Insurance Agency Growth

Nov 20, 2008

  1. saieddie
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    saieddie Guru

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    Whats a good growth number for an aggressive independent agency?

    Multiline agent since 1995, I'm purchasing a small independent agency with some very competitive appointments. Its just the owner and one part time CSR. I've got access to current clients and referrals w/x-dates and policy info from a retiring captive agent. So, I've got a good base to work from.

    Renewals will pay all the bills in the first year.

    Figuring on $300,000 in FYC premiums the first year, and adding 1 employee a year for the first five years, is 25% premium growth a year for five years an unreasonable goal?
     
    saieddie, Nov 20, 2008
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  2. djs
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    djs Super Moderator Moderator

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    Re: Agency Growth

    Not sure what you mean.... $300K in FYC with only 1 CSR and no additional producers simply isn't going to happen.

    Heck, $300K in renewal commissions (which is what I assume you meant) with only 1 CSR will kill the 2 of you, very much limiting growth opportunities.

    I'm guessing a bit here, but if you are looking at $300K in service, and you want to grow at all, you'll need 3 licensed CSR's plus yourself, at a minimum. It depends on the balance of the book (commercial vs personal / auto vs home) to determine true workload.

    Also, figure a certain percentage loss with the agent change. Most people don't care, some will use it as an excuse to shop the policies.

    Also, make sure you know what the retention ratios were before you buy the agency. They don't get better, at least not initially.

    Dan
     
    djs, Nov 21, 2008
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  3. saieddie
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    saieddie Guru

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    My bad, I meant $300,000 in premiums.

    I'm not too worried about retention. In my area, the preferred companies with the best rates are USAA, Allstate, and this company. I figure, worst case scenario, I'll only lose 10%. The current owner/agent is staying on for up to a year to transition with me. I'm more concerned w/new business.

    My five year goal is to have, me, a commercial agent, a personal lines agent/csr, and a full time csr, with 2.5 million in renewal premium.
    Long range - 20 yr goal, is to have 15 million in premiums renewing and letting my kids take over day to day operations.
     
    saieddie, Nov 21, 2008
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  4. 1manshow
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    Good goals !

    Depending on your demographics,work ethic, organizational skills,time management and management skills, marketing plan, current market penetration, current agents persistency,etc...... you can probably better determine if those goals are attainable.

    Unless you are in a high growth area, 15 mil. in 20 years might be considered by many to be a bit lofty of a goal.


    FYI: I think we are very efficient with each of our personal lines CSR's servicing 175-200K comm.
    3 CSR's =500- 600K Comm
    Comparative rater, AMS, dual and triple monitor stations must have all been good choices:idea:
     
    1manshow, Nov 21, 2008
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  5. saieddie
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    saieddie Guru

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    I'm in a high growth area, a little south of Washington, DC. We're not recession proof, but feel lesser effects due to all the gov't and military jobs.

    I'm shooting for 15 million in 20 because thats approx what the agency I'm with now has done. They are 90% commercial lines though, with a niche market.

    My agency is going to be 60/40 personal/commercial lines for the first few years. I'd like to get it to 30/70 by the 20th year.
     
    saieddie, Nov 21, 2008
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  6. djs
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    djs Super Moderator Moderator

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    Yes, that would be an excellent efficiency. Doesn't leave anytime for growth, unless that is handled by separate producers, in which case, you're golden!

    It is easier for 3 to handle $600K in commissions than it is for 1 to handle $175K, there are certain efficiencies when someone has time to complete a task before the next call, something that happens easier with more people in the office. Even at that though, churning $200K through a CSR is totally awesome.

    And yes, I would agree, the tools you provide make the difference. For instance, I used to pay my staff to fold letters and put them in envelopes (I mail between 750 and a 1000 a week). I finally broke down and leased a folder inserter, which can do all 1000 of those in about an hour. Kept me from hiring an additional person, and cost me about $140 a month. Finding these efficiencies are extremely important for the P&C office of the future.

    Dan
     
    djs, Nov 21, 2008
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  7. 1manshow
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    Washington, DC I'll bet the average personal lines premium per account in that area is pretty high.

    Don't know how intimate you were with carrier contract negotiations at your current agency ? We have had good luck negotiating growth incentives with two of our top carriers that other agents with the same companies do not take advantage of. We will add approx. 20K to our profit this year from growth incentives alone. Some carriers don't overlook the importance of loyalty and growth from their agents, be sure to ask for your piece of the pie.


    Good luck in your endeavor !
     
    1manshow, Nov 22, 2008
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  8. saieddie
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    saieddie Guru

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    Premiums aren't too bad. Virginia is generally pretty inexpensive on the auto and home side.

    The district sales manager seems to think 25% growth is attainable with some work. The current agents aren't growing like that anymore, but apparently they're living off their renewals and waiting for the phone to ring.
     
    saieddie, Nov 24, 2008
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  9. 1manshow
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    I try to thank God every day for agents who like to sit and wait for that phone to ring:biggrin:
     
    1manshow, Nov 24, 2008
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  10. bobson
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    What else are you supposed to do? Markets are tough, economy is in the crapper, nobody is buying. You can't go out and get any business! :D
     
    bobson, Nov 24, 2008
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