2025 Best Practices Study

BEST PRACTICES STUDY SCALING EXCELLENCE: GROWTH STRATEGIES FOR INSURANCE AGENCIES

2025

©2025 Copyright ©2025 by the Independent Insurance Agents & Brokers of America and Reagan Consulting, Inc. All rights reserved. No portion of this document may be reproduced in any manner without the prior written consent of IIABA or Reagan Consulting. In addition, this document may not be posted as a link on any public or private website without the prior written consent of IIABA or Reagan Consulting.

We wish to thank the following companies for their sponsorship. The funding provided makes possible the development of the 2025 Best Practices Study and the Best Practices Gateway website.

2025

Study Sponsors

2

2025

Study Sponsors

3

Introduction & Overview ..................................................................................................................... 6

2025 Study Highlights .......................................................................................................................10

Generative AI: Transforming Insurance Practices ..........................................................................16

Executive Summary............................................................................................................................24

Agencies under $1.25 Million in Revenue..........................................................................24

Agencies between $1.25 Million and $2.5 Million in Revenue........................................28

Agencies between $2.5 Million and $5 Million in Revenue .............................................32

Agencies between $5 Million and $10 Million in Revenue ..............................................36

Agencies between $10 Million and $25 Million in Revenue ............................................40

Agencies between $25 Million and $100 Million in Revenue..........................................44

Agencies over $100 Million in Revenue .............................................................................48

Cross Category Comparison ............................................................................................................52

Glossary...............................................................................................................................................84

2025

Table of Contents

4

5

Introduction & Overview

2025

Best Practices Study

6

Intro & Overview

7

Best Practices Study , please contact Reagan Consulting at 404-869-2535.

About the Study: The History

Since 1993, Reagan Consulting and the Big “I” have partnered to produce the Best Practices Study , a comprehensive examination of the top performing agencies across the country. The Study compiles benchmarking data on the key metrics of agency performance and value, including revenue growth and profitability, financial stability, expense management, and sales and operations productivity. Every three years, the Big "I" and Reagan Consulting ask insurance companies, state association affiliates, and other industry organizations to nominate agencies they consider to be among the best in the industry for each of the BPS ' s revenue categories. Nominated agencies are then invited to participate in the Study by completing an in-depth survey detailing their financial and operational year-end results. These results are then scored and ranked objectively to determine which agencies earn the Best Practices agency designation. 2025 is the beginning of the current three-year Study cycle (2025-2028). Over 1,100 independent agencies throughout the U.S. were nominated to participate in the annual Best Practices Study . Although participation took extensive time and effort, 349 of the nominated agencies qualified and were designated as Best Practices agencies. These top-performing agencies' results serve as the foundation for the 2025 Best Practices Study and the next 2 years of the Best Practices Study. Inclusion in the Best Practices Study is a prestigious recognition of superior performance. 2025 marks the beginning of a new study cycle. Agencies that believe they have the qualities of a Best Practices agency and wish to be nominated to participate in the 2028-2030 Study cycle should contact their state association or an insurance carrier and ask that their name be submitted. To learn more about nominating your agency to participate in the 2028 The Process Future Participation

The 2025 Best Practices Study

The 2025 Best Practices Study is composed of four primary sections:

1) Study Highlights – an overview of the Study results and the latest industry trends

2) Insights on Agency Generative AI Use – A review of the ways independent agents are currently using and preparing to implement Generative AI. 3) Executive Summaries — Key benchmarks and perspectives are summarized for each of the six revenue categories. 4) Cross Category Comparison — The complete array of Best Practices benchmarks for all six revenue categories, arranged in a side-by-side format that allows for quick metric comparisons. If you have questions about the information published in the 2025 Best Practices Study , please contact Reagan Consulting at 404-869-2535. Visit the Best Practices Gateway for access to the annual Best Practices Study at: www.reaganconsulting.com/best-practices. Other resources and tools to help agencies improve their performance and enhance the value of their business are also available via the Big "I" website: www.independentagent.com. If you would like to purchase the Study , contact the Big "I" Education Department by calling 800-221 7917 or online at www.independentagent.com/best-practices. For More Information

Intro & Overview

8

2025

Best Practices Study

9

2025 Study Highlights

2025

Best Practices Study

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Introduction

In a dynamic and increasingly competitive insurance marketplace, top- performing brokers aren’t just reacting to change — they're anticipating it. Success in this industry requires more than hard work and client relationships; it demands a clear understanding of where your firm stands today and how it can get even better. That’s where the Best Practices Study comes in. Since 1993, the Best Practices Study has offered meaningful performance comparisons to top-performing peer firms across a range of key performance indicators. Whether you're a regional agency or a growing national player, these benchmarks allow you to evaluate your business against high-performing counterparts — firms that are setting the standard for financial strength, operational efficiency, sales growth, client retention, and overall strategic execution. Benchmarking gives context to your numbers. A 10% organic growth rate or 20% EBITDA margin is impressive —but how does that compare to others in your space? Without benchmarks, it’s difficult to know what “good” really looks like, let alone “great.” With them, you gain a clearer view of what’s possible and what you should be aiming for. Benchmarking isn’t just about comparison ; it’s about action. These insights can help you pinpoint opportunities for improvement, make more informed decisions, and align your team around realistic, data driven performance goals. Whether you're focused on improving producer productivity, managing expenses, optimizing carrier relationships, or preparing for a future ownership transition, the Study can serve as a guidepost. To ensure relevance for firms of all sizes, the Study reports across seven comparison groups — from very small to very large brokers — allowing you to benchmark your performance against peers with similar scale and structure. This year's Best Practices Study includes two new revenue categories: $25-100M and over $100M. Given the rapid expansion at the high end of the marketplace due to consolidation, this distinction ensures that super-regional and national brokers with revenues over $100 million are accurately represented. Growth and profitability are the foundational benchmarks, but the report includes more than 3,000 data points covering every major dimension of brokerage operations. The result is a comprehensive, actionable resource designed to help you make smarter decisions, sharpen your competitive edge, and position your firm for long-term success.

2025 Best Practices Growth Overview

Healthy organic growth remains the lifeblood of Best Practices agencies. In this year's Study, organic growth for BP agencies remained strong. Even so, in most size categories, organic growth rates dipped from last year’s results. This is a trend to monitor closely.

Organic Growth

11.7%

11.3%

11.3%

11.4%

10.4%

10.4%

10.1%

9.8%

9.7%

9.5%

9.0%

8.7%

5.4%

N/A

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M $25-100M >$100M

2024 2025

2025 Study Highlights

11

Organic growth for independent agencies is driven by four factors:

1) New Business (adding new business)

2) Account Retention (holding on to existing business)

3) Economic Conditions (the overall economy)

4) P&C Rate (the insurance rate charged for P&C insurance policies)

New Business. New business activity is captured in the Sales Velocity metric, which is simply Commission and Fee (C&F) Income written as a percentage of the prior period’s baseline result. An agency that booked $250K in new C&F business in 2024 with $2.0M in C&F income in 2023 would have a 12.5% Sales Velocity. In general, a Sales Velocity north of 12 is considered healthy.

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

EXAMPLE: 2024 Written New Business

$250,000

2023 Commissions & Fees

$2,000,000

The answer to the question, “Do we have a strong sales culture?” is best answered by an agency’s Sales Velocity

SALES VELOCITY

12.5%

result. An agency without an industry average or better Sales Velocity is unlikely to have a strong sales culture. As the old saying goes, “nothing good happens until someone sells something.” For 2025, five of the six revenue categories for which we have year-over year data posted declining Sales Velocity results. Although each BP group managed to exceed the 12.0 Sales Velocity baseline, a slowing growth engine is something to watch very closely.

Sales Velocity

15.9%

15.1%

15.0%

15.0%

14.9%

14.3%

14.0%

14.3%

14.1%

13.4%

13.4%

13.6%

12.7%

N/A

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M $25-100M >$100M

2024 2025

An even more nuanced understanding of new business results comes from an examination of Sales Velocity banded by age class (Freshmen, Sophomores, Juniors, and Seniors). A healthy Sales Velocity balance between all four generations of producers is key to ensuring long-term organic growth potential and agency perpetuation viability. An overweighting in either of the junior or senior classes may indicate that an agency needs to ramp up its producer development efforts among its younger generations. 3.4% 2.8% 2.3% 2.1% 4.7% 4.4% 4.2% 5.1% 3.2% 3.3% 3.3% 3.5% 3.7% 3.2% 4.5% 4.2% $5-10M $10-25M $25-100M >$100M Sales Velocity by Producer Age / Class Freshmen (up to age 35) Sophomores (age 36-45) Juniors (age 46-55) Seniors (over age 55)

$2.5-5M

1.0%

4.8%

2.5%

4.3%

Account Retention. Account retention, expressed as renewed account revenue as a percentage of prior period revenue,

$1.25-2.5M

1.5%

3.7%

5.3%

3.9%

<$1.25M

0.5%

5.3%

4.3%

3.3%

2025 Study Highlights

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is the other organic growth lever (along with Sales Velocity) over which an agency has control. This metric is affected by P&C rate, but it is nonetheless an excellent peer comparison to gauge overall account retention.

Although accounts come and go due to acquisitions and other factors outside an agency’s control, most often a lost account results from a real or perceived service misstep or a subpar value proposition in the marketplace.

Renewed Revenue

The answer to the question, “Do we have a strong service culture?” is best answered in light of an agency’s account retention results. An agency without industry-average or better account retention results is unlikely to possess a strong service culture.

97.7%

97.7%

97.5%

96.8%

96.6%

96.3%

92.9%

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M $25-100M >$100M

Economic Conditions. Now we turn our attention to the first organic growth level over which an agency has no control – the health of the overall economy. A good proxy for measuring economic health is the U.S. gross

domestic product, or GDP. GDP is the total value of all goods and services produced in the U.S. for a given time period. It's a key measure of a country's economic activity and overall health. An agency’s organic growth is highly correlated with GDP. GDP growth in 2024 was 2.8%, which is considered healthy. A robust economy is generally accompanied by expanding exposure bases and new business opportunities, which fuel organic growth. Overall, agents and brokers have a healthy economy in which to operate in 2025.

U.S. GDP Growth

6.1%

2.9%

2.8%

2.5%

-2.2%

2020

2021

2022

2023

2024

Source: Bureau of Economic Analysis

P&C Rate. The second organic rate level over which agents have no control is P&C rate. Although rates for coverage also change in the life & health insurance space, the typical BP agency derives the vast majority of its C&F income from P&C business, so P&C rate is the measure most closely monitored for purposes of discussing agency growth.

An expanding P&C rate environment is referred to as a hard market, whereas a shrinking rate environment is known as a soft market. With average P&C rate up 6.4%, 2024 was the seventh consecutive hard market year. P&C rate cooled materially versus the prior year. Although 2024 was still a hard market year, continued market softening may be an indication that the overall growth environment will become more challenging. This will require Best Practices

CIAB P&C Rate Changes

11.3%

10.3%

9.2%

8.0%

6.4%

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 2024

Mid-Sized Accounts

Source: CIAB

2025 Study Highlights

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agencies to redouble their efforts in new business and account retention to ensure positive organic growth is achieved.

NUPP

Investments in new producers remain key to maintaining strong organic growth over time. Are you investing at an appropriate level? To address this question, Reagan Consulting developed a metric called NUPP – Net Unvalidated Producer Payroll. Expressed as a percentage of net revenue, NUPP is the difference between what an agency pays its unvalidated producers (producers-in-development)

NUPP

3.9%

3.6%

3.0%

2.3%

2.0%

1.9%

1.8%

1.7%

1.7%

1.7%

1.7%

1.6%

1.6%

N/A

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M $25-100M >$100M

2024 2025

and what the unvalidated producers would earn under the agency's regular commission schedule. An agency NUPP is perhaps the best indicator of whether it is investing at an appropriate level to ensure its long-term growth capacity.

Effective Investments in Growth: Calculating the NUPP

Step 1: Find the total compensation of all unvalidated producers Number of Unvalidated Producers

3

Actual Payroll of Unvalidated Producers $174,000 Step 2: What would the unvalidated producers earn under the agency’s normal producer commission schedule? Unvalidated producer's total book of business $125,000 Agency blended commission rate 32% Implied (“earned”) compensation $40,000 Step 3: Calculate the NUPP as a percentage of revenues Actual payroll of unvalidated producers $174,000 Implied (“earned”) compensation ($40,000) NUPP $134,000 Agency Net Revenues $7,500,000 NUPP - Net Unvalidated Producer Pay (as % of revenues) 1.8%

2025 Best Practices Profitability Overview

Without question, profitability is the most important financial metric to master. Healthy profits are necessary to ensure suitable shareholder investment returns are achieved. Profits fund the growth investments

necessary to increase agency value and fund perpetuation redemptions. As such, healthy profits are a must. And yet, many agency owners are unsure how to measure their own profitability. Many rely on their financial statements, which are rarely an accurate indication of true profitability. Even worse, many agency owners have no idea how profitable they should be.

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization.

Think of EBITDA as pre-tax cash flow.

2025 Study Highlights

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The most common profitability metric throughout the Best Practices Study is pro forma EBITDA. An agency’s pro forma EBITDA is reported earnings before Interest, Taxes, Depreciation, and Amortization, after normalizing revenue and expense adjustments are made, and discretionary expenditures made for the benefit of owners are added back. Pro forma profit reflects the agency's real and sustainable profit after the numbers are cleaned up to remove any static.

Pro Forma EBITDA

Pro forma profitability remained at near all-time highs in this year's Best Practices Study . Many of the significant expense reduction gains achieved during the COVID Pandemic have become permanent fixtures for Best Practices agencies.

30.0%

29.7%

28.1%

28.8%

29.6%

28.2%

27.5%

25.8%

24.9%

24.8%

23.1%

22.3%

21.4%

N/A

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M $25-100M >$100M

2024 2025

Conclusion

The independent insurance brokerage industry is evolving rapidly, shaped by consolidation, emerging technologies, shifting client expectations, and rising performance standards. In this environment, the ability to benchmark your firm against high- performing peers isn’t j ust helpful, it’s essential. This report provides a comprehensive look at how firms of all sizes perform across a wide range of metrics. By organizing data into seven distinct peer groups, we’ve made it easier to compare your results to those of brokers with similar scale and resources. With over 3,000 data points, this report offers both breadth and depth, covering everything from growth and profitability to productivity, compensation, and operating structure. But data alone doesn’t create change. What matters most is how you use this information. We encourage you to take a close look at where your firm stands today and identify the areas with the greatest potential for improvement. Use these benchmarks to challenge assumptions, sharpen your strategy, and set ambitious but achievable performance goals. Ultimately, benchmarking is not a one- time exercise. It’s part of an ongoing commitment to continuous improvement. The firms that make the most of this report will be the ones that treat it as a tool — not just for measurement, but for growth, innovation, and long-term success.

2025 Study Highlights

15

Generative AI: Transforming Insurance Practices

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Overview

The release of OpenAI’s ChatGPT in November 2022 marked a pivotal shift in how artificial intelligence is perceived and utilized, especially within insurance brokerages and agencies. Generative AI now presents both a disruptive threat and a compelling opportunity to automate workflows, enhance customer engagement, and streamline operations. Generative AI is a branch of artificial intelligence focused on products capable of producing original content or making decisions based on the data it has been trained on. While Traditional AI is designed to analyze existing data and provide responses rooted in that information, generative AI can generate entirely new outputs derived from the same data. The real value lies in how organizations implement and weave AI into their culture and daily processes. As Roy Amara’s adage reminds us, the impact of technology is often overestimated in the short term and underestimated over time, making it crucial for brokerages to understand where AI fits into their overall technology adoption journey. One Best Practices agency recently implemented an AI platform tailored for producers and account teams. By mapping out key workflows, the agency identified four primary areas where AI could enhance efficiency: Loss Run Analysis, Coverage Analysis, Statement of Value (SOV) Comparison, and an Ask Anything Agent feature. The platform’s adoption has led to measu rable benefits, with staff saving an average of 7.5 hours per week and the agency achieving a 244% return on investment.

In the 2025 Best Practices Study , firms were asked whether they had invested in Generative AI. As expected, firms in the largest two revenue categories led the way with 60% of firms $25 100M and 84.2% of firms over $100M answering yes. These firms are leveraging their scale and complexity to build AI into their workflows, but as AI solutions become more prevalent and integrated with legacy AMS systems, there are opportunities for firms of all sizes to implement AI soon.

% of 2025 Best Practices Firms who invested in AI

84.2%

60.0%

22.0% 22.0% 23.3% 25.0%

11.5%

<$1.25M $1.25 2.5M

$2.5 5M

$5 10M

$10 25M

$25 100M

>$100M

AI Use Cases & Transformation Strategy

As Jon Kelly, CEO of Modern Metric, notes, “AI is only useful when it is in context and on a platform.” Generative AI excels at structuring unstructured data and supporting tasks that benefit from partial automation, with humans providing final review. However, it should augment, not replace, human expertise.

Customer-Facing Applications

Generative AI is revolutionizing customer-facing solutions for insurance brokerages by streamlining client interactions, personalizing services, and improving satisfaction. AI-powered chatbots efficiently handle routine inquiries and claims, while automating intake forms and generating tailored coverage summaries. Agentic tools also help brokers quickly summarize documents and present clear advice. Additionally, AI enhances onboarding by providing interactive guides, creating a more responsive and engaging client experience that drives loyalty and sets new standards in the industry.

Generative AI: Transforming Insurance Practices

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Internal Operations

On the back end, AI is improving efficiency in document processing, compliance monitoring, and data analytics. Examples include:

• Direct Bill reconciliation: automating matching and posting of carrier payments. Within the first month of implementing an AI-powered direct bill reconciliation tool, one Best Practices firm achieved automatic reconciliation for approximately 80% of their statements. This improvement freed up the accounting team to focus on more strategic financial tasks. • Training tools: AI-based simulation and onboarding programs. A top-100 agency has implemented AI as a digital assistant to support CSRs in their daily work. This digital assistant has significantly improved form submission accuracy and enhanced client interactions, resulting in more efficient and positive outcomes. • Policy checking: flagging discrepancies between bound and issued policies. In a pilot program, another top-100 agency implemented an AI-powered policy checking tool to create coverage summaries or explain a certain insurance clause. With an average of 30 minutes saved per day per support staff member, the ROI for this product was 3,807%. • AMS (Agency Management System) AI integrations: applying LLMs to extract insights and streamline workflows within systems like Applied or Vertafore. Applied is addressing broker workflow inefficiencies with their 'Digital Roundtrip of Insurance' roadmap, natively embedding data and AI capabilities to drive top line growth through upsell/cross-sell insights and prospecting plus bottom-line efficiencies in data entry automation and back-office commissions reconciliation. • Integration of acquired firms: can vastly reduce integration costs and timing. A Best Practices agency has adopted AI to streamline post-close integration tasks, utilizing technology to clean, transform, and migrate AMS data. As a result, integration timelines have been cut from 180 days to just 45 days. Producers are leveraging tools like ZoomInfo for prospect research, proposal generation tools like Modern Metric’s to craft tailored presentations faster, and client benchmarking tools like BrokerPRO to create client friendly dashboards with credible data. Generative AI assists producers in improving client communications, summarizing opportunities, and preparing for meetings more efficiently — driving higher productivity and growth. For instance, producers leveraging BrokerPRO as part of their sales workflow have achieved a 31% increase in win rates and a 106% boost in average deal size. Consequently, those adopting technology see measurable growth in both their book size and overall compensation, reinforcing the value of embracing AI driven tools in a modern brokerage environment. Producer Enablement

Differentiating Between Quick Wins and Long-Term Transformation

Taken from Emilia Sherifova, CEO / Founder, Stealth AI-Native Technology Company (ex-CTO Partner, KKR; ex-CTO, Northwestern Mutual):

“ A frequent pitfall in AI programs is mistaking tactical victories for wholesale reinvention. Early wins matter, as they spark belief and build organizational “AI muscle.” We observed a broker using an AI intelligence engine to prioritize and score leads, resulting in a 22% reduction in lead-to-close time and a 2.6-fold increase in the likelihood of conversion. Another used generative outreach to lift email open rates and quote requests. Real impact, minimal surgery. These bites of low-hanging fruit prove w hat’s possible and create momentum. Transformation,

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however, begins when AI rewires the work itself. These aren’t point tools; they’re end -to-end redesigns that reset cost curves and customer experience.

“ The best roadmaps run on two tracks: velocity (quick wins, fast ROI) and vision (long-cycle reinvention). But track two can’t reside in IT; business leaders must ask, “If we built this function from scratch around AI, what would it look like?” Technology e nables change; however, business owns it. Treat early wins as scaffolding, not substitutes, fund bold bets while proving value, and keep the business in the driver’s seat. The brokers that master this dual tension will lead the industry. ”

Producer and Staff Upskilling

Brokerages must prepare their workforce to thrive in an AI-augmented environment. AI readiness is particularly critical for attracting and retaining young producers. Today’s talent expects access to modern tools, data-driven workflows, and an intuitive user experience. Producers who are equipped and embrace new technology in their sales process are and will continue to be more successful compared to their peers who resist the change. In a recent study conducted by Reagan Consulting, Broker Tech Ventures (BTV) partner firms were surveyed to evaluate the performance of their producers. Producers were split into two groups, tech-enabled and non-tech-enabled, then ranked based on new business generated in 2024.

Median New Commissions of Producers under 35

Median Book Size of Producers under 35

$384,355

$216,000

$170,909

$104,000

Tech-Enabled

Non Tech-Enabled

Tech-Enabled

Non Tech-Enabled

Producers under age 35 who are tech-enabled generated over $65,000 more in new business last year and had a total book size averaging $168,000 larger than their non-tech-enabled peers. Producers at BTV partner firms have access to a suite of tools, including AI Assistants, AI Customer Sourcing tools, and AI Policy review applications. Producer AI Tools augment a producer's sales ability by eliminating the low-value tasks and making them more effective and efficient at reaching a greater number of prospects. Beyond producers, the broader staff must also be trained and upskilled. When implemented in context, AI eases cognitive load and helps staff move away from repetitive tasks and toward higher-value client-focused activities. In this way, AI does not replace the workforce but enhances it, allowing employees to spend more time solving problems and building relationships.

AI Organizational Readiness

Technology alone does not create value; organizational readiness does. Studies consistently show that the success rate of AI implementations correlates directly with upfront planning, structural alignment, and change management strategies. Brokerages looking to adopt generative AI must start with internal alignment and a clear-eyed view of what readiness entails.

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A dedicated technology leader — whether a CTO, innovation head, or an employee who is passionate about leading the change — is critical. This individual should be empowered to own AI strategy and be accountable for execution. In high-maturity firms, 91% have already appointed a dedicated AI leader according to a 2025 Gartner Survey on how firms are adopting AI. Remarkably, this person does not need to be a technologist by training. Many successful AI leads in insurance brokerages bring a mix of 75% industry expertise and 25% technical fluency. They are operational leaders who understand the business and are comfortable with technology while bridging strategy and execution. Equally vital is the support of key business leaders. Their engagement ensures alignment between technology goals and business priorities, and they must hold teams accountable for using new tools effectively.

Beyond investments in data quality, brokerages must also implement strong governance frameworks that safeguard client data, ensure compliance, and prevent misuse. U.S.-based firms also need to stay ahead of evolving regulations that pertain to AI and consumer data, including state-specific requirements and federal guidance still in formation. Numerous online resources are available for monitoring AI regulation. The law firm BCLP provides a comprehensive tracker that covers both proposed and enacted regulations at the federal and state levels.

“Agencies that have invested in having a complete and accurate dataset of their customers and policies will get a much better return on their AI investment than those who have not.”

Kabir Syed CEO of ennabl

Organizations should allocate appropriate resources towards change management initiatives, including planning and training, to effectively address the transformations introduced by AI. Legacy workflows within insurance brokerages are often inflexible and slow to adapt. Without a strong commitment to preparing employees for these changes, successful adoption may be an uphill battle.

Rollout Structure

A well-executed AI roll- out plan is essential to turn intention into impact. AI won’t create value unless it is adopted at scale, and that adoption requires structure. The rollout must be phased, intentional, and aligned to specific workflows. The following are the key stages of an effective rollout structure.

Identify use cases and define KPIs for success

Assign a pilot team and build a beta model

Map employee workflows

Prepare and release into production with training and change management

Post-release monitoring and reinforcement

Roll into phased implementation

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1) Map employee workflows

The first and most critical step is to map out employee workflows in detail. AI solutions are only valuable when integrated into employees’ daily tasks and existing platforms. If the AI application sits outside of the workflow, requiring users to toggle between systems or perform extra steps, adoption rates will plummet. This mapping should identify core responsibilities and repetitive tasks; manual processes that rely on judgment, pattern recognition, or structured decision-making; current bottlenecks and inefficiencies; and platforms or tools currently used by employees. The mapping process creates the context for AI and helps ensure that solutions are not built in isolation but instead solve real problems where users already work.

2) Identify use cases and define KPIs for success

With workflows documented, technology leaders can identify use cases where AI is likely to create the most immediate impact. Look for tasks that are repetitive and time-consuming or that require interpretation of unstructured information such as emails, PDFs, or policy documents as well as those that have clear benchmarks for improvement (e.g., time saved, error rate reduction).

Defining success early on is just as critical. What will a successful implementation look like? Setting specific KPIs ensures alignment among stakeholders and enables data-driven evaluation post-rollout.

3) Assign a pilot team and build a beta model

Select a small, representative group of users to test the AI tool in a low-risk, high-value function of the business. The pilot team should include individuals who are open to new technology and can provide constructive feedback. The goal is to build a fun ctional “beta” model that proves feasibility while allowing for iteration.

During this phase: •

Collect user feedback continuously

Track defined KPIs

•

• Identify integration gaps or resistance patterns • Refine the interface and user experience

This step reduces risk and builds internal advocates who can help champion broader rollout efforts.

4) Prepare and release into production with training and change management

Even the best tools will fail if users aren’t trained, supported, and bought in. Organizations must be transparent about what’s changing and why. Transparency reduces resistance and proactive communication builds trust. Training should be role-specific, practical, and outcome-driven. Rather than offering general AI overviews, training should walk employees through exactly how the tool works within their specific workflow. Resources might include hands-on workshops, interactive onboarding guides, peer-led training sessions and support channels for troubleshooting. The goal is not just to teach functionality but to show how the AI tool helps each employee do their job more effectively.

5) Post-release monitoring and reinforcement

Launch is not the finish line —it’s just the start of value realization. Post -implementation, the organization should continue tracking KPIs and monitoring usage patterns to ensure adoption. Many tools fail because

Generative AI: Transforming Insurance Practices

21

people simply don’t use them consistently. Technology leaders should collaborate with business unit heads to reinforce usage expectations, trouble shoot obstacles, and adjust based on real-world usage. Incentives and accountability matter. Adoption often requires both “carrots” (e.g., performance metrics, recognition) and “sticks” (e.g., performance expectations tied to usage).

6) Roll into phased implementation

Once the pilot proves successful and early lessons are integrated, the AI solution can be scaled across other departments or use cases. This phased approach minimizes disruption and allows each new phase to build on the momentum and insights of the previous one. A phased rollout not only expands AI usage strategically, it also avoids overwhelming employees and ensures that value is being captured as implementation scales.

Conclusion

AI is not just a new type of technology platform to be leveraged but a strategic capability within an organization. Agents and brokers can transform their business through generative AI and need to be prepared to build this new capability through organizational readiness, a clear rollout strategy, and a commitment to equip staff with the training and skills necessary to be successful. By starting with quick wins and embedding AI into real workflows, brokers can become more efficient, intelligent, and client-focused.

To learn more about Generative AI and its application for Independent Agents, visit the Big “I”’s technology resources page (https://www.independentagent.com/agency-management/technology/) .

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Generative AI: Transforming Insurance Practices

23

Executive Summary

Key Metrics by Agency Revenue Category

<$1.25M

Agencies under $1.25 million in revenue

24

Executive Summary

Average Revenues $813,367

Regional Distribution

Weighted Average Shareholder Age (WASA) 58.4

Revenue Distribution (as a % of Gross Revenue)

◼

Northeast

6.7%

◼

Midwest

33.3%

Corporate Structure

◼

West

13.3%

Average Number of Shareholders 1.5 Average Number of Agency Locations 1.1

◼

Southeast

46.7%

Sole Prop. 6.7%

C Corp 13.3%

◼

Southwest

0.0%

LLC 13.3% PROFILE & REVENUE GROWTH & STRATIFICATION

◼

Commercial P&C

35.1%

◼

Personal P&C

56.4%

◼

Group L/H/F

4.0%

S Corp 66.7%

◼

Contingent/Bonus

4.0%

◼

Other

0.5%

Notes

Account Stratification

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Commercial P&C

• Agencies under $1.25M in revenue posted a 9.0% organic growth rate, increasing from 5.4% in 2024. For the first time in three years, this revenue group does not have the lowest overall organic growth rate. • This revenue category generated the highest percentage of revenue from personal lines (56.4%) of all revenue categories.

◼ < $5K

69.2%

16.8%

15.5%

14.2%

◼ $5K to $10K ◼ $10K to $25K ◼ $25K to $50K

13.1%

12.4%

11.2%

6.1%

9.0%

7.2%

2.8%

◼ > $50K

3.4%

8.9%

Group L/H/F

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

◼ <50 Lives

94.5%

◼ 50-100 Lives ◼ >100 Lives

0.8%

Median

Top Quartile

4.7%

Note: Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F.

<$1.25M

25

Executive Summary

• Effective NUPP, the product of an agency's investment in unvalidated producers (NUPP) and success rate in hiring producers (Producer Success Rate), is expressed as a percentage of net revenue and is the best overall measure of an agency's effectiveness in recruiting and developing sales talent. • Firms in this revenue band took a significant step forward in lowering their Weighted Average Producer Age (WAPA) to 47.4, down from 49.4 in 2024 and 51.1 in 2023. • This revenue group posted the lowest Effective NUPP of any revenue group, staying consistent from 2024 after having the highest Effective NUPP in 2023.

Book of Business per Producer (commissions and fees)

Book of Business by Age

Effective NUPP

NUPP 1.9%

New Business

Average Book

Commercial P&C PRODUCTION SALES VELOCITY Personal P&C Life/ Health/ Financial Multi-Line

$29,841

$300,404

Producer Success Rate 21.3%

$44,774

$129,499

◼

5.7%

Up to age 35

◼

38.6%

Age 36-45

$44,774

$129,499

◼

29.7%

Age 46-55

Effective NUPP 0.4%

◼

26.0%

Over age 55

$35,759

$441,449

Sales Velocity

Notes & Definitions

Age Banding of Sales Velocity

• Sales Velocity is a critical metric in determining organic growth. It is defined as this year's written new business divided by last year's commissions and fees. • Age Banding of Sales Velocity can help a firm assess where new business and growth are coming from and prepare for perpetuation.

16.3%

13.4%

◼

Over age 55

3.3%

◼

Age 46-55

4.3%

◼

Age 36-45

5.3%

◼

Up to age 35

0.5%

Average

Top Quartile

<$1.25M

26

Executive Summary

Profitability

Employee Productivity

Rule of 20 Score

The Rule of 20 measures an agency's shareholder returns and is calculated by adding 50% of an agency's Pro Forma EBITDA margin to its organic commission & fee growth rate. An outcome of 20 or higher means an agency is likely generating, through profit distributions and/or share price appreciation, a shareholder return of approximately 15%-17%, a typical agency/ brokerage return under normal market conditions.

36.0%

Pro Forma Metrics:

Top Quartile

Average

31.0%

28.2%

27.9%

Number of Employees

5.2

Revenue per Employee

$190,113

$234,569

33.7

27.4

Compensation per Employee

$70,628

$50,298

Pro Forma Pre-Tax Profit PROFITABILITY & PRODUCTIVITY

Pro Forma EBITDA

Spread per Employee

Comparison Group Average Top Quartile

$119,485

$122,415

Average

Top Quartile

Organic Growth & Profitability Scatter Plot

50%

45%

The graph to the right provides a look at the Rule of 20 results for agencies in this revenue category. The solid black line represents all combinations of organic growth and EBITDA margin that result in a Rule of 20 score of 20.

40%

35%

30%

25%

20%

15%

10%

5%

0% Profitability (EBITDA Margin)

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Note: Firms identified as outliers have been set to have a maximum growth of 30% or a maximum profitability of 50%. They appear on the graph line bordering the chart instead of plotting their actual results.

<$1.25M

27

Executive Summary

Key Metrics by Agency Revenue Category

$1.25-2.5M

Agencies between $1.25 and $2.5 million in revenue

28

Executive Summary

Average Revenues $1,875,302

Regional Distribution

Weighted Average Shareholder Age (WASA) 54.0

Revenue Distribution (as a % of Gross Revenue)

◼

Northeast

22.2%

◼

Midwest

25.9%

Corporate Structure

◼

West

3.7%

Average Number of Shareholders 1.7 Average Number of Agency Locations 1.5

◼

Southeast

40.7%

C Corp 14.8%

◼

Southwest

7.4%

• PROFILE & REVENUE GROWTH & STRATIFICATION LLC 29.6%

◼

Commercial P&C

49.6%

◼

Personal P&C

41.1%

◼

Group L/H/F

2.6%

S Corp 55.6%

◼

Contingent/Bonus

5.9%

◼

Other

0.8%

Notes

Account Stratification

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Commercial P&C

• The $1.25 to $2.5M revenue band posted the highest top quartile organic growth rate at 15.9% for the second year in a row compared to other bands. Agencies in this revenue group continue to gain the smallest percentage of revenue from Group L/H/F business compared to other revenue bands, decreasing 0.4% from 2024.

◼ < $5K

59.0%

19.7%

◼ $5K to $10K ◼ $10K to $25K ◼ $25K to $50K

14.3%

15.9%

14.3%

13.9%

11.8%

12.1%

10.1% 10.0%

4.9%

◼ > $50K

9.9%

0.7%

Group L/H/F

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

◼ <50 Lives

76.8%

◼ 50-100 Lives ◼ >100 Lives

1.1%

Median

Top Quartile

22.1%

Note: Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F.

$1.25-2.5M

29

Executive Summary

• Effective NUPP, the product of an agency's investment in unvalidated producers (NUPP) and success rate in hiring producers (Producer Success Rate), is expressed as a percentage of net revenue and is the best overall measure of an agency's effectiveness in recruiting and developing sales talent. • These firms posted the highest NUPP (3.6%) of all revenue bands in 2025. • After posting the highest sales velocity the past three years, this revenue group has dropped to 14.3%, tied for the 3 rd highest sales velocity across all groups.

Book of Business per Producer (commissions and fees)

Book of Business by Age

Effective NUPP

NUPP 3.6%

New Business

Average Book

Commercial P&C

$52,786

$349,993

Producer Success Rate 31.5%

Personal P&C

$64,501

$276,773

◼

12.3%

Up to age 35

Life/ Health/ Financial

◼

29.0%

Age 36-45

$97,645

$193,151

◼

26.1%

Age 46-55

Effective NUPP 1.1%

◼

32.7%

Over age 55

Multi-Line

$42,683

$223,064

Sales Velocity

Notes & Definitions

Age Banding of Sales Velocity

• Sales Velocity is a critical metric in determining organic growth. It is defined as this year's written new business divided by last year's commissions and fees. • Age Banding of Sales Velocity can help a firm assess where new business and growth are coming from and prepare for perpetuation.

18.0%

14.3%

◼

Over age 55

3.9%

◼

Age 46-55

5.3%

SALES VELOCITY

◼

Age 36-45

3.7%

◼

Up to age 35

1.5%

Average

Top Quartile

$1.25-2.5M

30

Executive Summary

Profitability

Employee Productivity

Rule of 20 Score

The Rule of 20 measures an agency's shareholder returns and is calculated by adding 50% of an agency's Pro Forma EBITDA margin to its organic commission & fee growth rate. An outcome of 20 or higher means an agency is likely generating, through profit distributions and/or share price appreciation, a shareholder return of approximately 15%-17%, a typical agency/ brokerage return under normal market conditions.

Pro Forma Metrics:

Top Quartile

39.1%

39.1%

Average

29.7%

28.9%

Number of Employees

11.3

Revenue per Employee

$184,206

$221,568

35.6

27.4

Compensation per Employee

$87,608

$76,381

Pro Forma Pre-Tax Profit PROFITABILITY & PRODUCTIVITY

Pro Forma EBITDA

Spread per Employee

Comparison Group Average Top Quartile

$96,598

$122,352

Average

Top Quartile

Organic Growth & Profitability Scatter Plot

50%

The graph to the right provides a look at the Rule of 20 results for agencies in this revenue category. The solid black line represents all combinations of organic growth and EBITDA margin that result in a Rule of 20 score of 20.

45%

40%

35%

30%

25%

20%

15%

10%

5%

0% Profitability (EBITDA Margin)

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Organic Growth

Note: Firms identified as outliers have been set to have a maximum growth of 30% or a maximum profitability of 50%. They appear on the graph line bordering the chart instead of plotting their actual results.

$1.25-2.5M

31

Executive Summary

Key Metrics by Agency Revenue Category

$2.5-5M

Agencies between $2.5 and $5.0 million in revenue

32

Executive Summary

Average Revenues $3,686,085

Regional Distribution

Weighted Average Shareholder Age (WASA) 55.7

Revenue Distribution (as a % of Gross Revenue)

◼

Northeast

13.8%

◼

Midwest

41.4%

Corporate Structure

◼

West

10.3%

C Corp 20.7%

Average Number of Shareholders 2.1 Average Number of Agency Locations 2.4

◼

LLC 10.3%

Southeast

20.7%

◼

Southwest

13.8%

• PROFILE & REVENUE GROWTH & STRATIFICATION •

◼

Commercial P&C

50.1%

◼

Personal P&C

33.3%

S Corp 69.0%

◼

Group L/H/F

5.8%

◼

Contingent/Bonus

9.0%

◼

Other

1.8%

Notes

Account Stratification

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Commercial P&C

These agencies posted a 10.4% organic growth rate, down from having the highest rate in 2024 at 11.7%. Commercial P&C growth rate decreased 5.8 percentage points year over year, contributing to the lower total agency organic growth rate.

◼ < $5K

40.4%

21.2%

◼ $5K to $10K ◼ $10K to $25K ◼ $25K to $50K

15.7%

16.7%

13.7% 13.0%

17.0%

11.0%

10.4%

11.1%

8.3%

◼ > $50K

15.8%

3.6%

Group L/H/F

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

◼ <50 Lives

74.8%

◼ 50-100 Lives ◼ >100 Lives

14.4%

Median

Top Quartile

10.8%

Note: Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F.

$2.5-5M

33