Account Manager and CSR Roles and Performance

By Catherine Oak and Bill Schoeffler

Account managers are the backbone of an agency. Account managers (AM) are also called customer service representatives (CSR) and are critical to the agency’s reputation. Many are the key to retention, and clients look to them to get their needs met. Producers are very dependent on them to not only service the accounts but often to help close the sale.

The question for most agency owners is how to grade account manager performance and determine productivity and appropriate roles?

It is often quite hard to find or develop good account managers. Agencies tend to “steal” the good ones from each other. Current low unemployment rates exacerbate the lack of AMs availabile on the open market. Scarcity of quality employees has a profound impact on agency performance and profitability, since less qualified employees often are filling the void.

Account managers make up roughly half of all employees in an agency. Keeping in mind that payroll is the largest expense in any agency, the productivity of the account managers is directly related to the profitability of the agency. The hiring and retention of good AMs, including establishing fair and motivating compensation, is a key to increasing profits and agency value.

Job Fundamentals

The role of the account manager boils down to the collection, processing and distribution of information. The collection of information aspect tends to be the most significant skill. The AM needs to know what information to gather (technical skills) and how to ask for it (interpersonal skills).

In some agencies, the AM is also becoming a good salesperson, selling additional coverages the client needs, like business interruption, EPLI and umbrella policies. The account manager also needs to be a “people” person. Good social skills and the ability to act as a go-between for the different parties — clients, producers, underwriters and agency owners — are a must.

Good time management skills are important for AMs. The typical account manager spends about half of her/his time talking to clients or insurance company personnel, gathering and distributing information and problem solving. The balance of her/his time is spent on paperwork and computer input. The latter items are tasks that an AM/CSR could often delegate to an assistant or clerical person, so they have time to cross sell, explain coverages, handle claims and keep the relationship strong. This improves profitability and productivity. The delegation is called “staff stratification” and is the delegation of clerical tasks to the least costly QUALIFIED employee!

Job Performance

The first step to evaluating job performance is to write a job description spelling out the account manager’s tasks and responsibilities and making sure both parties agree to it. It is best to have the AM draft the list of tasks they do and then show those to the manager to create their job description.

It is important to include predetermined performance standards. An account manager needs to know what size book management expects her/him to handle. Management, on the other hand, needs to offer proper training and support to allow the account manager to get to the productivity level expected.

There are several ways to objectively measure job performance. Many automation systems allow the tracking of transactions by account manager. These automated reports reflect the information recorded on the agency database as the AMs move through their daily work. This allows management to review the volume of work performed by each account manager. Transactions required will vary based on the composition of the book of business handled. Some types of business are more labor intensive than other types, for example contractors require a fair amount of hands-on work for certificates and changes to the policy.

Another method is to compare the number of accounts and commission dollars handled by each account manager. It is important, however, to compare apples to apples. Breakdown the AM’s books of business by line of business (personal, commercial, life and health). Then determine the average size account in each line (commission dollars divided by number of accounts).

The last step is to compare performance to a benchmark. This method provides a clear indication about the profitability of an account manager and the book of business that they handle.

It must be noted that even a good AM could be stuck with a troublesome book of business and appear to be unproductive. Management needs to use the performance numbers in their proper context. Even if each account manager in an agency is measured relative to each other, a problem may occur if each AM handles a vastly unique book of business. For example, one AM may have a larger number of contractors that could require more labor than another account manager’s book, which is mostly retail businesses or even BOPs.

Sometimes, the producer that works on the account with the account manager does not do their job and delegates a lot of their work to the AM. In other cases, producers may be controlling and not delegate enough of the service work to the AM. When looking at the agency’s results by department and by AM, these questions need to be asked if the AM workload results seem too high or too low compared to the standards.

Performance should also be based on subjective measurements. Once a year, key clients handled by each account manager should be surveyed to see what they think of the service they are receiving. Underwriters of the key markets should also be asked for input on the performance of each AM.

Performance rating should be a combination of subjective and objective criteria. An account manager’s strength (and value to the agency) may be partially hidden if performance is graded on only one type of input. A good performance review form for the AM to complete on their performance should also be used and completed on their anniversary date. The manager and the producers who work with the AM should look over the review and provide their input.

AM Role Path to AE

The AM position can also be a path to a newly created position in many agencies called the account executive (AE). This role is a hybrid between an AM and a producer since agencies have a very hard time finding good producers. One solution is to move good, long term account managers into this AE role. This is essentially a producer role to maintain and handle existing accounts without a focus on new sales. Often, some of the smaller accounts of the owner and key producers are placed with the AE. If producers retire and their accounts cannot be made “house” accounts, an AE can be assigned instead. The AE is usually paid 15% to 25% of the book of commissions handled and should have an AM or CSR to delegate the clerical service work to.

Job Compensation

The next big question is what is fair compensation? The first criterion is to make sure it is affordable compensation. Hiring the world’s best account manager is not a good idea if the cost will sink the company. Compensation needs to be in line with job duties and responsibilities.

A good way to look at compensation is to do a quick reality check. Simply take the commission dollars to be handled by an account manager and subtract compensation costs (include taxes and benefits) to determine what the “spread” is for that specific position.

The next step is to evaluate if the remaining dollars are enough to cover producer compensation, overhead and provide a fair return to the owners. This analysis will have to rely on a “gut feel” rating. Unfortunately, there are many variables from agency to agency. However, some benchmarks show a net spread (after all expenses are factored) of around $50,000 in average agencies and $85,000 in high-performing agencies to be a good marker.

The bottom line for this process is to see if there is a fair return to owners after expenses are taken out. A low return or loss will require an adjustment to compensation (AMs or producers), a decrease in overhead costs, or an increase in the book size. If adjustments are not feasible, then management must think about rehabilitating or getting rid of that specific book of business, especially small commercial accounts. The analysis of affordable compensation is important, however, what an owner may feel is appropriate may not be the same as what they will need to pay.

Today’s strong economy has a tremendous impact on what the prevailing wages are. A recent Insurance Journal survey shows the average salary of PL AMs/CSRs ranges from a low in the Midwest of $43,273 to a high in the West of $76,667. Salaries for CL AMs/CSRs seemed to range from $50,061 in the Southeast to $85,561 in the West. Quite a bit of additional good compensation information for various other agency positions and for producers was in this survey. (See Insurance Journal’s 2020 Agency Salary Survey in the Feb. 24 issue for more information).

What must be noted is that salaries have gone up in recent years but there has not been a corresponding increase in the commission dollars handled. Major reasons for the stagnant size of the account manager’s book of business are often soft market conditions and lower commissions paid by the carriers. It also seems that automation has increased the account manager workload, because everyone expects more and more information and service. Also, carriers expect the agencies to do more of the insurance companies’ work without getting paid for it.

Incentive Compensation

Many agencies today do not want to just keep giving annual raises, especially with long-term employees that are at the top of the compensation level in their area. The way to do this and provide motivation is to give bonuses or other incentives when extraordinary work has been done, or when additional sales through cross selling are achieved, as well as great retention. All of these areas can give the AM/CSR additional compensation or incentives, like time off, a company trip, childcare and the like.

Some agencies regularly give their service employees rewards when they have increased sales or send cross sell leads to other departments.

Outside Services for AM Duties

There are various sources that agencies can use to provide support to the AMs, such as Patra, ResourcePro, Insuserve-1, Virtual Insurance Pro, WAHVE and eDesk (Nationwide). These are for-hire services for agencies that handle clerical items, like policy checking, certificates, endorsements and the like for a very affordable rate. Some offer full backroom support as well. Services and prices vary greatly, so research for the best fit and cost effectiveness. These services can provide relief to agencies that can’t find the great service employees they need, especially for commercial lines.

A Final Thought

Hiring and keeping a good account manager requires management practice, which is both art and science. Review the numbers to make sure all of the statistics are in line, but make sure the subjective side is also included in the process.

It often proves true that it is better to hire a well-qualified AM and pay them more than to just fill the position with a low paid, not-so qualified person. Highly productive account managers/CSRs handle more work with less supervision and thereby can save expenses in the long run.

For the typical agency, the quality of the account manager determines the quality of the service and the quality of the agency overall. The path to reaching top performing agency status is not easy, but the right account managers are necessary for the journey.

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