The Importance of Balancing Your Book of Business - tax books on the table with calculator and pencils by pexels-nataliya-vaitkevich

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.

What Balancing Your Book of Business Means

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.

It Helps 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 mergers and acquisitions among larger companies. Over time, InsurTechs could just keep accumulating personal lines, leaving fewer clients for independent agents to cater to.

Personal Lines Generate Lower Growth

The other big reason to diversify between personal and commercial lines is your agency’s growth. Simply put, it can be downright challenging for an insurance agency to grow with just small personal lines. Each line simply doesn’t lead to enough profit. You need the higher premiums and income of commercial lines to balance out these personal lines.

Commercial Lines Can Be More Stable

Don’t forget that the loss ratios of commercial lines also tend to be more stable over time. In the last decade, they have even performed better.

A Diverse Book of Business Helps With Referrals

In addition to future-proofing your insurance agency, having a balanced book of business helps with referrals. This is a natural consequence of a diverse client base. After all, a diverse client base typically leads to a larger extended network of potential prospects.

Your Reputation

A balanced book of business also just helps your overall reputation. If you have a diverse client base, people will see your agency as a business that can help nearly anyone. You will be viewed as a leader in the industry and the go-to option for anyone, regardless of what they need.

It Boosts Your Cross-Selling Opportunities

Offering both personal and commercial lines will also improve your ability to cross-sell other products or services. After all, every business owner also needs personal insurance, for example.

Add Commercial Lines Wisely

If your insurance agency currently has more personal lines than commercial lines, you will need to put in some thought and effort to balancing the ratio. Make sure to consider the profitability of lines in comparison to your level of investment. You don’t want to make a significant investment for minimal profit.

One approach is to focus on a particular type of commercial line. Maybe you want to focus on seasonal businesses. Or maybe you can also focus on tech companies or large manufacturers. All you need to do is decide which industry to focus on.

Evaluate Your Book of Business and Plan

Before balancing your book of business, you need to evaluate their current state. This is as simple as looking at the information in your insurance agency management system. Start by comparing personal versus commercial lines. Once those are balanced, consider balancing your book of business in other ways as well. For example, to diversify the demographics you serve, look at current target personas.


Having a balanced book of business protects your business from issues you may face in the future. If personal lines struggle, commercial lines can give the necessary support or vice versa. A diversified clientele also improves your reputation and your opportunities for cross-selling.