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

another producer’ for a public broker hoping for the occasional stock option. The fact that we can offer stock to the high-performing producers who are growing our agency is a real advantage to us in becoming the ‘employer of choice’ in our community.” Almost 60% of agencies in this group intend to perpetuate their business internally. Active involvement in the community was also identified as a key competitive advantage. “People like to do business with people also doing business locally,” one agency owner said. “The fact that we’re sponsoring your son’s little league team and sitting across from you at the Rotary meeting – that counts for something around here. At the end of the day, insurance is all about personal relationships and we never forget that.” Carrier representation was also viewed as a key competitive advantage by agencies in this group. The average agency represents 3.7 and 5.3 national and regional personal P&C carriers, respectively. For commercial P&C business, the average agency represents 5.7 and 9.5 national and regional carriers, respectively. Total revenue from the top P&C carrier averaged 24.0%.

Keys to Maximizing Productivity

(Top 5 Listed in Order of Frequency Mentioned) 1. Maximizing technology usage

2. Writing profitable business

3. Education / training

4. Standardization of procedures

5. Quality of employees

management systems – fewer and fewer providers are used by agents. Over 90% of Best Practices agencies in this revenue group use either Applied or AMS agency management systems. The average agency continues to leverage technology heavily in order to ensure maximized productivity – 80% scan and manage documents electronically and 93.3% have dedicated websites. The average Best Practices agency dedicates 1.3% of net revenue to IT expenditures (hardware/software, leasing, maintenance, data lines, ISPs, outside consultants, etc.). Another key trend contributing to increased productivity continues to be transitioning from agency to direct bill – 68.6% of P&C revenue is now collected at the company level for the average Best Practices agency in this group. Interestingly, only 3.4% of agencies in this Best Practices group use service centers for commercial P&C accounts – none use them for personal P&C business. Not surprisingly, people are identified as the most common competitive advantage. A culture oriented towards internal perpetuation was also frequently cited as a competitive advantage – particularly in recruiting talented producers. One agency owner said it this way: “Let’s face it … this is an entrepreneurial business that attracts salespeople who want some skin in the game. The best in this business don’t want to be ‘just Gaining a Competitive Edge

Keys to Achieving a Competitive Advantage (Top 5 Listed in Order of Frequency Mentioned) 1. The quality of our employees

2. Community presence

3. Carriers

4. Internal perpetuation

5. Service to customer

32 2007 Best Practices Study | Agencies with Revenues Between $1,250,000 and $2,500,000 | Executive Perspectives