The Commission Conflict in Insurance Sales

Dave and Jason Watt talk about the quiet conflict in insurance sales and how big commissions can shape what gets recommended.

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I remember, this is 30 years ago, one of the presidents of one of the insurance companies, so if there’s a bias here, it’s for the insurance company. Had a great line to me. He said, “Dave, you know, you’re critical of some of the things we do.” And he said, you’re not wrong. He said the actuaries and our people come up with a product that is good in some circumstances, then marketing grabs a hold of it and all of a sudden it’s good in most circumstances.

And then the agents grab a hold of it and all of a sudden it’s great in all circumstances. And he said that’s kind of the pattern that we’re always fighting. And 40 years later, I’m not sure that’s changed a whole lot.

I think one of the issues there too it’s impossible to ignore the compensation that somebody can earn in that space. You have the, again, my pharmacist example. Pharmacist shows up.

It seems like they can write a check for $50,000 a year to pay premiums outta their corporation. I’m the insurance agent who’s sitting across from that person.

I know that’s gonna turn into a fairly healthy check in my pocket. That might be about an $80,000 commission that I’m gonna earn on the sale of that product. That’s a lot of money, and it’s, I think, naive to suggest that there’s not some conflict there.

Yeah. Even subconsciously, I mean, you’re, you’re going to be influenced by that and, and not look high and low.