Author: VU Faculty
Since this "article" covers so much ground, the only logical spot for it was the Miscellaneous section of Agency Management. This was a question submitted to our "Ask an Expert" service and the composite responses are shown after each part of the question.
Below is a lengthy series of questions from one email handled by our Agency Management faculty. The first point to keep in mind is that our Ask an Expert service is currently free, so questions should be fairly brief, and expect answers, while substantive and to the point, to be the same (I think the faculty was just on a roll on this one). The second point is that, while our faculty can answer many questions on their own, if they don't know the specific answer, they probably know where it can be found and will point the questioner in the right direction. The third point to remember is that many of our faculty are consultants and independent instructors...you CAN hire them for complex tasks! Now, here's the "question":
"Need some help on the following. Any resources sources -- or outright 'yeah, I know that one myself' -- are greatly appreciated! Thanks."
1. How many accounts/transactions does the average underwriter process in a year?
My best guess for a source here will be The Institutes...whoever is responsible for their Associate in Underwriting (AU) program. Could be that the information is in one of the AU books.
In my experience, it it difficult to tell what these numbers might be since some underwriters handle only auto, others GL, still others property, packages, etc. However, as a former package and workers' comp underwriter I recall that we were assigned work load by agency. We were expected to handle 10 to 15 renewals a day on top of all other transactions including endorsements and new business. Again, this varies by line of business. A large account specialist might handle only one or two.
Questions 1 & 2 depend heavily on the company's method of processing. My wife worked for a carrier here which sent all mail to a processing stop to see if there was a file (took as much as 15 days). It was then sent to an underwriting assistant (10 more days unless it required more info from agent), and then to an underwriter if any exceptions applied (more time depending on agent's response time). If everything was perfect, their agent could expect a policy within 45 days.
You might also mention the IIABA Best Practices Agency Profile/Self Diagnostic Tool. Great source of information of this type.
2. How long does it take a company to process a new account? Renewal? (Same for agency -- new account? Renewal?)
ACORD probably has some info on this from their Managing Your Automated Agency or P.O.W.E.R. of Change materials.
I can provide some input on agency time frames here. Depending on the agency, and this will really vary, see the Master Agency Manager section on Philosophy of Agency Management, Volume 1, section MP-4. This should provide some insight into the variations that can occur.
A commercial CSR handling medium size accounts ($5000-$50,000 premium) usually will have anywhere from 15 to 25 per month. This is different from a small accounts (BOP) person who could have as many as 45 to 75 per month. And, of course, there is personal lines which could be as many as 100 to 125 per month. The other aspect to keep in mind is how much is direct bill? This does cause a change in how much work can be done on the agency level.
Have him check out ACORD's "Mapping the Future" for info on what it cost
and how long it takes for a company and an agency to process a transaction. It is limited to small commercial and personal lines but has some good info.
3. What's the average profit margin per agency?
The average agency profit margin varies dramatically. Since many agencies are closely held and many times "S" corps, the profit margin could be zero. So, it is important to analyze what we most often see. I complete about 60 appraisals per year and, from this information, the average profit margin is about 7.5%. However, this really depends on the size of the agency and the type of business handled. The current GPS (Growth and Performance Standards) published by CIC provides some good information as I am sure the BP study will also.
4. Agency breakdown of expenses. As detailed as possible.
The Society of CIC publishes detailed info on this, I think, every two years. You can probably track down the book or a personal resource at their web site at www.scic.com. In addition, I'm sure there's lots of info in the Best Practices studies and/or Agency Universe report (new one just coming out).
The Best Practices Study has a the agency expense breakdown as well as the CSR salary info and profitability info. Check the website for the 1999 study.
Another source is Master Agency Manager (MAM). Check out Volume 1, Agency Values section, AV-4, appendix page 2.
5. How much do CSRs get paid? ( Any regional differences?)
That info is also available from IIABA and CIC. In addition, Carol Hammes with the Middleton Group does a salary survey by region or state about annually.
Also, the Best Practices endorsed tools includes the annual Non-Producer Compensation Study conducted by BMG. It gives all the salary info by agency position and is broken out regionally and by agency size. Also, I am doing a private study on compensation for a group of our clients right now. It will be interesting to see the CSR salary comparisons with other industry data.
Again, MAM has some information, in fact a new article will be out this month on this very subject. In the meantime, the Human Resources section HR-13 has a summary of info on non-producer compensation.
6. Breakdown of premium by account size. As detailed as possible. Whatever groupings make sense. For example:
XX% of gross premium booked are accounts less than $1,000;
XX% are $1,000 to $5,000;
XX% are $5,000 to (etc.)
I'm sure that will vary wildly by agency, though some of the resources above may have averages.
I am assuming, dangerous to do, that we are talking about commercial business in agencies here. If so, most agencies will have the following on average:
20-25% of total premium for small commercial under $5,000
40-60% of total premium for medium commercial between $5,000 to $25,000
15-25% of total premium for large commercial over $25,000
In addition to all of the above, one of our faculty members provided several articles on these issues, along with an Excel spreadsheet summarizing their statistical analysis of hundreds of agencies.