Larger insurance agencies today are more likely than not to employ a director of risk management, a claim specialist and a loss control specialist, according to Business Management Group Inc.’s 2005-2006 Non-Producer Compensation & Benefits Survey.
The survey found signs of an evolution in the risk management area as many agents and brokers expand the role they play with clients. Risk managers once worked only in larger companies. Claim and loss control specialists typically worked in insurance companies. Now, however, skilled professionals from these disciplines are showing up on the staff roster in mid-size and large insurance agencies. “These new services are now part of their arsenal as agencies struggle to gain competitive advantage and provide extra services for larger clients,” said Suzy Hammett, BMG vice president and author of the study. “The claim specialist position now appears in 69 percent of agencies with revenues of $5 million or more, while the director of risk management is in 53 percent and the loss control specialist is in 56 percent of these agencies.”
The survey found the current financial climate at agencies continues to be challenging, with compensation and benefits now accounting for 55 to 65 percent of an agency’s expenses as a percentage of revenues. “Our data showed that agencies feel squeezed between lower revenues from a softened market and increased costs of benefits, especially healthcare. The general response has been to shift more of the benefits costs to employees and to implement compensation programs that reward best performers and focus managers and staff on agency growth and retention,” Hammett said.
“Salary increases are basically flat, averaging 4.1 percent in 2004 and a projected 3.9 percent for 2005, but they continue to be more directly tied to objective performance criteria than in the past.”
The survey also found that employees are being asked to shoulder more of their own healthcare costs. Today, 74 percent of agencies require employees to contribute to their healthcare premium, up from 61 percent four years ago. Employee share of their own healthcare coverage is down slightly, averaging 11 percent for personal coverage, but it has risen to 58 percent of the actual cost for employees who want the insurance to cover their families, Hammett noted.
The increased cost of benefits is also taking a toll on other benefits. Educational subsidy programs were offered by 79 percent of the agencies in 2003 compared to 68 percent of agencies in this year’s survey, she said.
One trend identified in the 2003 survey – the shortage of trained producers – continues. “Mid-sized and larger agencies and brokers that are focused on growth usually find it too expensive to recruit trained staff from competing agencies. Instead, they’re hiring a full-time sales manager to train and mentor new staff, then recruiting producer trainees with non-insurance sales backgrounds and training them in-house,” Hammett said. This is happening in about one-third of agencies with more than $5 million in revenues and in more than half the agencies with revenues of $10 million or more.
The survey, which BMG has conducted and published every two years since 1990, includes compensation and other information collected from more than 421 agencies throughout the country. The latest survey, includes salary and benefits information on 46 agency-brokerage positions, up from 30 in the last survey. The expansion of the survey reflects increasing job specialization and new positions. The survey presents its findings on a national basis, and also shows data differences among six regions of the country and among seven agency/broker revenue sizes.
Business Management Group Inc., an independent agency/broker consulting firm, is a subsidiary of The Hartford Financial Services Group Inc. The 81-page survey costs $169 plus tax and is available by calling BMG at (800) 772-0208 or visiting at: www.bmgconsulting.com.
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