2007 Best Practices Study

Agencies with Revenues Between $10,000,000 and $25,000,000

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Financial Stability

Top 25%

Average

Balance Sheet Current Ratio

1.34:1 10.0% 44.8%

2.01:1 29.6% -3.9%

Tangible Net Worth (% of Net Revenue)

Receivables/Payable Ratio

Aged Receivables

% Receivables Aged Past 60 Days % Receivables Aged Past 90 Days

13.3%

1.6% 0.9%

2.4%

Accounts Receivable

Average

+25% Profit

+25% Growth

Agency Billed vs. Direct Billed by Carrier % of P&C Revenues that are Agency Billed % of P&C Revenues that are Direct Billed

52.6% 44.0%

54.6% 32.9%

74.9% 25.1%

Receivable Management Practices Participants were asked to indicate which practices they utilized and to score the practices’ effectiveness where 1=NOT EFFECTIVE and 5=EXTREMELY EFFECTIVE. 1 2 3 4 5

% Using

Management reviews receivables regularly

100.0%

Have strict collection policy

65.5%

Encourage/require use of direct bill

72.4%

Encourage/require use of premium finance

79.3%

Use pre-billing and binder billing

86.2%

Centralize collections & remove producer involvement

37.9%

Charge producers for bad debt-write-offs

89.7%

% of Premium charged back to Producers for bad debt write-offs: 89.8%

131 2007 Best Practices Study | Agencies with Revenues Between $10,000,000 and $25,000,000 | Financial Stability