Insurance Agency Management,
Start an Agency,
Grow an Agency
I had lunch the other day with one of our agency partners, and we were talking about some of the keys to growing a successful agency. We covered a lot of ground and had a good exchange.
We were talking about how to write larger accounts, so I asked him what his average account size was. He started to give me a premium number, but I stopped him (see my earlier post “It’s Commisson. NOT Premium” for why) and asked for the average commission. Well, we decided to work with $400.
So, then I asked, “If someone came to your office and asked you to write their account and the commission was $100 would you do it?” He told me yes, and was quite surprised when I said that I would not.
“No. I don’t like going backwards!”
If I wrote that $100 account, my average commission would now be something like $390!
One of the most effective ways to increase the profitability of an insurance agency is to increase your average commission per account. This requires no more rent, personnel, or other overhead! But to increase your average you have to a) know what it is, and b) write business at or above the average.
This sounds hard, but it’s not. Decide to focus on accounts that pay more. Round. Cross sell. Up sell. There are other strategies. These are just a few. Hopefully, you get the idea.