6 Things Insurance Agencies Should Review Before Year-End
December may mark the end of the calendar year, but September is a much better time to start looking at how your agency is likely to finish it. By the time year-end results arrive, many of the factors behind them are already set.
A few hours spent reviewing the right things now can uncover issues that still have time to be addressed.
1. Review your contingency and profit-sharing agreements
If your agency participates in carrier contingency or profit-sharing programs, pull out the agreements and see where you actually stand. Depending on the carrier and program, compensation may be influenced by loss ratio, premium volume, growth, retention or a combination of measures.
Don't wait for the final calculation to find out which numbers mattered. Identify the measures your agency can still influence and the ones you'll simply need to account for in your year-end expectations.
2. Take another look at open claims and reserves
Open claims can affect loss ratios used in some carrier profit-sharing calculations because incurred losses may include reserves for claims that haven't yet been paid.
Review significant and older open claims and make sure the carrier has current information. Has a situation changed? Has a claim been resolved but not yet closed? Is there a reserve you don't understand?
Reserve decisions belong to the carrier, but asking questions and making sure the claims team has accurate, current information is reasonable agency management.
3. Check your progress against carrier goals
Where does your agency stand on premium, new business, growth or other carrier goals?
If you're close to an important threshold, there may still be time to reach it through business already in your pipeline. Carrier goals should never override finding the right market for the client, but knowing where you stand can help inform where appropriate opportunities are placed during the remainder of the year.
4. Identify important renewals before they become urgent
Look ahead at significant accounts renewing between now and December 31. Which are likely to renew smoothly, and which deserve attention now?
A large account lost late in the year can affect agency revenue, retention and potentially carrier results. Starting early gives producers and account managers more time to address service issues, coverage changes, pricing concerns or other problems before the renewal becomes urgent.
5. Clean up your year-end pipeline
Take a realistic look at open opportunities. Which are actually likely to close this year? Which need a decision, proposal or follow-up to keep moving? Which have stalled and shouldn't still be included in the forecast?
A cleaner pipeline gives the agency a more accurate picture of where production is likely to finish and where the team should spend its time during the final months of the year.
6. Talk to your financial and tax advisors
Don't wait until the last week of December to start thinking about the agency's financial year.
If you're considering equipment or technology investments, employee bonuses, retirement contributions or other significant financial decisions, now is a good time to talk with your accountant or financial advisor about what should happen before year-end and what can wait.
The goal isn't to manufacture activity simply because the calendar is changing. It's to avoid discovering in January that there was something worth addressing when you still had time.
Year-end may be months away, but there are fewer opportunities to influence the results with every week that passes. September is a good time to find out where your agency stands and decide what, if anything, deserves attention before December 31.
Republished with permission from IA Today
