Independent Agency Growth Rate

[WBF]

What would you say the average annual growth rate for your independent insurance agency is? I have read that between ten and twenty percent is normal. I would just like to know if other independent agents find that to be on target with what they have seen in their own agencies in recent years.

[AgencyEquity]

I have not seen any numbers on this, however if you really took all agencies out there and gave an average growth rate as far as premiums and revenues, you would probably see a slight decline over the last 5 years. The reason for this is because premiums have declined and compound this with the economy, this has also driven declines. Workers Comp is one area we have seen huge declines because these premiums of course are based on payroll. Well with fewer people on the payrolls and those who are not it may not be working as many hours, this premiums have seen significant declines, let alone significant decreases in the rate per/100. If you are trying to gauge the growth of any one agency, such as agency you are looking to start or purchase, this is very hard to say because it is the individual that will make that happen more so that any regular organic growth. However the bottom line is, in recent years, there has been very little if any growth if you take the average and the totals of all.

[Rainmaker]

There are many different segments to the retail insurance broking industry, ie the 1) globals; 2) top 10 public; 3) top 100; 4) the SuperRegionals; 5) the Regionals; 6) single-location agencies; 7) small independents under $1M of commission....to identify just a few - all of them have different models, alignments, characteristics...and yes...metrics vary for each as much as cultures do.

So carving out data that applies to each segment that can be relied upon to most ably address your question is problematic at best.

If you are looking for guidelines to budget against, perform projections or establish goals for next year, or develop performance guidelines against - that's another dynamic as well. And, while taking into account industry data is always a good idea for those purposes, at the end of the day you should set the standard, the goals, and the metrics that will serve to create the ROI you have determined is the appropriate reward for your efforts, time, investment and sacrifices.....

We do have benchmark data here at Rainmaker - however, as I like to answer posts on the Insurance Journal 'sans-sales pitch' I would encourage you to start by looking at the financials for the public brokers - easy to find on the internet, check out their quarterlies and the Chairman's comments about different business units, lines of coverage, growth in certain markets and industries, etc., etc., and you'll at least get credible data which has the benefit of not only being large numbers (thus lowering standard deviation) but audited as well for accuracy. This should give you a good 'gut-check' and provide you with a starting point for determining your own corridors of performance for your agency.

Hope that helps

[lonestar]

I would say 10% to 20% is an average growth rate for an IA.

[jtownagent]

If you are a member of the Independent Insurance Agents and Brokers of America, I suggest a review of IIABA "Best Practices" program information; www.iiaba.net , This will allow you to compare your own agency with other agencies similar to you own. You can review the summary information online and then decide if it may be worth the small cost to purchase any number of publications and programs. Your State Association can also help you with general Best Practie information.