2007 Best Practices Study

Agencies with Revenues Between $1,250,000 and $2,500,000

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Top Challenges (Top 5 Listed in Order of Frequency Mentioned) 1. Finding the right employees

Keys to Their Success

To quote management guru Tom Peters, when asked to identify everything you need to know about strategy, “It’s the people, stupid.” Perhaps no other “success factor” is rated more highly or consistently in this study, regardless of agency size. Great insurance agencies employ great people – great leaders, great sales people, great support staffs. This is true of all Best Practices agencies – recruiting, hiring and retaining the best talent available remains the most fundamental distinctive. This “people investment” is significant – the average agent in this group devoted 57.9% of net revenue to compensation and 56.7% of agencies plan to hire at least one new producer this year. New business results for this group speak to the quality of the sales professions employed – the average new business results, per producer, totaled $83,994 (commercial P&C producers), $36,674 (life & health producers), $42,293 (personal P&C producers) and $71,634 (multi-lines producers). Likewise, support personnel in this Best Practices group score very high in terms of average business serviced per CSR - $294,719 (commercial P&C CSRs), $220,803 (life & health CSRs), $155,214 (personal P&C CSRs) and $247,760 (multi-lines CSRs). Factors Most Critical to Agency’s Success (Top 5 Listed in Order of Frequency Mentioned) 1. The quality of our employees 2. Our markets (aggressive, available and competitive)

2. Finding talented producers

3. Carrier relations / soft market conditions

4. Company consolidation

5. Developing a sales culture

Top Challenges

Finding the right people continues to be a challenge for Best Practices agencies. As one agency owner put it: “It used to be, our biggest issue was finding and developing young producers. That’s still an issue and it probably always will be. But now, we’re also having a really tough time hiring good support people. Finding well-educated, intelligent and motivated employees, even those we’re willing to train from the ground up, is really tough for us.” Market conditions continue to provide challenges as well. The ongoing soft P&C market and marketing issues on coastal exposures were identified by many agents in this group as primary challenges. As a result of these and other issues, the average agency in this group grew organic revenue by 10.4%, the same rate achieved in the 2006 Best Practices Study. With the current soft market, a common refrain is “we have to sell a lot of insurance just to stay even.”

Maximizing Productivity

Productivity metrics for these Best Practices agencies speak to a very high level of productivity: the average revenue-per-employee for this group totaled $144,801, a level formerly reserved for much larger agencies. Technology and procedures standardization are two issues often noted as the reason for these impressive productivity results.

3. Service focus

4. Our use of technology

5. The quality of our clients

Consolidation continues in terms of agency

31 2007 Best Practices Study | Agencies with Revenues Between $1,250,000 and $2,500,000 | Executive Perspectives

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