What Are the Success Metrics and Best Books in P&C?

[uptownABD]

Hi there, I'm a veteran life agent considering getting into P&C. I've solda t MDRT levels before and I'm thinking of getting into PnC for the long-term income stability it provides...versus the "sell or die" lifestyle in life sales.

Anyway, I want to know what are the benchmarks for production here? In life, we had Al Granum's One-Card-System and his 100 point month as activity goals to drive production.

Is there any industry-wide knowledge like this in P&C, like "Write 8 new lines per week" or "write $500,000 of premium per year" or anything like that to benchmark the activity required to build a book?

I have a bunch of other questions too, like "How many quotes turn into sales, etc." that I'd love feedback on.

To that end, are there any "must-read" books in this space, like Ben Feldman's "The Feldman Method" or Al Granum's "One Card System" in life insurance?

Thanks a lot!

 

[OKCinsurance]

Every P&C agency is different on how they measure "success". Each agency is going to be different on how the measure production. A small agency could say writing $10,000 in new premiums a month is a ton and a large agency would say they would have to shut the doors if they averaged that. Retention is a bigger and easier factor to measure. If an agency is writing non standard auto/home business their yearly retention could be around 50% or worse where an agency writing preferred business can possibly be around 90%. My agency only quotes and writes preferred home and auto insurance and we have about a 88% retention rate on a $6 million book. We have grown it from $0 to $6 million in 7 years only focusing on writing preferred home and auto insurance. No commercial and no non standard at all. To us, non-standard means a person with no prior auto insurance or a home that is currently up for sale or a home needing a lot of work. It blows other agents minds that we will walk a good commercial client but its all about specialization and not wasting your time or resources. We quote about 8 deals to close 1 but that number is different for everyone. A referral from a current client is much easier to sell than a random person that called into the agency for a quote that saw you on Google. My advice would be to specialize in a line of insurance whether that be commercial or home/auto and build the book by yourself without a secretary or agent until you have to have one. Build a friendly website that allows for people to get a quote and get connected with mortgage lenders. Its not easy and takes time to start building your book.

 

[djs]

Really, you need to back into your numbers to put this together. What is solid in Los Angeles may be unobtainable in Des Moines IA and probably isn't needed due to business costs.

Figure out what your costs are of doing business each month, including E&O, agency managment, Raters, office space, phones, etc. Figure fixed costs for these, though some you may have to take averages on.

How many policies do you need on the books to cover that? If you know the costs, and have no idea what your policy mix will look like, a lot of P&C insurance plans are written based on an average of $100 per policy per year. I recommend using $80, but again, this will vary based on where you are and what type of business you write.

Then figure out how much you need to make a year from the business and figure out how many policies you need for that.

You'll also need to throw in some marketing costs as well.

Once you have some sort of estimate of the policies you need to keep your doors open, then you can multiply that by the average annual premium per policy. This tends to average $1000 near me, but again, it will vary depending on what you write and where you are.

Now you know what size book you need.

Now, how do you get there in 3 years? Can you afford to make it happen? Don't underestimate the negative cashflow up front.

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Metrics to think about:
- Profitability: This is measured to the carrier. Does the carrier make money from the policies you write? If not, appointments will be hard to come by and perhaps even to keep. Carriers don't mind paying claims, but they want to keep their claims less than they make. Ask the carrier rep what is average in your area to get a good metric for this. They won't tell you most of the time, but you just need one that you can apply to everything.
- Policies per household: (called different things) This is how many 'things' do you insure in any given household in your book, on average. The more stuff you have insured, the more likely they will stay with you. I think the average is 1.8, you want to be at 2.3 or better. Don't sweat this metric, but it helps drive better business.
- Where does your business come from: A lot of people don't track this, but its important to know. In the P&C world, you quickly learn what business is easy to write and what business becomes a time waster. Hands down, I think most P&C agents will agree that the best referral is a related industry (i.e., mortgage broker) center of influence referral. The worse business tends to be walk in business (for preferred focused clients).

I'm sure you can find some sample P&C agency business policies online to get some ideas of what to think about. Try to get a copy of an application to one of the preferred carriers and see what they ask about, might be good things to track.

Dan