2023 Best Practices Study

Introduction

Th e big story in this year’s Best Practices Study is the industry's remarkable performance coming out of the COVID-19 pandemic. The commitment to continual improvement that Best Practices agencies demonstrated before the pandemic paid huge dividends amid an economic disruption of historic proportions. This year's Study shows that Best Practices agencies not only survived the pandemic, but they came out of it stronger than ever.

Best Practices agencies have never been healthier. Let's look at the numbers.

Organic Growth

The organic growth results in this year's Study (calendar year 2022 results) were exceptional. Other than during the post-9/11 hard market, the industry has never delivered organic growth at the levels achieved in this year's Study . Growth rates for only the smallest revenue group (under $1.25M) decelerated. All other revenue groups saw their organic growth rates increase. The largest revenue group (over $25M in revenue) saw their growth rates increase by over 25%.

Organic Growth

10.8%

10.8%

10.5%

10.3%

10.2%

10.0%

8.7%

8.5%

8.3%

8.2%

7.2%

6.4%

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M >$25M

2022 2023

Sales Velocity

A rapidly recovering post-pandemic economy and a continued hard P&C market contributed materially to these growth results. What about new business? To what extent did new business results support these exceptional growth rates? Sales Velocity, calculated as current period written new business divided by prior period recorded commissions and fees, is the metric that answers this question.

Sales Velocity = Current period written new business divided by prior period recorded commissions and fees

EXAMPLE: 2022 Written New Business 2021 Commissions & Fees

$250,000 $2,000,000

SALES VELOCITY

12.5%

Sales Velocity

If there is a cautionary tale in this year's Best Practices Study , it may reside in this year's Sales Velocity results. Sales Velocity decreased in five of the six revenue categories - only the largest revenue category (>$25M) saw an increase in Sales Velocity. Generally, a Sales Velocity north of 12-13% is considered healthy, so this year's results are by no means dire. But Sales Velocity (new business activity) is slowing. The economic recovery will eventually

17.4%

15.8%

15.7%

15.5%

15.4%

15.3%

15.1%

15.1%

14.8%

14.6%

13.7%

13.1%

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M >$25M

2022 2023

Study Highlights

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