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... x No Thanks Loading.. Maximize Profits With Contingency Contracts 4/30/2013 by CompleteMarkets Editor , Chris Burand This content has not been rated yet. Make sure that you're getting all you can out of your contingencies. According to the Academy of Producer Insurance Studies, the average independent insurance agency with annual revenues of $250,000 or more spends between $1 and $1.08 in operating costs for every dollar of earned commission. So, how can agencies afford to stay in business? The answer: Contingency bonuses. Contingency revenue is pure profit. However, most agents don't use contingencies to their best advantage. By using contingency contracts strategically, agents can increase their bonuses by 10% to 500% . In essence, contingency bonuses are profit-sharing dollars that a contracted insurance company pays to an agency if the agency achieves predetermined premium volumes, loss ratios, and other objectives. Insurance companies offer contingency bonuses because they feel that agencies have a certain degree of control over loss ratios. The bonuses serve as an incentive for agencies to perform in-house underwriting functions before submitting applications to a company. Contingency contracts vary by company, and the best contract for one agency might not be the best for another. That's why it's important to analyze all contingency contracts and their possible outcomes thoroughly before selecting one. I started analyzing contingency contracts while working for an insurance company. A competing company offered one of my clients a commission percentage that my company couldn't match. However, I knew my company had a very good contingency program and that my client would probably qualify for a contingency bonus ...

... all former employers listed, even those from jobs many years ago. Ask references about their knowledge of the candidate's work history. During the interviewing process, ask the applicant if any of their past employers would be reluctant to provide a job reference. Ask them for written letters of recommendation. Learn if they've kept copies of their termination notice or performance appraisals. Finally, be sure to inquire about occasions when they had to deal with something "unfair" in their previous jobs. The response should help reveal their character. Don Phin, JD, CPCM is president of HR That Works, Inc., a firm specializing in management, employment law, and risk management. He serves as the Human Relations Key Consultant for IMMS.com. You can reach Phin, a past president of the American Academy of Employment Law Attorneys, at (800) 234-3304; e-mail [email protected] ; or visit www.hrthatworks.com . Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for you, your business or your family? Get quality appointments - Save yourself a whole lot of time & money when you use our directory of carriers, wholesalers and service providers. Negotiate lucrative contracts with carriers and wholesalers. Net result. More revenue for your agency! Clients & Prospects will research you, your co-workers and your agency here. The most comprehensive online insurance industry reference library for - Personal Lines Professionals Commercial Lines Professionals Life/Health & Benefits Professionals Online newsletters and content that you can use for your clients and social media efforts ...

... PED future projections? If you can't answer these questions, you don't have an accurate picture of how every area of your agency is doing. You have a total picture through your P&L and balance sheets, but not an accurate one for departmental decisions. You need to know your profit in each area to make crucial decisions on issues such as pay levels, raises and bonuses, owner compensation, and expansion or reduction of an area. Without specific data, you're making decisions based on averages. This could be very costly. It's important that all expenses of the agency be allocated to an income-producing area. Don't have an administration department for expenses only. Agencies are given excellent guidelines to measure their total income and expenses through studies and reports by IIAA, PIA, ACORD, The Academy of Producer Insurance Studies, and others. But I haven't seen any that consider the PED. Some of these guidelines are also skewed by the use of consultants and outside contractors that agencies don't figure into their employee count. You'll need to build your own PED model. The question I'm most often asked is, How do you do this? ' Many agency-management systems will get you close, if your accounting area takes the time to allocate every expense and income item. The allocation of income is easy. It's the expense side that takes time, and changes regularly. I believe that the best way to produce the final product is with Excel or a similar spreadsheet. The nice thing about Excel is that it's easy to change, and can run what if' scenarios. The important ...

... is not just about making money, but also about having fun and building relationships along the way. Ask yourself this question: "How can I do a good job of branding and selling our agency to current and prospective employees?" All you have to do is open up any good book on sales or marketing and replace the word "customer" or "client" with the word "employee," – and you'll gain a great deal of insight about how to be a better leader and manager. Don Phin, JD, CPCM is president of HR That Works, Inc., a firm specializing in management, employment law, and risk management. He serves as the Human Relations Key Consultant for IMMS.com. You can reach Phin, a past president of the American Academy of Employment Law Attorneys, at (800) 234-3304; e-mail [email protected] ; or visit www.hrthatworks.com .  Reproduced, with permission, from Rough Notes magazine. Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for you, your business or your family? Get quality appointments - Save yourself a whole lot of time & money when you use our directory of carriers, wholesalers and service providers. Negotiate lucrative contracts with carriers and wholesalers. Net result. More revenue for your agency! Clients & Prospects will research you, your co-workers and your agency here. The most comprehensive online insurance industry reference library for - Personal Lines Professionals Commercial Lines Professionals Life/Health & Benefits Professionals Online newsletters ...

... employees reemployed as soon as possible. See if any of your local temporary firms need workers. Provide downsized employees with a job-counseling program. Consider offering some executives outplacement services. Acknowledge the impact on those who remain. This is a great time to get employees engaged in the company's future and help find solutions to help reduce costs and/or or grow revenues thus preventing further layoffs. HR That Works users are encouraged to read the Special Report: Downsizing, Layoffs, and Reductions in Force in the Special Reports area. Don Phin, JD, CPCM is president of HR That Works, Inc., a firm specializing in management, employment law, and risk management. He serves as the Human Relations Key Consultant for IMMS.com. You can reach Phin, a past president of the American Academy of Employment Law Attorneys, at (800) 234-3304; e-mail [email protected] ; or visit www.hrthatworks.com . Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for you, your business or your family? Get quality appointments - Save yourself a whole lot of time & money when you use our directory of carriers, wholesalers and service providers. Negotiate lucrative contracts with carriers and wholesalers. Net result. More revenue for your agency! Clients & Prospects will research you, your co-workers and your agency here. The most comprehensive online insurance industry reference library for - Personal Lines Professionals Commercial Lines Professionals Life/Health & Benefits Professionals Online newsletters and content that you can use for your clients and social media efforts ...

... their legal services agreement. Make sure that you understand all of the terms and conditions in this agreement and that any additional understandings reached are clearly stated in writing. Make sure they have an insurance policy. You might even go so far as to learn the extent of coverage and obtain a copy of the Declaration page. CONCLUSION Hiring the right attorney will go far to reduce and perhaps even eliminate your exposure to the cost, time, and emotions associated with employee litigation. The next article will discuss the questions you should ask to make sure that you and your attorney communicate through the litigation process. Don Phin, JD, CPCM, is president of donphin.com, inc., a firm specializing in management, employment law, and risk management. Phin, a past president of The American Academy of Employment Law Attorneys, can be reached at (800) 234-3304, e-mail [email protected] , or the company Web site www.donphin.com . Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for you, your business or your family? Get quality appointments - Save yourself a whole lot of time & money when you use our directory of carriers, wholesalers and service providers. Negotiate lucrative contracts with carriers and wholesalers. Net result. More revenue for your agency! Clients & Prospects will research you, your co-workers and your agency here. The most comprehensive online insurance industry reference library for - Personal Lines Professionals Commercial Lines Professionals Life/Health & Benefits Professionals Online newsletters and content that you can use for ...

... adamant that every agency owner should sell ASAP to avoid higher tax rates. They allow for almost no exceptions. However, the reality is that while a small percentage of agency owners should sell soon to avoid higher taxes, most should not sell this year or next. The logic is simple: even with higher tax rates in the future, the agency owners will make more money by not selling today. There are two common scenarios in which agency owners will make more money by not selling today. First, consider the following example: Suppose an agency's owners are making the equivalent of 25% of revenues annually as a combination of their sales and dividends/bonuses. This is a reasonable, even conservative, assumption. (The most recent Growth and Performance Standards by the National Alliance Research Academy shows that the average agency with revenue of $3 ,000,000+ averages a 10% profit margin and executive compensation equals 16% of revenue. Assume the agency has $3 ,000,000 in revenue, a 25% pro forma EBITDA and the agency is valued at 6.0 times EBITDA. This means the owners are today making $750,000 annually, and the agency is valued at $4 ,500,000 (assuming the balance sheet is neutral) . Assume the sellers get a 15% tax rate (which doesn't apply to all sellers) . Their tax bill is then $675,000, making their net $3 ,825,000. If the owners don't sell for five years, the tax rate goes to 35%, the ...

... case scenario?" I said that in the best case scenario, $150,000 commission might be breakeven. His response, "$ 150,000 commission? I thought you meant $150,000 premium! Hah! $150,000 commission isn't possible in five years or even 10 years. It took me 20 years to build a $150,000 commission book! Your standards are ridiculously high!" More recently, an agency owner told me he was "proud" of his producers who, on average, had 10 years of experience and wrote only $150,000 each. That is far below the norm and yet it is far better than what the owner in the previous example thought possible. According to the new Producer Profile by the National Alliance Research Academy, the average commercial producer has between $300,000 and $350,000 commissions. It varies by age, location, experience, agency size, and other factors, but the overall average is $300,000 to $350,000. Should an agency owner be proud of producers who are not even doing half of the industry average? So how much production can a producer produce if a producer can produce? Before going further, let me clarify the question by stating that it does not matter how much new business a producer generates. New business only matters relative to retention so both metrics combined or a net new measure can be used. Another agency owner expects all of his experienced producers to grow their books by at least $50,000 annually, even ...

... employees? Are you serious in stating that your company doesn't tolerate harassment or discrimination? Is this a fun place to work? Do you offer competitive wages, salaries, and benefits? Have you done a thorough job analysis to make sure that you're clear about the skills and abilities I need to succeed in this position? Is there any other significant information you haven't disclosed that might concern a reasonable job applicant? In reality, both applicants and companies lie in the hiring process. The art of hiring lies in getting to the truth. Don Phin, JD, CPCM is president of HR That Works, Inc., a firm specializing in management, employment law, and risk management. He serves as the Human Relations Key Consultant for IMMS.com. Phin, a past president of the American Academy of Employment Law Attorneys, can be reached at (800) 234-3304; e-mail [email protected] ; or visit www.hrthatworks.com . Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for you, your business or your family? Get quality appointments - Save yourself a whole lot of time & money when you use our directory of carriers, wholesalers and service providers. Negotiate lucrative contracts with carriers and wholesalers. Net result. More revenue for your agency! Clients & Prospects will research you, your co-workers and your agency here. The most comprehensive online insurance industry reference library for - Personal Lines Professionals Commercial Lines Professionals Life/Health & Benefits Professionals Online newsletters and content that you can use for your clients and ...

... in the process of delegation, you should first determine whether an SOP covered this item. If it didn't, incorporate the procedure for future reference. 7. SOPs help you set performance expectations more easily. Make sure that job descriptions, performance appraisals, and other performance tracking tools are directly related to the SOPs. 8. SOPs help you grow your business. Do you think that McDonald's or Southwest Airlines could have grown without them? 9. SOPs provide an instant orientation for new employees and a cross-training mechanism for teams Don Phin, JD, CPCM is president of HR That Works, Inc., a firm specializing in management, employment law, and risk management. He serves as the Human Relations Key Consultant for IMMS.com. You can reach Phin, a past president of the American Academy of Employment Law Attorneys, at (800) 234-3304; e-mail [email protected] ; or visit www.hrthatworks.com . Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for you, your business or your family? Get quality appointments - Save yourself a whole lot of time & money when you use our directory of carriers, wholesalers and service providers. Negotiate lucrative contracts with carriers and wholesalers. Net result. More revenue for your agency! Clients & Prospects will research you, your co-workers and your agency here. The most comprehensive online insurance industry reference library for - Personal Lines Professionals Commercial Lines Professionals Life/Health & Benefits Professionals Online newsletters and content that you can use for your clients and social media efforts ...