2001 Best Practices Study

Analysis of Agencies with Revenues

Between $500,000 and $1,250,000

ARRIER

ELATIONSHIPS

“We identified our ’sweet spot’, i.e. the

type of business that we excel at

writing, and concentrated on it so that

we could deliver it to the companies very

efficiently and profitably. On a

proactive basis we align ourselves with

those carriers that want the business in

the manner in which we can deliver it.

Technology is a big piece of our decision

to align with a company.”

“Never over-promise but always try to

over-deliver.”

“Our front line staff understands the

importance of saying no to certain

accounts or certain prospects. We won’t

write everything that comes in the door.

We don’t want to jeopardize good loss

ratios by making a careless decision on

the front line.”

The practices used by this group of agencies to build and maintain

productive relationships with their carriers include the obvious:

align the agency with carriers that have compatible

business directions, philosophies, and technology support;

work with the carrier to set realistic production goals;

write good, profitable business that the company wants;

be extremely responsive to the carriers requests; and

build personal relationships at multiple levels within the

company.

Many of the agencies interviewed indicated they met with their lead

carriers on a periodic basis to make sure that the agency was

meeting its commitment to the carrier, and to address any issues

that might be impacting that commitment. They also try to visit the

carrier’s location and encourage company personnel to visit the

agency regularly as a way of developing a closer working

relationship.

While competitive rates, good products, and the contingency

agreement remain key considerations for these agencies, the

carrier’s technology support is becoming critical to the relationship.

ERPETUATION

EADERSHIP

EVELOPMENT

“Our buy-sell agreement spells out how, if

any one of the three people dies, their

ownership interest would be acquired by

one of the remaining two. It’s funded by

life insurance. I own a policy on my

parents and they own one on me. The

intention is for me to acquire their

interest in the agency over time and that

is being done through a schedule of

gifting each year, as well as an ultimate

buyout of some kind, at our discretion. It

would be facilitated if one or both of them

passed away.”

Perpetuation is a major challenge and weakness for these

agencies.

Those that have a formal perpetuation plan in place feel they have

addressed the major issues. They know:

(1) to whom they want to transition the ownership,

(2) when they want to begin the transition, and

(3) how they will do it – including the preparation of the legal

and funding vehicles and training of the new leadership.