2007 Best Practices Study

Agencies with Revenues Between $10,000,000 and $25,000,000

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Keys to Their Success

Top Challenges (Top 5 Listed in Order of Frequency Mentioned) 1. Soft P&C market conditions 2. Developing and maintaining sales culture 3. Finding, developing and retaining employees

Not surprisingly, people issues are at the top of the list for factors most critical to agency success. Hiring and retaining the right people were viewed as the primary keys to success. As one agency owner put it, “Finding the right people is more difficult than ever – for everyone, not just for us. When we really isolated the cost to replace anyone, from the receptionist to a top- notch producer, it became clear to us that we had to become world-class at keeping the good people we’d already hired.” These “people investments” are indeed significant – 90% of agencies in this group hired new producers last year – at an average wage of almost $70,000 – and 87% of agencies plan to hire additional producers in the coming year. Writing new business remains a high priority for this group as well – new business produced per P&C and Life & Health producer averaged $114,755 and $130,896, respectively. One of the top agents in this group pointed out: “Excellent service is the cost of doing business in this industry, it’s not a distinctive. If you’re not providing great service, you’re going to find yourself out of business. Sales … new business … that’s where the separation between the pretenders and the winners emerges.” Factors Most Critical to Agency’s Success (Top 5 Listed in Order of Frequency Mentioned) 1. Top caliber sales and support team

4. Leadership development

5. Satisfying carrier appetites

Challenges They Face

The soft P&C market continues to take its toll on even the best agencies in the business. Although the soft market was almost universally identified as a major concern, agents in this group nonetheless posted excellent organic growth rates – the average agency in this group grew P&C fee and commission income by 15.5%. Needless to say, to grow at these rates in a soft market, these Best Practices agencies are writing significant volumes of new business. Despite this new business success, the second most- frequently mentioned challenge among for agencies remains the development and maintenance of a sales culture. It is clear that the “sales culture” question is a dynamic, rather than static, issue for even the best agencies – it is not a “once and done” issue, but one requiring constant attention. As mentioned earlier, people are key to success in the insurance distribution business. Recruiting, developing and retaining excellent employees remains a key challenge for Best Practices agencies in this group. With regard to insurance carriers, company consolidation, higher and higher volume requirements and a perception of ever-changing strategies are frequently identified as primary challenges.

2. Low employee turnover

3. Relentless focus on generating new business

4. True partnership with key markets

5. Constantly measuring, adjusting and improving

117 2007 Best Practices Study | Agencies with Revenues Between $10,000,000 and $25,000,000 | Executive Perspectives