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F

INANCIAL

S

TABILITY

1. Current Assets -

Assets that can be converted to cash or a cash equivalent within twelve months.

Includes cash, marketable securities, accounts receivable, notes receivable maturing within twelve months, and

prepaid expenses.

2. Current Liabilities -

Liabilities that require a cash outlay during the next twelve months. Includes accounts

payable, the current portion of long-term debt (the portion due during the next twelve months), payroll and

income taxes payable, and payroll that has been earned but not paid.

3. Current Ratio -

Current assets divided by current liabilities.

4. Intangible Assets -

Includes expirations (purchased customer lists), restrictive covenants, and goodwill.

5. Tangible Net Worth -

Total assets minus intangible assets equals total tangible assets. Total tangible assets

minus total liabilities equals tangible net worth.

6. Accounts Receivable -

Amounts due from insureds.

7. Accounts Payable -

Amounts due to insurance companies.

8. Receivables/Payables Ratio -

Accounts receivable divided by accounts payable.

9. Aged Receivables -

Measures the length of time that receibvables are past due (over 60 days, over 90 days).

E

MPLOYEE

O

VERVIEW

1. Revenue per Employee -

Net revenues divided by the total number of full-time equivalent employees.

2. Compensation per Employee -

Total compensation divided by total number of full-time equivalent

employees.

3. Spread per Employee -

Total revenue per emloyee minus compensation per employee. While revenue per

empoloyee is a standard for measuring productivity, the “spread” measures the dollars per employee available

to pay all other agency expenses adn generate a profit for the agency.

P

RODUCER

I

NFORMATION

1. Validated Producer -

Producers whose book of business is sufficient to cover his/her wages under agency’s

commission formula.

2. Annual Pay per Producer -

Includes compensation that shows up on the producer’s W-2 and resulted from

the producer’s production responsibilities.

S

ERVICE

S

TAFF

I

NFORMATION

1. Service-Related Personnel -

Non-commissioned personnel who have responsibility, either directly or

indirectly, to provide or support service delivery to the agency’s clients.

2. CSR - Customer Service Representative -

Positions with the main responsibility of client service or to

provide support in providing client services. Includes Account Executives, Senior CSRs, CSRs, Account

Managers, Assistant CSRs.

3. Customer Service & Processing -

Includes activities such as processing new and renewal accounts, issuing

endorsements/ID’s/certificates of insurance, file maintenance, speaking with customers on the phone, company

correspondence, invoicing, etc.

4. Administration -

Includes any time spent on non-customer service functions such as training,

education, receptionist duties, internal meetings, agency matters, general clerical duties, etc.

2005 BEST PRACTICES STUDY - APPENDIX

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