2007 Best Practices Study

Agencies with Revenues Between $1,250,000 and $2,500,000

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

1.44:1 18.9% 61.2%

2.05:1 35.8%

Tangible Net Worth (% of Net Revenue)

Receivables/Payable Ratio

5.0%

Aged Receivables

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

-88.9% -83.9%

1.4% 2.7%

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

24.8% 68.6%

16.3% 83.7%

28.9% 46.1%

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

75.9%

Encourage/require use of direct bill

89.7%

Encourage/require use of premium finance

79.3%

Use pre-billing and binder billing

79.3%

Centralize collections & remove producer involvement

48.3%

Charge producers for bad debt-write-offs

51.7%

% of Premium charged back to Producers for bad debt write-offs: 85.7%

45 2007 Best Practices Study | Agencies with Revenues Between $1,250,000 and $2,500,000 | Financial Stability