2001 Best Practices Study

Analysis of Agencies with Revenues Less Than $500,000

“Over the years we have written some large accounts when the market was hard, so when we made the money we put it aside. We didn’t spend that money but invested it wisely. We have been able to weather several rocky periods without borrowing money ... and, we finance everything in house. Not having any interest expense helps considerably.” “We do not live or die on selling just P&C. We also sell L&H, pension plans, mutual funds. With 92% of our accounts we have at least two lines of business or more. When we sell the client life insurance we know that, if for some reason we lose the P&C, we will retain the account because they are not likely to change their life insurance. We almost always get the P&C back.” “We stress account selling pretty heavily and continuously. If we are out at a farm in June selling hail insurance, we can usually get them to look at their risks and usually end up selling something else.” “Gaining the endorsement of the restaurant association has allowed me to market statewide where the calls roll in daily. What a great way to do business!”

At the same time, most successful smaller agencies do not use their size as an excuse for not successfully managing their finances. The typical agency in this study group is good at managing its receivables, keeping sufficient trust balances and investing properly the cash they have. More often than not, the principals of these insurance agencies prepare budgets in order to respond to the cyclical nature of the flow of their business, to prepare for capital expenditures and to measure their performance. R EVENUE G ROWTH Strategies for growing revenues in this study group run the gamut. Several have specialized in targeted niches and gained endorsements from associations or other trade groups while others have gravitated to offering their clients complete solutions – property & casualty, life & health and financial services. The top agencies in this study group appear to have fairly strong sales cultures with a focus on either developing strategic alliances or on account development and cross selling (although many see this focus as providing better service to the client.) Production goals and commission income are monitored very closely. Referrals are actively solicited and local advertising and community involvement are used to build a good stream of business.

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