Agency Compensation Rose Again in 2023 But Not Everyone Is Pleased

Agency salaries and total compensation rose in 2023 for everyone in the Insurance Journal Agency Salary Survey. But while insurance agency personnel made more money last year, not everyone was satisfied. Managers/owners and producers were less satisfied with their compensation overall despite their reported higher pay. On the other hand, support staff/CSRs/account executives reported both higher salaries and higher satisfaction with compensation.

That’s all according to the 2024 Agency Salary Survey, which polled some 700 agency employees and managers nationwide throughout the month of January on salary trends in 2023.

One respondent explained the trend: “Revenues have mostly increased due to the hard market while staffing has remained about the same.”

Another wrote: “Compensation does not make up for low staff and high workload. We are simply understaffed,” adding that the agency’s management and steady working hours have kept them going even if they feel unsatisfied about compensation in general.

Another manager added that their agency has had multiple issues retaining staff due to compensation. “We need to find a way to balance the amount of workload to ability of CSR and new/young employees to the insurance industry and pay scale should be a bit higher in order to keep from losing CSRs within a 5-year term to higher paying agencies.”

According to the 2024 Agency Salary Survey, total income for agency owners, principals and management increased the most in 2023 — a 16.1% increase. Producers/sales total income increased 12.6% for 2023. While agency support staff total income showed a 9.6% increase for last year.

(Total income includes salary plus additional compensation such as profit sharing, bonuses, and other income.)

However, satisfaction with compensation declined overall to an average of 3.36 in 2023 from 3.61 in 2022 based on a scale of 1-to-5 where “5” equals “most satisfied.” (See Agency Compensation Satisfaction Index chart, page 29.)

Management/agency owners/agency principals reported a compensation satisfaction score of 3.79 in 2023, down slightly from 3.85 in 2022.

Producers/sales reported satisfaction of 3.12 in 2023, down from 3.39 in 2022.

Support staff/CSR/account executives reported a satisfaction score of 3.16 in 2023, up slightly from 3.11 in 2022.

Restructuring Service Teams

It’s a balancing act in today’s competitive hiring market, says Mary Newgard, partner at Capstone Insurance Recruiters, a national recruiting firm based in Iowa. “This year, my gut read is that insurance agency hiring will be less about niche roles and more focused on solving problems created by recent talent shortages,” Newgard said. That means agencies will have to be creative.

Insurance agencies faced significant recruiting challenges in 2023, particularly when hiring customer service representatives (CSRs), which led to considerable salary hikes.

Insurance Journal’s 2024 Agency Salary Survey revealed that average salaries for support staff were:

• Account Exec/Commercial Lines CSR ($89,854)
• Account Exec/Personal Lines CSR ($57,331)
• Support Staff ($69,942)

Capstone’s own annual compensation survey shows that between 2017-2021, the average CSR salary was just under $50,000, but grew in 2022 to $55,384. In 2023, the highest salary reached $71,000. Newgard says that should these high salaries for CSR positions remain the norm, retail agents and brokers will need to rethink CSR compensation and roles to be competitive.

More than half of Capstone’s client service hires in 2022-2023 were for 100% remote positions, Newgard said.

Agencies are finding that they can be competitive with compensation when hiring experienced talent outside their own geographical regions.

She says that insurance agencies big and small alike struggle to find experienced insurance talent, which in her view makes company size less of a factor than location.

“By and large, we have noticed through the years that compensation is fairly even across the different cities, states and regions,” Newgard said. There’s always going to be the outliers such as New York, San Francisco, or Los Angeles. But the cost-of-living differential is about the same in most parts of the U.S.

That’s one reason she anticipates agencies moving toward a regional service team approach this year where they can strategically target markets with large pools of experienced insurance talent. Remote work options have been driving and will continue to drive this trend going forward, Newgard says.

“Most agencies are going to need to create new positions, which is going to mean that you’re going to have to come up with more money,” Newgard predicts. “And you’re going to have to think about what those brackets look like and how to compete for roles that are going to be focused on leadership and managing client service teams.”

In 2024, expect a lot of agencies and brokerages to rebuild their service teams, making them more nimble, technical and efficient, she said. “This may mean eliminating archaic positions or creating entirely new roles.”

Employee Targets

While the agency M&A market cooled in 2023 (see page 20), the best-in-class firms are still hot areas for acquisitions. That means top talent will continue to be targets at recently acquired firms.

“It’s well established that when a firm announces it has sold, it is playing defense against all competitors.Everybody swoops in and tries to steal the people,” according to Kevin Stipe, partner and CEO of Reagan Consulting.

But good talent leaves for more than money.

“A great culture can reduce your employee turnover by a meaningful percentage,” Stipe says. “If there’s a sense of the culture changing (post-acquisition) then people could be more open perhaps to look at other jobs than they would be under just your normal status quo environment because there’s been a change of ownership.” Stipe says those firms get targeted.

One agency principal responding to Insurance Journal’s annual salary survey, agreed. “Employees are being targeted by headhunters more and more,” they said. “The employees that don’t want to leave, they want more money from us.”

The winning formula to retain top talent is simple, Stipe said. “It’s something I learned 30 years ago, and I think it rings just as true today as it always did — the firms that hire high quality talent and are willing to pay for it end up running laps around the firms that don’t do that.” That’s the winning strategy, he says.

He advises agencies to pay close attention to developing their firm’s culture as well, particularly in the new world of remote work. “You can afford to pay your employees more if you can retain the best,” he said. “Turnover absolutely kills you, so to the degree that you can limit turnover by paying attention to a high-quality culture, then you can pay people more, and it’s a win for everybody,” he said. “You can pay people more, get higher performance, and still be as profitable, or more profitable, than your peers.” That’s the winning formula.

Wages Rise

While a rising tide in compensation tends to raise all wages, that’s not always helpful. Rural, smaller agencies are forced to compete with larger firms across the country, says Art Betancourt, founder and CEO of AEBetancourt, a national professional placement and executive recruiting firm for the industry.

There’s still a wage disparity geographically, although that appears to be shrinking, at least on the service side. “Overall, I would say on the service side, wages have probably increased 10% to 20% per role,” Betancourt said. “That’s definitely impacting the more rural or the smaller brokers a lot more and they can’t afford to keep up.” Smaller agencies need to realize they have to pay more in today’s employee-driven market, he said. “That also might mean that they have to do more with less people.”

That’s not always bad news for everyone. Betancourt says that might mean hiring two really good account managers for $80,000 a year versus keeping three mediocre account managers for $60,000 a year.

Betancourt says his firm continues to see recruiting efforts focused about 50% on service staff and 50% on producers. That’s a different than a few years ago where recruiting focused more on producers some 80% of the time.

The demand for service talent in the industry has pushed compensation ranges up over the past two years but he sees the pace of compensation growth slowing some this year. That’s not to say the pace of demand will fade.

“There has been a shift in the last year or two where there is a realization that some employees do have more options,” he said. That “shift of power” from the employer to the employee boils down to a lack of available talent. He says people are no longer willing to stick around and just be “okay.” When someone calls and offers them 20% more in pay, they take it, he said.

Even so, Betancourt predicts a bit more stabilization in compensation this year, but the high demand for quality talent isn’t going to get better anytime soon. There are just not as many people getting into the sector as there are getting out.

“So there’s going to continue to be a war for talent for at least the next decade,” he predicts.

Agencies looking to hire only in-office talent will have a tough time competing with other agencies offering remote options, he added.

“We’re finding that agencies that are having the most difficult time filling positions are the ones that are fully in-office 100% of the time,” he said.

“When we talk to candidates, one of the most common things they say is, ‘I’m only interested if this is remote.'”

Betancourt agrees that retaining top talent is critical today. To do so, management and agency owners need to first be good listeners. “You have to listen to your employees,” he said. “You might not be able to meet everything that they want or desire, but there are some things that could be low cost to you but meaningful to your talent.”

Deliver on those needs when possible and deliver them consistently, he suggests. “If you can do that, then those people are more willing to stay.”

Betancourt says culture is important but sometimes the small stuff means more.

“Consistency on delivering on small things, surprisingly, are the things that get under your people’s skin the most,” he said. “If they feel like they’re listened to and that you’re consistently delivering on the things that you’re able to, people might be willing to let some of the bigger things go. That’s how you can drive a better culture within your organization.”