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

(systems, software and training). They have also reached the size where they need full-time IT managers and spend just under 1.0% of their net revenues on IT personnel compensation.

Maximizing Productivity

Perhaps the best measure of productivity for an insurance agency remains the revenue-per-employee metric. In this year’s study, the average agency generated $180,451 in revenue-per-employee. In the 2004 Best Practices Study , comparably-sized firms in generated $154,848 in revenue-per-employee – this year’s results reflect an improvement of 16.5% in only short three years. It is interesting to note that material improvements in productivity are still being made today, even after years and years of steady investment in technology, training and procedures standardization.

Gaining a Competitive Edge

Organic growth for agencies in this group totaled 17.0%, a clear indication that this group of agents is highly competitive in the marketplace. These results, good in any environment, are especially noteworthy in light of the current soft P&C market. Not surprisingly, key to remaining competitive include a relentlessly focus on service excellence, retaining employees, niche marketing and adding value for the customer at every step. In an environment in which many agents & brokers offer essentially identical “product” at identical pricing, remaining distinctive becomes increasingly challenging. One agent’s challenge, however, is another agent’s opportunity - as one agent puts it, “If you can’t distinguish yourself in this marketplace, you’re in the wrong business. A little innovation in our drab industry goes a long way. Once you’ve got a prospect asking himself why his agent isn’t thinking outside the box like you are, ‘game over.’ People are dying for creative thinking and solutions to their risk exposures.”

Keys to Maximizing Productivity

(Top 5 Listed in Order of Frequency Mentioned) 1. Measure / monitor / adjust every aspect of business 2. Doing things the right way the first time

3. Thorough and non-negotiable systems and procedures

4. Ongoing investments in automation and training 5. Eliminating unprofitable account relationships

Keys to Achieving a Competitive Advantage (Top 5 Listed in Order of Frequency Mentioned) 1. Low employee turnover 2. Focusing new business efforts on strategic opportunities

Another excellent measure of productivity is commission serviced per CSR. The top commercial P&C CSRs in this group of agencies were able to manage books averaging $620,000 in commission income. Group Life & Health and Personal P&C CSRs in this Best Practices group were able to manage books averaging $352,000 and $175,000 in commissions, respectively.

3. Developing niche business expertise

4. A relentless commitment to service

5. Seeking to add value in every client encounter

The average agency in this revenue group invested 1.9% of net revenue in information technology

118 2007 Best Practices Study | Agencies with Revenues Between $10,000,000 and $25,000,000 | Executive Perspectives