BMG also found that a growing number of agencies are paying closer attention to total compensation, spurred by the growing cost of health care coverage.

In Atlanta, Suzy Hammett, BMG vice president and author of the survey, said, “The cost of health care coverage for many firms is projected to average nearly 25 percent of wages in less than five years.” As a result, she said, firms are evaluating the cost of health care and retirement benefits before deciding how much to award in raises.

“Certainly training existing and new hires is an important way to avoid the salary spiral brought on by offering large pay increases to lure seasoned personnel from other agencies,” she noted.

While most salaries have increased by 6 to 8 percent, mean salaries for operations and sales managers have jumped 18 percent since the last survey in 2001. Mean salaries for employee benefits CSRs also rose 17 percent in the two-year period. Overall, however, for service, marketing, claims and accounting staff, salaries did not increase.

In 1999, BMG said it found that 47 percent of participating agencies offered incentive plans to managers, while today that number has grown to 82 percent.

The percentage of companies that offer incentives to non-manager staff has held steady at a significant 74.

Also, 56 percent of the participants reward managers based on specific performance objectives, and more than 18 percent offered long-term incentive plans to managers.

Ms. Hammett said this shift in agencies compensation strategies is leading to more sharing of profits with non-producer staff. As a result, while base salaries may not show much increase, total compensation for some has gone up, she said.

As an example of goal-based incentive plans for managers, she said a commercial lines manager could have compensation tied to net growth of their department and business retention, the agencys overall growth and profit, and meeting goals for a departmentsuch as implementing imaging or scanning.

Most U.S. survey participants indicated their planned compensation increases this year will be between 3.0 and 5.7 percent, with the Southwest accounting for the highest anticipated increase, and the Northeast the lowest.

BMG has been doing this survey since 1990. It is conducted every two years and endorsed by the Independent Insurance Agents and Brokers of America as one of their Best Practices Tools.

More information is available from Business Management Group at www.bmgconsulting.com. BMG publishes a separate survey of agency owners, executives and producers in alternate years.

Reproduced from National Underwriter Edition, June 23, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.