THE IMPORTANCE OF BALANCING YOUR BOOK OF BUSINESS written by Lisa Price , Jenesis
As an insurance agency , you almost certainly have a book of business . Even if you haven ’ t heard the term book of business , you most likely have one . This is simply the list of clients that you maintain . You probably have your insurance agency management software handle it for you , or you may use a customer relationship management system . But just having a book of business is not enough . You would also want to balance it for the longevity of your insurance agency .
BALANCING YOUR BOOK
The idea of balancing your book of business is fairly simple . It just means that you want it to be diversified .
In this case , the balance refers to the weight or proportion of different types of clients you currently have . You would want it to be balanced between commercial and personal clients or between different types of insurance policies . You can also try to have a balance across carriers or even demographics . There are plenty of ways to diversify or balance your book of business .
That being said , you can ’ t realistically expect to have equal balance across all aspects of your book of business . Start by focusing on one facet , such as personal lines versus commercial lines clients .
HELP FUTURE-PROOF YOUR AGENCY
The reason you need to balance your book of business is the same reason you would diversify an investment : It offers protection . For example , imagine that your book of business is well-balanced between personal and commercial lines customers . If competition for personal lines increases dramatically or something affects your profit margins , the commercial lines are there to minimize the impact on your bottom line . The opposite is also true .
This is a similar idea to how you diversify an investment portfolio . You allow the parts of your book of business that do well to compensate for those that are struggling .
THE FUTURE OF PERSONAL LINES IS UNCERTAIN
The need to balance your book of business between personal and commercial clients is especially important given the uncertainty of the market . Specifically , there is speculation that independent insurance agents will soon find it harder to keep personal clients .
Some of this speculation comes from the trend of
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