2007 Best Practices Study

Agencies with Revenues Over $25,000,000

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

1.29:1

1.82:1 32.5% 39.3%

Tangible Net Worth (% of Net Revenue)

8.9%

Receivables/Payable Ratio

59.3%

Aged Receivables

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

9.3% 5.8%

1.1% 0.7%

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

55.9% 36.1%

42.2% 43.6%

54.9% 30.8%

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

87.5%

Have strict collection policy

66.7%

Encourage/require use of direct bill

70.8%

Encourage/require use of premium finance

83.3%

Use pre-billing and binder billing

83.3%

Centralize collections & remove producer involvement

12.5%

Charge producers for bad debt-write-offs

62.5%

% of Premium charged back to Producers for bad debt write-offs: 78.7%

161 2007 Best Practices Study | Agencies with Revenues Over $25,000,000 | Financial Stability