Organic revenue growth for insurance agencies and brokerage firms stalled in the third quarter of 2017, falling to 3.9% from 4.6% in the second quarter. Even as growth fell, profitability continued to soar in the third quarter.
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Third quarter results
(Photo: Courtesy of Reagan Consulting)
Firms participating in Reagan Consulting's Organic Growth and Profitability (OGP) Survey did report several bright spots regarding growth. Jim Campbell, a partner at Reagan Consulting, noted that "the OGP survey showed mixed growth by product line, with commercial lines continuing to struggle. Group benefits led the way at 6.3%. Personal lines growth, while lagging other lines, reached 3.0% — the second highest rate for the third quarter in the nine-year history of the OGP," Campbell said. "Third-quarter organic growth declined from a recent Q3 high of 6.8% in 2013, but the slight increase from 3.6% in the third quarter last year suggests that agencies and brokerage firms may have bounced off the bottom and will see improved growth ahead," he said.
Pricing is still a challenge in many property-casualty lines, though trends appear to be moving in a favorable direction, Campbell said. Economic growth is also showing signs of strengthening, with the latest estimates from the U.S. Department of Commerce reporting back-to-back quarters of GDP growth of at least 3%. Profitability, which Reagan Consulting defines as agent-broker earnings before interest, taxes, depreciation and amortization (EBITDA), hit a median of 22.7% in the third quarter.
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