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

For Best Practices firms both bullish and bearish on life after healthcare reform, developing a deep and wide suite of voluntary benefits products and services was cited as a growth strategy. Finally, a large number of Best Practices firms see the development of fee-for-service models as significant to their ability to generate revenue in the healthcare arena in the future. Top Adjustments (Top 5 Listed in Order of Frequency Mentioned) 1. Focusing on larger accounts (>50 lives) and voluntary products 2. Eliminating or reducing sales commissions for small health insurance accounts written 3. Working to better understand and work with and through state exchanges 4. Developing fee-based compensation models 5. Developing best-in-class intellectual capital around how best to navigate and respond to Health Care Reform Facing Challenges Health care reform, growth and people – these three issues remain the issues most on the minds of Best Practices agencies. Although a mediocre economic recovery continues to confound many firms, these three issues were, by a wide margin, the most- frequently cited challenges facing this group of Best Practices agencies. As has been well documented, the independent insurance agency world is not one dominated by young people. This continues to create many challenges, but one challenge seems to be on the forefront of many Best Practices agencies today – finding enough talented young people to backfill for the coming retirement of significant numbers of senior insurance agency employees.

were seen as fertile recruiting territories for experienced and well-trained insurance professionals. Today, in light of insurance company consolidation and centralization (and the accompanying loss of abundant regional offices), this is no longer the case.

Top Challenges (Top 5 Listed in Order of Frequency Mentioned ) 1. Internal perpetuation

2. Finding enough sales talent 3. Finding good support people 4. Organic growth 5. Health Care Reform - how to respond and prosper in the future

Further, in light of today’s ubiquitous restrictive agreement realities, in which key employees, particularly producers and account executives, are effectively “locked-up,” competing agencies offer limited personnel “poaching” opportunities. Increasingly, insurance agents are forced to “grow their own” talent. For agencies unable to develop an efficient way to train and develop “green” insurance employees, the future is unclear. Other commonly cited challenges included satisfying insurance company appetites for new business, keeping up with technology and developing the next generation of leadership. Interestingly, long-time readers of the Best Practices Study will recognize how many (most) of the challenges faced in the industry remain the same, year after year.

2013 Best Practices Study

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

For many years, the insurance companies themselves

“This business is amazingly resilient. Sure we have problems…we always do. Obamacare is the big one for us right now. But a little perspective is helpful. Before Obamacare, it was the banks, or Eliot Spitzer, or the Internet. We got through all that just fine.”

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