PIA to NYC: Setting the Record Straight on Agent Commissions

May 19, 2021

WASHINGTON – In written and oral testimony before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Rebecca Kagan Sternhell, the Director of Federal Affairs for the City of New York, incorrectly stated that agents receive a 30 percent commission each year on flood insurance policies backed by the National Flood Insurance Program (NFIP).


“That is just not true,” said PIA National Vice President of Government Relations Jon Gentile. “Independent insurance agents are not earning 30 percent commission for selling NFIP policies.”

“Ms. Sternhell apparently conflated two different entities, both of which contribute to the value policyholders receive when they purchase an NFIP policy,” Gentile said. “The first is the Write-Your-Own (WYO) insurance carrier, which receives approximately a 30 percent reimbursement payment from the federal government for writing and servicing NFIP policies. The second is the independent insurance agent, whose commission is paid by the WYO out of the reimbursement funds it receives. Neither the WYO nor the agent retains the full 30 percent payment—not in the year the policy is initially issued and not in any subsequent year.”


Most policyholders are unaware of the work independent agents invest in them throughout the policy year. Independent agents are in regular communication with consumers concerning payments, cancellation notices, mitigation options, and mapping changes. They engage in discussions with mortgage companies if ownership of an insured property, particularly in a mandatory flood zone, is changing hands. Throughout the year, changes in underwriters’ understanding of a property’s risk can necessitate the purchase and development of an Elevation Certificate (EC), additional flood proofing, and new photos.


Perhaps most importantly for consumers, independent agents stand with their policyholders after a flooding event, even when that event also affects their own homes and businesses. “Considering all the work agents do throughout the year and in the aftermath of floods, PIA would be pleased to discuss increasing the compensation for independent flood agents,” he added.


Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance but specialize in coverage of automobiles, homes, and businesses. PIA’s web address is http://pianational.org.