2001 Best Practices Study

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

C OMMUNICATIONS –

“It’s amazing the impact a quick ‘thank-you’ e-mail to an underwriter or employee who’s gone out of their way to help you can have, especially if you carbon-copy their immediate supervisor.” “We have strict rules regarding our use of voice mail. It is not there for our employees to use it to screen their calls. We are in business to answer our phones. If we don’t, someone else will.” “Everyone in the agency meets early for breakfast every Monday morning for an hour to get all our issues on the table before the phone starts ringing. Overall it is the most productive time any of us spend all week.” “We have an expected pretax profit margin each year and we manage expenses to ensure we get there. ” “Our producers have 90 days to collect on an account. After that, it’s passed on to our collections person and the producer is never paid their commissions, regardless of whether we eventually collect on it. Producers are paid only on those accounts that are collected inside three months.” “We started compensating new business producers differently than our account sitters. It’s okay if you have a few account sitters - I guess that’s inevitable and they have their place, but you sure better pay them differently than you pay the guys who are shouldering the new business load.”

E MPLOYEE , C LIENT , AND C ARRIER Best Practices agencies continue to work hard to ensure effective communications both internally and externally. They continuously evaluate the most effective methods of achieving it. Although email and voice-mail, when used correctly, are wonderful tools to connect agents, insurance companies, and consumers, improper use of these technologies can create additional work or cause considerable frustration when face-to-face communications would be simpler. Our Best Practices agencies work hard to ensure that face-to-face communications are available when needed (both internally and with carriers & customers) and that technological solutions are used extensively when appropriate. A number of Best Practices agencies we interviewed indicated that, in this day of electronic connectivity, weekly agency or department-wide staff meetings are more important than ever.

F INANCIAL M ANAGEMENT

For agencies in this revenue size group, a significant financial orientation begins to emerge among Best Practices agencies. Few agencies are able to grow to this size and sophistication without a careful eye on the bottom line and the financial resources necessary to grow. In addition, the increased number of owners generally associated with these larger agencies requires a more broad-based orientation towards managing the agency “investment” for the benefit of many. A common list of financial management issues emerge with Best Practices agencies of this size: establishing appropriate compensation levels, aggressive collection practices, avoiding investments in non-operating assets, cash flow management, overnight investment vehicles, and operational budgeting.

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