2007 Best Practices Study

Agencies with Revenues Between $2,500,000 and $5,000,000

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Financial Stability

Top 25%

Average

Balance Sheet Current Ratio

1.15:1

2.03:1 26.8% -3.5%

Tangible Net Worth (% of Net Revenue)

8.9%

Receivables/Payable Ratio

43.4%

Aged Receivables

% Receivables Aged Past 60 Days % Receivables Aged Past 90 Days

5.0% -1.7%

1.4% 0.3%

Accounts Receivable

Average

+25% Profit

+25% Growth

Agency Billed vs. Direct Billed by Carrier % of P&C Revenues that are Agency Billed % of P&C Revenues that are Direct Billed

32.1% 64.5%

29.4% 70.6%

38.1% 61.9%

Receivable Management Practices Participants were asked to indicate which practices they utilized and to score the practices’ effectiveness where 1=NOT EFFECTIVE and 5=EXTREMELY EFFECTIVE. 1 2 3 4 5

% Using

Management reviews receivables regularly

100.0%

Have strict collection policy

83.3%

Encourage/require use of direct bill

93.3%

Encourage/require use of premium finance

86.7%

Use pre-billing and binder billing

90.0%

Centralize collections & remove producer involvement

43.3%

Charge producers for bad debt-write-offs

66.7%

% of Premium charged back to Producers for bad debt write-offs: 78.0%

75 2007 Best Practices Study | Agencies with Revenues Between $2,500,000 and $5,000,000 | Financial Stability