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solidations and commission rate cuts, an increasingly obvious softening of property & casualty
pricing and increased competition for both customers and agency acquisitions from national bro-
kers and banks. Most firms in this size category feel they have been priced out of the acquisition
market by publicly-traded competitors.
Keys to Maximizing Productivity
Responses to this question typically fall into two
groups: streamlining and leveraging. The most wide-
ly productivity-enhancing strategy noted by these
principals involves streamlining agency processes -
via better use of technology, standardization of proce-
dures and regular employee training.
The top performers also noted a different approach to
enhancing productivity - that of leveraging the
time/efforts of the firm's most highly paid employees
- the producers. Several methods of doing this were
suggested, but one clearly stood out - getting produc-
ers to increase their book size and to do so by focus-
ing on attracting and retaining ever larger, more prof-
itable accounts. How are they doing this? They are using both carrot and stick. The carrot is
often a higher commission rate for new business. The stick? Among firms in this group, 59.4%
have ceased paying commissions to producers on their small accounts. The average commercial
account threshold, below which the producer is not paid a renewal commission? $3,316 in com-
missions.
Keys to Achieving a Competitive Advantage
Firms in this revenue category consistently point to their employees as the key to their competi-
tive advantage. The mid-size and large accounts, which they focus on, are still sold relationally,
although they require an ever-increasing level of value-added resources (90.6% of these firms
have an in-house claims department, 78.1% offer loss-
control/engineering and 65.6% have a dedicated market-
ing/placement department.)
A distinctive advantage frequently mentioned is private
ownership. With the ability to offer meaningful owner-
ship - either via book equity (more than 1/3rd of these
agencies offer book equity to some or all of their produc-
ers) or through outright stock ownership, many of these
firms view the ability to offer ownership as a key advan-
tage in the battle for talent.
AGENCIES WITH REVENUES BETWEEN $10,000,000 AND $25,000,000
128
EXECUTIVE
PERSPECTIVES
PROFILE
REVENUES/
EXPENSES
FINANCIAL
STABILITY
EMPLOYEE
OVERVIEW
PRODUCER
INFO
SERVICE
STAFF
INFO
TECHNOLOGY
INSURANCE
CARRIERS
APPENDIX
Keys to Achieving a
Competitive Advantage
(Top 5 Listed in Order of Frequency Mentioned)
1. Skilled staff / depth of
experience / knowledge
2. Reputation for integrity
and excellence
3. High level of service
4. Value added services / risk
management & claims
services
5. Carrier relationships /
market clout
Keys to Maximizing Productivity
(Top 5 Listed in Order of Frequency Mentioned)
1. Use of automation
2. Continuous training
and education
3. Standardized processes
and procedures
4. Incentive compensation
5. Set high expectations and
monitor performance