2024 Best Practices Study

Introduction

When last year’s Best Practices results were published (which were excellent – across the board), the $64,000 question was: could the industry go anywhere but down? Rising interest rates, the inevitable tapering of P&C rates, and a looming recession had the industry on edge. Most brokers braced themselves for softer rates and a declining economic environment. It was largely assumed that growth and profitability levels would decline – the only question was how steep the decline would be. The industry has its answer, and the news is not just good - it's historically good. This past year will be remembered as a high watermark for our industry. In the Best Practices Study's thirty-plus-year history, we have never seen operating and financial results across all revenue categories that matched those achieved in this year’s Study . This is a testament to our industry's resilience, adaptability, and commitment to a Best Practices mindset.

Let’s look at the 2024 Best Practices results for a handful of the most critical benchmarks.

Organic Growth Organic Growth is total growth, net of any acquisition activity. It is a function of four factors: new business, account attrition, rate, and exposure. Organic growth is the typical agency's most important operating metric and best indicator of overall health. Without consistent and positive organic growth, agencies will struggle to remain viable over time and to achieve adequate investment returns.

P&C Rate Changes

11.3% 10.3%

9.2%

8.0%

6.1%

4.0%

2.1%

0.2%

-1.5%

-3.3% -4.0%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Overall, the 2024 Study’s organic growth results were excellent. Although many factors contributed to these results, P&C rate played a considerable role. The P&C market is now in a seventh straight hard year and shows no signs of cooling anytime soon. It would be challenging not to grow in this rate environment. The US economy, which had been red hot after the worst of the COVID-19 pandemic, settled into a more regular rhythm, with GDP increasing by 2.5% versus 2022. New business results were solid. Overall, the industry scored an A- for organic growth in 2023. Mid-Sized Accounts Source: CIAB

All but two Best Practices revenue categories showed improved growth results compared to last year. Only the smallest revenue category delivered modest growth results (5.4%). The advantages of scaled (large) brokers are well known. In most cases, larger brokers enjoy a significant competitive advantage in the marketplace, given the tools and resources they wield. 2023’s modest growth results from smaller agencies in the study should remind all independent brokers, especially smaller

Organic Growth

11.7%

11.3%

11.4%

10.4%

10.8%

10.8%

10.3%

10.0%

9.8%

8.7%

6.4%

5.4%

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

2023

2024

Study Highlights

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