South East Michigan Independent Insurance Agency Survey Results 2014
After a long winter, here comes the sun!
The independent agencies that were able to weather the recession have returned to profitability. A slow but steadily recovering economy has helped, but agencies have also become more efficient and strategic. The adaptations that were forced by the recession have created more streamlined and flatter organizations.
Due to attrition and growth, hiring demands have been very strong. Locally we have a shortage of experienced candidates. We lost a good part of the workforce during the recession to early retirements, career changers, and relocations. At the same time, organizations suspended or cancelled their training programs during the worst years and now there is also a gap in the pipeline of younger people entering the industry.
We decided to conduct a survey this year because we received many individual inquiries from our agency clients regarding local trends in compensation, benefits, and the business in general during the past year. Many of the national resources for benchmarking do not address the unique business climate of SE Michigan.
The results that follow were compiled from independent agencies located in Oakland, Wayne, Macomb, Livingston & Washtenaw counties. If there was a discernable difference between counties we have noted it. We have also included data that we have gathered informally from active candidates and client companies in order to make sure that each segment was equally represented in the summary.
Agency Revenue
The reported differences between 2012 and 2013 were fairly consistent between agencies. All responding agencies reported an increase in revenue between 5 and 10%. We have seen demonstrated financial health among our client agencies, with many again looking to invest in producer hires and book purchases.
Staff
On average, agencies are at a flat headcount, or up by 1-2 employees. Most agencies do not anticipate adding to staff in 2014. The average revenue per employee was $124,927, although this was a large range (from approximately $88,000-$180,000).
Employee Benefits
100% of the agencies reporting offer group medical benefits of some type. All agencies reported an increase in their group health insurance premiums, with most ranging between 9 and 12%. One agency reported more than a 50% increase. Coverage offerings seem to have remained consistent, with some reductions in HSA contributions or small increases in employee contribution amount. None of the responding agencies planned on eliminating their group health plan.
Flex time / Remote Office
30% of reporting agencies do allow flex time for their workers. The vast majority of these agencies have set work shifts that employees may utilize. Only two agencies specifically mentioned working from home under certain circumstances and only for certain categories of employees. 80% of reporting agencies have part-time employees in several categories, notably clerical and receptionist positions.
Compensation
The below compensation levels reflect a combination of long term employees and recent hires. It is important to note that if we had restricted the compensation numbers to people hired in the calendar year 2013, the averages would have increased. This is an employee market, and salaries are rising in order to entice people to make a move.
*Macomb and Livingston counties had slightly lower salaries for each category.
| Compensation by position – Average | ||
| Position | 2014 | |
| Commercial AM | $55-70k | |
| Commercial CSR/Tech | $42-50k | |
| Personal AM | $35-50k | |
| Emp. Benefits AM | $55-70k | |
| Emp. Benefits CSR | $45-60k | |
| Analyst | ||
| Agency/Operations | $70-90k | |
| Manager | ||
Producer Compensation
There are as many variations here as there are producers in the workforce.
Average commissions paid were 39% on new business and 37% on renewal.
The lowest reported was 25% on new and 30% on renewal. Not surprisingly, the lower commissions correlated with providing a base salary and/or draw against commissions.
A straight commission producer (no base, no draw) was paid an average of 47% on new and 47% on renewal.
The majority of reporting agencies paid commission on all accounts, regardless of revenue amount generated. Those that did have thresholds set the guidelines between $1 and $5k.
Training & Development
The majority of responding agencies require that their service staff is licensed. If it is not “required” it is encouraged. Most agencies preferred online continuing education courses or carrier sponsored classes.
30% of responding agencies had hired someone without insurance experience in the past year. Training was mostly one-on-one with experienced staff members. Sometimes this was supplemented by carrier sponsored classes and/or online tutorials. Overall the outcomes have been very good, although time consuming. The positions which were hired/trained for included personal and commercial lines assistants and producers.
Miscellaneous Questions
The use of service centers and the likelihood of considering outsourcing for policy checking remained relatively unchanged from our 2009 survey:
| 2009 | 2014 | |
| Utilize Service Centers | 67.0% | 65.0% |
| Consider outsourcing | ||
| (policy checking) | 18.0% | 12.0% |
Most agencies provide 2-3 weeks of vacation and 3-5 personal/sick days. The least amount offered was 1 week for the first year.
The multiples cited in recent book purchases ranged from 1.00-1.25, however only 2 agencies reported.
57% of agencies report having a no social media policy during work hours.
Cell phone use was generally allowed, but there were several comments regarding overuse. We heard a lot about this during the past year or so, with agencies struggling with setting limits without banning them entirely.
18% of agencies report losing a carrier or broker contract in the past year due to volume demands.
Summary
Many of the employers we talk with have shared that although they are seeing profitability rise again, business is more challenging than ever. There is general financial health with our agency clients and a cautious optimism for continued growth.
Hiring was very strong in 2013, much of it due to pent up demand and a willingness to invest in additions to staff.
We hope that this information is useful to you. We appreciate your participation and value your business. Please let us know your thoughts and feedback!