Looking at a few P&C agencies and wondering what the realistic numbers should be when considering the operating expense vs revenue for a Property and casualty business ? I understand that number can fluctuate dramatically depending on size of the office and CSRs and producers involved .. but for those of you operating successful businesses what are your expenses / revenue ratio ? I have heard some suggest that business expenses ( office , marketing , support ) should ideally run at or below 40 % but that sounds low especially if you have additional support team ? Thanks
P&C Ideal Operating Expense
- Thread starter mkmaem
- Start date
This is going to vary a LOT depending on where you are at in building an agency. A new agency will likely be over 100%, since there are no renewals to help out.
A stagnate agency can do better then 40% since they are not actively marketing or working their book. Keeps the cost low, but eventually leads to being out of business.
I prefer to think about it as you should spend 100% of your new business commission on getting new business. You should have a CSR/producer for every 1000 'things' in force. Now you have to figure out the size you want to be, what that means in terms of office space, number of employees and calculate where you will be at. This isn't a rule, just a way to think about things.
Dan
A stagnate agency can do better then 40% since they are not actively marketing or working their book. Keeps the cost low, but eventually leads to being out of business.
I prefer to think about it as you should spend 100% of your new business commission on getting new business. You should have a CSR/producer for every 1000 'things' in force. Now you have to figure out the size you want to be, what that means in terms of office space, number of employees and calculate where you will be at. This isn't a rule, just a way to think about things.
Dan
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Simple but good DJS. KIS Keep it Simple.
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What about marketing and time wasted on insurance forums....
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Your situation is pretty unique. Not many of us are spending nothing on marketing, especially newer agencies.
Are your ams, rater, etc covered by your fees you pay to siaa? That's still peanuts really compared with marketing expense. I think that explains the disconnect you see.
Are your ams, rater, etc covered by your fees you pay to siaa? That's still peanuts really compared with marketing expense. I think that explains the disconnect you see.
The 40% figure I'm looking at is QuickBooks numbers for tax purposes so the expenses include a lot of things I show to reduce my taxable income. Meals and entertainment, mileage, tolls, client/company gifts, and yes marketing/operating expense.
I do spend a lot of marketing money on Internet leads but I also do direct mail, social media, website, referral gift cards, etc.
I do have a lot of center of influences but not as good of a setup as you have. You're rent is also unbelievably low.
I do spend a lot of marketing money on Internet leads but I also do direct mail, social media, website, referral gift cards, etc.
I do have a lot of center of influences but not as good of a setup as you have. You're rent is also unbelievably low.
