NEXT LEVEL

[SEANMYERS]

I have had an Insurance Agency since yr 1996 and I've enjoyed a comfortable income/living up until now. I am stuck as to how to take my Agency to the next level and by that I mean taking in at least 250k yr in gross commssions annually. I know this is possible as I know of other Agencies that make this kind of money & more. I am fortunate to have aquired almost all of the preferred markets I need (Safeco/Travelers/CNA/Hartford etc.) I am wondering if anyone has advice on what happens next so to speak so that I become more than just a 1 or 2 man operation.
(hard to keep good employees!)

Advice is also needed on proper compenesation for a sales agent (I was offering 50% commission on all new & renewal business, including broker fees......I was not supplying leads although full access to my current book of business was avaialable for cross selling purposes. Some said this was too generous!

Anyway anyones thoughts would be appreciated......I don't have big dollars for a sizable marketing campaign.

thanks
Sean

[wlunday]

Sean, I'm not sure where you hail from, but here's how it worked for me...

I had a small, nitch life / health agency between 1980 and 1997. A good friend with a small (indy) P/C agency wanted to retire. His annual gross commissions at the time were right about $110,000 on about $850K of premium... all preferred, mostly Safeco. A real typical "mom & pop" operation.

I bought it in November of '97. He stayed on for 6 months full-time (no comp) to help the transition, then retired. In June of 98 I hired a full-time commercial producer and also contracted with Safeco to participate in their "Key Markets" marketing campaign. We received tons of great leads, both personal and commercial. By the end of 1999 we had boosted our personal lines premium to over 1.5 million and added over $200K of additional commercial premium. We now have four working here, a personal lines person, a commercial lines person, an office manager / CSR (my wife) and myself as the life & health person. It's lean, but working well.

With that said, my point is that you can go to the next level if you partner with a carrier and then religiously work the leads quickly as they are produced! The year we did the marketing campaign with Safeco we wrote well over 300 new policies, all preferred, and added over 500K of premium... just from the campaign! Safeco paid half of the cost. Our part was just a little over $2500. You don't need a deep pocket for these programs, just a desire to produce for the carrier you ask to help you market. Not a bad deal at all. (Their spring trip to Cancun was great, too!)

And finally, team up with a life & health producer so you can "round" the accounts. The more policies you have in a household the better the retention, the better income and more professional the appearance.

Good luck.

Swymmer

[d's insurance store]

I've always felt that when you successfully own and manage a smaller agency, then you're still in the insurance business. As you grow larger, you migrate into the people business, because managing people is what's the biggest challenge as you grow beyond the day to day transactional aspect of an insurance agency.

Many agency owners get larger by acquisition, because it allows for immediate cash flow while you pay the debt service. Once the debt is retired, then you're in a position to leverage the additional commission income. Many times an agency has enough slack and the proper internal systems to take on acquired business without a major attending increase in expenses.

Otherwise, to do it organically, you're going to have to ramp up your marketing, big time! And that means figuring out what your best product is and whether or not the market exists for it in large enough numbers to exploit your strengths.

When the prior poster, wlunday, spoke of partnering with SAFECO, that implies that at least at that point in time, SAFECO offered a competitive product in the various markets the carrier was looking to grow. And wlunday was also probably in an area that provided the large enough markets to make the lead campaign worthwhile in both personal and commercial lines. His results might have been a lot different if SAFECO did not provide either the price points or products that dovetailed with what the marketplace wanted/needed. If the market is ripe for exploitation, then this kind of partner/lead program is like shooting fish in a barrel if the agency owner really works the system. But, disconnect with what the market wants/needs and what you can provide, and you'll feel as though it would have been easier to just flush the marketing money down the drain.

In order to exploit personal lines, you need a price point that makes acquisition easy...becasue in spite of all the talk about service and satisfying needs (blah, blah, blah), that market is largely driven by price at the acquisition phase, and retained by service.

Commercial is dependent on what's nearby and what you can do differently than what's being offered. If you're in an area that is experiencing major economic disruption and contraction, then it may not be the best time to start a marketing campaign. Just ask those agents who for the past 6 years specialized in residential contractors in areas of massive growth, only to hit the wall with current construction conditions in distressed areas. What they might of thought was going to be fat city into eternity is now a sea of late/cancellation notices and very little phone activity and returned commissions from unearned premium.

Just my thoughts on a quiet day.

[Lee3632005]

Acquisition, add producer(s), or read E-Myth. I am trying to go the E-Myth route. Alan.