AutoRisk Financial Models Project

AUTOMOTIVE RISK CONSULTANTS OVERVIEW

AutoRisk Consultants (AutoRisk) was founded in 2010 by Michael Graham, with an initial focus
on property and casualty insurance product placement services for the automotive aftermarket.
AutoRisk has experienced rapid growth and today has two full-time and two part-time customer
service personnel, five salespeople/producers.
AutoRisk uses Independent Contractor Agreements for producers and gives the producers higher
commission rates in exchange for the IC status, as the producers control their schedules and work
from home.
Auto Risk is licensed and operating in Colorado, New Mexico, Kansas, Missouri, Texas,
Wyoming and Nebraska.
AutoRisk plans to expand into Arizona and Utah in 2017.

PROJECT DESCRIPTION OVERVIEW

AutoRisk desires to have financial models with illustrate the true costs of the model of higher
commissions to AutoRisk. This would include a model which shows the producer how their
increased revenue grows over time and compares it to a model of the compensation a producer
would earn in a traditional agency model.

FINANCIAL MODELS NEEDED

1. Model of AutoRisk revenue growth at a company level
2. Model of AutoRisk revenue growth at a producer level
3. Model of AutoRisk costs vs revenue growth at a company level at 80/20 splits
4. Model of AutoRisk costs vs revenue growth at a producer level at 80/20 splits
5. Model of AutoRisk costs vs revenue growth at a producer level at X/Y split levels
6. Model of AutoRisk costs vs revenue growth at a producer level if producer gets a base
salary at X/Y split levels
7. Model of AutoRisk ROI on providing a producer a base salary
8. Model of Cost, Time Value of Money Calculations on providing a base salary
9. Model of when a producer exercises their option to retire and sell their book of business
to AutoRisk, what is cost to AutoRisk using cash flow to fund vs financing at X%

AutoRisk, February 18th 2017

 AutoRisk Financial Models Project

KNOWN ASSUMPTIONS IN THE MODELS

Below is a list of assumptions that will be known in the models, thus models should be built with
the assumptions at the top of the models, so that the assumed values can be changed or
modeled to allow for any scenario to be fully studied.
1. Gross Premium
2. Gross Revenue
3. Commission % on Revenue
4. Commission Split(s)
5. Fixed Costs %
6. Variable costs (financing costs) as a %
7. Retention Rate (what % of prior year premium renews in subsequent years)

EXHIBITS (attached)
Model of X/Y Splits: shows growth of book of business, factors in retention and shows
commissions at different levels over time
Model of Typical Package: what an insurance sales person would earn at a traditional
agency
Bukaty vs AutoRisk: this compares earnings at the Bukaty Agency with the 80/20
AutoRisk Model
Bukaty Exit Value: this illustrates the income Trail after exiting the Bukaty Agency
Premium to Revenue: converts insurance premium to revenue. Revenue is the measure
used by independent agencies

AutoRisk, February 18th 2017