Premium only tells half the story when it comes to your Insurance Agency’s growth. So why are so many agencies still using it as their primary metric? To understand the value of tracking by revenue, we need to go back to math class. Don’t worry, we’ll keep it simple.
For this example, our agency brought in 190k of property insurance this month. $100k of that premium was with Carrier A, while only $90k was through carrier B. Now, convention would tell us that we’re making more money off Carrier A. But what if I told you that wasn’t the case? Premium alone only paints half the picture. To see things through the scope of revenue, let’s look at our Carrier’s commission rates:
Carrier A: 10% commission * $100k Premium = $10k Revenue
Carrier B: 15% commission * $90k Premium = $13.5k Revenue
Now that you understand the basics of tracking by Revenue, let’s look at some examples of how it can impact your agency.
Most salespeople in the industry work to bring in the highest premium lines that best solve customer’s needs, but as you already know, a high premium doesn’t always mean the best value for your agency. If your salespeople know which of your carriers offer the highest premiums on certain lines, they can start selling smarter. Let’s look at an example:
You are covering both a winery and a craft brewery. You have two carriers to choose from for these policies. The premiums are all the same across the board, but the commission rates are different. Carrier A offers 10% on wineries and 15% on breweries. Carrier B offers just the opposite, 15% on wineries but only 10% on breweries. By knowing this, you can make a smart sale using Carrier B for the winery and Carrier A for the brewery.
Maybe you don’t have the luxury of a hundred different carriers to choose from. Revenue reporting can help you sort out which lines make your agency the most money. One more time, let’s go back to our winery and brewery. If your carrier offers 10% on Breweries but 15% on Wineries, you know to focus marketing and sales power on bringing in wineries.
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