The 2013 Best Practices Study by the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) revealed an increase in agencies with specialization, an increase in technology investment and greater profitability across most of the study's revenue groups.

The Best Practices Study began in 1993, as part of the foundation's efforts to improve agency performance and create agencies of higher value. The survey and subsequent study of leading independent insurance agencies documents the effective practices and encourages other agencies to adopt similar tactics.

Findings reveal that specialization has increased in agencies of all sizes, suggesting that developing specialized expertise in a certain industry or product helps agencies facilitate targeted leads and referrals, improve retention and also remain competitive in the industry.

Additionally, the study documented an improvement in organic growth since last year's study, with the average growth rate in total commission and fee revenue at 9.4 percent (up from 2.1 percent) for agencies with net revenues of less than $5 million. For agencies with net revenues greater than $5 million, that number is at 9.8 percent (up from 4.5 percent) from last year.

As a whole, agencies are expanding, investing in growth strategies that allow for organic growth and obtaining a competitive edge. Hiring new producers, enforcing greater producer accountability, focusing on specialty areas and expanding marketing efforts are just some of the strategies that have allowed for industry growth.

Strong revenue growth, in turn, has improved agency profitability. Results show that contingent income has grown at an average of 21.8 percent for agencies with revenues less than $5 million, and an average of 10.7 percent for revenues more than $5 million. Agencies improved in monitoring and controlling expenses, allowing operating profits to grow faster than contingent income. Additionally, agency shareholders can expect to earn 15 to 17 percent per year through stock price appreciation and shareholder distributions.

The study also revealed that many of the Best Practices agencies have plans to invest in technology in the coming year, including Internet marketing and social media efforts and agency management systems.

“The 2013 results indicate that Best Practices agencies continue to grow and increase profitability, the key components of agency value,” says Robert Rusbuldt, Big “I” president & CEO. “Overall, we are pleased, but not surprised, that the independent insurance agency system remains strong and stable.”

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Big &ldquo;I&rdquo; Study Shows Industry Growth

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