2011 Best Practices Study


	2011 Best Practices Study
	Agencies with Revenues between $2,500,000 and $5,000,000

	Producers: CL GL&H PL Multi-Line \| Most Successful Producers \| New Producer Hiring/NUPP

Producer Information

New Producer Hiring
	Average	+25% Profit	+25% Growth
% of Agencies that Hired New Producers Last Year	47.4%	30.0%	60.0%
# of New Producers Hired Last Year	1.6	1.7	1.8
Average Annualized Wages per Producer Hired	$46,672	$62,000	$43,229

*Insufficient Data

Net-investment in Unvalidated* Producer Pay

The NUPP
	Average	+25% Profit	+25% Growth
Expressed as a percentage of Net Revenue, the NUPP is the difference between what an agency pays its unvalidated producer(s) and what the producer(s) would earn under the agency’s normal commission schedule. A NUPP of 1.5% is considered a healthy level of investment.	1.1%	1.0%	1.4%
High	3.8%
Low	0.0%

*An unvalidated producer is one whose production does not yet cover his/her wages

Understanding the NUPP

One of the most important investments an agency can make in organic growth is in the hiring and developing of new producers. By measuring pure payroll costs, the NUPP benchmark allows an “apples-to-apples” comparison with other agencies regarding the amount of direct investment an agency is making in new producers. The NUPP benchmark is intended to be simple and is not designed to measure all other ancillary expenses that accompany the hiring and developing of new producers.

While the NUPP provides a general investment guideline, an agency should also consider the success rate of its new producers, i.e. the percentage of new producers hired during the past 5 year period that have achieved the sales goals set before them. By multiplying the NUPP by the producer success rate, an agency can further determine the effectiveness of its NUPP . High performing agencies typically achieve an Effective NUPP between 1.0% - 1.5%.