Insurance business Proposal

This is a summary of expenses to help you understand what the amounts might be.

4. Average Premiums and Base Numbers to use in your Compensation Simulator:

Below are the average Premiums and Base number recommendations I would use to input into your simulator for your targeted market area.  The production estimates are just estimates!  When you talk with your affiliated Sales Leader I would be sure to ask them what types of production they would be looking for in a new agent!

Auto:

Premium: $1390 (Annualized)

Auto Lapse Cancellation Rate: 17%

Estimated Monthly Production: 50-60 (this is a guestimate where I would start).  Though for Years 2 – 6 increase approx. 5% each year)

Fire:

Premium: $1405 per year

Fire Lapse Cancellation Rate: 11%

Estimated Monthly Production: 25-30  (this is a guestimate where I would start).  Though for Years 2 – 6 increase approx. 5% each year)

        ***Something to keep in mind is you are limited to how many homeowner policies you can write In Florida. I recommend speaking with the Sales leader in regards to what is currently allowed and how you can make up the difference (writing through a state insurer, plups (personal liability umbrella policies), paps (personal articles policies) and business policies

Life:

Life Premium: $500 (this is an estimate based on selling term and whole life)

Life Estimated Monthly Production: 8 - 12 (this is a guestimate where I would start).  Though for Years 2 – 6 increase approx. 1 additional life each month)

Health:

Health Premium: $250 (this is an estimate based on hospital income, and other health products)

Health Estimated Monthly Production: 2 - 4 (this is a guestimate where I would start).  Though for Years 2 – 6 increase approx. 1 additional life each month)

Bank:

Credit Cards/Loans Commission: $75 (you get $25 for credit cards, though can get 500 – 1000 for Mortgages though you will sell more credit cards than loans)

Credit Cards/Loans Monthly Production: 4 - 6   Years 2 – 6 increase approx. 1 additional per month

Deposits Commissions: $50 (you get $25 for Savings accounts or up to $150 for CD’s)

Deposits Monthly Production: 2 - 4  Years 2 – 6 show growth though probably only .5 per month growth each year (just reflect an additional 1 in Year 3, then year 5)

Mutual Funds:

MF Premium: $5000

MF Production per month: 1 - 2 (I would show growth here for years 2 – 6, though no more than 3 per month by year 6 is realistic)

5. Team:

I would strongly recommend hiring 2 - 3 Full time team members.  They should be salespeople as well.  You will probably want to offer some type of commission or incentive along with a base pay to ensure your team is motivated and meeting/exceeding goals you have created.  Follow along with the proposal to complete all of the sections.  Team and Marketing should contain most of your details within your proposal.  These areas will be of great focus during your interview.

6. Marketing:

Here’s some details you might want to think about using within your marketing section of your proposal:

1. Direct Mail:

a. We call our direct mail program Prospector Plus (+).  How it works is we use a 6 touch bundle program for sending mail approximately every 6 weeks to each lead you purchase.  The current cost for sending a 6 touch bundle of direct mail is .66 cents.  What this means is that for .66 cents each person will be getting either letters/postcards from you approximately every 6 weeks (each piece of mail is only costing you about .11 cents). 

i. You want to have a program in place where you are sending new bundles each month.  I would also recommend having some knowledge as to the ROI for this towards your anticipated production goals.

1. Ex: Purchasing 3,000 new bundles of Prospector + direct mail will cost $1,980 monthly (3000 x .66).  Anticipating a response ratio of 1.5%, 45 people will call each month for an Auto quote.  Assuming a close ratio of 20%, you will sell approximately 9 new auto households each month (45 x 20%). 

· Since this is Households, and most Households have more than 1 car, you could safely assume the following:

· Estimating each household has an average of 1.75 cars, I anticipate 16 raw new auto polices per month (9 Households x 1.75 cars = 16 Raw New Auto Policies)

· From the auto, you can expect to multi-line customers for your Fire, Life, Health, Bank and Mutual Fund goals as well.

2. Internet Leads:

b. This is the latest push for building new business.  Internet leads come from websites such as netqoute.com and insureme.com.  These are hot leads, where a customer is inquiring for a price quote.  Whatever Insurance Agents/companies purchase leads in the same area will also get that same lead.  It’s important to have a quick response for the greatest ROI.  State Farm is currently subsidizing these leads by approx. $5.  These will cost you approximately $6 - 9 for each lead (actual cost being $10 - $13 per lead though subsidized by $4).  Prices can vary depending on the quality of the lead.

ii. You want to have a program in place where you are purchasing so many of these each month. 

2. Ex: Purchasing 150 Internet leads per month will cost approximately $1050 per month ($7 x 150).  There is no response ratio associated, since you are acquiring all of the details for these customers who are coming to you looking for a quote.  Assuming a success ratio of approximately 4%, this will generate approximately 6 new auto Households each month (150 x 4%).

· Since this is Households, and most Households have more than 1 car, you could safely assume the following:

· Estimating each household has an average of 1.75 cars, I anticipate 11 raw new auto polices per month (6 Households x 1.75 cars = 11 Raw New Auto Policies)

· From the auto, you can expect to multi-line customers for your Fire, Life, Health, Bank and Mutual Fund goals as well.

1. Referrals:

a. Many agents have a referral system in place.  Recent study have shown that approximately 27% of raw new auto business comes from referrals.  Something to keep in mind though is as a new agent your results will take time after building customers and relationships.

b. Your referral program could include gifts available to customers who drive referrals to you in the form of a gas or coffee shop gift card (less than $20 for tax purposes).  Talking about how you will utilize your satisfied customers to build your agency with their friends and family is a great idea.

2. Telemarketing:

c. Of course there are the “Do Not Call” lists, though there are people you can reach out to in the community.  Additionally, potentially 20-30% of the Prospector + direct mail leads you purchased often also include phone numbers as well.  Having a system in place for calling on people to build appointments is a great tactic.

· Ex: I often hear of a success ratio for someone interested in a quote to be approximately 10%.  If you set goals for your team members to make 50 cold calls each per week, they can anticipate quoting 5 customers (50 x 10%).  Utilizing a similar success ratio from the direct mail quoting of 20%, you can anticipate these calls generating 1 new Auto sale per week.  If you have 2 team members and yourself using this system, you could expect 12 new Autos per month (1 for each person in the office x 3 people x 4 weeks). From the auto, you can expect to multi-line customers for your Fire, Life, Health, Bank and Mutual Fund goals as well.

3. Social Media:

d. This is something a lot of people are utilizing.  Facebook pages for your Agency, Twitter accounts…

4. Community Sponsorships:

e. Are there any events that occur in your community?  Festivals you could take part in?  Little League or soccer teams you could sponsor and provide T-shirts for with your Agency on them?

5. Media – Digital/Print/Billboards:

f. Local newspapers?  Google hit words to purchase if someone searches for “your community and insurance”?  Billboards? (these can be very costly)