2004 Best Practices Study

AGENCIES WITH REVENUES BETWEEN $10,000,000 AND $25,000,000

solidations and commission rate cuts, an increasingly obvious softening of property & casualty pricing and increased competition for both customers and agency acquisitions from national bro- kers and banks. Most firms in this size category feel they have been priced out of the acquisition market by publicly-traded competitors. Keys to Maximizing Productivity

EXECUTIVE PERSPECTIVES

PROFILE

Responses to this question typically fall into two groups: streamlining and leveraging. The most wide- ly productivity-enhancing strategy noted by these principals involves streamlining agency processes - via better use of technology, standardization of proce- dures and regular employee training. The top performers also noted a different approach to enhancing productivity - that of leveraging the time/efforts of the firm's most highly paid employees - the producers. Several methods of doing this were suggested, but one clearly stood out - getting produc- ers to increase their book size and to do so by focus- ing on attracting and retaining ever larger, more prof-

Keys to Maximizing Productivity (Top 5 Listed in Order of Frequency Mentioned)

1. Use of automation 2. Continuous training and education 3. Standardized processes and procedures 4. Incentive compensation 5. Set high expectations and monitor performance

REVENUES/ EXPENSES

FINANCIAL STABILITY

EMPLOYEE OVERVIEW

itable accounts. How are they doing this? They are using both carrot and stick. The carrot is often a higher commission rate for new business. The stick? Among firms in this group, 59.4% have ceased paying commissions to producers on their small accounts. The average commercial account threshold, below which the producer is not paid a renewal commission? $3,316 in com- missions. Keys to Achieving a Competitive Advantage Firms in this revenue category consistently point to their employees as the key to their competi- tive advantage. The mid-size and large accounts, which they focus on, are still sold relationally, although they require an ever-increasing level of value-added resources (90.6% of these firms

PRODUCER INFO

SERVICE STAFF INFO

have an in-house claims department, 78.1% offer loss- control/engineering and 65.6% have a dedicated market- ing/placement department.) A distinctive advantage frequently mentioned is private ownership. With the ability to offer meaningful owner- ship - either via book equity (more than 1/3rd of these agencies offer book equity to some or all of their produc- ers) or through outright stock ownership, many of these firms view the ability to offer ownership as a key advan- tage in the battle for talent.

Keys to Achieving a Competitive Advantage (Top 5 Listed in Order of Frequency Mentioned) 1. Skilled staff / depth of experience / knowledge 2. Reputation for integrity and excellence 3. High level of service 4. Value added services / risk management & claims services 5. Carrier relationships / market clout

TECHNOLOGY

INSURANCE CARRIERS

APPENDIX

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