2013 Best Practices Study

Analysis of Agencies with Revenues Between $5,000,000 and $10,000,000

Key Benchmarks Mgmt. Perspectives Profile Revenues Expenses Profitability Employee Overview Producer Info Service Staff Info Technology Insurance Carriers Appendix

Developing New Producers Perhaps no single issue consumes as much time and energy for growth-oriented agents & brokers as the question of how to recruit and develop producer talent. Given the relative scarcity of good new sales talent and the high cost of recruiting, these Best Practices firms are becoming much more methodical in terms of developing new recruits to ensure that their investments are likely to pay off. A large number of the firms have very specific and regimented training & development tracks that involve both inside and outside sales and insurance training resources, depending on the specific needs of the producers in development. These resources, when coupled with an effective mentoring relationship with an experienced producer, were frequently cited as the means that were most instrumental in significantly increasing producer development success rates. Other frequently-cited producer development practices included maintaining strict accountability with young producers on expected activities. A real help in this has been an increased level of accountability and follow-up with company insurance schools after on-site training is completed. Several of these schools now have as a part of their programs a significant amount of interaction with their graduates after the fact to ensure that the lessons learned are being applied. Finally, focusing producers early on in a limited number of product or industry niches (as opposed to developing, primarily, as a generalist producer)

continues to be a common practices leading to producer development success. Adjusting to Health Care Reform The Patient Protection and Affordable Care Act (PPACA) passed in 2010, includes many provisions that will take effect between now and 2020. This legislation continues to prove to be a real challenge for Best Practices agencies to navigate, as a great deal of uncertainty remains as to how it will be fully implemented. Many agencies see the PPACA as a significant threat to their employee benefits practices (especially accounts serving under 50 employees), while others see it as a huge opportunity. And, of course, many agents and brokers fall somewhere in between – hopeful for the future but unclear on how it will ultimately affect them. For agents with small benefits practice groups, the primary “survival strategy” cited was to focus on finding ways to work effectively with state insurance exchanges to retain commission or fee income for clients who access these exchanges for their coverage. For other agencies who view healthcare reform as a huge opportunity, many seek to develop their benefits practices as true experts in navigating and responding to the PPACA as a significant means by which they can differentiate themselves from smaller, less sophisticated competitors. Best Practices agencies that are betting on the future of the healthcare business see the development of deep intellectual capital as a significant leg up in coming out on top. training for inexperienced sales recruits 4. Allocating a fixed percentage of revenue towards producer development year-in / year-out 5. Strict accountability from the very beginning Keys to Developing New Producers (Top 5 Listed in Order of Frequency Mentioned) 1. Recruit proven sales talent from outside the industry 2. Active mentoring relationships with seasoned producers 3. Significant and consistent investments in sales methodology and insurance

“We do much better when we hire producers in classes of two or three. It allows us to really leverage our internal training resources (which have been expensive to develop) and it gives these young people a shared sense of mission and builds camaraderie. “

2013 Best Practices Study

Agencies with Revenues Between $5,000,000 and $10,000,000

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