Organic growth rates among the nation’s independent insurance agents and brokers doubled from 2020 to 2021. It’s one of several zeniths uncovered in the latest Reagan Consulting Growth & Profitability Survey (GPS), which measured fourth-quarter 2021 results, completing the full-year look at the industry sector.
Reagan partner Tom Doran reports the following records were set last quarter:
- At 8.8% for Q4 2021, median organic growth reached the highest level ever achieved in the history of the GPS, which dates back to 2008.
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Broker valuations are at all-time highs.
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At 11.4%, 2021 commercial P&C organic growth reached a record high.
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2021 is officially the industry’s most profitable year. Reduced travel and entertainment expense amid the pandemic was one of the primary drivers of improved profitability, as it was in 2020.
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Agents and brokers scored 20.6 on the Rule of 20 metric ― a proprietary Reagan measurement of a broker’s health and investment return to owners. We’ve never even come close to breaking 20 as an industry before, says Doran. At 24.6, public brokers scored even higher on the metric in 2021.
- While hard work was a factor, much of the accelerating growth story can be attributed to the rapidly recovering economy, says Doran. And Q4’s accelerating growth occurred almost exclusively among commercial lines.
Organic growth of individual lines
While commercial P&C broke survey records, personal P&C lines saw organic growth of 3.3%. This is consistent with historical growth norms of 2% to 4%, “regardless of the overall economy and rate environment,” says Doran.
At 4.0%, employee benefits lines were up only slightly, dampened by “by a workforce taking a frustratingly long time to get back to work” during the ongoing pandemic, Doran adds. Service and hospitality businesses, for example, still haven’t returned to pre-COVID-19 employment levels.
2022 outlook
“We’ve earned the right to celebrate our successes in 2021,” says Doran. Looking ahead, agents and brokers are optimistic, predicting 2022 organic growth of 7.1%. Doran urges them to remain focused. “Supply chain issues persist. COVID refuses to become a bad memory. Inflation rates are at their highest levels in a generation, and interest rates are predicted to begin increasing to cool things off,” he says. “2022 will have its challenges.” For further observations and commentary on the Q4 2021 results, contact Tom Doran at Reagan Consulting, 404.869.2534 or tom@reaganconsulting.com.
he Reagan GPS was formerly known as the Organic Growth & Profitability (OGP) Survey. Each participating agency in the GPS receives a customized, confidential report of its performance compared with the overall survey results, along with Reagan’s quarterly commentary of industry trends affecting agents and brokers. For information on participating in the survey, contact Michelle Appelbaum at 404.869.2541 or michelle@ReaganConsulting.com.
About Reagan Consulting
Reagan Consulting is a management consulting firm providing strategic consulting, valuation, capital raising, and merger-and-acquisition (M&A) services to the independent insurance distribution system. The firm’s services for insurance agents and brokers, bank-owned agencies and other participants in the insurance distribution marketplace include: appraisals of fair market value, capital raise advisory, mergers and acquisitions advisory, ownership perpetuation planning, strategic planning facilitation, key employee compensation and equity plan design, and agency performance benchmarking. Reagan Consulting co-developed the well-known Best Practices Study and produces the quarterly Growth & Profitability Survey.