2009 Best Practices Study

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

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Breakdown of Expenses — What This Means to You

In the past the study has consolidated revenues and expenses into fairly broad categories making some comparisons difficult. Factors such as corporate structure (e.g., C corporation versus S corporation) further complicated expense comparisons because of what was or was not reflected on the income statement. The study now provides greater detail for both revenues and expenses which has resulted in more meaningful benchmarks for better “apples-to-apples” comparisons. The new expense breakdowns include: Compensation Expense – Both Payroll and Benefits have been broken down to provide a better understanding of the participating agencies’ costs – what costs are somewhat fixed (payroll taxes) versus discretionary costs (retirement benefits, insurance, etc.). Selling & Operating Expense –These expense categories now include greater detail, including any depreciation and amortization expense associated with the category. This allows for a more accurate picture of the total expenses incurred as both cash (e.g. monthly lease payment) and non-cash expenses (e.g. computer depreciation expense) are captured.

Expenses (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Compensation Expenses Payroll Employee

46.0%

33.7%

45.3%

“Non-Employee” Producers

0.8% 0.2%

0.0% 0.0%

0.0% 0.0%

Temporary Help Total Payroll

47.0%

33.7%

45.3%

Benefits

Payroll Taxes Retirement

2.9% 2.5% 2.7% 0.0% 8.1% 1.4% 0.8% 0.2% 1.1% 1.3% 3.7% 55.1%

2.1% 2.5% 1.6% 0.0% 6.2% 1.6% 0.8% 0.2% 1.0% 1.1% 3.7% 39.9%

2.4% 3.1% 2.2% 0.1% 7.9% 0.8% 0.7% 0.4% 1.0% 1.4% 3.2% 53.2%

Insurance

Other

Total Benefits

Total Compensation

Selling Expenses T&E/Conventions Auto Expenditures Auto Depreciation

Total Auto

Advertising/Promotions

Total Selling

27 2009 Best Practices Study | Agencies with Revenues Between $1,250,000 and $2,500,000 | Revenues/Expenses