Roger Smith sums up insurance with two words and one contraction.
"It's necessary evil," he said.
Insurance is complicated. Reams of paper arrive in your mailbox -- documents few actually read.
But even if you did sift through the all the numbers, there is one figure you surely will not find: your agent's cut.
Car insurance is required by law; homeowner's coverage is required by many lenders. We have no choice, and likely no idea how much the middleman makes.
When we asked some of the country's top insurers, including Nationwide, State Farm, Liberty Mutual, and Allstate how much of our premiums go back to the agent in the form of a commission, we got nowhere.
Liberty Mutual said: "We do not publicly share our employee compensation policies."
State Farm's reply was similar: "An agent's rate of commission is part of a private business contract."
That's when we asked Ray Bouchard, who runs Bouchard Insurance in Clearwater.
"Your standard rates of commission are anywhere from five percent to 12 percent of the premium," Bouchard said.
Where does that money go? Bouchard says lots of work goes into an insurance policy behind the scenes. And that work requires lots of people.
"We have about 210 employees," he said of his agency.
Simple math tell us that as premiums rise, as they have recently, the agent's commission increases. But Bouchard says it's not that simple.
"When I started in this business many years ago, the commission levels were much different than they are today," he said. "Those numbers have been squeezed."
Still, insurance can be a lucrative business.
Consider Citizens, the state-run insurer of last resort.
A spokesman said the company pays agents a 10 percent commission.
The company's top ten agency (by volume of policies) collected more than $18 in commissions last year alone. On average, $115 of every homeowners' policy in that pool goes directly to the agent.
But that is nothing compared to flood insurance.
The taxpayer-funded National Flood Insurance program is broke. Its debt exceeds $24 billion, according to the Government Accountability Office.
And yet, insurance agents are winning with this loser.
Gary Boulware would know.
"We studied this for about seven years," he said.
Boulware, a University of Florida government professor, authored a nearly 300-page analysis of the NFIP. The scope is far broader than the commission NFIP pays. Yet, page 53 reveals a stunning statistic: insurance agents' cut is close to a third of your premium.
"The private insurance companies which collect the premiums are entitled to 31.8 percent of the annual premium in the form of a commission," Boulware wrote.
By e-mail, the Federal Emergency Management Agency said the figure is closer to 28 percent.
Either way, Boulware said consumers like have no idea that so much of their premium is going to their insurance agent.
"Nobody knows that," he said. "It would be very difficult for you to Google that and find it anywhere other than somebody like myself that has done lots of research."
Can we eliminate our insurance agent? That's only likely with companies that offer "direct" policies.
They advertise heavily to switch. The commercials are comical, and constant. And that's where Bouchard offers a warning.
"Somebody's paying for that," he said.
That someone...is you.
FOX 13 / WTVT-TV
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