* Independent insurance agents and brokers can celebrate a four-year growth trend. So reports Reagan Consulting upon releasing its third-quarter Organic Growth and Profitability (OGP) study The industry organic growth rate in Q3 was 6.1%--tied for the highest growth rate in the last 15 quarters. "This strong Q3 performance is another confidence builder for the industry," says Harrison Brooks, vice president of the firm.
All lines of business contributed to the strongest nine-month growth performance since September 2013. Commercial lines led industry growth at 6.8%, surpassing group benefits growth for the first time since 2014. Group benefits continued strong growth at 6.3% and personal lines - at 3.8% growth - posted its highest Q3 growth rate since Reagan began the OGP survey in 2008.
Brokers expect strong growth throughout 2018, estimating a full-year growth rate of 6.0% versus just 4.5% in 2017. "If history is any indication of future performance," says Brooks, "strong GDP tailwinds are likely to continue to drive strong organic growth for agents and brokers."
Agency Organic Growth by Quarter (2015-2018) 2015 I 5.8% II 5.9% III 4.4% IV 4.6% 2016 I 5.1% II 4.0% III 3.6% IV 4.2% 2017 I 3.9% II 4.6% III 3.9% IV 4.5% 2018 I 5.6% II 6.1% III 6.1% Source: Reagan Consulting OGP (ReaganConsulting.com) Note: Table made from bar graph. The strong growth performance in the last quarter has been accompanied by significant investment activity in the insurance distribution space. "Sustained organic growth and healthy industry fundamentals," notes Brooks, "have led to some big bets being placed on both the acquisition and insuretech fronts."
Three recent acquisitions were announced at record valuations: the $6.3 billion acquisition of JLT by Marsh & McLennan; the $700-plus million acquisition of Hays Companies by Brown & Brown; and the minority investment in HUB by Altas Partners of Toronto, Ontario.
Big bets have also been placed on the insurance technology front. CapitalG, Google's investment arm, purchased a large minority stake in Applied Systems. Meanwhile, Salesforce, no longer satisfied to just be a customer relationship management tool, is aggressively pursuing new agency partnerships and is aspiring to become the industry's next major agency management system.