64 / 191
2010 Best
Practices Study
Agencies
with Revenues
Between
$2,500,000 and
$5,000,000
64
Analysis of Agencies with Revenues Between $2,500,000 and $5,000,000
Mgmt. Perspectives
Profile
Revenues
Expenses
Profitability
Employee Overview
Producer Info
Staff Service Info
Technology
Insurance Carriers
Appendix
To be successful in the current market, agencies“simply
need more at-bats”. They have implemented more
aggressive sales and marketing plans and are
leveraging relationships by staying active in the
community, asking for referrals, and working on
centers of influence. Another agent stated, “take care
of people and they will take care of you”.
Adjusting toHealth Care Reform
One of the most discussed and debated topics in
recent history came to a head in 2010. Comprehensive
healthcare reform became a reality. This was of specific
interest to insurance agents and brokers as the group
life and health business will be directly impacted by the
reform. Although the law has been passed, uncertainty
as to what the final outcome is uncertain as the
regulations associated with the law have largely yet to
be written.
As a result, the successful agents and brokers have
taken different steps to address this issue. Surprisingly,
the most mentioned action taken in light of healthcare
reform is to do nothing. As one agent stated, “we view
this as an opportunity, but we are not making any
adjustments”. Others stated that they are “still
evaluating” or “have made no adjustments”.
Others are taking a more proactive approach and
trying to stay on the cutting edge of development by
increasing communications with clients. One stated
that “we are educating our customers of the specific
impacts of healthcare reform on them”.
Expanding into other product lines, including ancillary
and voluntary products, is another common
characteristic of successful agent and brokers. In doing
so, they believe they can replace, and possibly exceed,
the level of business that may be lost as a result of
healthcare reform.
Successful agents and brokers are also expanding their
value-added services for the employee benefits
business. One agent stated that they “developed a
wellness plan to offer services above and beyond.”
Another stated “we are trying to bring value added
services including COBRA administration and wellness”.
Others are continuing to grow the group benefits book.
Many feel that clients will need an agent “to guide
them through the process” and are shifting to a fee
versus commission basis.
Facing Challenges
Successful agents and brokers, despite their successes,
continue to face challenges. Many of the
aforementioned items, while successful steps have
been taken to address, continue to present challenges
for agents and brokers. Since there are no “silver
bullets”, these items require constant attention as
successful agents and brokers constantly adapt to
changing environments.
Recruiting and developing talent remains the top
challenge. The struggle to recruit, train and retain
good talent continues. Moreover, as the baby boomer
workforce nears retirement, the issue is more prevalent
than ever and the implications far reaching. The near
term retirement of the first Baby Boomers combined
with the pressure placed on the company by the
aforementioned economic conditions is placing a
strain on agency perpetuation plans.
The impact of the depressed economic environment
combined with the persistent soft market was the
second most often mentioned challenge. While
successful agents and brokers have developed
strategies to generate organic growth under these
conditions, the economic environment and soft market
is also placing pressure on their profit margins.
Therefore, controlling expenses was the third most
mentioned challenge. Successful agents and brokers
are responding by “examining every dollar they spend”
and “maximizing productivity of our employees.”
Finally, brokers are also dealing with pressure from
insurance carriers. This takes many forms from pressure
to increase volumes to reductions in contingent
income. These issues can also be linked to the
depressed economic environment and the continued
soft market.
Top Challenges
(Top 5 Listed in Order of Frequency Mentioned
)
1. Recruiting and Developing Talent
2. Economic Conditions and Soft Market
3. Expense Control
4. Perpetuation
5. Carrier Pressures
Top Adjustments
(Top 5 Listed in Order of Frequency Mentioned)
1. No Action at This Time
2. Increase Communication with Clients
3. Selling Ancillary / Volunteer Products
4. Expanding Value Added Services
5. Growing Book