2010 Best Practices Study

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

Mgmt. Perspectives

To be successful in the current market, agencies“simply need more at-bats”. They have implemented more aggressive sales and marketing plans and are leveraging relationships by staying active in the community, asking for referrals, and working on centers of influence. Another agent stated, “take care of people and they will take care of you”. Adjusting toHealth Care Reform One of the most discussed and debated topics in recent history came to a head in 2010. Comprehensive healthcare reform became a reality. This was of specific interest to insurance agents and brokers as the group life and health business will be directly impacted by the reform. Although the law has been passed, uncertainty as to what the final outcome is uncertain as the regulations associated with the law have largely yet to be written.

services including COBRA administration and wellness”.

Profile

Others are continuing to grow the group benefits book. Many feel that clients will need an agent “to guide them through the process” and are shifting to a fee versus commission basis. Facing Challenges Successful agents and brokers, despite their successes, continue to face challenges. Many of the aforementioned items, while successful steps have been taken to address, continue to present challenges for agents and brokers. Since there are no “silver bullets”, these items require constant attention as successful agents and brokers constantly adapt to changing environments. Recruiting and developing talent remains the top challenge. The struggle to recruit, train and retain good talent continues. Moreover, as the baby boomer workforce nears retirement, the issue is more prevalent than ever and the implications far reaching. The near term retirement of the first Baby Boomers combined with the pressure placed on the company by the aforementioned economic conditions is placing a strain on agency perpetuation plans.

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Staff Service Info

Technology

Insurance Carriers

Appendix

Top Adjustments (Top 5 Listed in Order of Frequency Mentioned) 1. No Action at This Time 2. Increase Communication with Clients 3. Selling Ancillary / Volunteer Products 4. Expanding Value Added Services 5. Growing Book

Top Challenges (Top 5 Listed in Order of Frequency Mentioned ) 1. Recruiting and Developing Talent 2. Economic Conditions and Soft Market 3. Expense Control 4. Perpetuation 5. Carrier Pressures

As a result, the successful agents and brokers have taken different steps to address this issue. Surprisingly, the most mentioned action taken in light of healthcare reform is to do nothing. As one agent stated, “we view this as an opportunity, but we are not making any adjustments”. Others stated that they are “still evaluating” or “have made no adjustments”. Others are taking a more proactive approach and trying to stay on the cutting edge of development by increasing communications with clients. One stated that “we are educating our customers of the specific impacts of healthcare reform on them”. Expanding into other product lines, including ancillary and voluntary products, is another common characteristic of successful agent and brokers. In doing so, they believe they can replace, and possibly exceed, the level of business that may be lost as a result of healthcare reform. Successful agents and brokers are also expanding their value-added services for the employee benefits business. One agent stated that they “developed a wellness plan to offer services above and beyond.” Another stated “we are trying to bring value added

The impact of the depressed economic environment combined with the persistent soft market was the second most often mentioned challenge. While successful agents and brokers have developed strategies to generate organic growth under these conditions, the economic environment and soft market is also placing pressure on their profit margins. Therefore, controlling expenses was the third most mentioned challenge. Successful agents and brokers are responding by “examining every dollar they spend” and “maximizing productivity of our employees.” Finally, brokers are also dealing with pressure from insurance carriers. This takes many forms from pressure to increase volumes to reductions in contingent income. These issues can also be linked to the depressed economic environment and the continued soft market.

2010 Best Practices Study

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

64