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Analysis of Agencies with Revenues
Between $2,500,000 and $5,000,000
C
OMMUNICATIONS
–
E
MPLOYEE
, C
LIENT
,
AND
C
ARRIER
“Empowered employees want to know
where the agency stands relative to the
larger goals.”
“We have no excuse for not letting our
employees know how we are doing.
They are the ones doing the work.”
“Some of our insurance companies
think that they are in a lesser position
in our firm. By showing them the
numbers, it helps communicate where
we stand relative to our goals, and
shows them what they need to do to get
to their goal.”
Many agencies have taken great efforts to enhance their level of
communication with their employees, clients, and insurance carriers.
Practices such as annual reports of the agency’s operations
outlining financial and operational results, monthly or quarterly
newsletters, and other communication tools are becoming regular
practices of the leading agencies. In regard to communications with
employees, there is clearly an increased openness to share
financial and operational data with employees. By doing so,
employees are brought into the decision making process so that
they can influence the results. Many of the best agencies
communicate goals annually, and let the staff know the progress
made towards the goals.
In regard to client communications, the use of email is clearly a
practice of the leading agencies. The opportunity to do broadcast
emails and the opportunity to periodically make proactive contacts
with clients has become a practice of the leading firms.
Finally, in regard to communications with carriers, several firms
indicated a willingness to “open the books” with their carriers to let
the company know exactly where they stand relative to the other
carriers with the agency. While many of the leading firms remain
reluctant to do this, enough of the agencies interviewed are sharing
specific premium volume of other carriers, that the practice was
worth noting here.
F
INANCIAL
M
ANAGEMENT
“The budgeting process has eliminated
many of the disagreements that the
shareholders used to have about spending
money. We budget at the beginning of
the year, and then manage exceptions to
the budget. If it serves our clients and
employees, we spend the money.
Otherwise, we don’t.”
“We recently hired a new producer. Our
Controller helped us measure the return
on investment given a number of
different assumptions. The returns can
be so high for a successful producer that
it got all of the other producer/owners
invested in this person’s success.”
For the
Best Practices
agencies in this study group, financial
management goes beyond preparing the annual budget, keeping
receivables in check and monitoring the P&L statement. Decisions
regarding producer hiring, automation utilization, productivity
measurements and profitability are better made with a full evaluation
as to the operational and financial impact to the firm.
With mergers, acquisitions, the purchase of books of business and
the other significant financial commitments that face these agencies,
confidence in the financial modeling, and the ability to create
“financial accountability” is clearly a critical success factor.
As a result, these agencies have elevated the responsibility for the
financial management of the agency to a more strategic position.
Increasingly, they have someone in the position of financial
manager who possesses the skills to provide the critical thinking
and analysis to help management properly evaluate decisions and
measure success.
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