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EXECUTIVE PERSPECTIVES
Keys to Their Success
For decades industry pundits have predicted the demise of the small agency. Yet, agencies with
revenues less than $500,000 continue to survive and thrive as evidenced by those in this year's
Best Practices Study. This study group achieved a net
revenue growth rate of 10.4%, in spite of a softening
market, and enjoyed a 26.0% Pro Forma Pre-Tax
Profit.
They most often attribute their success to their good
customer relationships, the quality of their employees,
and their use of technology.
Because the majority of the agencies are located in
smaller communities with populations under fifty thou-
sand, relationships tend to be very personal.
Customers are friends, neighbors, and business
acquaintances. Employees are part of the agency "fam-
ily" whose customer interactions reflect their commit-
ment to service and mirror the trust, authority, and
respect they are given by the agency principals.
Technology is used heavily to support personal customer interactions. Whether it is the use of
their agency management systems or internet access to carrier systems, technology allows these
agencies to be able to respond quickly and decisively to customers' needs.
Challenges They Face
75% of the agencies in this revenue cate-
gory listed carrier relationships as their
number one challenge. Although they cur-
rently represent an average of 12 carriers,
three more than the number reported in the
1993 Best Practices Study, the agencies in
this study group find it increasingly diffi-
cult to get markets, meet minimum vol-
ume commitments, work with changing
carrier appetites, and adjust to shrinking
commission rates. The second most fre-
quently mentioned challenge was finding and grooming new producers that could successfully
take over the business. Facing this challenge may be the reason that 20.8% of the agencies indi-
cated that they plan to sell their agencies to a third party within the next 10 years. Another 29.2%
plan to sell to a third party in 11+ years.
REVENUE SIZE CATEGORY HERE
EXECUTIVE
PERSPECTIVES
PROFILE
REVENUES/
EXPENSES
FINANCIAL
STABILITY
EMPLOYEE
OVERVIEW
PRODUCER
INFO
SERVICE
STAFF
INFO
TECHNOLOGY
INSURANCE
CARRIERS
APPENDIX
7
AGENCIES WITH REVENU S UNDER $500,000
Factors Most Critical to
Agency's Success
(Top 5 Listed in Order of Frequency Mentioned)
1. Personal service that results in
strong customer relationships
2. Experienced, knowledgeable long-
term employees
3. Use of technology and automated
systems
4. Ability to satisfy and retain good
carriers
5. Niche marketing
Top Challenges
(Top 5 Listed in Order of Frequency Mentioned)
1. Meeting carriers’ minimum volume requirements
2. Attracting / keeping adequate number of stable
and competitive markets
3. Adjusting to decreasing commission rates
4. Hiring and developing young producers
5. Increased competition