2010 Best
Practices Study
Agencies
with Revenues
Under $1,250,000
4
Analysis of Agencies with Revenues Under $1,250,000
Mgmt. Perspectives
Profile
Revenues
Expenses
Profitability
Employee Overview
Producer Info
Staff Service Info
Technology
Insurance Carriers
Appendix
this group of agencies has been “more active than ever
to attract new business.” They used multiple channels,
not to mention the tried and true…”ask existing
customers for more business!”
Adjusting to Health Care Reform
Typically, life & health insurance accounts for less than
10% of this group’s revenue, so the most common
action taken in light of health care reform is no action
at all. However, for those that have life & health books
of business, legislative change is viewed as either an
opportunity to expand the business into new areas or
as an impending threat to the revenue source and their
ability to provide an affordable benefits program to
their own employees.
For those seeing opportunity, they feel more people
will have or want to purchase health insurance and are
positioning themselves to be trusted source of
information and products to those consumers. One
agent indicated,“Our practice is adjusting by becoming
very well informed of the implications of the reform at
the various stages and passing our knowledge onto
our clients and prospective clients. We’re using the
situation to expand our client base.”
Others are developing plans to aggressively market
products to individuals, hiring or aligning with an
outside health and benefits broker, revamping their
websites for additional focus on healthcare insurance
products, and attending classes for further training.
For those with a more negative view of the reform
impact, they too are staying informed but have
reduced their marketing and prospecting for group
health clients.
Facing Challenges
A perennial challenge for agencies in this revenue
category is finding, developing and retaining quality
employees. However, recent cash flow constraints
endured by many of these agencies have made it
especially difficult to find and attract qualified
employees, and to fund ongoing development and
rewards for current employees.
In discussing a wage freeze on all employees, one
agency manager confided, “our clerical staff has helped
us have good profits this year and I want to reward
them as soon as possible. They currently share
commissions on business they produce but I want
them to enjoy wage increases.”
Cash flow constraints have been brought on by the
continuing soft market and weak economy. As agency
profit margins have shrunk, expense control has
become increasingly important. Many of the agencies
in this group wrestle with the need to hold or cut
spending levels at the same time they need to invest in
new sales and improved retention.
New sales are needed to meet their volume
commitments to their carriers, to maintain their
agencies’ values and to fund the internal perpetuation,
a route that most want to take but are often unable to
achieve.
Retention is critical for positive net growth but difficult
as the agencies’ commercial clients are closing their
doors and their personal lines clients seek lower
pricing. One agent explained, “Due to the current
economy, clients are calling us and asking for their
account to be priced with other carriers…..it feels that
we are working harder than ever to retain long-time
clients.”
This same agent, however, exemplified the advantage
of being an Independent Agent and why this group
continues to thrive by adding, “We are glad to be an
independent agency that is able to retain our business
although we may have to move it among carriers with
the agency.”
Top Challenges
(Top 5 Listed in Order of Frequency Mentioned
)
1. Recruiting, retaining, and rewarding quality
employees
2. Controlling Expenses
3. Maintaining positive growth
4. Meeting carrier volume commitments
5. Staying up with technology
Top Adjustments
(Top 5 Listed in Order of Frequency Mentioned)
1. Taking no action
2. Staying informed and keeping clients inform
3. Investigating/preparing for opportunities that
will surface
4. Continuing to sell L&H products but not as
aggressively
5. Considering the impact on agency’s own
benefits package