Known in the insurance industry for its work as an agency valuator, Marsh Berry formed Agency Peak Performance Exchange (APPEX) back in 1997. Its purpose, explained Albert Lloyd, Marsh Berry senior vice president and executive director of APPEX, remains the same as it was at its founding to improve performance by gauging how well an agency is doing against its peers and to give agency heads insight into how to make their organizations through learning the experiences of others.

The association today has 85 privately-held agency members from across the country with average revenues of $7.2 million.

It is a program, Mr. Lloyd points out, that first establishes agency benchmarks with a quarterly report, called Perspectives for High Performance. The report lists 250 benchmarks, comparing an individual member's performance against the industry based on its revenue size. The data used is collected from Marsh Berry's own data base, he said.

The members use this information for comparison and to determine if they are reaching the performance of excellence they seek. But what is unique about APPEX is the 12 PAX meetings held twice each year. The purpose of these meetings is for members to meet and discuss their performance with other members.

The members, who are set up in groups of non-competing agencies (referred to as a virtual board of directors), discuss their financial results with one another. They then discuss with one another what needs to be done at each agency to improve agency performance. To ensure vital financial information is never released, each APPEX member signs a confidentiality agreement to never reveal information about what is discussed at the meetings, Mr. Lloyd noted.

“The whole goal is if you bring a problem to that group, inevitably, someone has a solution, because they have been through that before. And if they don't, then they know of someone who has been through it and has a solution for it,” he explained. “It really shortens the learning curve, or the time to find a solution to a problem for the members.”

For an indicator of how well the process works, Mr. Lloyd provided a look at how well agencies that have been a part of APPEX have improved since the founding of the group. Of those who joined in 1997, by 2003, he reported that agency revenues grew 51 percent and that agency values increased by 102 percent. Although Mr. Lloyd did not have comparable industrywide performance figures over the same time frame, he believes that these member performance figures were well above the industry averages.

Brad Havemeier, president of Gulfshore Insurance Inc., in Naples, Fla., who has been a member since 1997, said APPEX has proven to be a good opportunity to improve his business, which today boasts in excess of $10 million in revenue and more than 75 employees in the Naples office and a second office in Marco Island, Fla. The agency is a regional property-casualty insurance generalist, he said.

“We strive to be in the top 25 percentile of our business peers,” he said. “This is not something for everyone.”

Chief executives who report to the group of mentors must make a commitment for improvement by the next meeting, observed Mr. Havemeier. If the executive has not made that improvement, the executive has to explain why to the group, he said.

“We want sincere, committed people who come prepared to these meetings,” said Mr. Havemeier. “We have a strong requirement that senior management attend these meetings. There is no place to hide in these groups.”

“We can't just take anybody,” said Mr. Lloyd, explaining that applicants are selected from among hundreds waiting to join APPEX. “This group wants results and improvements. You will not find a higher group of performers anywhere.”

To qualify for membership, the agency must generate $3 million or more in revenue, be open to new ideas, and be willing to share financial information, concepts and ideas, said Mr. Lloyd.

It is also not cheap to be a member. There is a one-time enrollment fee of $8,000 and monthly dues of $700, plus symposium registration fees. Members also have to cover their own expenses for the symposium meetings. But agents feel the benefits outweigh the costs.

A new member, David McDonnell, president of McDonnell Insurance in Memphis, Tenn., said he was looking for the ability to benchmark his company of 47 employees and compare it to the industry average. A commercial p-c firm that also handles a full line of employee benefits and some personal lines business, he was under the impression that his agency was a top performer. But when he got his performance report from Marsh Berry, he realized his agency was not doing as well as he thought. Looking for help, APPEX was the place he turned.

“Consultants are good, but it is good to be with other agencies from around the country to get information on where to go,” said Mr. McDonnell.

He is looking for good, solid organic growth for his agency and a strong perpetuation plan involving his producers in the agency's future.

“We are looking at 15-to-20 percent organic revenue growth in the future,” said Mr. McDonnell. “Without APPEX, we would not have had the same confidence to reach that goal.”

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, March 25, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.