2018 Best Practices Study

In addition to using benchmarking to focus on building a culture of continuous improvement, we see agencies using Best Practices benchmarking data to support their strategic planning efforts and to manage employee compensation.

Strategic planning is one of the most important leadership exercises for high-performing insurance agents and brokers. These planning exercises are often fundamental turning points in the lifecycle of an agency and the comparison benchmarking provided by the Best Practices Study can provide key strategic insights and tactical steps in the planning process. Effective strategic planning involves understanding the strengths of the business that give it an advantage, the weaknesses that put the business at a disadvantage, the opportunities that can be exploited and the threats that pose potential future problems. Once these items are understood, plans can be put in place to fortify, pursue or address key areas. “When our management team sits down to map out the future of the Company,” explains one BP agent, “benchmarks play a big role in providing the guardrails for many of our decisions. It forces us to remain focused on all aspects of the business to assure that our chosen metrics remain in line with our financial goals.”

One of the benefits of participating in the Best Practices Study is that each agency receives a detailed Agency Performance Analysis, which provides a comparison of the agency’s results versus that of its peer group. This Agency Performance Analysis serves as a critical tool during strategic planning. As one agent said, “We begin each strategic planning exercise with a deep dive into our Agency Performance Analysis. Before we start talking about where we want to go, we need to clearly understand where we are.” One of the more recent applications of the Best Practices Study is as an objective measure for determining compensation, particularly executive bonuses. Not only do the metrics provide objective measures for performance, but they also provide a comparison reflective of current market dynamics. For executives whose primary responsibility is driving shareholder value, Best Practices metrics can be a very useful way to gauge success. The Rule of 20 metric (addressed later in this paper), serves as a proxy for shareholder returns and is used by many agencies to evaluate executive performance and determine bonus levels. In its 25-year history, the Best Practices Study has established itself as a key resource in many of the industry’s leading firms. The core benchmarking data within the BPS has many applications for today’s agency leaders and is positioned to be a foundation of performance improvement for years to come. We are excited to see where the next 25 years take us.

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