Independent Insurance Channel Growth Remains Stable: Reagan Consulting Urges Agents, Brokers to Continue Improving Efficiency.

ATLANTA (February 17, 2020)--Optimism remains high in the independent insurance channel, despite a slight drop in year-end 2019 growth rates and profitability. Agents and brokers predict that 2020 will be a stronger year with 7.0% organic growth, according to the latest Organic Growth and Profitability (OGP) survey report from Reagan Consulting. Median organic growth in the channel slowed slightly to 5.9% in the fourth quarter (Q4) of 2019, after having exceeded 6% in five of the previous six quarters. Also, the 2019 median year-end EBITDA (earnings before interest, taxes, depreciation and amortization) dropped slightly to 20.1% from the 2018 year-end EBITDA of 20.2%.

Those declines are insignificant unless they prove to be the beginning of a trend, says Bobby Reagan, CEO of Reagan Consulting. A more significant change, says Reagan, is a shift in the biggest sources of revenues and earnings in the channel. As of year-end 2019, commercial lines surpassed group benefits in both organic growth and profitability.

Compounding Small Differences

Reagan also reports encouraging news: "Operating income rose from 12.5% in Q4 2018 to 13.1% in Q4 2019, proving that brokers were more efficient in controlling their expenses."

Reagan Consulting has charted large variances in efficiency among agents and brokers across all revenue sizes. Reagan encourages agents and brokers to continue working to maximize their efficiency, and, using the Q4 2019 median and top quartile (75% percentile) firms to illustrate, he explains how small differences in organic growth and profitability compound over time.

"Although the difference in the...