Agency Salary Survey: Employee Pay Spikes As Agency Talent Pool Shrinks

On the heels of the lowest U.S. unemployment rate in 53 years, insurance agency employees across the nation reported the highest salary and compensation percentage increases in the history of Insurance Journal’s annual Agency Salary Survey.

Agency employees who responded to the confidential survey — which has been collecting insurance agency salary data and compensation trends since 2008 — revealed that average salary adjustments jumped higher in 2022 than any other year during the past 14 years. You can download the full agency salary survey report here.

Average total income adjustments — which comprise all income changes for the year, including salary and incentive-based compensation and bonuses — also rose higher in 2022 than any other previous year for both management/agency owners/principals and support staff/CSRs/account executives.

Producers/sales employees reported an average total income change of 13.6% overall in 2022 — while that figure is down from a record 17.9% total income change in 2021, it remained the highest overall percentage change among the three categories in the survey.

Competition is fierce for qualified talent in insurance agencies nationwide and salaries are rising as a result, according to industry insiders.

Nearly every position in the agency needs new talent, says Mary Newgard, partner at Capstone Insurance Recruiters, a national recruiting firm based in Iowa. Client service teams are the most pressed for new hires, she says.

“I don’t think there’s a single agency that I could talk to right now that wouldn’t say they have at least one, if not multiple needs, in their client service team,” Newgard said. “It’s really dominating the focus for recruiting.”

Al Diamond, president of the Agency Consulting Group Inc. based in Cherry Hill, New Jersey, agrees, adding that urban, smaller agencies are feeling the heat most when it comes to hiring service team positions.

“When you’re in major metropolitan area and you have a $1 million agency, which isn’t terribly small, but still on the smaller end, and you’re competing against $10 million, $15 million and $20 million shops around you, and they’re paying their people $100,000 a year to be a customer service rep, that’s very tough to match,” he said.

Smaller agencies in more rural areas can still compete, according to Diamond, because they have the service and products those communities want. “The rural communities, the South, the Midwest, even the rural West, are completely different marketplaces than the urban and suburban communities and they don’t react the same way,” he said.

But in most metropolitan markets, to be a contender in this competitive landscape, agencies often need to rethink their offers, according to Art Betancourt, founder and CEO of AEBetancourt, a national professional placement and executive recruiting firm for the industry based in Grand Rapids, Michigan. The reasons good talent leave employment have changed significantly in the past two years, he said.

A 2022 McKinsey study found that 40% of U.S. workers reported they may leave their jobs in the near future and many of those would exit their current industry during that move. McKinsey reported that of those who made a move out of the finance and insurance sectors, 68% found jobs in other industries.

It used to be that people moved for a better culture and job fulfillment, Betancourt said. Millennials cared about doing good and sought jobs where culture and purpose meant more to them. But in today’s recruiting environment, Betancourt says that motivation has changed. There’s been a major shift in what motivates workers to move, he says.

“The number one reason why people move today is for compensation; not for culture and that kind of thing,” he stressed.

The number two reason people move is flexibility in their work schedule, he added.

Remote work and compensation go together in today’s competitive hiring environment. Whether it’s offering fully remote positions or some form of hybrid work, if agencies aren’t willing to be flexible and allow some form of work from home, it’s much more difficult to fill roles, Betancourt said.

Add to that the graying of lines between various geographies and the competition for top talent becomes even more fierce, he said. Agencies are no longer just competing with the wages in their local market — they have started competing with wages pretty much anywhere in the country, he added.

“We know people get paid more in New York and Miami; those agencies there, especially the more sophisticated ones, maybe some private equity backed, they’ve said, well, it’ll be a lot easier to find talent if we pay an LA [Los Angeles] wage in Grand Rapids, and have them work from home,” he said. That might mean hiring someone in a different geography but then giving them a 40% raise in pay. “How do you say no to that?”

Betancourt said that for agencies to be “in the game” they have to offer competitive pay along with flexible work options. But that doesn’t mean offering above the going rate for talent. “You don’t have to be way above or way below, but you at least have to be orthodox, or average, of what everybody else pays to compete,” he said.

Diamond says that trend is a bit different in rural agencies.

“You won’t find many of those rural, smaller agencies allowing a lot of remote workers,” he added.

But Betancourt agrees that agencies’ biggest needs in hiring today are for service level positions and that trend will not change anytime soon. “It’s been our biggest growth area in the last year and a half,” he said. “It’s exploded, there’s such a huge need right now.”

Costs Per Employee

The rising cost of living and high inflation have put added pressure on pay scales, Newgard says.

“People want more so there’s a constant rightsizing for comp,” she said. “Candidates, job seekers, insurance professionals are definitely going into the market right now asking that question without any sense of shame whatsoever … ‘Would my job search reveal to me that I’m being underpaid?’ And you know, I think that’s a fair question.”

Newgard says that to retain the best talent agencies need to have consistent conversations with their employees about compensation. That means making sure formal review systems are in place so that employees stick around. The easiest motivator for someone to make a career transition is pain, she said. “And certainly, pain in your pocketbook is one reason people move,” she said.

It’s not the only reason but if employees see they are underpaid or not being paid to their skill level, that is good reason to make a change, according to Newgard. And when agencies lose an employee and then need to fill that vacancy, they may end up with a replacement that has half the experience but wants the same money, she said. That’s why retaining key talent is critical.

“This need to constantly be asking the question — and you ask it of your people and you ask it of other people through the interview process — what are you making, is the best barometer agencies can use to determine if they’re in a safe spot, or if they need to do some rightsizing with their current staff and their salary bandwidths,” Newgard said.

Training

Finding quality talent and retaining talent are not new dilemmas for agencies, says Christopher Boggs, vice president, agent development, research and education, for the Independent Insurance Agents and Brokers of America. That’s always been a challenge — service staff rotating from agency to agency for higher pay within their geographical area. But the challenge gets tougher when remote work opportunities are added to the mix.

“What we’re doing is we’re stealing from each other, only now it’s even worse because someone in New York could hire somebody from North Carolina and pay them New York wages,” he said. “Well, nobody in North Carolina can afford New York wages.”

The solution, Boggs says, is training. Training new people from outside the industry to come in and training current employees to move up. But that’s not always easy for independent agencies to do, he said. Agencies are unwilling, or perhaps, unable to do so, he said.

Training takes a lot of time. Also, the agency side of the business can be complicated, he said. “You need to understand coverage, you need to understand carrier appetites, you need to understand that company A fits this client where company B doesn’t,” Boggs said.

Then there’s training for technology, accounting, and everything else that goes on inside an agency. “Our members don’t really take the time to train somebody new to the industry and so they all end up looking at talent that exists in the same bucket.”

Training lacks both at the agency level and at the carrier level, Boggs says. “Historically, up until about 25 years ago, carriers had training programs.” It would be six or eight months of training before underwriters tackled the job of underwriting. “Now you come in, spend 10 days in training and they have you underwriting. You can’t learn anything about this business in 10 days,” he said.

Agencies also don’t have anywhere to go to for the training they need. There is no one place where agencies can turn to get all the training they may need for new-to-the-industry employees, Boggs said.

Training programs are available, but they are fragmented. “So, for a small 20-person agency to hire somebody with no insurance experience and train them up, while it would be far more beneficial for them to do so in the long run, they just don’t feel like they have the time, and largely they don’t,” he said.

You can download the full agency salary survey report here.