2007 Best Practices Study

Agencies with Revenues Over $25,000,000

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

The principals of these firms were asked to identify the keys to their success. As in the past, the clear consensus is that recruiting talented people – producers and non-producers – is clearly the most important success factor. This year’s study surfaced something new among the top performers. They now mention employee development, and specifically the development of leaders, as a critical issue. One agency principal who was distinguishing between management and leadership shared the insight that “running an agency and growing an agency are two different things.” He was pointing out that it takes a leader to grow an agency. More and more agencies also seem to be focusing on the importance of developing a people-friendly culture that attracts the industry’s best and brightest talent. Agencies that have learned how to sell clients on value rather than simply price are learning how to develop a value proposition for employees that does not simply rely on paying employees the highest wages in their market. Factors Most Critical to Agency’s Success (Top 5 Listed in Order of Frequency Mentioned) 1. Recruiting of talented employees at all levels 2. Development of employees and leaders 3. Develop a winning, performance- oriented culture 4. Opportunity for ownership used to attract talent

Top Challenges (Top 5 Listed in Order of Frequency Mentioned) 1. Growing in a soft market 2. Finding quality sales and support employees

3. Concerns about national healthcare

4. Competing with public companies for acquisitions 5. Maintaining our culture as we expand geographically

Challenges They Face The challenge of growing revenues in an extended soft market is clearly the greatest challenge faced by the Best Practices Agencies. Especially in the hard-hit Midwest and Northeast regions, organic growth has been especially difficult to achieve. The Southeast, Southwest and coastal areas have fared much better during the past couple of years. Several firms noted that finding quality employees from within the industry is getting tougher and tougher, which is necessitating a move to recruit from outside the industry. With that said, nearly 80% of producers hired by this largest group during the past year came from either another broker or an insurance carrier. Collectively, this group hired approximately 200 new producers last year, and roughly 135 of these “switched teams” from one agency to another. A frequently noted concern is the possibility of national health care legislation. As this group has been investing heavily in developing group health insurance business in recent years, the loss of a significant portion of this revenue would be extremely damaging. As a result, this group is keeping a close eye on U.S. political trends.

5. Increasing/sustaining organic growth

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2007 Best Practices Study | Agencies with Revenues Over $25,000,000 | Executive Perspectives