132 / 204
2013 Best
Practices Study
Agencies
with Revenues
Between
$10,000,000 and
$25,000,000
132
Analysis of Agencies with Revenues Between $10,000,000 and $25,000,000
Key Benchmarks
Mgmt. Perspectives
Profile
Revenues
Expenses
Profitability
Employee Overview
Producer Info
Service Staff Info
Technology
Insurance Carriers
Appendix
Developing New Producers
In recent years, Best Practices Agencies have ratcheted
up their producer recruiting and hiring efforts in
order to increase their organic growth rate while also
preparing for the retirement of their Baby Boomer
producers. This year’s Study includes a relatively new
metric: the Net Investment in Unvalidated Producer
Pay (NUPP.)
The NUPP allows firms to compare their producer
investments with their peers. It measures the degree
to which an agency is subsidizing its developmental
producers – within reason, the higher the NUPP, the
better. The average NUPP for the $10-$25 million
firms in this year’s Study is 1.2% of revenue.
As firms have more aggressively invested in recruiting
new producers, the success rate of those hires has
become increasingly important. Historically, BPS firms
have typically achieved a success rate of roughly 50%.
In this year’s Study, the number has hit a surprisingly
high level of nearly 60%. How are firms achieving
this? The answer: A more concentrated focus on
Producer Development.
Adjusting to Health Care Reform
Despite the ebbs and flows of the politics around
the Patient Protection and Affordable Care Act
(“PPACA”) legislation, reform of the U.S. healthcare
system is here to stay. For the $10-$25 million BPS
Study Group, healthcare reform is a concern, but it is
simply one of many. To put it in perspective, group
medical commissions/fees and overrides represent
approximately 17% of the average firm’s overall
revenues. And if the most vulnerable small groups
(under 50 lives) are isolated, they represent only 27%
of that figure. Thus small group medical represents
less than 5% of overall revenues (27% of 17%.)
Many agencies view healthcare reform as a
tremendous opportunity for growth, since clients
are desperate for quality information from a trusted
source that truly understands their business. As such,
the industry’s leading agencies are taking aggressive
steps to become the trusted advisor regarding the
rapidly changing healthcare landscape.
Keys to Developing New Producers
(Top 5 Listed in Order of Frequency Mentioned)
1. Start with a recruiting strategy that is
focused on a particular type of individual
(such as industry outsiders, under age
30, but with sales experience)
2. Customize a development pathway
designed specifically for the candidate
pool being targeted
3. Set realistic sales goals from day one and
monitor progress constantly
4. Assign each new producer a capable
mentor
5. Use best in class outside resources
(carrier schools, sales consultants)
whenever possible
“We are paying more attention
than ever before to ensuring
that those we hire become
successful. We’ve built a three
year development program that
includes a mentor and extensive
skills training.”