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2007 Best Practices Study | Agencies with Revenues Under $1,250,000 | Executive Perspectives
Appendix
Insurance
Carriers
Technology
Service
Staff Info
Producer
Info
Employee
Overview
Financial
Stability
Revenues/
Expenses
Executive
Perspectives
Profile
Agencies with Revenues Under $1,250,000
Changing Agency Demographics
In prior years the annual Best Practices Study has
included an “Under $500,000” revenue category. This
year the study combines the “Under $500,000” group
with the “$500,000 - $1,250,000” revenue group.
This change addresses the challenge of identifying and
maintaining an adequate number of outstanding small
agencies to study. Many of the agencies nominated
to participate decline to do so because the time
commitment is too great or, if they do participate,
they quickly outgrow the category.
Combining the two revenue categories also reflects
what other industry research indicates – that the
number of smaller revenue-sized agencies is declining
while the typical agency is getting larger. This trend,
however, does not mean the small agency is doomed.
A majority of the top-performers in this new revenue
category had total revenues under $725,000.
Keys to Their Success
Having access to good stable markets and maintaining
those carrier relationships is always on the list of the
smaller agencies’ Top 5 Critical Success Factors. This
year, however, it is at the top of the list, and
maintaining those relationships provides the key focus
for much of what they do.
Since the majority of the agencies are in communities
of less than 50,000 people, many in rural areas with
declining populations, it is increasingly difficult to
keep good stable markets. As a result, the agencies are
extremely good underwriters. As one principal said,
“We inspect everything. It is not worth jeopardizing a
carrier relationship for a poor risk.”
A focus on “growing revenues” and “being a sales
organization” was very clearly articulated by these
agencies because they need to feed their markets in
order to maintain them. The average organic growth
rate for the group was 9%. The top 25% with the
highest organic growth, however, achieved a growth
rate of nearly 25%. Many have specialized and
developed niche markets and program business that
expands their geographical marketing area from local
to regional, and in many cases, nationally.
Like their larger counterparts in greater metro areas,
many of these agencies rely on networking and
strategic alliances within and outside of their
communities to provide a regular source of referrals.
Whether they are a “generalist” or “specialist”, all rely
on their talented, hard-working staffs to provide
exceptional service which results in strong retention
rates and the ability to cross-sell and fully develop
existing accounts effectively and efficiently.
Challenges They Face
Not surprisingly, maintaining carrier relationships is
the top challenge for the agencies in this group.
Many reside in areas with declining populations
and/or are enduring soft market pricing, both make it
difficult to meet the premium volume commitments
carriers need or want.
Factors Most Critical to
Agency’s Success
(Top 5 Listed in Order of Frequency Mentioned)
1. Accessing and retaining good
carriers
2. Having talented, dedicated staff
3. Providing exceptional client service
4. Focusing on revenue growth /
selling
5. Utilizing technology / efficient
workflows