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Raising Revenue Strategies

Iroquois Member Agents frequently tell us that the greatest benefits of Iroquois membership are the strategies Iroquois provides to increase agency revenue, profits and value. We don’t presume to tell our Members how to run their agencies. Our goal is to give them ideas, incentives and strategies. Then they can decide which strategies will work best for them.
How can an agency increase revenue while at the same time meeting the needs of its customers and staff? Iroquois can assist you with several important strategies for maximizing revenue, including market analysis and optimization; Market Alliances; and placement of specialty business.
Market Analysis and Optimization:

A well run agency should have an optimum mix of markets so they can write and retain more of the type of business they wish to service -- now and in the future. Having too few carriers leads to missed opportunities to write good business in segments that are new to the agency or are highly competitive. Many agents are quick to identify this problem and seem on the perpetual prowl for new carrier or market relationships. Focus on new markets, however, often masks a problem of equal or greater importance, which is having too many markets or the wrong markets. “An agency’s natural tendency is to always want more carriers’ products to sell, and to never want to give them up once they get them,” said Iroquois Regional Manager Lindy Bane. “Consequently, it is not unusual to find an agency whose business is spread too thinly across too many carriers. This means the agency: 1) doesn’t reach a “critical mass” of premium with their carriers to qualify for profit sharing or bonus revenue; 2) doesn’t earn negotiating leverage with the carrier on underwriting and pricing; and 3) probably faces a lot of pressure for increased production or threats of contract cancellation.”
What should an agency do if they find themselves in this situation? First, they should analyze their current carrier relationships to see which ones are best meeting their needs. Iroquois has a special Carrier Analysis process that can help. Next, the agency should identify potential book consolidations that will result in retaining essential business while building larger and more profitable books with fewer carriers. “An agency is usually better off with 3 carrier books each with $400,000 in premium, than with 6 books at $200,000 apiece. In most cases they will earn profit sharing at the higher premium level and will command more attention from the carriers,” said Bane.
A comprehensive Carrier Analysis should be completed annually, the results of which may be: 1) satisfaction that all is well; 2) minor fine tuning of market selection; or 3) a major overhaul in carrier relationships. Iroquois can help as much or as little in this process as you wish.
 
Book Transfers or Market Consolidation
Iroquois has several programs related to the process of potential carrier consolidation; including analysis, assistance with the transfer process, and expense reimbursement. Ask an Iroquois Representative about the details.
“Preferred” Compensation
Because of its size and historic profitability, Iroquois earns “preferred” status with the large majority of its Carrier-Partners. As a result, Iroquois receives above average commission and bonus income, and its members can in most cases earn much higher total compensation through Iroquois than they could with direct carrier contracts.
“When I started with Iroquois 25 years ago, many small and mid-sized agencies needed Iroquois to access carriers they could not get on their own,” said Iroquois Mid-Atlantic President Matt Ward. “Today, market access is much easier, but agencies of all sizes still choose to access carriers through Iroquois because they can make more money doing so.”
Bonus Compensation:
Bonus compensation -- whether it be profit sharing, contingencies, supplemental compensation or growth incentives -- is of vital importance to independent agencies. The amount of bonus revenue often distinguishes well run, “best practices” agencies from those that barely survive. In fact, industry data suggests that bonus revenue (or the lack thereof) represents a very high percent of the average agency owner’s profits. Identifying and implementing strategies to maximize bonus revenue is therefore of prime importance to agency principals. One such strategy is to form a Market Alliance with Iroquois and one of your existing carriers.
Market Alliances
Most Iroquois Member Agents have pursued carrier appointments with Iroquois’ assistance and support using our “Direct Access” model, whereby the agency receives a sub-code under Iroquois’ Master code. A second strategy is for members to move an existing carrier contract under their Iroquois relationship. We call this latter profit-boosting tool a “Market Alliance”, whereby an alliance is formed between the carrier, Iroquois, and the Member agent to improve results and share in the rewards of greater profitability. Just as in the “Direct Access” model, the agency’s direct carrier code now becomes a sub-code of the Iroquois Master code, for as long as the agent wishes it to continue.

Why would an agency insert Iroquois into their formerly direct carrier relationship and give up a piece of the “compensation pie” for that book? Very simply, they would not do so unless the alliance formed between the carrier, Iroquois, and the Member Agent generates improved results and greater agency revenue and profitability. Fortunately, this isn’t a matter of speculation, for Iroquois can help you clearly determine the financial merits of a Market Alliance.
This important strategy can not be fully explained on a website, especially as each agency’s situation is unique. Contact an Iroquois representative in your state to discuss this option more fully. He or she can provide more detail on the merits of a potential Market Alliance.

Placement of Specialty Business
Most agencies can access carriers or brokers for Affluent Personal Lines, Flood, Bonds, and E&S; but the best way to maximize your income on this business is to place it through Iroquois-provided carriers. Ask an Iroquois Representative to explain how this works and the financial benefits for your agency of doing so.

Important Introduction

Trust in Iroquois' judgment led a longtime member agent to a very happy client and a new and important carrier relationship. Click on the image for the whole story.