2004 Best Practices Study

REVENUE SIZE CATEGORY HERE AGENCIES WITH REVENUES BETWE N $10,000,000 ND $25,000,000

EXECUTIVE PERSPECTIVES A New BP Size Category

EXECUTIVE PERSPECTIVES

In past years, the largest BP size category included all firms over $10 million in revenue. For this year's study, a new category was established for firms over $25 million in revenue. Therefore, there is now a new category for firms between $10 and $25 million in revenue. Of the 30 firms that were selected for this new category, the average revenue is $14.6 million. With an average of 98 employees, these firms generate revenue per employee of just under $155,000. In terms of ownership, two are bank-owned, with the balance of the firms independ- ently owned. Keys to Their Success

PROFILE

REVENUES/ EXPENSES

Factors Most Critical to Agency's Success (Top 5 Listed in Order of Frequency Mentioned) 1. Ability to find, recruit and retain talented staff 2. A focus on revenue growth / new business 3. Superior customer service / strong relationships 4. Carrier relationships / good markets 5. Effective use of technology

The principals of these firms were asked to identify the keys to their success. Two responses dwarfed all others: 1) the ability to attract and retain talent - especially producers and 2) the ability to create and maintain a sales culture. Responding to key issue #1, this year's study included a set of questions relating to new producer hires. A key finding: the average firm hired 2.7 producers last year, which repre- sented 13.3% of their total producer base. For 2004, they planned on hiring another 2.8. The average wage paid to a new producer was $64,875.

FINANCIAL STABILITY

EMPLOYEE OVERVIEW

PRODUCER INFO

Where did these new producers come from? The majority (55.1%) came from a competing insur- ance broker, while roughly 1 out of 5 came from a carrier. Only about 1 in 10 came from outside of the insurance industry - a sign that the industry's effort to improve its "market-share" of talent is having only limited success. On a more positive note, these firms are making strides in developing and maintaining a sales cul- ture, with average new commissions of $96,692 per commercial p&c producer and $117,619 per employee benefits producer. Challenges They Face

SERVICE STAFF INFO

TECHNOLOGY

Top Challenges (Top 5 Listed in Order of Frequency Mentioned) 1. Finding and recruiting talented staff 2. Finding new, young producers 3. Changing market conditions / decreased commissions 4. Loss of markets 5. Ongoing training of new and experienced personnel

Without a doubt, the number one challenge for these firms is building their talent base - both of sales and support people. For most, the desire to do so is strong, but they lack the ability to find and then attract top talent. The second greatest challenge mentioned by the partici- pants is finding ways to continue to grow revenues in the face of a host of challenging factors, including carrier con-

INSURANCE CARRIERS

APPENDIX

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