Countering the economy at large, insurance agencies are adding employee, according to the Best Practices Study from the Independent Insurance Agents & Brokers of America.

“This year’s study indicates that the Best Practices Agencies, overall, continue to perform well, despite facing some challenges in soft market conditions,” says Madelyn Flannagan, the association’s VP of agent development, education and research. “As expected, overall organic growth was down significantly again this year but was buoyed by positive growth in both Personal P&C and Group L&H. This trend continues from 2007 when we began to study the current group of Best Practices Agencies.”

While this year’s study shows that the total number of employees reported remained steady in agencies with revenues under $5 million, agencies with revenue agencies over $5 million increased headcount by an average of four people.
 
The study, compiled by using the year-end results of the participating agencies most recently completed fiscal year end, also examines the relationship between headcount and profitability.

A new benchmark introduced in 2007, the “Rule of 20,” calculates whether or not an agency is creating significant returns. In general, an outcome of 20 or higher means an agency is generating adequate shareholder returns, while a score of less than 20 indicates sub par performance. For smaller agencies, the average score dropped from 25.6 to 14.4, while for larger agencies it fell from 24.2 to 13.4.
 
“The new commissions produced per validate Commercial Lines producer was down across the board in all agency size categories,” Flannagan says. “Given the soft market, this was not a surprise and may be a factor in the increase of multi-line producers in the larger agencies.”

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