Getting A Handle On Your Agency's Life Potential

GETTING A HANDLE ON YOUR AGENCY'S LIFE POTENTIAL

One reason agencies shrug off their Life potentials is they have no idea how big that potential may be. In each agency, of course, the precise figure will be shaped by many variables. Some generalizations, however, are valid as starting points.

'The greatest value of a P/C agency is that it is a magnificent prospecting tool for Life business,' said the president of a large P/C agency, who was a personal producer in P/C and Life benefits. This statement was-and is- shocking and true.

During the so-called 'normal' times, when P/C commissions ranged in the 30% field (plus contingencies), some P/C agents earned more on Life commissions than on P/C. Increasingly, surveys reveal agencies' Life income inching upward as a percentage of total income. Many agencies are showing 5% to 10% of the bottom line coming from Life production; more are in the 10% to 20% range, and a few are breaking the 25% mark. Yet there are some agencies- admittedly a small percentage, but enough to show a consistent pattern within reach-earning 50% of profit from Life! The P/C profit is equaled or exceeded by the Life profit.

1. The common thread these agencies have is a commitment to Life production.
2. That commitment starts with recognition of potentials.
3. As a guide, complete the following data about your agency. Develop guidelines toward improving Life income.

Personal Lines

• In independent agencies, for each $1 million of P/C premium that insureds spend, they spend close to $1.5 million on Life/Health products.
• Even if all of the $1.5 million is renewal business yielding only 5% commissions, that constitutes $75,000 a year. Obviously, no overhead is incurred. How does $75,000 compare with an agency's net on $1 million of P/C premium? Face it-most Life business is obsolete, in need of serious improvement in the hands of a competent professional.
• Most P/C insureds prefer their Life business to be written by their P/C agent or an associate-but many write it elsewhere because they aren't asked by their P/C firm.

You can start shaping what you'd like your Life business to do for you. The major benefits that can be derived from Life production are listed below; you may add your own. Number them in order of importance to you, 1 being the highest priority.

File this completed form for future reference, to see how reality compares to hopes or expectations.

A reasonable goal is to develop gross P/C:Life ratio for income to 1:1. Life income should equal P/C income (and, incidentally, P/C income should be greater, too, as a side benefit).