Insurance Agency Benchmarking – FAQs

1. Our general ledger has many more categories than your benchmark template. Why is your template so consolidated?

The categories in Agency Consulting Group’s Composite Groups represent the standard operating statement categories for the insurance agency industry. These 31 categories represent all income and expense lines normal to insurance agency operations. Your General Ledger categories are still very useful but should be combined for management and comparison purposes.

2. Are the dollar comparisons or percentage comparisons of greater importance in Benchmarking?

The dollar comparisons in benchmarking only assures you that your agency is being compared to the proper Composite Group. The percentage comparisons help you determine whether your agency is above or below the Composite Group averages for the line of revenue or expense that you are reviewing.

3. What does it mean if my line items are above or below those of the Composite Group?

If your line items differ from the Composite Group by less than 10% (in either direction), we consider it within tolerance of the averages. If any line item deviates from the Composite Group by more than 10%, it is considered either ‘Exceptional’ (if the difference was better than the averages) or ‘Exceeds Tolerance’ (if the difference is worse than the averages).

4. Does a deviance over 10% mean that my results are better or worse than the Composite Group’s?

Not necessarily – and this is the MOST IMPORTANT PART of the analysis. If your results deviate from the industry averages, it is incumbent on you to determine why it is different. The deviation may mean that you have identified an area within your operations that can be improved for enhanced profitability. But the deviation, positive or negative, could also be easily explained and a normal part of your business (not needing correction).

For instance, if your Occupancy is substantially above or below that of the Composite Group, it may mean that you occupy more space than needed for an agency your size. But it could also mean that you reside in the downtown area of a major metropolis and pay top dollar rent. On the other hand, a low occupancy cost is understood if you reside in a rural town where per square foot cost may be 1/3 that of a major metropolitan area.

The deviation, itself, is less important than WHY the deviation occurred.

5. Does having all of my indicators within tolerance mean that my agency runs well?

It does – if you are satisfied that your agency is “Average”! Most agents seek to become more profitable by distributing revenues and controlling expenses BETTER than the average agency.

6. What do I do if I do not understand the analysis or if I need help improving operations?

EMAIL ( OR CALL US (800-779-2430)! The automation of the Benchmarking program has permitted us to cut the cost of the process tremendously (as can be attested to by the thousands who have submitted their data for analysis in the past). We have always been available to consult with agents regarding aberrations and what they mean and offer our services to help improve performance in any agency area (additional consulting or on-site visits, of course, are billed separately).

7. What if my operating classifications are different than yours?

The industry has adopted our classification system as the standards. However, every agency has the right to classify their categories however they desire. For instance, many agencies still place postage costs in the general “office supplies” category. We recommend that it be split out because the importance of managing postage costs requires you to know them separately from other office supplies.

If you prefer your categories, go ahead and submit your data in accordance with your categories (i.e. postage costs in office supplies), but understand that you should combine the Composite Group’s separate costs to identify their value compared to your classification system.

8. What do I do after the Benchmarking Analysis is complete?

Benchmarking does two things – it now compares your agency against your Specific State (or other sponsoring homogeneous group) Peer Group and against all agents of similar size within the industry – and it forms the basis of a Self-Improvement Plan. Many agents decide that that they want to improve certain revenue distribution or expense categories to maximize profits. They incorporate these plans in their Strategic and Tactical Planning process and repeat the Benchmarking Analysis quarterly or annually to measure their progress both against their Peer Composite Group and against their own historical performance. Since there is no longer a cost to entering data, you may do so with any rolling 12 month result at any point in the year to compare your agency against the Composite Group (please do NOT enter partial year data – it will return erroneous results). This means you can take six month result for current year and add the last six month results of the prior year to review your performance part way through your fiscal year.

9. What is the Quick Analysis Program?

Viewing your State and the National Composite Group is free to all agencies that input their data to the Agency Consulting Group, Inc. database. Many agencies would like to see both the Composite Group Benchmarks and National Benchmarks compared against their own agency’s data on a real-time basis. The Quick Analysis Program (cost only $25 through Paypal) makes this comparison possible. You will see a side-by-side analysis of your agency vs. your Composite Group and vs. the National Composite Group of agencies of your size with an indicator noting if you have achieved Exceptional or Aberrant results in each of the categories of revenue and expense and in your Balance Sheet Liquidity Ratios.

10. How do I know that my information is treated confidentially?

When your data arrives at Agency Consulting Group, Inc. it automatically enters the database and returns you a User Name and Password (you choose the password). There is NO input document and we only maintain your identity to e-mail you a FREE SUBSCRIPTION TO THE PIPELINE as a thank you for submitting your data. Your agency’s data set and identifier is not related and we will have no way of knowing which agency belongs to which data set without the password (that you generate yourself). Don’t lose the password – that would require you to reenter your data.

Click Here to Enter Your Agency’s Data