What’s In YOUR Agency Management System?

So if I were to ask you, “What is your agency’s rate of retention?” (in general, not specifically by line of business), what would your answer be? 80%? 90%? Higher, or lower? Chances are, and I would be willing to wager on this, that your answer would be the same that I hear from most agencies: “Oh, we have a fantastic retention rate, I am sure it is over 90%!”

Well, that is fantastic, except that:

a) There is an excellent chance that your response is incorrect as it is most likely lower than you assumeb) How come you cannot tell me exactly what it is, for each line of business?

b) How come you cannot tell me exactly what it is, for each line of business?

Well, the answer to both of my statements above is very simple, but before we discuss the answers and why, let us chat a bit about retention, and its impact on your business and its employees.

Assuming your agency has a high rate of retention, let’s say 90%. That appears to be an excellent rate, considering all of the outside influences that the independent agents face these days with direct writers, online marketers, and what have you. However, even though 90% appears on the surface to be something to brag about on the golf course with your fellow agents and brokers, a 90% rate of retention very simply means that you now have to work 10% harder than you did last year, just to break even! In addition, let’s also assume that you have been in business for ten years, and each year your agency is operating at a 90% retention level, so when you extrapolate that figure out in reverse, you are constantly having to work harder and harder than the year before, just so that you do not lose what you and your staff worked so diligently for previously!

Let’s now complicate this calculation even further: have your carriers all called you this year and told you that they are going to raise your commission rates, increase profit sharing, and expect you to do less service work? I don’t think so…if anything, your commissions (if they haven’t been reduced), have most likely remained the same. Granted, premiums have increased so you will make up some of the revenue that way, but that is the equivalent of a supermarket raising the price of milk to offset the cost of bread. Furthermore, your agency expenses have been on the rise with labor costs, health care and other insurance costs, rent, utilities, etc., so an increase in premiums does not necessarily offset the 10% loss of clientele.

There are a few different ways to manage this loss of business and revenue. However, you cannot address the issue until you are fully aware of exactly what the issue is, and can definitively determine exactly what the agency’s rate of retention is. So how do you do that? Well, to begin with, you need an automated tool that will help you to measure exactly how you keep your existing business. For instance, as a business owner, you should have at your fingertips the ability to go into your management system, request a report on business retained and have the ability to manage the renewal process. You should also be able to not only see this information when you request it but also be alerted to indicators throughout the policy year on factors that may cause the policy to not renew. If you have this information automatically provided to you and your appropriate staff on a regular basis, you may then implement a process and schedule tasks to address these areas of concern, before you receive the call requesting a BOR (broker of record), or copy of their existing declarations page, or even worse: an LPR (lost policy release) which indicates that the coverage has been replaced.

Don’t work harder to generate less income…let automation do this for you. EZLynx has patented tools to automate these processes for you. For additional information on how EZLynx can help you and your business, please contact us today!


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