The relationship between insurance carriers and insurance agents is an intricate one, with multiple factors that influence where agents place their business year after year. While agents will often claim that compensation isn’t a deciding factor, the data shows otherwise—although there is some nuance to consider.
In a recent study by Celent and Vertafore, more than 600 life and health insurance agents shared their wants, needs, and preferences around compensation. We explored the life insurance findings in a previous blog, and now turn to the health market to examine three primary motivators:
- Commission structures
- Recognition programs
Understanding the finer points of agent compensation preference is key to carriers fostering stronger relationships. Because while commissions are transactional, compensation strategy is a lever carriers can use to deepen agent loyalty, drive growth for specific products, and differentiate themselves in a competitive market.
Commissions still count
While the report shows that compensation's influence is more complex than a simple commission payment, we don’t want to overshadow the continued importance of base commissions on agent decision-making. They are important, to a degree. In the report, 27% of respondents said commission drives where they place business, while 26% said they prioritize higher commission if all other factors are equal.
However, 42% of respondents also said that regulations around commission rates, such as the standardized rates for Medicare Advantage plans, limit their overall influence. When viewed together, these findings indicate that base commission is still a motivating factor, but less so due to regulations on certain products. But what about the different aspects of a compensation plan? Here are the top four plan options considered vital for agents placing business:
Long-term commissions
What we see is that agents place high value on long-term commission benefits as well as competitive percentages on immediate payouts. This illustrates that agents aren’t just looking to make quick sales but value nurturing lasting relationships with clients. As one respondent wrote:
Dynamic commission tiers motivate agents to focus on long-term customer relationships rather than one-time sales.”
So what does that mean for carriers? Commission plans should emphasize persistency and income continuity to better align with agent values and reduce churn. A show of investment in your agents’ time and effort will foster loyalty and enhance relationships. And while commissions form the foundation of agent compensation, they’re only part of a larger equation; carriers looking to deepen loyalty should also consider how they recognize and reward performance beyond base pay.
Rewards & recognition
Bonuses and contests have been a staple of the agent rewards landscape for years. They incentivize agents, can help bolster lines of business for specific products, and offer carriers the potential to distinguish themselves as a partner of choice. So, what about rewards and recognition do agents prefer when placing business? There are several different types of bonuses and other incentives, but we can establish a few widely shared truths before diving into the specifics.
First, production-based bonuses were reported by agents as both highly important and widely available. This means carriers are tuned into this expectation and providing it; it has become standard for any modern compensation strategy. Second, almost all monetary bonuses or other rewards like vesting, tier adjustments, and profit-sharing agreements are considered highly important to agents when placing business. The key is finding ones that rank high for importance but low for availability—that’s where the opportunities can be found. Let’s look at a few potential candidates in the graph below.
Short-term bonuses – The most valued yet least available bonus type according to health insurance agents, these incentives are offered for achieving predetermined goals within a shorter time frame.
Quality measure bonus – An incentive based on the quality of service provided rather than total sales, this incentive ranks second for least available despite its importance to agents.
Custom vesting rules – This feature focuses on the schedule or terms that determine when and how agents receive commissions on their book of business and offers more flexibility and security year after year.
Besides their relevance to a comprehensive rewards and recognition structure, these three bonus types illustrate gaps between current carrier offerings and agent preferences. Identifying these gaps and investing in a compensation strategy that incorporates more features that agents prefer could distinguish carriers from their competition and lead not only to improved agent relationships but accelerated growth.
Digital empowerment
Technology is reshaping the agent experience, and compensation is undergoing a major transformation because of it. Digital access, transparent communication, and flexible payment schedules have become as important to agents as the size of their commission. The study supports this; nearly 90% of respondents said they value custom dashboards, self-service tools, and even AI solutions that help them track compensation in real time.
The modern insurance agent handles a wide array of clients, policies, and carriers, which can make routine tasks feel like a slog, especially if their carriers each have unique dashboards, systems, and support teams. Carriers who can invest in ways to make agent lives easier can market themselves as an easy, effective partner. With regards to compensation, carriers can achieve this through custom commission schedules and automated dispute tools. Let’s review some data that supports these points.
- 89% of agents rated personalized payment schedules as essential or very important, while 77% prioritized flexible frequencies such as monthly or quarterly options. These features, which could be implemented online for easy agent access, can help agents establish predictable income.
- 78% of agents rated an automated and easy dispute process as either mandatory or very important, emphasizing a need for transparency and convenience.
For many of these features, agents also responded that the majority of their carriers already provided adequate solutions, though some gaps remained with more complex issues like recoupment, garnishments, and chargebacks. This indicates that carriers have been shifting toward a more agent-friendly approach to compensation but may have pockets of improvement left to make. As one agent respondent put it:
One of the biggest changes I’ve seen is an increasing focus on transparency in commission structure. More insurers are providing detailed breakdowns of commission structures and clearly outlining how commissions are calculated. This helps agents and brokers better understand their earnings and incentives.”
At the end of the day, the features carriers should offer to win more agents are flexible payment schedules, transparent statements, and automated processes that streamline workflows and communication between them and their agents.
Paving a way forward
The motivators we discussed tell a story: Agents are no longer motivated by compensation alone. They are being influenced by how that compensation is structured, how their performance is recognized, and how much easier their work is made by their carrier partners.
For carriers wanting to grow their business and establish new agent partnerships, competitive pay is no longer enough. Your programs should foster transparency, flexibility, and trust. Aligning your compensation strategy with agent preferences will strengthen existing loyalty, enhance retention, and drive more production.
Vertafore’s Sircon Compensation provides comprehensive insurance commission tracking and customization that empowers carries with the speed and flexibility necessary for today’s markets. As a key element of our distribution management platform, Sircon Compensation is designed to motivate agents and strategically drive sales of products you want to prioritize.