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Inflation Impacts Agency Growth

Over the past 15 years, insurance agencies have experienced inflation in two distinct forms.

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Over the past 15 years, insurance agencies have experienced inflation in two distinct forms. First is the tremendous exposure growth thanks to the booming U.S. economy. Agencies’ sales increased substantially because their commercial customers’ sales and employee counts were increasing, and people everywhere were buying bigger homes and new cars. Second, agencies also periodically benefited from increasing rates. Collectively, these factors fueled huge increases in agency revenue and profit growth. True to John Kenneth Galbraith’s quote, “Inflation does not lubricate trade but by rescuing traders from their errors of optimism or stupidity,” these inflationary factors rescued the industry. Inflation, like always, hid an ugly reality: many agencies forgot how to sell.

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