2007 Best Practices Study

Agencies with Revenues Under $1,250,000

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

1.30:1 13.7% 68.4%

2.02:1 29.4%

Tangible Net Worth (% of Net Revenue)

Receivables/Payable Ratio

7.5%

Aged Receivables

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

11.8%

7.2% 3.1%

9.4%

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

18.2% 79.0%

16.7% 72.2%

20.1% 79.9%

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

94.1%

Have strict collection policy

85.3%

Encourage/require use of direct bill

94.1%

Encourage/require use of premium finance

85.3%

Use pre-billing and binder billing

61.8%

Centralize collections & remove producer involvement

50.0%

Charge producers for bad debt-write-offs

29.4%

% of Premium charged back to Producers for bad debt write-offs: 75.0%

17 2007 Best Practices Study | Agencies with Revenues Under $1,250,000 | Financial Stability