Timothy Schucker walks through why insurance agents go broke despite writing policies. Writing $30,000 in annual premium requires 500 direct-mail leads at $40 each ($20,000 cost), a 10% closing rate, and an 80% retention rate that cuts realized premium to $24,000. Lead costs and chargebacks eat the commission.
$30,000
About $600
About 50 policies
10% (1 in 10)
About $40 per lead
Here's why Most insurance agents make no money even when they write business. Let's say that you write $30,000 in annual premium in one month. Typically it's going to take you about 50 policies to hit that because the average insurance policy is about 600 bucks. Now a highly skilled insurance agent is going to close about 1 in 10 on every lead that they have. So we got 10% closing rate. Now the question is how are you going to get those leads now? For decades on decades the number one lead source for the insurance industry has been direct mail. Now recently those costs have skyrocketed. You're now going to be expecting to pay about $40 on average for a direct mail lead. 500 times 40 is 20 grand just on leads. 30k minus 20k, what's that? We got 10k left over. But wait, we haven't accounted for chargebacks. Let's say you have a 80% retention rate. 80% of 30k is 24k.
