Brooke has agreements with more than 500 property and casualty insurance companies to provide you with a better selection. An important element of franchisee success is access to quality, competitive products provided by some of the nation’s largest and most reputable property and casualty insurance companies.

As the nation’s 22nd largest insurance agency (Business Insurance 2006), we enjoy a certain level of clout with insurance carriers. Although like any agency, we cannot guarantee that a company appointment will be granted, or that a company will continue to allow us or our franchisees to represent them. Nor can we guarantee a certain commission level to our agents. Ultimately, the insurance companies make the decisions on appointments and commission rates. However, because product access helps make franchisees successful, we have developed a proactive approach with insurance companies.

Brooke has created a company marketing team to coordinate relationships with insurance companies. Many of the team members have years of insurance experience and insurance company backgrounds, which provide them valuable insights. The following is the first of a series of monthly “musings” to help franchisees better understand the role of the company marketing team.

There are many factors that make one insurance company more attractive to our franchisees than another company. So in our dealings with companies, we work to improve our relationship with the carriers on several fronts, such as “ease of doing business,” geographic availability, product availability, commissions and other important factors. Negotiations can be a balancing act between these many considerations. Although commission levels are only one of several factors, we know that many Brooke franchisees are experiencing the effects of a “soft market.” Soft markets are characterized by lower insurance premiums, which result in lower commissions for insurance agents. As a result of the soft market, many of our seasoned franchisees have experienced a decrease in revenues and have asked for increases in commission rates to help offset decreases in premium rates. For this reason, we want to highlight the role of the company marketing team in negotiating with insurance companies for competitive commission rates whether the markets are “soft”, “hard” or “just right”.

The company marketing team coordinates research and negotiation of competitive commission rates. To help ensure that commission levels are competitive, Brooke:

• Generally negotiates directly with senior insurance company management
• Regularly meets with insurance companies to discuss commission rates
• Requires those negotiating with insurance companies to certify to Brooke Franchise executive management each month that their negotiations have not been to Brooke Franchise’s advantage at the expense of a lower than “street level” rate to our franchisees.

Written monthly certifications delivered to Brooke Franchise’s executive management may be viewed through BMS and include the following certifications by each regional manager, area manager and company marketing team member for negotiations during the month.

• I have not entered into any insurance company supplier contracts in which Brooke Franchise Corporation is receiving a commission override, bonus payment, or profit sharing that reduces the franchisee commission rate lower than the standard (street level) commission rate offered by the insurance company supplier.
• I have not caused the termination of an insurance company supplier contract due to requiring said company to provide commission, bonus payment, or profit sharing.
• I have not removed an insurance company supplier from any franchisee’s company list based on said company’s failure to provide commission overrides, bonus payments, or profit sharing.

In addition to negotiating competitive commission rates, Brooke negotiates with insurance companies for performance based profit sharing, overrides and marketing agreement payments to Brooke. Some insurance companies also offer contingency agreement payments to Brooke. These additional payments are typically based on profitability with some volume requirements, which allow Brooke to receive payments based on the purchasing power of the entire franchise network without decreasing the rates of commissions paid to franchisees. Although we are not required to pay these amounts to franchisees, we have invested an amount equal to or more than these additional payments from insurance companies in the franchise brand in the form of cooperative advertising reimbursements, discounts on logo supplies and advertising professional expense.

As the result of the carrier relationships coordinated by the company marketing team, many insurance companies also support our franchisees by participating in the national convention, local franchise meetings and producer development programs.