It’s an oft-repeated saying that the career of an insurance agent can be fulfilling, but the important question on people’s minds is is it profitable? After all, anyone who decides to pursue a career as an insurance agent for the long term will need to know that this is a viable career path that can pay their bills.
The bottom-line question most people want an answer to is, how much does an insurance agent make in Canada? Those of you who are on the fence about pursuing an insurance sales career may also want answers to know the answers to these:
If you’re an average consumer who’d like to know how much your insurance agent earns or are considering a career in insurance yourself, then this guide may prove useful. In this article, you can find everything you need to know about the earnings of an insurance agent in Canada.
On average, an insurance agent in Canada can earn around $54,600 to $58,890 a year. That’s 4,550 to $4,907.50 a month, or $21.87 to $23.59 an hour.
Here’s the average hourly and annual wages of insurance agents in Canada broken down by lowest to highest, according to figures from prosfy.com:
|
Percentile wage estimates for insurance agents in Canada |
||
|
Percentile |
Yearly wage |
Hourly wage |
|
25% |
$48,000 |
$19.23 |
|
50% (median) |
$51,000 |
$20.43 |
|
75% |
$56,050 |
$22.46 |
Note that the figures for the 1% and top 10% earners among insurance agents in Canada are not disclosed.
Insurance agents typically earn via commissions. How much an insurance agent earns can vary depending partly on their commission structures. The commission percentage they receive can be higher or lower, depending on the type of insurance, the type of insurance agent, and in which industry they offer it.
There are a few factors that can determine if agents selling insurance earn higher or lower commissions. Several factors including the type of insurance, the type of agent, and commission structures impact how much an insurance agent can potentially earn in Canada.
The type of insurance can greatly influence the commission and commission rates that an insurance agent can earn. Here are the common insurance lines in Canada and their respective commission rates:
This includes auto and home insurance, and if the insurance agent is independent, agents can earn commissions of around 15% for new policies and 2% to 15% commissions for renewals.
Independent insurance agents can earn 40% to 115% of the first-year premiums for new policies, and then 1% to 2% in commissions for renewals.
Commissions in commercial lines insurance varies according to the line of business. Here are the varying commission rates:
This type of insurance is a comprehensive form of coverage that protects a business, its employees, and the public. It’s a combination of employer’s, product, and public liability insurance. The commission rate for this insurance is 12.5%.
It’s ironic that in today’s hyper-connected business environment, a lot of Canadian businesses that need cybersecurity insurance don’t have it. But the clients and businesses that do have it typically pay 20% in commissions to insurance agents.
Another factor that affects commissions is the type of insurance agent. The standard industry practice is for insurance providers to contract insurance agents to sell their products. Here are the two most common categories of insurance agents and how much they can earn:
Captive agents work exclusively with a single insurance company or agency. The commissions they earn can be smaller, usually at 5% to 10%. This is because they can only offer the insurance products of the insurer they work for. Another reason why their commissions can be smaller is that they may get a monthly insurance agent salary apart from commissions.
It’s not unusual for some insurance companies to provide their captive agents with additional perks like health and retirement benefits, and access to marketing and administrative resources.
Compared to a captive agent, an independent agent can earn more in commissions, typically around 15% for new policies. Independent insurance agents can receive 1 to 2% commissions for policy renewals.
While they do not receive a salary, independent insurance agents have the freedom to sell products of different insurance carriers. An advantage of this is that they can offer a broader range of products to their clients from as many insurers as they like.
In general, an independent insurance agent is the higher-earning agent between the two. Aspiring insurance agents should keep in mind, however, that while they can earn more in commissions from more insurance products, this depends on their ability to close insurance sales. Also, independent agents pay for office space, marketing, advertising, and other expenses which can take a bite out of their commissions.
The location at which an insurance agent resides or which region or market they service likewise has an impact on their earnings. The more developed and more densely populated a province or region is, then the higher the demand for insurance.
And since the cost of living is also higher in more urbanized areas, the clientele is often wealthier, raising the cost of premiums and commissions. Here is a list of some of the earnings insurance agents can expect in certain parts of Canada:
|
Province/region |
Annual earnings |
|
Ontario |
$75,000 |
|
Alberta |
$72,500 |
|
Nova Scotia |
$55,000 |
|
Québec |
$54,873 |
|
British Columbia |
$53,625 |
|
New Brunswick |
$48,750 |
|
Saskatchewan |
$45,328 |
Source: talent.com
These factors can significantly affect an individual insurance agent’s earnings as well. There is a direct relationship between an agent’s level of education, years of experience, and qualifications – the higher they are, the higher their earning potential.
Those considering an insurance agent career and want to maximize their earnings should specialize in the types of insurance that pay the highest. Keep these types of insurance in mind for the biggest commissions:
This is one of the most lucrative types of insurance, mostly because of its commission structure. Life insurance agents can earn substantial upfront commissions, ranging from at least 40% to as high as 100% of the policy’s premiums in its first year.
Commissions from life insurance policies can continue in the following years at lower rates, translating into long-term earnings for savvy agents who know how to maintain good client relationships.
Individual health insurance policies and supplemental health coverage can give agents competitive commission rates. Health insurance agents can expect to earn 5% to 20% of the premiums of new policies they sell. Other specialty health insurance products like critical illness insurance can give even higher commissions due to their low volume and complexity.
Insurance that gives coverage against various business risks can be lucrative as well. The commission rates here are significantly higher than those in personal lines. Commissions from this type of insurance can range from 10% to 20%, depending on the nature of the business and the risks involved.
Insurance policies for businesses like commercial property and business liability insurance can offer more substantial commissions due to the size of their policies.
Personal auto insurance gives lower commissions, but since this insurance is required across Canada, insurance agents can make substantial amounts by going by volume. Commissions on personal auto insurance can range from 10% to 15%, but agents may earn added bonuses or higher commissions through incentives or multi-policy discounts offered by some insurance providers.
Property, homeowners’ and tenant insurance can offer commissions ranging from 10% to 20% of their premiums. These kinds of insurance may yield substantial commissions, thanks to their larger premiums and additional coverage.
An insurance agent earning modest commissions or compensation may use this as reference and have an idea of which types of insurance to offer to get the most commissions:
|
Insurance type |
Commission rate |
|
Life insurance |
40% to 100% for the first year’s premiums; less on following years |
|
Health insurance |
5% to 20% for new policies; higher rates for more complex policies |
|
Commercial insurance |
10% to 20% depending on the business type and its risks |
|
Auto insurance |
10% to 15% with potential for volume bonuses |
|
Property insurance |
10% to 20% with higher commissions for high-value policies |
The good news about working as an insurance agent is that your average earnings are still well above the salaries of average Canadian workers in general. Those who wish to maximize their earning potential but have the minimum educational or professional qualifications should not be discouraged.
There are many strategies you can use to leverage your position and increase your earnings. For starters, you can choose to offer the more lucrative insurance products like life insurance and commercial insurance. You may search for job opportunities in companies that offer training programs or skills development at no cost to you. You can also try making a lateral career shift to a slightly more profitable profession as a commercial lines broker instead.
In general, the profession of insurance agent can be quite profitable, but realize that it does take some time and considerable effort and investment into your own skills and credentials to maximize earnings.
Knowing how much insurance agents make in Canada, does this career path appeal to you? Let us know your thoughts in the comments.
