Contingency, often referred to in various terms like “bonus,” “profit sharing,” or “growth incentives,” represents a form of revenue an agency owner can earn beyond just the baseline commissions from writing policies. Essentially, it’s additional income tied to the performance and profitability of the agency. Not every agency qualifies for it, but many have the opportunity to earn it, and it typically depends on three key factors: size, growth, and loss ratio. Larger agencies with strong profitability stand to gain the most from contingency, but smaller or newer agencies can also benefit, even if the initial amounts are relatively small.
Why Contingency Matters
Many agencies hit a plateau in their growth, often due to a lack of contingency income. Unlocking this revenue stream can be a game changer. Whether it’s a few hundred dollars or tens of thousands, it all can be meaningful. For some startup agencies, even modest contingency payment can help alleviate financial pressure. If the agency is financially stable, they could see significant contingency payments that enable broader growth strategies. Having this extra capital allows agencies to reinvest in their growth, expand their team, and stand out in a competitive market.
Reinvesting in the Community
Contingency doesn’t just benefit the agency—it can also be a means to give back to the community. Creating new job opportunities can help your agency on multiple fronts. Not only is it providing a job for someone in your community but it could help your agency share the workload so you could have time to volunteer at your favorite charity. Access to extra revenue can have a positive impact on the community by allowing the agency to sponsor a local youth sports team or giving back where there is a need. Investing in the community builds stronger relationships and demonstrates that success goes beyond just business growth.
Final Thoughts
The opportunity to earn contingency income is one that agencies of all sizes should explore and maximize. It’s a valuable resource for growth, reinvestment, and community support. If you’re not already taking advantage of it, now might be the time to consider how to unlock this revenue stream.