One of the pillars of the U.S. economy is the number of new businesses and small businesses that provide jobs and services in their respective communities. And behind each of these small operations is most likely a single entrepreneur whose imagination is fueled by the thought of engaging in some industry such as operating a restaurant, a print shop, or automotive center. For the small business owner/operator, the focus is on building the business and meeting the numerous federal, state, and local administrative regulations is generally an unwanted distraction. Of those regulations, meeting a state's workers' comp requirement is one of the most important, since failure to do so can result in significant fines. Study after study also has found that workers' comp insurance costs represent a major impact on a business's bottom line. For that reason alone, an employer's insurance agent is as important and necessary as the employer's accountant, lawyer, or financial advisor.

The Agent's Role

The agent's primary role is to serve as the middle person between the employer and an insurance company. Agents work in everything from large brokerage firms to "mom and pop" operations, which may be located in small storefronts. For the most part, agents are paid on a commission basis, which are paid by carriers based on a percentage of an employer's premiums. According to studies conducted by such groups as the Council of Insurance Agents and Brokers, the average agent's commission on a workers' comp policy ranges anywhere from six percent to 10 percent. In the event an agent has a larger client, the commission rates can even be higher, or include a bonus.