Many insurance agencies invest little or no time in maintaining accounting records. Let’s face it, with the demands on owners in running day to day operations, who has time? In many cases commission statements and loss ratios can’t be found. Believe it or not, the biggest challenge when selling an insurance agency is proving your annual revenue. We constantly help agency owners contact insurance carriers for commission statements and loss ratios. Here are a few steps to help you organize this information so if and when you decide to sell your agency, it’s ready to show.

  • When statements are received file them in a file folder labeled “CARRIER2008”.Maintain a separate folder for each carrier. If you receive the statements electronically, print them. Yes, we’re big proponents of a paperless environment, but it’ll need to be printed eventually.
  • Add a worksheet to the top of each folder with a graph of 12 months. When the statements are filed in the appropriate folders, write the amount of the statement in your graph under the corresponding month
  • File them alphabetically by carrier in a bankers box. Maintain a separate bankers box for each year.

By following these few simple steps, you’ll increase the value of your agency dramatically. You may have this information in quickbooks or an agency management system, but buyers will always need the actual statements to reconcile the information from your income and expense statement. You should also follow the above steps for your loss ratios. Since carriers don’t send loss ratios as often as they do commission statements, use a binder or consolidate 2-3 carriers per folder.

Finally, delegate these duties to someone in your agency. If you have a bookkeeper or accounting department, they’re perfect candidates. If you don’t have an accounting person, consider hiring one. The next time you consider hiring a CSR or Sales person, hire an accounting clerk instead. They can take over several projects and free your upper managers and/or the owner to focus on money making activities like closing sales, training, servicing and motivating the staff.

Having this information will help you if you ever apply for a loan, get audited or want to sell your agency.

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