2007 Best Practices Study

Agencies with Revenues Between $5,000,000 and $10,000,000

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Financial Stability

Top 25%

Average

Balance Sheet Current Ratio

1.34:1

1.98:1 27.1%

Tangible Net Worth (% of Net Revenue)

7.2%

Receivables/Payable Ratio

55.4%

9.1%

Aged Receivables

% Receivables Aged Past 60 Days % Receivables Aged Past 90 Days

17.5% 11.2%

2.4% 1.9%

Accounts Receivable

Average

+25% Profit

+25% Growth

Agency Billed vs. Direct Billed by Carrier % of P&C Revenues that are Agency Billed % of P&C Revenues that are Direct Billed

35.4% 61.2%

23.5% 76.5%

33.1% 66.9%

Receivable Management Practices Participants were asked to indicate which practices they utilized and to score the practices’ effectiveness where 1=NOT EFFECTIVE and 5=EXTREMELY EFFECTIVE. 1 2 3 4 5

% Using

Management reviews receivables regularly

96.4%

Have strict collection policy

75.0%

Encourage/require use of direct bill

89.3%

Encourage/require use of premium finance

82.1%

Use pre-billing and binder billing

75.0%

Centralize collections & remove producer involvement

46.4%

Charge producers for bad debt-write-offs

85.7%

% of Premium charged back to Producers for bad debt write-offs: 86.5%

103 2007 Best Practices Study | Agencies with Revenues Between $5,000,000 and $10,000,000 | Financial Stability