10 ways to Increase your Agency’s Profit Sharing Bonus
- October 28, 2012
- Written by An AgencyEquity Exclusive
1. Join a Cluster, Alliance, or Network
This is the best way to increase profit sharing for a small to medium size agency. This can do more wonders for profit sharing than a Merger or an Acquisition. A merger or acquisition usually involved two agencies, most cluster groups have twenty or more agencies, with some regional and national groups having hundreds of agencies. Because of profit sharing volume requirements, these groups can participate in the most generous top tier profit sharing bonuses. While membership in these groups can cost thousands a year in either fees or commission splits, in most cases the pooled profit sharing returned to agency members are well worth the return on your investment.
2. Acquire an Insurance Agency
With an acquisition, one plus one can equal three when it comes to profit sharing. The reason why it works this is way is because of minimum profit sharing volume requirements. If a carrier has a 500k minimum requirement to participate in profit sharing, an agency with 200k of premiums and another agency has 300k of premiums would not make profit sharing on their own. However combining those two books gives a production volume of 500k. If both of those agencies combined have 150k of underwriting profit at a 6% bonus, they would get a 9k bonus they would have never received on their own. This is why insurance agencies sell for a premium, because when added to an existing agency, an agency can build up their volume with a carrier and achieving additional profit sharing that none of these agencies achieved on their own.
3. Merge with another Agency
A merger will do the same things as described under “Acquire an Agency.” Volume is the key to increasing an agency’s profit sharing.
4. Loss Ratio Management
While production is important, without a profitable book of business, there is no profit to share. This will only happen by managing the agency’s book of business and writing quality business. One way to do this is by working with the carrier and their underwriters by reviewing each account. Another way to do this is by hiring a consultant to do this for you and can also advise you on loss ratio management.
5. Hire a producer
A producer with a book of business can instantly add to your profit sharing production requirements as well as a producer without a book who is motivated to build a book.
6. Hire an agency coach or mentor
There are a number of consultants who have previously had a career in sales management with a national or regional firm who have opened up their own consulting practice to help small to medium size agencies increase their production.
7. Beef up your marketing
Increasing your agency production to meet profit sharing goals requires you to market your agency. Some examples of marketing would be to purchasing leads, sending out a press release or sending an agency newsletter.
8. Improve your efficiency
Efficiency brings more productivity to an Insurance Agency, it also helps you access more information to help you make better underwriting decisions.
9. Expand into another State
For the agencies that specialize, are near a state line or want to open a branch office, expanding into another state opens up a bigger market for your agency. Getting licensed in a state you want to expand into is your first step.
10. Upgrade your website
A contemporary looking website with updated information is essential, your best prospects will review your website. Don’t lose business because you either don’t have a website of your website is outdated.