Gaining the clarity and wisdom needed
to run an independent insurance agency
By Carey Wallace
The average adult is estimated to make 35,000 decisions in each day. It is tough to think about how many decisions we each make in a year. As our world is changing, we are fortunate to have many resources to utilize as we navigate all these decisions.
For decisions about our health, we may use data provided by an app on our phone, our smartwatch, an Oura Ring or maybe even a good old-fashioned visit with a doctor. For decisions about our kids, we can ask other parents for advice, listen to podcasts, or read one of the tens of thousands of books published on raising children.
There is no shortage of information that we can consume to build our knowledge and support our decision-making process. What does this process look like inside your agency? Gaining a clear line of sight on your agency is a critical step in achieving the information you need to make strong business decisions. Without that line of sight, decisions can seem premature, uninformed and in some cases impossible.
Setting a vision
When setting the vision for your independent insurance agency, it is important to align your long-term goals with your agency’s core values and differentiators; take into consideration your market conditions, carrier relationships and most importantly, your customers’ needs.
Consider where you want the agency to be in five to 10 years, whether that’s growth through acquisition, specialization in a niche market, geographic expansion, or building a legacy business for succession. A clear vision should inspire your team, guide decision-making, and serve as a foundation for strategic planning, technology investments, and talent development.
Building a solid budget
Once your vision is clearly defined, building a solid budget for your independent insurance agency means aligning financial resources with strategic priorities. Start by identifying the core initiatives needed to achieve your vision such as hiring, marketing, technology upgrades, or geographic expansion.
Next, estimate the associated costs. Forecast revenue based on realistic growth expectations and historical performance. Allocate expenses into clear categories that align with the industry benchmarks, ensuring that every dollar supports your long-term direction. A close examination of where you allocated resources last year and the return you received from those investments can help you determine if allocating resources in the same areas makes sense for the agency’s success.
Once your budget is set, you have the tool to monitor key metrics such as profitability, expense ratios, and cash flow to stay on track and allow for adjustments as the business evolves. A well-structured budget becomes a roadmap that keeps your agency financially disciplined and strategically focused.
Numbers without guardrails are just numbers, but benchmarks
can provide the guardrails and perspective you need
to identify opportunities for improvement or adjustment.
Creating a forecast
Creating a forecast for your independent insurance agency involves projecting future revenue, expenses, and cash flow based on historical data and strategic goals. Start by analyzing past performance trends, such as policy growth, retention rates, and commission income.
Next, factor in anticipated changes like new hires, marketing campaigns, or operational shifts that could impact performance. Break down projections monthly or quarterly to track seasonality and market cycles. Include both best-case and conservative scenarios to prepare for uncertainty.
A clear, data-driven forecast helps you make informed decisions, allocate resources wisely, and measure progress toward your agency’s short-term and long-term goals.
Defining your key performance indicators
Defining key performance indicators (KPIs) for your independent insurance agency is essential for tracking progress, identifying opportunities, and driving strategic decisions. Focus on metrics that align with your agency’s goals, such as revenue growth, client retention, policies per client, new business written, average premium per policy, and profitability.
Operational KPIs like revenue per employee, quote-to-bind ratio, and customer service response time can also provide valuable insight. Choose a mix of financial, sales, and service indicators that reflect both the health of your agency and the effectiveness of your team.
Regularly reviewing these KPIs ensures you stay accountable and can quickly adjust your strategy as needed.
Using benchmarks
Once you have the vision, budget and forecast set, utilizing industry benchmarks when evaluating your agency’s financial performance will allow you to gain both context and clarity about its performance. Numbers without guardrails are just numbers, but benchmarks can provide the guardrails and perspective you need to identify opportunities for improvement or adjustment.
Benchmarks help identify strengths, weaknesses, and areas for improvement by showing whether key metrics such as revenue per employee, expense ratios, or new business commission levels are in line with your peers. This comparison provides valuable insights for strategic planning, operational adjustments, and investment decisions. It also helps agency owners set realistic performance goals and ensures the business remains competitive in a constantly evolving market.
Ultimately, benchmarks turn raw data into actionable intelligence, guiding smarter, more confident decision-making.
A trusted peer group … offers encouragement, accountability,
and objective feedback, helping you make better decisions and stay focused
on your goals. Simply put, you’re more likely to grow and succeed when you don’t go it alone.
Getting a health checkup
Getting a valuation every three years serves as a vital financial health checkup for an independent insurance agency. It provides a clear picture of your agency’s current worth, identifies trends in growth or risk, and highlights how key decisions are impacting long-term value.
Regular valuations help owners stay informed, set strategic goals, and prepare for opportunities like selling, acquiring, or succession planning. Just like a physical checkup, a valuation ensures you catch potential issues early and stay on track toward building a stronger, more valuable business.
Building your network
Surrounding yourself with other experienced professionals helps you stay informed on industry trends, avoid common mistakes, and gain fresh perspectives on challenges and opportunities. These relationships can be found inside mastermind groups, as part of the state association, or in other peer groups and can help to foster continuous learning, strategic thinking, and innovation especially valuable in a rapidly evolving industry.
A trusted peer group also offers encouragement, accountability, and objective feedback, helping you make better decisions and stay focused on your goals. Simply put, you’re more likely to grow and succeed when you don’t go it alone.
Fractional talent
An independent insurance agency owner should also consider utilizing fractional talent when growing the agency because it provides access to high-level expertise without the cost of full-time hires. Whether it is a fractional CFO, marketing strategist, HR specialist, or technology consultant, these professionals can help drive growth, improve operations, and solve complex challenges on a part-time or project basis.
This flexible approach allows agency owners to scale strategically, fill knowledge gaps, and implement best practices while managing overhead. Fractional talent is especially valuable during key growth phases or transitions, offering seasoned insight and execution support without long-term commitment.
Wrap-up
Gaining the clarity needed to make sound business decisions can be accomplished in many ways. It may include taking the time to set your vision, building a solid budget, creating a forecast, utilizing benchmarking data, joining a mastermind group, reading business books, listening to podcasts and even expanding your team to include engaging with an advisor who has the skills you don’t currently have on staff in a fractional manner so it is both cost-effective and impactful to the team.
Driving sound business decisions takes careful planning, execution, and work, but the good news is that there is plenty of support available in this area, and you do not need to travel that road alone.
The author
Over the past 16 years, Carey Wallace has worked with hundreds of independent insurance agencies helping them understand their agency’s value and turn that knowledge into an actionable plan for their future. She prides herself on taking the time to understand the agency’s unique situation and helping them build the future they envision for themselves. She is a Certified Exit Planning Advisor (CEPA) and provides a variety of business consulting services including valuation, perpetuation planning services, acquisition support, financial and compensation analysis, and fractional CFO services through the company she founded, Agency Focus, LLC. To learn more, please visit www.agency-focus.com or contact Carey at Carey@agency-focus.com.
