Insurance Firms Expand Services to Stay Competitive

June 13, 2005 ( - Larger insurance agencies are now more likely than not to employ a risk management director, a claim specialist, and a loss control specialist, according to a new survey.

A news release said that Business Management Group (BMG), Inc.’s 2005-2006 Non-Producer Compensation & Benefits Survey also found signs of an evolution in the risk management area as many agents and brokers expand the role they play with clients. Risk management and claim and loss control specialists are now showing up at mid-size and large insurance agencies, according to the survey.

“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, in the news release. “The claim specialist position now appears in 69% of agencies with revenues of $5 million or more, while the director of risk management is in 53% and the loss control specialist is in 56% of these agencies.”

At the same time, the survey found the current financial climate at insurance agencies continues to be challenging, with compensation and benefits now accounting for 55% to 65% 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 health care,” Hammett said. “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.”

The survey found that employees are being asked to shoulder more of their own health care costs. Today, 74% of agencies require employees to contribute to their health care premium, up from 61% four years ago. Employee share of their own health care coverage is down slightly, averaging 11% for personal coverage, but it has risen to 58% 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 benefit offerings. Educational subsidy programs were offered by 79% of the agencies in 2003 compared to 68% this year, she said.

The 81-page survey costs $169 plus tax and is available by calling BMG at 800-772-0208 or going to . BMG, an independent agency/broker consulting firm, is a subsidiary of The Hartford Financial Services Group.