Two surveys by the leading national agent and broker associations indicate that producers continue to see improvements in their business, but profitability may not be as large as the market shifts from its soft-market phase.
The Independent Insurance Agents & Brokers of America (IIABA) released its 2012 Best Practices Study, which found organic growth improved at a modest pace for producers.
“The results of this year’s Best Practices study indicate that organic growth continues to improve as the independent agency system faces the unusual combination of a hardening market and a continuing soft economy,” says Madelyn Flannagan, IIABA vice president of agent development, research and education. “Most Best Practices agencies confidently held their ground and have put resources and systems in place to move cautiously into a changing market.”
The report says organic growth improved to its highest level since the economic downturn in 2008-2009.
Small to midsize agencies grew organically by 2.1 percent, while larger agencies grew by an average of 4.5 percent. The IIABA credited the growth to strategies agents learned during the economic downturn.
Agencies also cut the fat from their businesses by lowering expense and controlling costs. These lessons, learned during the soft market, produced flat revenue growth for agencies.
Robert Rusbuldt, IIABA president and CEO, says the results “were not stellar” as agencies continued to bounce back from the Great Recession and soft market. "Overall, we are pleased but not surprised that the independent insurance agency system remains strong and stable,” he says.
Meanwhile, the Council of Insurance Agents & Brokers released its third-quarter pricing survey of producers which found third-quarter pricing averaged a 3.9 percent increase.
Medium-size agencies had the best numbers with 4.5 percent, and large accounts showed the lowest increase at 3.5 percent.
“We definitely saw an increase in most lines, but it was more of a creep than a leap,” says CIAB President & CEO Ken A. Crerar. “Carriers seemed more focused on tightening terms and conditions.”