Thoughts for the Agency Considering Insurance Consulting

More and more insurance agents are adding consulting to their list of services. Some agencies are moving to a fee model. Here are some issues to consider:

Is the move to a fee compensation system for the entire agency? Will the entire agency move to a fee model or will only commercial clients switch? Will you move current clients to the fee model? If you will have a mixed compensation system, will you offer the fee model to your current clients?

How will your insurance companies respond to this move? Much depends on the contracts you have with your insurers and brokers. Will the leadership of your local and regional offices be supportive? What experiences have your carriers had with fee-based transactions?

What state licensing / regulatory issues are there? Many states have separate regulations for consultants. Some allow agencies to accept fees but only with a restriction on future commission income. Do your producers need a consultant’s license? What are the issues with the non-residence licenses you may hold?

How will you segregate fee business from your agency’s contingent fee program? Will you accept contingent fees on consulting business? What are the legal and ethical issues? Will your insurers and brokers assign separate producer codes for your fee clients?

How will you structure your fees? Who will set fees for specific clients? How will you set your fees? Will you bill by the hour? Are contingent fees a viable option? Is a fixed fee the right way to go? How will you set the fees? Will the consultant control the fee charged? When will the fee be due from the client? Will the fee be included in premium financing agreements? How will the consultant share in the fee?

How will you market the change to consulting? Most clients will see the change to fee-based consulting model as a positive. What will you do to market the change? How will you get the word out?