Reading your carrier statement like an owner, not an accountant

Carrier statements weren't designed to be read by humans. They were designed to be processed. The result is that most agency owners — even very sophisticated ones — have a vague sense of which carriers are 'good for us' rather than a precise number.

What a statement actually tells you

Strip a statement down to its components and you're looking at: written vs. earned premium, new vs. renewal commission, contingency or supplemental compensation, and chargebacks. Each of those tells a different story about the relationship.

"Most agency owners have a vague sense of which carriers are good for us. Almost none have a number."

The four questions every statement should answer

• ·What's the all-in commission rate, including contingencies, by line of business?
• ·What's the loss ratio trend that's actually driving the contingency?
• ·How much chargeback risk is sitting in the unearned portion?
• ·Is the carrier consuming more service time than it's paying for?

Carrier profitability is not the same as carrier revenue

A carrier that pays a 12% commission but consumes 40% of your CSR time is not your most profitable carrier — even if it sits at the top of your revenue report. We routinely find that the third- or fourth-largest carrier by revenue is the single most profitable line of business once allocated cost is factored in.

What we actually look at

For our agency clients, we build a carrier-level profitability dashboard that ties revenue, contingency timing, allocated service cost, and loss-ratio trends into a single view. The conversations that come out of those dashboards — about which markets to grow into, which to taper out of, which producers to deploy where — are usually where the firm earns its keep.