Last week’s post discussed a presentation that I attended at IIAG’s Fall Conference on how to create an engaged workforce and how to use metrics to identify and resolve problems with an agency’s performance. The other presentation that I attended at the Fall Conference was about the 2014 Best Practices Study of independent insurance agencies that was recently released. It was given by Shirley Lukens of Reagan Consulting, which is responsible for putting together the study. Ms. Lukens referred to herself as the “mother of the study”, which began in 1993.
The Best Practices Study looks at the top performing agencies nationwide in six categories based on annual revenue, from agencies with less than $1,250,000 to agencies with more than $25,000,000 in revenue. It identifies how the agencies in each revenue group are performing in various areas, including income and expense distribution, revenue and profitability growth, employee production and compensation, and technology expenses. In doing so, it sets standards for those areas that other agencies can use to determine how they are doing compared to the agencies in the study. The closer your agency is to meeting those standards, the greater its competitive edge will be.
Like the speaker in the other presentation I attended, Ms. Lukens recommended that the employees of an agency should be involved in determining what could be done to improve the agency’s performance in those areas where it failed to meet the standards set by the Best Practices agencies. The study offered some surprising information about what those agencies were doing to increase their organic growth rate, which is one of the two main components of agency value (the other being profitability) and according to Ms. Lukens the more important of the two. In addition to the well-known practice of rounding out accounts by cross selling insurance products to them, the study found that the best practices agencies were using more advertisements and were hiring more new producers.
It was surprising to me to hear that roughly half of all new producers hired by the best practices agencies came from outside the insurance industry and that there was not one particular type of outside experience that stood out. With respect to the hiring of young producers, the study found that having a regular presence on college campuses and providing internships to prospective employees were very important predictors of a successful hire. However, having a degree in risk management turned out to be not so important. One other important factor that makes sense when you think about it was to hire two or more new producers at the same time. By doing so, a natural competition is created, which can lead to a reduction in training time and costs.
Ms. Lukens mentioned that Regan Consulting would be releasing a Producer Recruiting and Development Study on its website sometime this week that would contain information on the best practices for recruiting and developing producers. While there, you may want to take a look at the 2013 Best Practices Study, excerpts of which can be found by clicking here.
If you would like a copy of Ms. Lukens presentation, which contained much more information about the results of the 2014 Best Practices Study, please let me know and I will send it to you.