Compensation packages for experienced multiline producers at insurance agencies average more than $100,000, according to a new survey.

And the study also found that agencies have changed compensation packages and their recruitment and training strategies to reflect a trend toward staff-driven, organic growth to expand their operations.

These were some of the results of a survey published by Business Management Group Inc. (BMG) in its “2006-2007 Owner, Executive and Producer Compensation Survey.”

The aim of the survey is to enable agencies to benchmark their compensation plans against industry norms by looking at various factors, including revenue size and region, the company said.

“With a shortage of sales talent in today's market, hiring producers from outside the industry has become a key recruiting strategy for almost 85 percent of respondents in our survey,” explained Suzy Hammett, vice president and author of the study, in a statement.

Ms. Hammett said the findings mean “it's even more important for agency principals to know how to attract and retain top performers with good training programs and competitive compensation packages.”

The report finds that the level of compensation for agency producers was directly related to the agency's size and individual earnings. The smallest agencies, with less than $500,000 in revenue, averaged $55,000 in total compensation per multiline producer.

Larger agencies, with revenues in excess of $25 million, averaged $192,400 per producer. Nationally, the average total compensation was $44,583 for new, inexperienced producers and $113,925 for seasoned multiline producers.

Producer commission rates at the largest agencies, with revenues greater than $25 million, averaged 4-to-12 percent less than those in midsize and smaller agencies, the report said.

This difference, the study found, may be due to the fact that larger agencies tend to provide additional resources such as sales centers, central marketing and account executives that increase the cost of acquiring and keeping business but can help increase an individual's productivity.

The benefits and perks offered by an agency were important components of a producer's total compensation package. For example, 57 percent of the survey group provided reimbursement for travel and entertainment expenses, while 32 percent paid a monthly auto allowance which averaged $431 per month.

The 46-page report on the survey, conducted in March 2006 and last published in 2002, is based on responses from 162 agencies and brokerage firms, categorized by line of business, six regions and 2005 total agency revenue.

For executives, the most important factors in determining base salaries were management responsibility and the size of the book of business produced. Sixty-two percent of respondents ranked agency profits as the key factor for determining executive bonuses compared with 50 percent in the 2002, the study said.

To retain the most senior personnel more agencies offered long-term incentives in the form of stock redemption and deferred compensation plans. Thirty-six percent of respondents were offering incentives to owners and 39 percent were offering plans to senior management, compared with just 25 percent in 2002.

In addition, 27 percent of agencies were offering executives equity in their book of business, while 24 percent were offering senior management stock options.

Another continuing trend was the focus on developing new and larger accounts. According to the survey, 24 percent of agencies were eliminating or reducing commissions on small-commercial accounts.

More agencies were found to be establishing small-business units to handle sales and service functions and reduce operating expenses so their producers could focus on larger accounts.

Similarly, the study said agencies were depending more on customer service representatives to sell additional insurance products to customers and structuring their compensation to reflect this trend.

The survey found 65 percent of agencies were paying CSRs for writing new business, up significantly from 43 percent in 2002. CSR sales commission percentages, which varied by line of business, averaged 21 percent for commercial lines, 24 percent for personal lines and 22 percent for employee benefits.

Additional information is available by contacting BMG at 800-772-0208 or visiting www.bmgconsulting.com.

BMG, a subsidiary of The Hartford Financial Services Group Inc., based in Hartford, Conn., is an agency-broker consulting firm that has surveyed and published agency compensation studies since 1990.

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