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Drumming up new sales is linked to larger paychecks for health insurance salespeople, a new study has found. The BDO Insights Report also found, perhaps not surprisingly, that insurance company sales reps who focus on national and major accounts are the most highly paid team members.
The report used data from a survey of 1,900 sales positions in insurance companies, drawing its information from insurance agents rather than independent brokers. The study looked at compensation such as base salary, sales incentives, commissions, and corporate incentives. It also examined the use of long-term incentives and plan design information for sales representatives, account managers, inside sales, and customer service staff. And it reviewed data on pay-for performance relationships and how they affect sales incentive plans.
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New sales = highest compensation
The report noted that in the insurance industry, new sales are the area that is most lucrative in terms of compensation. A senior account representative focused on new sales received an average of $181,800 in cash compensation annually, according to the data. A junior representative earns $126,900 in cash compensation.
In comparison, a senior rep who primarily is responsible for account management and renewal work earns an average of $171,800 annually; a junior rep earns $109,600. In the sales and account management role, senior reps earn $151.800; junior reps earn $125,600 annually.
The report noted that the size of the insurance company has a limited impact on how much sales reps are paid. "A comparison of the pay levels for sales representatives at the fourteen largest participants in the survey relative to the thirteen smaller organizations shows that while larger companies lag a bit in base salary, total cash compensation is 3% higher for senior representatives and 6% higher for junior representatives," the report says. "This close alignment in pay levels is the likely result of the need for smaller health insurers to compete head-to-head for talent with larger companies, and therefore requiring them to keep pay levels competitive to attract and retain employees."
In addition, sales reps who sell specialty products only, or both health and specialty products, tend to be paid more than agents who sell only health insurance. The report noted that specialty products may require additional training and certifications for agents who sell such products.
Fewer bonuses, more commission work
The study found that there has been a shift away from sales bonus plans and toward commission plans. "Historically, the most common plan vehicles were sales bonuses or a combination of a sales bonus and a commission plan," the report says. "Last year, the prevalence of commissions exceeded the prevalence of sales bonus plans… This year, the trend continued with an increase in prevalence of commission plans across sales roles." The report added that the prevalence of sales bonus only incentive plans had decreased as much as 12 percentage points.
The report also noted that long-term incentives are not a large factor for most sales roles, but are used more with senior sales roles. They are also somewhat more common at larger organizations.
In conclusion, the report says developing effective sales incentive plans will continue to be a complex issue, one that should be data-driven in order to be more effective.
"Sales incentive plans need to evolve to reflect changes in insurance industry market forces, changes in the talent market, and changes to your company's go-to-market strategy. While overhauls may not be necessary, plans are likely to need updates to keep abreast of current conditions," says Judy Canavan, managing director of global employer services at BDO, and one of the authors of the report.
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