2013 Best Practices Study

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

Key Benchmarks Mgmt. Perspectives Profile Revenues Expenses Profitability Employee Overview Producer Info Service Staff Info Technology Insurance Carriers Appendix

Three years ago, BPS agencies described their greatest challenge as the combination of a weak economy and a soft insurance market. Today, with the economy growing and P&C premiums on the rise, agency owners have focused their attention elsewhere. Their focus is on “people” issues. With the Baby Boomer generation now in retirement mode, agency owners must continue to grow their businesses, even while they try to replace many of their most valuable long- term employees. The firms that do the best job in building their talent base over the next several years will clearly emerge as winners. Top Challenges (Top 5 Listed in Order of Frequency Mentioned ) 1. Recruiting high potential producers 2. Recruiting technical talent, particularly in specialty areas 3. Perpetuation planning to ensure continued private ownership 4. Increasing the books of all producers, so as to reduce reliance on a small group of high performers to drive agency growth 5. Creating producer book of business succession plans to ensure a smooth transition of an agency’s key customer relationships from one generation to the next

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

1. Take responsibility for being clients’ “go to” advisor on issues relating to healthcare reformby becoming an expert in how the law is affecting small and mid-size employers 2. Adopt a fee-driven compensation model to remain competitive on larger groups, while preserving adequate profit levels on small groups 3. Strengthen service offerings around compliance and analytics, focusing on larger (over 100 lives) groups 4. Diversify into ancillary products and services 5. Get engaged in state policy decision- making structure to wield influence on policy and to keep informed of coming changes

Facing Challenges Perhaps the single greatest unifying attribute of Best Practices agencies is the way they respond to the challenges they face. Like firemen who run into - rather than out of - burning buildings, these agents elevate their game when things are difficult.

“Our growth in benefits has slowed down because we’ve been spending a large amount of time guiding our existing clients. At the same time, we are bullish on the future, especially for larger groups.”

2013 Best Practices Study

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

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