2007 Best Practices Study

2007 Best Practices Study

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

FINANCIAL STABILITY

66. Current Ratio – Current assets divided by current liabilities. A current ratio greater than 1:1 indicates that cash and assets with short term maturities are sufficient to meet a firm’s short-term obligations. 67. Tangible Net Worth – Total assets minus intangible assets equals total tangible assets. Total tangible assets minus total liabilities equals tangible net worth. Represents the net value of the corporation if it were liquidated. A low or negative tangible net worth impacts a firm’s ability to invest in new opportunities, develop new products, hire new employees, make other capital expenditures and handle stockholder redemption obligations. 68. Receivables/Payables Ratio – Accounts receivable divided by accounts payable. This ratio measures the collection practices of an agency, with a lower ratio representing more timely collections of those amounts due from insureds. 69. Aged Receivables - Measures the length of time that receivables are past due (over 60 days, over 90 days)

EMPLOYEE OVERVIEW

70. Total # of Employees (FTE) - Total number of full-time equivalent employees including agency principals. 71. Revenue per Employee - Net revenues divided by the total number of full-time equivalent employees. 72. Compensation per Employee - Total compensation divided by total number of full-time equivalent employees. 73. Spread per Employee - Total revenue per employee minus compensation per employee. While revenue per employee is a standard for measuring productivity, the “spread” measures the dollars per employee available to pay all other agency expenses and generate a profit for the agency.

PRODUCER INFORMATION

74. Validated Producer - Producers whose book of business is sufficient to cover his/her wages under agency’s commission formula. 75. Annual Pay per Producer - Includes compensation that shows up on the producer’s W-2 and resulted from the producer’s production responsibilities.

SERVICE STAFF INFORMATION

76. Service-Related Personnel - Non-commissioned personnel who have responsibility, either directly or indirectly, to provide or support service delivery to the agency’s clients. 77. CSR - Customer Service Representative - Positions with the main responsibility of client service or to provide support in providing client services. Includes Account Executives, Senior CSRs, CSRs, Account Managers, Assistant CSRs. 78. Selling New Business - Includes total account development (i.e., account rounding, upgrading, and cross-selling) and may include soliciting new accounts in the absence of a dedicated producer. 79. Customer Service & Processing - Includes activities such as processing new and renewal accounts, issuing endorsements/ID’s/certificates of insurance, file maintenance, speaking with customers on the phone, company correspondence, invoicing, etc. 80. Administration - Includes any time spent on non-customer service functions such as training, education, receptionist duties, internal meetings, agency matters, general clerical duties, etc.

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2007 Best Practices Study | Appendix