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The Rough Notes Company Inc.



July 27
07:45 2021

Inside Matters

By Mary M. Belka, CPCU, ARM, ARe, RPLU, CIC, CPIW


It can be eye-opening to analyze factors that affect account manager productivity

As agencies seek to increase efficiency  and reduce expense, the most common question I receive goes something like this: “Quick question—What size of book should an account manager be able to handle?” The bottom line—and my standard answer—is, “It depends.” And it depends on many factors.

Getting to the proper and realistic answer involves asking some questions before offering a number.

Numerous industry benchmarks and anecdotal information offer ranges based generally on discipline (commercial lines or personal lines, for instance) and agency size. Most averages are relatively low, and well-run agencies can exceed them.

Armed with data, you can address deficiencies and determine the number of accounts your staff can manage, beyond industry benchmarks.

It can be eye-opening to analyze the factors that can affect productivity and profit; and it can be rewarding to take the necessary steps to address them if you can.

Keep in mind that a significant method of increasing productivity is increasing the average size of accounts by selling the right coverages in the first place. Avoid skewing results by cherry-picking “comfortable” categories.

Productivity checklist

A good place to start is with reports. Things to look at include:

  • Size of book handled
  • Average revenue per account
  • Number of policies per account
  • Retention by commission and number of policies (do not depend upon carrier reports; these are highly inaccurate, especially when accounts are moved)
  • Number and size of E&S policies, particularly monoline, including the number of policies with each monoline carrier/provider
  • Percentage of agency-bill policies
  • Activity per account (defined; consistently used categories create accurate analysis)
  • SIC/NAISC codes (to determine “high net/low net” accounts, for instance contractors or truckers)
  • Phone reports, including number and length of call, high-volume periods, number of billing inquiries, etc.
  • Hit ratios
  • Production report
  • Number of carrier/provider relationships and revenues for each
  • Income statement, particularly expenses (paper, toner, mail, three-ring binders; are you still paying for those?)
  • Commercial lines array of accounts tiered by commission size

In general, personal lines involves a high volume of low-revenue transactions. Personal lines accounts are usually smaller than commercial lines and employ download fairly consistently. Account managers are more apt to be involved in handling new business quoting for personal lines. Interestingly, the smaller the account, the more work it is.

Writing larger, multiple-policy, targeted personal accounts rather than single policies, achieving high retention (94%), and using a relatively small number of high-quality carriers (4 or 5) are primary factors in increasing productivity. Pre-qualification increases hit ratios (> 67%), creating a sustainable model.

Most agencies in the $1 million to $3 million revenue range have too great a percentage of commercial lines accounts developing revenues under $500,000 due to reactive writing of accounts. Agencies with active producers recruiting specific target accounts rather than taking orders enjoy greater overall productivity.

Role definitions

It’s important, as well, to look at and define who in the agency performs what roles. Here are some things to consider:

  • Are clearly defined position descriptions in place for all servicing and sales staff, eliminating duplication or gaps in responsibilities?
  • Are account managers the first line of defense, handling all aspects of servicing on assigned accounts from cradle to grave, including new business, renewal, endorsement requests and checking, certificates, and claims? Or are producers handling service components?
  • Are requests from clients sent to producers first then forwarded to account managers?
  • Are account managers required to copy producers on responses to clients and/or underwriters?
  • Are processors, assistants, or outsourcing services handling any service components?

Duplication should be eliminated whenever possible. Producers can focus more time on new business sales and some renewal activities for larger commercial accounts when they are not involved in day-to-day servicing. The earlier the agency can introduce account managers as the servicing arm for the agency, the better the service it can provide and the more efficient and profitable the agency can become. Having a team of professionals—not just the producer—forging positive relationships with clients actually strengthens those bonds, increasing retention and efficiency.

Of course, some handoffs make sense. For instance, certificates can be managed using available, properly implemented software solutions, saving time and effort. Often, items can be handled more efficiently by the account manager in the time it takes to forward or explain them to a processor or assistant. Verifying coverage by checking policies/endorsements is the single most important job of the account manager.

Change requests should be handled by account managers, documented consistently in the system, and thoroughly checked by the individual who ordered them. Increasingly, agencies are allowing these items to be attached without verification. While this may raise pure “productivity” numbers, the trade-off for efficiency should never be an increased potential for E&O claims.

A relatively small number of effective account managers with a thorough understanding of the accounts they handle is more efficient than the old Henry Ford model of splitting the account manager position into multiple lower-level tasks. Remember, all handling components and costs must be accounted for when measuring productivity, whether they are done by one or many. Splitting tasks rarely increases the size of the book of business being handled, just the expense. ROI measurement matters.

Segmentation and account assignment also come into play when considering roles and responsibilities. Questions to ask include:

  • Are departments segmented by discipline (personal or commercial lines)?
  • Is there any producer involvement in personal lines?
  • Are small commercial accounts segmented and handled by account managers without producer involvement?
  • How are accounts assigned? Is it an alpha split or is there a one producer/one account manager relationship?

Each discipline should be handled and analyzed separately; the optimum book size will vary between disciplines. It is more efficient for account managers to develop expertise and specialize in either personal or commercial lines and not attempt to handle a combination of disciplines. Some believe “one-stop shopping” for service with one individual is more efficient; it isn’t and can increase the potential for E&O.

Producer involvement generally decreases efficiency. Producers’ books of business are not created equal. The one producer/one account manager model is generally convenient for one or two people—the producer and/or the account manager. It breaks down as the agency grows—a more scalable model is needed. Procedures, documentation, and training are more consistent when books are divided equally between qualified account managers. Alpha split with some exceptions as needed, is most manageable and efficient for the long term.

New business

There are certain general considerations when it comes to how to handle new business. Some of these are:

  • Is there a specific target client profile that helps those who handle new business to pre-qualify suspects and propose only those accounts meeting the target client parameters? Or is the agency “quoting all comers”? (Note: State laws come into play in some situations.)
  • Are all prospects entered into a customer relationship management system?
  • Is there a target hit ratio that is monitored/measured?
  • Things to consider for personal lines new business include:
  • Do you have a dedicated personal lines producer who takes new business handling/proposing through binding?
  • Are there inside order-takers handling new business while others handle servicing?
  • Are account managers handling new business as well as servicing?

Account managers can handle more clients if they are not involved in quoting new business. If personal lines producers are responsible for new business through binding, the efficiency level of account managers can be raised significantly. Caveat: Producers must write accounts per agency and carrier requirements, with any follow-up or incorrect information on new business handled by the producer, not “cleaned up” by account managers after the fact.

Regardless of who handles personal lines new business, accounts should be assigned to account managers for day-to-day handling via alpha.

What about commercial lines? What do you need to consider on this side of the house?

  • What is the level of producer involvement in the process? Who manages/monitors submissions?
  • What is the timeline for handling new business? Do producers request low probability quoting on short timeframes, expecting immediate results?
  • Are small accounts below a specific revenue level assigned to account managers responsible for these accounts from cradle to grave, with producers focusing (and being paid) only on accounts above that threshold?
  • What is the number of carrier markets, especially for small accounts?
  • Are monoline E&S accounts written?
  • Are there any essential account manager duties not handled at all, for instance, checking policies/endorsements or omitting documentation vs. simply attaching images?

Procedures matter

Automation advancements notwithstanding, multiple carrier commercial lines rating, especially involving E&S, is time consuming. Allowing producers to request multiple carrier quoting, especially on small accounts, is an efficiency killer.

Consistency is key when it comes to procedures and the role of automation. Here are important considerations:

  • Are clearly defined, consistent, mandatory, audited procedures in place for all major workflows?
  • Do you accept cash?
  • Do you accept interim direct-bill payments in the office or over the phone?
  • Do you call or otherwise contact insureds who do not pay on time?
  • Do you rewrite accounts that cancel for nonpayment of premium?
  • What is the level of remarketing being done at renewal, especially on personal lines or small commercial accounts? On remarketed accounts, how often are accounts actually moved?
  • Is any paper still present?
  • How many monitors/screens are being used? Lack of multiple screens is a big reason people print things out.
  • Are you front-end scanning/retrieving?
  • Do you have agency-based, mandatory e-signature software?
  • Is headset use mandatory? Is writing down phone messages banned?
  • Are you using software for writable apps, for instance, Indio, Adobe Pro, etc.?
  • Are you still sending polices with three-ring binders (perish the thought) or are you sending via encrypted, file-sharing software via email?

Require compliance with procedures by all. Use current automation to the fullest and determine the ROI on new automation purchases. Insist on mandatory training and use of appropriate automation tools.

Achieving change

Armed with data, you can address deficiencies and determine the number of accounts your staff can manage, beyond industry benchmarks. Change is hard—but productivity leaks sap profit, energy, and growth.

The ability to remove emotion from the process and seek objective data to develop account management standards is invaluable to your agency’s long-term success. n

The author

Mary M. Belka is owner and CEO of Eisenhart Consulting Group, Inc., providing management and operations consulting to the insurance industry. She also is an endorsed agency E&O auditor for Swiss Re/Westport. A graduate of the University of Nebraska, Mary holds the CPCU, ARM, ARe, RPLU, CIC, and CPIW designations.

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