen or 2 dozen markets, both standard and Non Standard, Admitted and Non-Admitted carriers, some larger independents will have over a 100 markets or insurance brokerages to offer and each insurer has it's own underwriting and production guidelines. Some will offer direct bill programs and many may require the Agency have billing, underwriting and production capabilities.

Most states, including Texas Insurance regulations, do allow regulated agency fees. Regulations depending on your state may limit the amount and types of fees but all require fees disclosure in various ways.

With an independent insurance agent, it is true that you have access to many more potential insuring markets, but it is not unusual to incur fees for the extra services and market access available.

Example 1. We recently found replacement coverage for a residential property risk (Homeowners Policy), Previous annual premium was $4,600 on a direct bill program, new company came in at $2,100 for matching coverage with a $100 Agent Placement fee. total savings to the insured was $2,400 per year, same coverage, different brokering market with an agency billing and production requirement.

Example 2. You pay your insurance renewal bill of $1500 through your independent agent with your Credit Card, Visa International will likely charge the agent 40 to 80 dollars to process the charge from your card. If the agent does not collect an agents processing fee, that agent will not have the entire 1500 to transmit to the insurer as it will have been intercepted by the credit card processor. This is why as mentioned above. If you are placed with a direct bill program carrier you would likely not encounter an agency fee, but you still might encounter a payment fee depending on the company and your method of payment.

Example 3. You have an efficient affordable policy placed with a London Insurance Exchange, These international markets have little or no direct bill capabilities so standard annual agency servicing fees are in the 100 dollar range due to the overhead cost of Policy Production, Premium Collection and Transmittal.

The best place to learn about agency fees pertinent to your policy is with your Insurance Agent.

Information about regulation of insurance agents and agency fees can be found with your State Insurance Commissioner or Administrator.