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2007 Best Practices Study | Appendix
2007 Best Practices Study
Appendix
Insurance
Carriers
Technology
Service
Staff Info
Producer
Info
Employee
Overview
Financial
Stability
Revenues/
Expenses
Executive
Perspectives
Profile
FINANCIAL STABILITY
66. Current Ratio – Current assets divided by current liabilities. A current ratio greater than 1:1 indicates that cash
and assets with short term maturities are sufficient to meet a firm’s short-term obligations.
67. Tangible Net Worth – Total assets minus intangible assets equals total tangible assets. Total tangible assets minus
total liabilities equals tangible net worth. Represents the net value of the corporation if it were liquidated. A
low or negative tangible net worth impacts a firm’s ability to invest in new opportunities, develop new products,
hire new employees, make other capital expenditures and handle stockholder redemption obligations.
68. Receivables/Payables Ratio – Accounts receivable divided by accounts payable. This ratio measures the collection
practices of an agency, with a lower ratio representing more timely collections of those amounts due from
insureds.
69. Aged Receivables - Measures the length of time that receivables are past due (over 60 days, over 90 days)
EMPLOYEE OVERVIEW
70. Total # of Employees (FTE) - Total number of full-time equivalent employees including agency principals.
71. Revenue per Employee - Net revenues divided by the total number of full-time equivalent employees.
72. Compensation per Employee - Total compensation divided by total number of full-time equivalent employees.
73. Spread per Employee - Total revenue per employee minus compensation per employee. While revenue per
employee is a standard for measuring productivity, the “spread” measures the dollars per employee available to
pay all other agency expenses and generate a profit for the agency.
PRODUCER INFORMATION
74. Validated Producer - Producers whose book of business is sufficient to cover his/her wages under agency’s
commission formula.
75. Annual Pay per Producer - Includes compensation that shows up on the producer’s W-2 and resulted from
the producer’s production responsibilities.
SERVICE STAFF INFORMATION
76. Service-Related Personnel - Non-commissioned personnel who have responsibility, either directly or indirectly, to
provide or support service delivery to the agency’s clients.
77. CSR - Customer Service Representative - Positions with the main responsibility of client service or to provide
support in providing client services. Includes Account Executives, Senior CSRs, CSRs, Account Managers, Assistant
CSRs.
78. Selling New Business - Includes total account development (i.e., account rounding, upgrading, and cross-selling)
and may include soliciting new accounts in the absence of a dedicated producer.
79. Customer Service & Processing - Includes activities such as processing new and renewal accounts, issuing
endorsements/ID’s/certificates of insurance, file maintenance, speaking with customers on the phone, company
correspondence, invoicing, etc.
80. Administration - Includes any time spent on non-customer service functions such as training, education,
receptionist duties, internal meetings, agency matters, general clerical duties, etc.