2004 Best Practices Study

REVENUE SIZE CATEGORY HERE AGENCIES WITH REVENUES BETW EN $500,000 AND $1,250,000

EXECUTIVE PERSPECTIVES Businesses situated in small communities and towns excel at building relationships. We all want what's best for the people who live in our neighborhoods, the people we see at our children's Little League games, and even the people we run into at the grocery store. This is the philosophy of many of the agencies in the $500,000 - $1,250,000 category, who generally consider customer service to be the driving force behind their success. Keys to Their Success

EXECUTIVE PERSPECTIVES

PROFILE

Factors Most Critical to Agency's Success

Smaller agencies have depended on an extensive refer- ral network to facilitate growth year over year. Networking with other professional groups in the area has proven to be mutually beneficial. Agencies also look to cross-sell life, health, long term care, and retire- ment planning products to round out P&C accounts. Moving customers to Direct Bill can save both time and effort. Agencies in this revenue size category con- tinue to embrace this option. With as many as 98% of agency clients on Direct Bill, employees are free to do the things they do best. By not having to track down past due A/R, producers and CSRs are in a better posi- tion to proactively address the needs of their clients. Challenges They Face

REVENUES/ EXPENSES

(Top 5 Listed in Order of Frequency Mentioned) 1. Dedicated, knowledgeable, happy employees working in a positive environment 2. Stable markets with good array of products 3. Customer service that results in high retention and referrals 4. Being well respected and involved in the community (local community as well as the agent and carrier communities) 5. Positive return on technology investment

FINANCIAL STABILITY

EMPLOYEE OVERVIEW

PRODUCER INFO

Agencies of all size struggle with finding and developing new talent. This is no different for the agencies in this revenue category. Despite an increased willingness to bring in sales people from

other industries, 50% of Best Practices agencies that hired someone in 2003 recruited that talent from another insurance broker. In many cases, the agency principal is the largest producer as well as being responsible for new hires. Smaller agen- cies simply do not have the time or money to train and develop young producers or CSR's without experience. Being able to grow top line revenue is a concern that has to be addressed on an annual basis. Favorable market conditions

SERVICE STAFF INFO

Top Challenges (Top 5 Listed in Order of Frequency Mentioned)

1. Meeting carriers' premium volume requirements 2. Finding and retaining quality, skilled people 3. Offsetting declining commissions with increased production 4. Overcoming demographic limitations of smaller towns 5. Time management - finding time to sell

TECHNOLOGY

INSURANCE CARRIERS

in 2003 helped to temper the issue; however, agencies did what they could to insulate themselves from an inevitable downturn in the market. Many firms enjoyed excellent renewal rates that were augmented by increased pricing. Revenue per employee for this group was up to $108,742 for 2003, an amazing increase of 62.8% from just 10 years ago!

APPENDIX

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