The All Aboard Newsletter

2024 is in the books!

In the issue this week, I’m going to show a series of charts that tell the story of Peachy Insurance’s story through 2024.

I felt this was not only a different way to present information in the newsletter, but also saves me time in a very time constrained week (1:1 changes). I work hard to stay on schedule as much as possible, but sometimes it simply does not work! Thank you for your patience!

To be direct, December was one of our lowest producing months. Honestly though, I’m not mad about it.

We worked our tails off this year. We delivered amazing results with a significantly leaner staff than in 2023, while posting a profit of roughly 10% (owner pay included).

We grew by about $10million in premium, and then sold off a $3.6million book towards the end of the year. Our strategy has always been to buy small, underserved books, build them, and then sell them to a new agency owner. We got to see that strategy start to come full circle.

In 2023, we wrote around 10,000 items. This year we were down 25% on that number.

We’re one of the few agencies I’ve talked to that didn’t write more business this year than the year before, but our strategy to slow new business, get profitable, and drop our loss ratio seems to have worked beautifully.

As we enter 2025, one thing is clear: Agents all over the country are stressed with changes.

Just remember to figure out whats right for YOU and YOUR AGENCY, not the carrier you represent.

I was asked over and over how I could build on 2023’s results. My answer was that I wasn’t going to do it, because the incentives weren’t there for me to do it. In short, doing what the company wanted me to do, didn’t actually serve my best interest.

Always do whats best for you and the people you employ!

So with that, lets dive in!

The Final Results:

2024 in Charts

Our memories lie to us.

If you were to ask me what our lowest production number was for a given month, I probably would have told you 550 items or so.

Turns out, we had two separate months under that threshold.

I heard someone say: “When we look back at history, you tend to only remember the wins. You don’t remember the mess.” and I think that sentiment holds true here.

A month where we write 450 items is an example of our team underperforming, and underperforming HARD. But, funnily enough, I had already put it out of my mind.

In a way, its calming to forget “the pain” so quickly. Its a reminder that these issues we stress and obsess about are often fleeting. It begs the question: Are you really going to remember what you’re stressing about today in five years? Probably not.

In some months we wrote a lot of items. In others, not so much. But at the end of the day, I’m building towards profitable growth, so items don’t really matter that much to me at the end of the day.

We’re primarily focused on premium because that is the way we get paid.

Our goal is to go ROI profitable on our sales people after the first auto renewal, and go ROI positive on marketing immediately. We accomplished both of those goals while writing enough business to max our NB points for elite. And we needed every single point as retention was a BATTLE this year. More on that later.

Its not uncommon for us to be asked how many salespeople we have.

When I’d get asked this year, I would tell people we were around 13 salespeople. To be honest though I never really stopped to count how many people we had month over month.

When we finished 2023, we had around 21 salespeople contributing and we were writing significantly more business than we did in 2024.

But after missing our 2023 Bonus ($1.2mil) because of a 70% loss ratio on standard auto, we had to get profitable and get to a place where we didn’t rely on bonus.

That meant raising goals/standards for 2024. It meant holding people who weren’t hitting those goals accountable. We had “rebuilding” year of sorts on the sales team which I believe led to the troughs in production during summer. We emerged with a stronger team in the back half of the year though.

All in all, in Q1, we averaged 44 items per producer. In Q4 this year, we averaged 59 items per producer.

This was largely from our team working harder, not necessarily more efficiently. Thats proven by our next chart that shows Close Ratio didn’t really improve in the 2nd half, even though production did. Our team quoted more, and our best people raised their ceiling.

One last note here. I’m in no way dogging the team. They busted their ass this year in an incredibly tough rate environment. Its ultimately on me and my analytics team to target the best possible leads for them to work. Its a team effort, and I’m proud of them.

Georgia has been a bit volatile this year to say the least.

We’ve taken multiple rate increase in both the Home and Auto companies AND dealt w/ tightened RMPs. Add in the new auto product being priced higher than legacy, and our close rate has been up and down all year.

When we finally had a breakthrough in August with a 23% close rate…BOOM! 20% rate on home and a switch to the new product. Close rate dropped right down.

It is hard on the team when we take continuous rates, but what we always tell our salespeople is: “This is when you learn to truly sell. Anyone can sell when rates are great.” And kudos to our team for leaning into that.

With that being said, our goal is 20% item close (Items/Quotes) and we only hit that goal three out of 12 months this year. We have a lot work to do as we go into 2024 to get our close rate where we want and need it to be.

With 13 sales people, hitting our 15 quotes/day average, if we close at 20% (items/quotes), then we’re going to write 819 Items per month. We do that and we 4.0 on bonus and drive another $488,000 in revenue per year (about 2,300 more items).

Its too lucrative for us not to do it.

We must do it.

Marketing spend often ebbs and flows, and these two charts a great reminder of that.

Almost all of our marketing budget goes to leads, plus about $10k for our three SDRs and another $5,000 on various other small initiatives. We averaged between $45k and $50k a month in spend. That number represents about 10% of our revenue.

I’m a big proponent of using a % of your revenue as a benchmark for marketing costs based on your goal:

• Profitability Mode = 8% or less

• Slow growth near breakeven = 10-12%

• Growth Mode = 15-18%

• Hyper Growth Mode = 18-25%

We typically see less lead volume in November and December (which drives up the lead cost.) Then January rolls around and there is a TON of volume. I believe this is partly because people are getting their life in order and shopping their rates, but also because agents lower spend while waiting for bonuses to come in.

Another point to make here is that from April to June, we had a much lower lead spend than the back half of the year. Those also happened to be “down” production months.

The takeaway here though is that the ROI wasn’t better than higher spend, higher production months.

I’d rather spend more $ and write more business (to a point) and drive a higher ROI on the front end (and at the first VC renewal). But there is a sweet spot.

Too many leads? They don’t get worked properly. Quote rate drops and ROI does too.

Too few leads? Your sales engine sputters out and ROI drops with the production.

So find what works for you. For us that is probably around 6,000 leads a month for 13 producers and three telemarketers. We were quoting at 28% in July, August, and September with that type of volume and as we added more, quote rate steadily declined.

How does this chart make you feel?

Because it makes me feed baaaaaaad.

Our retention dropped HARD this year. After 24 months of brutal rate cycles, its to be expected. Unfortunately, we just took ANOTHER double digit auto rate in December, and January terminations for 2025 are already looking brutal.

I’ve never had a year where my auto retention was below 80% until this year, and I’m determined to improve that for 2025.

We needed to hit Elite and knew we’d need to max our New Business points because we couldn’t count on much from retention. In the end, we finished at 225 points (220 needed for Elite) with only five of those points coming from the retention bucket.

To put into context why it was so important to us, that first VC auto renewal we would have lost would have cost us $519,378 in revenue. With our comp changes we were already losing around $30k a month, and to lose another $40k? Well, that would have been the end of Peachy Insurance as a high producing agency.

We would have taken our ball, packed it up, and gotten as lean as possible.

I’m glad that didn’t happen, because everything is more fun when you’re chasing big numbers, big goals, and growing.

And speaking of good news…..

Loss ratio has been my #1 complaint the last two years. To set an arbitrary, nationwide goal of 68% is one of the most head scratching things I’ve ever seen here.

I will maintain that this is not an agent issue. 

Its a pricing issue.

Its an underwriting issue.

Its a claims issue.

But they hold agents accountable for it. Hmmm.

I cannot control the goals that are set for the agency. I have to play within the rules of the game, no matter how stupid and poorly constructed they are. Hot take? I’m not sure it is.

Going into 2024, we knew that the more new business you write, the worse your loss ratio would get. To give more context: we were told new business runs at over 100% loss ratio (at least in our state) in November 2023 after being told all year to “write more to outrun it” which only made the issue worse. Awesome right?

Therefore, in 2024 the strategy was to slow new business, focus on driving as much non-auto premium as possible, letting rates bake in, and THEN accelerating at the end of the year. We had no idea if the strategy would work, and still aren’t even 100% sure that getting under 68% this year and earning a bonus of around 1% was because of our own doing or just pure luck.

But we’ll take it.

Some people try to breakeven, and then get bonus to pay themselves.

Some go for broke, going into debt or their own pocket to run at a loss to pay for that growth with a bonus.

After 2023, I will no longer do either of those things.

I will continue to operate on a profitability goal so that when I get bonus, its truly that…. Bonus aka extra.

There are a ton of philosophies on this and there is no one right or wrong answer.

Do whats right for you, your agency, and your team.

Thats what we’re doing here at Peachy

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