Agents, Brokers Achieve Record Annual Growth in 2023

The independent insurance agent and broker channel posted an organic growth rate of 10.3% in 2023 — the highest annual level achieved since Reagan Consulting launched its quarterly growth and profitability study in 2008.

According to a Reagan, at 22.8, the 2023 median Rule of 20 score surpassed the previous highs of 22.2 set in 2022 and 20.6 set in 2021. Achieving a score of 20 or higher indicates an agency is meeting or exceeding historically expected investor returns for the sector. The blended metric is derived by combining the organic growth rate with half of the EBITDA margin.

“It goes without saying that this year’s record Rule of 20 result means that agency owners did quite well in 2023,” Kevin Stipe, Reagan partner and CEO, said in a press release.

Survey respondents predict 2024 results will be nearly identical to 2023: an organic growth rate of 10% and EBITDA margins pushing 23%.

Growth by Product Line

Stipe described last year’s personal P&C growth as unprecedented.

“The line of business that has historically grown by only 2% to 3% jumped to a record 10.3% growth in 2023,” he said, adding that with the lag effect of rate-increase filings, “it is reasonable to expect that 2024 will be another year of solid growth for personal lines.”

Meanwhile, commercial P&C organic growth dropped from its 2022 record high but still reached double digits again in 2023 at 10.9%. “The primary growth driver was the hard market — extending the current hard market to a remarkable six full years,” Stipe said.

Reagan reports that group benefits grew by 6.5%. That represents the highest growth rate since 2018.

Profitability Reaches a New High

According to Reagan, EBITDA margins set a record in 2023 and topped 23% for the first time.

After Covid-19 surfaced, EBITDA margins jumped by more than 2 percentage points, driven by the temporary elimination of certain selling costs. “Many believed this spike in profitability would subside once the world returned to normal,” Stipe said. “But that hasn’t happened. Instead, brokers have held on to the margin gains achieved during COVID — and built on them.”

2024 Outlook

Stipe said that agents and brokers are more confident heading into 2024 than they were a year ago, fueled by reports that the U.S. economy remains strong and a recession may not materialize.

“Agents and brokers ended up setting new records for growth and profitability in 2023,” Stipe says. “Perhaps even more stunning is that they are now projecting a repeat performance for 2024.”

Topics Trends Agencies