Demographic shifts are a pivotal and fundamental key market driver constantly reshaping the independent insurance agency Mergers and Acquisitions (M&A) landscape. This force is deeply interconnected with other significant M&A drivers, creating a dynamic and evolving market for agency owners.
Why a Low Producer Success Rate Is Forcing a New Approach to Agency Exits
For every independent agency owner, the twin goals are constant: grow the business and build a sustainable future. For decades, the primary method was to build—hiring and developing new producers from the ground up to drive organic growth and cultivate future leaders. But what if the data shows that for the vast majority of agencies, this traditional build strategy is a high-risk gamble?
The strikingly low producer success rate for small and mid-sized agencies (SMAs) is a critical business risk. It fundamentally challenges the traditional growth model and makes a strategic buy approach through Mergers & Acquisitions (M&A) a more viable and predictable path to a secure future.
The Reality of Producer Development
The data on new producer hiring reveals a clear divide between small and large agencies. While larger firms have the resources and structure to achieve success rates around 50%, the story for SMAs is dramatically different.
For agencies with less than $1.25 million in annual revenue, the producer success rate is a mere 21%.
| % of Agencies that Hired | Producer Success Rate | |
|---|---|---|
| <$1.25M ARR | 15.8% | 21.0% |
| $1.25M-$2.5M ARR | 24.1% | 38.6% |
| $2.5M-$5M ARR | 30.6% | 48.7% |
| $5M-$10M ARR | 68.6% | 54.0% |
| $10M-$25M ARR | 79.2% | 50.4% |
| $25M+ ARR | 97.9% | 50.0% |
This means that for nearly four out of every five new producers these agencies hire, the significant investment of time, salary, and training fails to yield a validated, revenue-generating team member. It’s a costly gamble that few small businesses can afford to make repeatedly, especially when compounded by a shrinking industry-wide talent pool.
From a Growth Problem to a Perpetuation Crisis
This operational challenge has profound long-term strategic consequences. An agency that cannot reliably develop new producers will almost certainly fail to cultivate a viable internal successor. The low success rate is a primary reason why the dream of an internal perpetuation is fading for so many owners.
When the build strategy fails over time, owners often find themselves at retirement age with no clear path forward. This lack of a developed successor is a key factor that forces them into a reactive external sale, often from a position of weakness and without the leverage to command their agency’s full value.
A More Strategic Path
Given the high risks and low odds of the build strategy, a strategic buy approach through M&A has become the more logical and predictable path for many SMAs.
- For Growth-Minded Owners: Instead of gambling on the 21% success rate of a single new hire, acquiring a stable book of business or a smaller agency provides a guaranteed, immediate stream of revenue and established client relationships. It is a more certain and often faster path to scalable growth.
- For Owners Planning an Exit: If you cannot reliably build your successor, the most effective strategy is to find one through an external sale.
The Marketplace for Strategic Growth
Milly Books is the modern platform designed to facilitate this strategic buy over build approach, providing a transparent and efficient marketplace for both sides of the transaction.
- For Buyers: Stop rolling the dice on new hires. Our marketplace offers a curated selection of quality agencies and books of business (Slices) that provide a more certain path to growth.
- For Sellers: If the challenge of building your next generation of leaders is too great, our platform connects you with a national network of qualified buyers ready to be your succession plan and secure the value of your life’s work.
In a market where organic growth is a gamble, strategic acquisition is a sound investment. Create your free account on Milly Books today to discover your next strategic opportunity.
Effectiveness Rate for New Producer Hiring
Every independent agency owner constantly asks the same question: How can I best invest my resources to drive growth? For decades, the traditional answer was simple: hire new producers. But new data reveals a startling truth: for the vast majority of small agencies, this investment has an average effectiveness rate that’s below water.
This inefficiency in the traditional growth model is more than a business challenge; it’s a major strategic risk that stifles growth and severely limits an owner’s options for internal perpetuation. It’s a key reason why a strategic M&A approach is becoming a more viable and necessary alternative.
The Inefficiency of the Traditional Growth Model
The performance of new producer hiring can be measured in two ways: the investment made (as a percentage of revenue) and the effectiveness of that investment in generating new business. The data reveals a stark reality for the smallest agencies (those under $1.25M in revenue): Their effectiveness rate for new producer hiring is disappointing 0.4%.
| NUPP (Average Investment) | Effective NUPP (Average Effectiveness) | |
|---|---|---|
| <$1.25M ARR | 1.8% | 0.4% |
| $1.25M-$2.5M ARR | 3.9% | 1.5% |
| $2.5M-$5M ARR | 2.3% | 1.1% |
| $5M-$10M ARR | 1.7% | 0.9% |
| $10M-$25M ARR | 1.7% | 0.8% |
| $25M+ ARR | 1.6% | 0.8% |
This low return on investment is a direct result of the 21% producer success rate for these firms. In practical terms, small agencies are spending precious capital on a growth strategy that fails nearly 80% of the time. This makes the traditional build strategy one of the most inefficient uses of an agency’s resources.
From a Growth Problem to a Perpetuation Crisis
This operational inefficiency has dire long-term consequences for an agency’s future. An agency that cannot effectively and efficiently develop new sales talent cannot realistically grow its own successor.
This failure to build a reliable talent pipeline is a primary reason the path to a traditional internal perpetuation is closing for so many owners. When the build strategy fails to produce a new generation of leaders, the owner is often left with no choice but to pursue a reactive external sale upon retirement, often from a position of weakness.
A More Capital-Efficient Path
Given the high cost and low return of the build strategy, a strategic buy approach through M&A offers a more predictable and capital-efficient path forward.
- For Growth-Minded Owners: Why gamble on the 0.4% effectiveness rate of a new hire? Acquiring a stable book of business or a smaller agency provides a guaranteed, immediate stream of revenue and established client relationships. It is a more certain and often faster path to scalable growth.
- For Owners Planning an Exit: If your build strategy has failed to produce a viable successor, a strategic sell to a strong external partner becomes the most effective way to realize the full value of the business you’ve created.
The Marketplace for Strategic Investment and Growth
Milly Books is the modern platform designed to facilitate this strategic buy over build approach. We provide a transparent and efficient marketplace for owners who recognize the limitations of traditional organic growth.
- For Buyers: Stop investing in a 0.4% return. Our marketplace offers a curated selection of quality agencies and books of business (Slices) that provide a guaranteed and immediate return on your growth capital.
- For Sellers: If a stalled growth engine is limiting your future, our platform connects you with a national network of qualified buyers ready to invest in the value you’ve already created, providing a powerful and lucrative exit strategy.
In a market where traditional growth strategies are failing, strategic M&A is the key to a secure and profitable future. Create your free account on Milly Books today to discover your next strategic investment.
How the Industry’s Talent Deficit is Redefining Agency Perpetuation
An independent agency’s greatest asset has always been its people. The traditional path to long-term success and perpetuation was built on the ability to recruit and develop the next generation of producers and leaders. But what happens when finding those people becomes the biggest challenge?
A systemic, industry-wide talent deficit is making it harder than ever to attract new professionals, fundamentally threatening the traditional model of internal agency succession. This shrinking talent pool is not just a hiring headache; it’s a powerful market force that is compelling owners to adopt new, external-facing strategies for their future.
The Numbers Don’t Lie: A Systemic Talent Shortage
This is not an individual agency’s failure to recruit; it’s an industry-wide challenge. The data paints a clear picture of a drying pipeline: the number of new trainees entering the insurance industry is projected to fall from 18,000 in 2015 to just 13,000 by 2028.
This means every agency, regardless of size or location, is fishing from a smaller and more competitive pond. For owners hoping to grow their own successor, the odds are getting longer every year.
| 2015 | 2022 | 2028 |
|---|---|---|
| 18,000 | 14,000 | 13,000 |
When a Smaller Pool Meets a Higher Risk
The problem of a shrinking talent pool is significantly compounded by the high risk and low success rate of developing new producers, especially for smaller firms. Key data reveals: For agencies with under $1 million in revenue, the producer success rate is a low 21%.
This means that for every five new producers a small agency invests in, only one is likely to become a validated, successful member of the team. When you combine a smaller pool of initial candidates with a nearly 80% failure rate for those you do hire, the grow your own succession strategy begins to look less like a plan and more like a costly, high-risk gamble.
An Aging Workforce and an Empty Pipeline
This talent deficit is on a direct collision course with the Silver Tsunami—the mass retirement of experienced Baby Boomer agency owners. As this wave of seasoned leaders prepares to exit, there is an insufficient number of new professionals ready to take their place.
This creates a perpetuation crisis for many small-to-mid-sized agencies. The dream of passing the business to a trusted internal successor fades when there is no one in the pipeline to pass it to. This reality, combined with the significant financial hurdles any potential successor would face, is effectively closing the door on the traditional internal sale.
A Strategic Response to the Talent Crisis
If you can no longer reliably hire your successor, you must find them through other strategic means. This is where a modern approach to Mergers & Acquisitions (M&A) becomes an essential tool for perpetuation. Milly Books was designed for this new reality. Our platform provides the strategic alternative for owners confronting the industry’s talent crisis.
- For Sellers: If you cannot find a successor internally, our Nationwide Marketplace connects you with a vast pool of qualified external successors—established agencies and growth-minded entrepreneurs who are ready to be your partner for the future and preserve the legacy you’ve built.
- For Buyers: If you are struggling to grow your team organically, acquiring another agency or a book of business (Slice) is the single most efficient way to add proven talent and established client relationships. Milly Books is the premier marketplace to find these strategic opportunities.
Don’t let the industry’s talent crisis dictate your agency’s future. Take control with a strategic approach to M&A. Create your free account on Milly Books today to find your next strategic partner.
How an Aging Workforce is Forcing a New Era of Agency M&A
Do you know the average age of your shareholders and key producers? If not, you may be overlooking one of the most significant risks to your agency’s future. In today’s rapidly evolving M&A landscape, metrics like Weighted Average Shareholder Age (WASA) and Weighted Average Producer Age (WAPA) have become critical indicators of an agency’s long-term health and perpetuation readiness.
A high WASA or WAPA is more than just a number; it’s a signal that your agency may be facing a perpetuation cliff. This, combined with industry-wide talent challenges, is dismantling the traditional internal succession model and making a strategic external sale the most viable path forward for a growing number of owners.
The Silver Tsunami: A Macro Trend with Micro-Level Consequences
The entire independent insurance industry is experiencing a Silver Tsunami—the mass retirement of the Baby Boomer generation. With 66% of all agency owners now over the age of 50, an unprecedented number of firms are heading toward a sale in the next decade.
Impact of an Aging Workforce (WASA and WAPA)
This macro trend has profound consequences at the individual agency level, which is where WASA and WAPA come into play. Data reveals a significant aging of key personnel across the industry:
The smallest agencies have the highest concentration of ownership (56.2%) with individuals over the age of 55.
| WASA | WAPA | |
|---|---|---|
| <$1.25M ARR | 57.6 | 49.4 |
| $1.25M-$2.5M ARR | 53.8 | 50.7 |
| $2.5M-$5M ARR | 55.8 | 51.4 |
| $5M-$10M ARR | 52.4 | 48.3 |
| $10M-$25M ARR | 52.2 | 49.1 |
| $25M+ ARR | 54.3 | 50.5 |
Impact of Producer Age Banding
Mid-sized firms show a dual threat, with a high WASA (55.8) and WAPA (51.4), and over 43% of their book of business is in the hands of producers over 55. These statistics paint a clear picture: many agencies are top-heavy with experienced leaders who are nearing retirement, creating an urgent need for succession.
| Over Age 55 | Up to Age 35 | |
|---|---|---|
| <$1.25M ARR | 26.9% | 7.4% |
| $1.25M-$2.5M ARR | 40.6% | 9.5% |
| $2.5M-$5M ARR | 43.2% | 8.6% |
| $5M-$10M ARR | 32.0% | 17.4% |
| $10M-$25M ARR | 33.6% | 10.6% |
| $25M+ ARR | 36.1% | 8.3% |
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 33 | 32 | 36 | 39 | 37 | 40 | 37 | 31 | 15 | 20 | 26 |
| Medium | 36 | 41 | 47 | 54 | 47 | 48 | 45 | 52 | 40 | 54 | 42 |
| Large | 53 | 54 | 49 | 53 | 49 | 54 | 48 | 56 | 45 | 56 | 59 |
(Small Sized Agencies) An Interesting Shift in Agency Age: The “Average Age” of agencies shows a curious trend. After hovering in the 30s for years, it dropped significantly in the 2010-2011 (15 years) and 2013-2014 (20 years) studies before beginning to climb back up. This could indicate an influx of new, younger agencies entering the market or participating in the survey in the years following the 2008 financial crisis.
(Medium Sized Agencies) Agency Age Fluctuates: The average age of participating agencies has varied over the years, often between 40 and 54 years old. This fluctuation, particularly the dips in age, may suggest cycles where a new generation of leadership or newly established agencies enter the medium-sized bracket, keeping the average age from continuously rising.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | 5% | 5% | 7% | 9% | 8% | 11% | 13% | 21% | 10% |
| Medium | – | – | 5% | 4% | 9% | 9% | 12% | 8% | 0% | 8% | 9% |
| Large | – | – | 3% | 11% | 8% | 9% | 14% | 12% | 0% | 9% | 6% |
(Small Sized Agencies) Revenue Growth Ebbs and Flows: The average annual revenue growth shows a clear connection to broader economic cycles. Growth was modest through the 90s, picked up in the mid-2000s, peaked at an impressive 21% in the 2013-2014 study (likely reflecting a strong recovery period), and has since settled to a still-healthy 10%.
(Medium Sized Agencies) Growth Has Been Steady but Unspectacular: The “Average Annual Growth Percentage” has been consistent, mostly fluctuating between 8% and 12% since the late 1990s, with a notable dip to 0% in the 2010-2011 study, likely reflecting the impact of the Great Recession. Unlike smaller agencies that saw a major growth spike in the 2014 study, medium agencies have maintained a more moderate and stable growth trajectory.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | 8% | 6% | 8% | 7% | 1% | 4% | 17% | 10% |
| Medium | – | – | – | 9% | 14% | 13% | 13% | 7% | 2% | 10% | 10% |
| Large | – | – | – | 28% | 16% | 30% | 27% | 18% | 8% | 10% | 10% |
(Small Sized Agencies) M&A Activity Spikes: Merger and acquisition activity also appears cyclical. After years of single-digit percentages, there was a significant spike in 2013-2014 where 17% of agencies reported a merger or purchase, which has since normalized to 10%. This suggests that small agency consolidation accelerates during periods of economic optimism.
(Large Sized Agencies) Merger & Acquisition Activity Has Cooled from Previous Highs: In the 1990s and early 2000s, large agencies were highly acquisitive, with M&A rates frequently between 27% and 30%. However, since the 2010-2011 study, this activity has stabilized at a much lower rate of 8-10%. This could suggest a shift from growth-by-acquisition to more organic growth and operational efficiency.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | 10% | 10% | 25% | 9% | 17% | 27% |
| Medium | – | – | – | – | – | 31% | 44% | 34% | 24% | 35% | 56% |
| Large | – | – | – | – | – | 57% | 36% | 42% | 54% | 48% | 39% |
(Medium Sized Agencies) A Significant Shift Towards Multiple Locations: One of the most dramatic trends is the increase in agencies with multiple locations. After data collection began, the figure was 31% and has now reached a high of 56% in the most recent study. This indicates a clear strategic shift over the last two decades towards geographic expansion, either through acquisition or opening new branches, as a primary growth lever.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | – | 100% | 67% | 71% | 89% |
| Medium | – | – | – | – | – | – | – | 97% | 88% | 77% | 89% |
| Large | – | – | – | – | – | – | – | 94% | 85% | 84% | 89% |
(Small Sized Agencies) A Sustained Commitment to Professionalism: Since tracking began, a very high percentage of small agencies have been owned or managed by someone with a CIC designation, reaching 89% in the most recent study. This highlights a long-term emphasis on professional education and standards at the leadership level.
(Medium Sized Agencies) Professionalism is Deeply Embedded: Since the metric has been tracked, the percentage of agencies owned or managed by a CIC has been extremely high, ranging from 77% to 97%. The percentage of employees holding CIC and CISR designations has also remained consistently strong. This shows a sustained, long-term commitment to high levels of professional education and standards within the leadership and staff of medium-sized agencies.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | – | 26% | 22% | 22% | 21% |
| Medium | – | – | – | – | – | – | – | 13% | 19% | 15% | 15% |
| Large | – | – | – | – | – | – | – | 14% | 16% | 15% | 20% |
(Large Sized Agencies) Increasing Investment in Professional Development: The percentage of employees holding the CIC designation has seen a significant recent increase, rising from 15% in the 2013-2014 study to 20% in the 2018-2019 study. This, coupled with the consistently high percentage of agencies led by a CIC, points to a deepening investment in the professional knowledge of their staff to handle more sophisticated risks
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | – | 1% | 1% | 1% | 2% |
| Medium | – | – | – | – | – | – | – | 1% | 2% | 1% | 1% |
| Large | – | – | – | – | – | – | – | 2% | 1% | 2% | 2% |
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | – | 10% | 11% | 13% | 6% |
| Medium | – | – | – | – | – | – | – | 14% | 17% | 14% | 15% |
| Large | – | – | – | – | – | – | – | 11% | 18% | 15% | 15% |
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 7 | 7 | 8 | 9 | 9 | 9 | 8 | 7 | 8 | 10 | 9 |
| Medium | 16 | 14 | 15 | 13 | 16 | 14 | 14 | 12 | 11 | 14 | 13 |
| Large | 22 | 20 | 27 | 23 | 23 | 22 | 19 | 24 | 30 | 19 | 34 |
(Small Sized Agencies) Carrier Relationships are Consistent: Small agencies have consistently worked with a small, core group of carriers. The average number of P&C Carries has stayed in a tight range of 7 to 10 for three decades. This indicates that small agencies prioritize deep relationships with a few key partners rather than expanding their market access broadly.
(Medium Sized Agencies) Carrier Relationships are Consistent: The average number of P&C Carries an agency works with has been very stable, typically ranging from 11 to 16. This suggests that medium-sized agencies maintain a consistent and strategic set of carrier partnerships over the long term.
(Large Sized Agencies) Expansion and Consolidation of Carrier Relationships: The number of P&C Carries that large agencies work with has fluctuated but hit a 30-year high of 34 in the most recent study. This contrasts with small and medium agencies, who maintain a more stable number of carrier partners. It suggests that large agencies are continually expanding their market access to serve more complex and diverse client needs.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 4 | 4 | 4 | 4 | 3 | 3 | 3 | 2 | 3 | 3 | 3 |
| Medium | 11 | 9 | 6 | 6 | 7 | 5 | 6 | 7 | 5 | 4 | 4 |
| Large | 15 | 13 | 12 | 10 | 11 | 9 | 8 | 8 | 16 | 11 | 12 |
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | 12% | 12% | 12% | 12% | 12% | 12% | 12% |
| Medium | – | – | – | – | 11% | 12% | 12% | 11% | 12% | 12% | 11% |
| Large | – | – | – | – | 11% | 11% | 12% | 11% | 12% | 12% | 14% |
(Small Sized Agencies) Commission Rates Are Unchanged: Perhaps the most striking insight is the stability of commission rates. The average Commercial Lines (CL) commission rate has remained at a flat 12% for over 20 years, and the Personal Lines (PL) rate has hovered between 12-14%. This suggests that the fundamental financial relationship between small agencies and their carriers has been highly resistant to change.
(Medium Sized Agencies) Commission and Retention Rates Are Fixed: Just like in small agencies, the financial fundamentals for medium agencies have barely changed in over two decades. Commercial Lines (CL) commission rates have held steady at 11-12%, while Personal Lines (PL) rates have remained in the 13-14% range. Critically, client retention for both CL and PL has been consistently high, almost always at 88-90%. This demonstrates a highly resilient and predictable business model.
(Large Sized Agencies) A Notable Increase in Commission Rates: Unlike their smaller counterparts who have seen flat commission rates for decades, large agencies have successfully increased their commissions in the most recent study period. The Commercial Lines (CL) commission rate jumped from a stable 11-12% to 14%. The Personal Lines (PL) rate also increased from a steady 14% to 16%. This suggests that large agencies are leveraging their significant premium volumes to negotiate more favorable terms with carriers.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | 14% | 13% | 13% | 14% | 13% | 13% | 12% |
| Medium | – | – | – | – | 13% | 13% | 14% | 13% | 14% | 13% | 14% |
| Large | – | – | – | – | 14% | 13% | 14% | 14% | 14% | 14% | 16% |
(Small Sized Agencies) Commission Rates Are Unchanged: Perhaps the most striking insight is the stability of commission rates. The average Commercial Lines (CL) commission rate has remained at a flat 12% for over 20 years, and the Personal Lines (PL) rate has hovered between 12-14%. This suggests that the fundamental financial relationship between small agencies and their carriers has been highly resistant to change.
(Medium Sized Agencies) Commission and Retention Rates Are Fixed: Just like in small agencies, the financial fundamentals for medium agencies have barely changed in over two decades. Commercial Lines (CL) commission rates have held steady at 11-12%, while Personal Lines (PL) rates have remained in the 13-14% range. Critically, client retention for both CL and PL has been consistently high, almost always at 88-90%. This demonstrates a highly resilient and predictable business model.
(Large Sized Agencies) A Notable Increase in Commission Rates: Unlike their smaller counterparts who have seen flat commission rates for decades, large agencies have successfully increased their commissions in the most recent study period. The Commercial Lines (CL) commission rate jumped from a stable 11-12% to 14%. The Personal Lines (PL) rate also increased from a steady 14% to 16%. This suggests that large agencies are leveraging their significant premium volumes to negotiate more favorable terms with carriers.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | 88% | 91% | 89% | 89% | 88% | 88% | 88% | 87% |
| Medium | – | – | – | 89% | 90% | 88% | 91% | 90% | 89% | 89% | 89% |
| Large | – | – | – | 89% | 91% | 89% | 89% | 91% | 91% | 92% | 92% |
(Small Sized Agencies) Client Retention is a Hallmark: Retention ratios for both commercial and personal lines have been consistently high, typically in the high 80s percentage-wise. This demonstrates the enduring strength of the small independent agency model in maintaining its client base over the long term.
(Medium Sized Agencies) Commission and Retention Rates Are Fixed: Just like in small agencies, the financial fundamentals for medium agencies have barely changed in over two decades. Commercial Lines (CL) commission rates have held steady at 11-12%, while Personal Lines (PL) rates have remained in the 13-14% range. Critically, client retention for both CL and PL has been consistently high, almost always at 88-90%. This demonstrates a highly resilient and predictable business model.
(Large Sized Agencies) Improving Client Retention Over Time: Large agencies have demonstrated a clear and steady improvement in client retention over the past 30 years. The Commercial Lines retention ratio has climbed from 89% to a strong 92%. The Personal Lines retention ratio shows an even more impressive improvement, rising from 88% to 92%. This indicates a successful, long-term focus on enhancing service and client relationships.
Agency Profile Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | 86% | 89% | 89% | 86% | 89% | 89% | 88% | 83% |
| Medium | – | – | – | 88% | 88% | 89% | 89% | 88% | 90% | 89% | 89% |
| Large | – | – | – | 88% | 88% | 88% | 88% | 90% | 90% | 91% | 92% |
(Small Sized Agencies) Client Retention is a Hallmark: Retention ratios for both commercial and personal lines have been consistently high, typically in the high 80s percentage-wise. This demonstrates the enduring strength of the small independent agency model in maintaining its client base over the long term.
(Medium Sized Agencies) Commission and Retention Rates Are Fixed: Just like in small agencies, the financial fundamentals for medium agencies have barely changed in over two decades. Commercial Lines (CL) commission rates have held steady at 11-12%, while Personal Lines (PL) rates have remained in the 13-14% range. Critically, client retention for both CL and PL has been consistently high, almost always at 88-90%. This demonstrates a highly resilient and predictable business model.
(Large Sized Agencies) Improving Client Retention Over Time: Large agencies have demonstrated a clear and steady improvement in client retention over the past 30 years. The Commercial Lines retention ratio has climbed from 89% to a strong 92%. The Personal Lines retention ratio shows an even more impressive improvement, rising from 88% to 92%. This indicates a successful, long-term focus on enhancing service and client relationships.
Income and Expense Trends—Revenues (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 42.17% | 41.47% | 42.27% | 37.09% | 39.51% | 36.50% | 36.98% | 37.32% | 36.03% | 35.32% | 36.31% |
| Medium | 56.36% | 54.85% | 56.23% | 52.82% | 52.48% | 47.97% | 50.37% | 45.09% | 45.56% | 47.57% | 43.32% |
| Large | 62.96% | 61.47% | 60.82% | 64.03% | 58.94% | 55.10% | 60.41% | 59.68% | 57.57% | 56.84% | 53.78% |
(Small Sized Agencies) Shift in Revenue from Commercial to Personal Lines: Over the past three decades, there has been a clear shift in the revenue composition of small agencies. In the earliest studies, commercial and personal lines commissions were nearly equal, each contributing around 42-43% of revenue. In the most recent study, personal lines commissions are the dominant source of revenue at 46.74%, while commercial lines have fallen to 36.31%. This suggests small agencies have increasingly focused on the personal lines market over time.
(Medium Sized Agencies) A Fundamental Shift in Revenue Mix: There has been a clear, long-term strategic shift in where revenue comes from. Commercial Lines, which once accounted for over 56% of revenue, have steadily declined to 43.32%. Conversely, Personal Lines have become much more important, growing from around 24% of revenue in the early years to nearly 40% in the most recent study. This shows that medium agencies are increasingly diversifying their revenue and finding significant growth in the personal lines sector.
(Large Sized Agencies) A Major, Recent Pivot to Personal Lines: The most dramatic trend is the recent shift in revenue composition. While historically dominated by commercial lines, its share of revenue has fallen to a 30-year low of 53.78%. In a striking reversal, Personal Lines commissions jumped to 22.04% of total revenue, its highest point in 30 years. This suggests large agencies are now actively and successfully pursuing growth in the personal lines market, a sector they had previously de-emphasized.
Income and Expense Trends—Revenues (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 43.11% | 43.07% | 43.11% | 48.62% | 44.92% | 47.22% | 49.07% | 47.63% | 48.22% | 50.53% | 46.74% |
| Medium | 23.99% | 25.09% | 25.10% | 28.95% | 26.52% | 33.47% | 31.91% | 33.30% | 30.48% | 38.75% | 39.63% |
| Large | 17.49% | 18.69% | 18.90% | 18.34% | 15.80% | 22.21% | 19.53% | 14.79% | 17.02% | 15.06% | 22.04% |
(Small Sized Agencies) Shift in Revenue from Commercial to Personal Lines: Over the past three decades, there has been a clear shift in the revenue composition of small agencies. In the earliest studies, commercial and personal lines commissions were nearly equal, each contributing around 42-43% of revenue. In the most recent study, personal lines commissions are the dominant source of revenue at 46.74%, while commercial lines have fallen to 36.31%. This suggests small agencies have increasingly focused on the personal lines market over time.
(Medium Sized Agencies) A Fundamental Shift in Revenue Mix: There has been a clear, long-term strategic shift in where revenue comes from. Commercial Lines, which once accounted for over 56% of revenue, have steadily declined to 43.32%. Conversely, Personal Lines have become much more important, growing from around 24% of revenue in the early years to nearly 40% in the most recent study. This shows that medium agencies are increasingly diversifying their revenue and finding significant growth in the personal lines sector.
(Large Sized Agencies) A Major, Recent Pivot to Personal Lines: The most dramatic trend is the recent shift in revenue composition. While historically dominated by commercial lines, its share of revenue has fallen to a 30-year low of 53.78%. In a striking reversal, Personal Lines commissions jumped to 22.04% of total revenue, its highest point in 30 years. This suggests large agencies are now actively and successfully pursuing growth in the personal lines market, a sector they had previously de-emphasized.
Income and Expense Trends—Revenues (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 5.08% | 5.30% | 6.02% | 5.74% | 6.72% | 7.94% | 8.66% | 6.57% | 6.77% | 7.84% | 7.65% |
| Medium | 7.30% | 6.68% | 7.25% | 8.55% | 11.00% | 8.91% | 8.70% | 10.69% | 14.68% | 9.86% | 7.23% |
| Large | 7.01% | 6.85% | 6.19% | 6.19% | 12.49% | 12.01% | 12.05% | 10.84% | 15.43% | 19.48% | 12.97% |
Income and Expense Trends—Revenues (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 6.00% | 6.41% | 5.20% | 6.27% | 5.92% | 5.50% | 3.77% | 6.79% | 4.37% | 4.83% | 6.78% |
| Medium | 6.40% | 7.62% | 6.03% | 6.64% | 6.57% | 6.89% | 5.88% | 8.70% | 7.57% | 3.98% | 8.84% |
| Large | 7.07% | 7.63% | 7.58% | 7.65% | 8.43% | 6.64% | 4.70% | 9.09% | 7.62% | 6.69% | 8.78% |
(Small Sized Agencies) Contingent Income Remains Unpredictable: Contingent (bonus) income continues to be a volatile part of a small agency’s revenue. It has fluctuated from a low of 3.77% to a high of 6.79% of total revenues, underscoring why agencies should not depend on this income for their base operational budget.
(Medium Sized Agencies) Contingent Income Rebounds: Contingent (bonus) income, which is tied to profitability and volume, recovered significantly in the latest study to 8.84% after hitting a low of 3.98% in the 2013-2014 period. This rebound contributes to the healthier profit margin and reflects improved performance in the eyes of their carrier partners.
Income and Expense Trends—Revenues (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 3.64% | 3.75% | 3.41% | 2.27% | 2.93% | 2.84% | 1.52% | 1.70% | 4.61% | 1.47% | 2.26% |
| Medium | 5.96% | 5.76% | 5.39% | 3.04% | 3.43% | 2.76% | 3.14% | 2.22% | 1.71% | 2.07% | 2.22% |
| Large | 5.47% | 5.37% | 6.50% | 3.79% | 4.34% | 4.04% | 3.32% | 5.60% | 2.36% | 1.92% | 2.40% |
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 26.36% | 25.46% | 24.51% | 27.97% | 26.07% | 23.87% | 23.82% | 25.91% | 27.47% | 24.49% | 28.68% |
| Medium | 20.99% | 20.54% | 20.93% | 17.72% | 19.06% | 19.59% | 19.52% | 20.38% | 23.34% | 18.34% | 18.83% |
| Large | 17.03% | 15.89% | 16.12% | 16.42% | 13.89% | 13.56% | 18.08% | 18.84% | 16.40% | 13.89% | 13.77% |
(Small Sized Agencies) Compensation is Consuming a Larger Share of Revenue: Total Compensation Expenses have trended upward, reaching a 30-year high of 68.17% in the most recent study. This is a significant increase from the roughly 60-63% range seen for most of the study’s history. The primary drivers of this increase are owner and sales compensation. Executive Owner Compensation reached 28.68%, one of its highest points, while Sales Salaries and Commission have steadily climbed to a high of 11.57%.
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 7.48% | 8.62% | 8.11% | 10.07% | 9.60% | 9.57% | 9.71% | 9.60% | 10.30% | 10.74% | 11.57% |
| Medium | 14.85% | 14.07% | 13.60% | 14.92% | 17.03% | 17.56% | 14.08% | 13.84% | 12.66% | 14.61% | 13.45% |
| Large | 16.84% | 17.22% | 17.52% | 20.63% | 21.16% | 21.59% | 20.65% | 19.17% | 19.16% | 23.74% | 21.13% |
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 19.31% | 18.70% | 20.10% | 17.85% | 18.70% | 19.63% | 20.30% | 17.12% | 18.73% | 18.55% | 18.53% |
| Medium | 18.64% | 20.18% | 21.69% | 23.07% | 21.32% | 22.17% | 23.22% | 22.12% | 22.15% | 24.94% | 20.89% |
| Large | 20.43% | 21.63% | 24.20% | 21.69% | 22.57% | 24.03% | 20.01% | 21.64% | 22.43% | 23.08% | 24.51% |
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 6.82% | 6.96% | 8.28% | 7.67% | 8.61% | 2.78% | 3.04% | 2.10% | 3.96% | 3.88% | 4.94% |
| Medium | 8.16% | 8.35% | 8.60% | 9.28% | 8.83% | 3.04% | 3.36% | 3.73% | 4.01% | 4.08% | 3.21% |
| Large | 8.42% | 8.48% | 8.57% | 9.23% | 8.85% | 2.91% | 3.02% | 3.25% | 5.36% | 3.80% | 4.26% |
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 3.73% | 3.48% | 4.26% | 4.52% | 4.46% | 3.82% |
| Medium | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 3.42% | 3.27% | 3.33% | 3.82% | 3.82% | 3.59% |
| Large | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 3.22% | 3.19% | 3.14% | 3.36% | 3.07% | 3.31% |
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 1.25% | 1.35% | 1.95% | 0.91% | 0.84% | 0.63% |
| Medium | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 1.76% | 1.92% | 1.75% | 2.08% | 1.20% | 2.05% |
| Large | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 1.71% | 1.32% | 2.26% | 1.81% | 1.16% | 1.69% |
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 59.97% | 59.74% | 61.00% | 63.56% | 62.98% | 60.83% | 61.70% | 60.94% | 65.88% | 62.96% | 68.17% |
| Medium | 72.77% | 74.27% | 78.49% | 74.37% | 71.33% | 71.51% | 73.39% | 71.24% | 68.06% | 67.00% | 62.02% |
| Large | 62.72% | 63.22% | 66.41% | 67.97% | 66.47% | 67.02% | 66.27% | 68.30% | 68.51% | 68.74% | 68.67% |
(Small Sized Agencies) Compensation is Consuming a Larger Share of Revenue: Total Compensation Expenses have trended upward, reaching a 30-year high of 68.17% in the most recent study. This is a significant increase from the roughly 60-63% range seen for most of the study’s history. The primary drivers of this increase are owner and sales compensation. Executive Owner Compensation reached 28.68%, one of its highest points, while Sales Salaries and Commission have steadily climbed to a high of 11.57%.
(Medium Sized Agencies) Compensation Costs Have Been Effectively Managed: The primary driver of lower expenses is the management of compensation. Total Compensation Expenses have steadily decreased as a percentage of revenue over the last decade, hitting a 30-year low of 62.02%. This indicates that medium-sized agencies are generating more revenue per compensation dollar spent, a key indicator of productivity and efficiency.
(Large Sized Agencies) Consistent Control Over Compensation Costs: Total Compensation Expenses have been extremely stable as a percentage of revenue, hovering between 66% and 69% for two decades. This indicates that as revenues grow, large agencies manage their biggest expense category in a controlled and predictable way. Within this stable total, there is a long-term trend of owner compensation decreasing as a percentage of revenue while sales and staff salaries increase. This reflects the evolution towards a more corporate structure reliant on a professional sales force and support staff rather than primarily on owner-producers.
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 90.28% | 90.04% | 93.76% | 93.65% | 94.48% | 95.40% | 92.02% | 87.84% | 95.75% | 89.75% | 97.68% |
| Medium | 91.93% | 92.85% | 96.21% | 93.57% | 92.54% | 93.04% | 91.70% | 89.64% | 92.57% | 92.79% | 82.84% |
| Large | 90.98% | 92.37% | 94.70% | 94.95% | 94.62% | 92.01% | 89.46% | 88.20% | 89.97% | 89.42% | 92.02% |
(Medium Sized Agencies) Surging Profitability Driven by Expense Control: The most significant insight is the massive jump in pre-tax profit to a 30-year high of 17.26% in the most recent study. This is more than double the profit margin of the prior two studies and stands in stark contrast to the shrinking profits seen in small agencies. This surge is not due to revenue growth, but to exceptional expense management. Total Expenses as a percentage of revenue fell to a record low of 82.84%. This suggests a strong focus on operational efficiency has paid off handsomely.
Income and Expense Trends—Compensation Expenses (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 9.72% | 9.96% | 6.24% | 6.35% | 6.52% | 7.60% | 7.98% | 12.16% | 4.25% | 10.25% | 2.32% |
| Medium | 8.07% | 7.15% | 3.79% | 6.43% | 7.46% | 6.96% | 8.30% | 10.36% | 7.26% | 7.21% | 17.26% |
| Large | 9.02% | 7.63% | 5.30% | 5.05% | 5.38% | 7.99% | 10.54% | 11.80% | 10.03% | 10.58% | 7.98% |
(Small Sized Agencies) Profitability is Under Significant Pressure:Pre-Tax Profit for small agencies has become much more volatile and is currently at a 30-year low of 2.32%. After enjoying profit margins between 6% and 10% for many years, and even a peak of 12.16% in the 2006-2007 study, profitability has been squeezed. The combination of higher total expenses (a record 97.68%) and fluctuating revenue streams has made it more challenging for small agencies to maintain historical profit levels.
(Medium Sized Agencies) Surging Profitability Driven by Expense Control: The most significant insight is the massive jump in pre-tax profit to a 30-year high of 17.26% in the most recent study. This is more than double the profit margin of the prior two studies and stands in stark contrast to the shrinking profits seen in small agencies. This surge is not due to revenue growth, but to exceptional expense management. Total Expenses as a percentage of revenue fell to a record low of 82.84%. This suggests a strong focus on operational efficiency has paid off handsomely.
(Large Sized Agencies) Remarkably Stable Profitability: Despite fluctuations in the economy and their own revenue mix, large agencies have maintained impressively consistent profit margins for the past 25 years. Pre-tax profit has reliably stayed within a band of roughly 8% to 11%. The most recent figure of 7.98% is on the lower end of this historical range, but it does not represent a sharp decline. This stability suggests a mature business model with predictable expenses and effective management.
Income and Expense Trends—Balance Sheet Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 1.68 | 1.65 | 1.57 | 1.58 | 1.72 | 1.91 | 1.95 | 3.87 | 2.54 | 4.89 | 4.99 |
| Medium | 1.20 | 1.25 | 1.15 | 1.31 | 1.42 | 1.61 | 1.67 | 1.61 | 1.86 | 2.30 | 3.10 |
| Large | 1.19 | 1.15 | 1.37 | 1.31 | 1.30 | 1.21 | 1.23 | 1.67 | 1.74 | 1.73 | 1.53 |
(Small Sized Agencies) Massive Improvement in Liquidity: The financial liquidity of small agencies has strengthened significantly over the last three decades. The Trust Position Ratio, which measures the ability to pay carriers, has tripled from around 1.65 to 4.99. This improved liquidity is heavily influenced by the insurance industry’s move away from agency billing to direct billing by the carrier. As carriers bill clients directly, the “Premiums Payable” liability on the agency’s books decreases significantly. Since the Trust Position and Current Ratios use this liability in their calculations, a smaller liability results in a much stronger ratio.
(Medium Sized Agencies) Improved Ability to Pay Carriers: The Trust Position Ratio, which measures the ability to pay insurance carriers, has shown consistent and significant improvement, rising from 1.20 to 3.10 over 30 years. This indicates that agencies are in a much stronger position to meet their obligations to their carrier partners, a positive sign of financial stability.
(Large Sized Agencies) Stable and Healthy Relationship with Carriers: The Trust Position Ratio, which measures the ability to pay carriers, has remained remarkably stable for 30 years, consistently staying in a healthy range between 1.15 and 1.74. This indicates a reliable and secure financial relationship with their insurance company partners.
Income and Expense Trends—Balance Sheet Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 0.68 | 0.65 | 0.66 | 0.54 | 0.64 | 0.48 | 0.67 | 0.96 | 0.86 | 1.71 | 2.17 |
| Medium | 0.59 | 0.65 | 0.64 | 0.63 | 0.60 | 0.57 | 0.46 | 0.66 | 0.79 | 0.57 | 0.91 |
| Large | 0.63 | 0.60 | 0.75 | 0.63 | 0.64 | 0.52 | 0.51 | 0.44 | 0.53 | 0.43 | 0.57 |
(Small Sized Agencies) Collection Efficiency on Remaining Agency-Billed Accounts Has Worsened: While overall liquidity is strong, the data shows a negative trend for the accounts that are still billed by the agency. The Collection Ratio has risen sharply from 0.68 to 2.17 (a lower number is better).
(Medium Sized Agencies) Stable Collection Ratio: The Collection Ratio, which compares receivables to payables, has remained relatively stable over 30 years, mostly fluctuating between 0.57 and 0.91. This indicates a consistent and effective management of the relationship between money owed to the agency and money the agency owes to carriers.
Income and Expense Trends—Balance Sheet Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 1.44 | 1.45 | 1.43 | 1.44 | 1.28 | 1.56 | 1.69 | 2.60 | 2.26 | 2.86 | 3.13 |
| Medium | 1.08 | 1.14 | 1.13 | 1.24 | 1.35 | 1.37 | 1.44 | 1.42 | 1.65 | 1.93 | 1.13 |
| Large | 1.12 | 1.12 | 1.21 | 1.24 | 1.15 | 1.17 | 1.15 | 1.40 | 1.64 | 1.52 | 1.02 |
(Small Sized Agencies) Massive Improvement in Liquidity: The Current Ratio, a key measure of ability to cover short-term liabilities, has more than doubled from 1.44 to 3.13. This indicates that small agencies today are in a much more secure cash position than in the past. This improved liquidity is heavily influenced by the insurance industry’s move away from agency billing to direct billing by the carrier. As carriers bill clients directly, the “Premiums Payable” liability on the agency’s books decreases significantly. Since the Trust Position and Current Ratios use this liability in their calculations, a smaller liability results in a much stronger ratio.
(Medium Sized Agencies) Liquidity Has Tightened Recently: While the long-term trend for the Current Ratio (a key measure of overall liquidity) was positive for many years, it saw a sharp drop to 1.13 in the most recent study. While still above the 1.0 threshold, this is its lowest point since the early 1990s and suggests a recent tightening of cash flow or an increase in short-term liabilities that warrants attention.
(Large Sized Agencies) A Recent and Sharp Decline in Liquidity: The most critical insight from the table is the dramatic drop in the Current Ratio to a 30-year low of 1.02 in the most recent study. After decades of stability, this ratio, which measures the ability to cover all short-term liabilities, is now dangerously thin. This could be the result of the sample size or could indicate significant increases in current liabilities at some participating agencies. It suggests a potential cash flow problem if not addressed.
Income and Expense Trends—Balance Sheet Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 73.90 | 41.20 | 49.50 | 44.93 | 27.03 | 43.46 | 50.47 | 76.57 | 130.24 | 79.01 | 208.64 |
| Medium | 22.40 | 33.60 | 29.10 | 43.42 | 60.60 | 44.67 | 48.78 | 42.07 | 47.20 | 52.79 | 63.37 |
| Large | 39.50 | 37.40 | 49.70 | 43.42 | 30.56 | 30.36 | 25.60 | 55.23 | 56.40 | 50.66 | 58.66 |
(Small Sized Agencies) Exceptional Growth in Working Capital Cushion: The Number of Days Working Capital Ratio has soared to an impressive 208.64, a 30-year high. This means the average small agency has a cash cushion to cover over 200 days of expenses without any new income. This reinforces the story of a much stronger and more resilient financial position for small agencies today.
(Medium Sized Agencies) Working Capital Cushion is Growing: The Number of Days Working Capital Ratio has improved over the long term, reaching a 30-year high of 63.37 days. This shows that despite the recent dip in the current ratio, medium-sized agencies have steadily built up a stronger financial cushion to cover their daily expenses in case of a business interruption.
(Large Sized Agencies) Strong and Improving Operational Cushion: Despite the tightening Current Ratio, the Number of Days Working Capital Ratio has improved over time and remains strong at 58.66 days. This means that large agencies maintain a solid cushion of working capital to cover nearly two months of expenses, indicating resilience in their day-to-day operations.
Income and Expense Trends—Balance Sheet Trends (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | 17.82 | 21.47 | 13.28 | 24.82 | 15.74 | 32.02 | 30.96 | 54.40 |
| Medium | – | – | – | 27.64 | 26.95 | 21.03 | 13.37 | 25.97 | 35.63 | 16.09 | 12.06 |
| Large | – | – | – | 27.64 | 24.54 | 21.95 | 19.51 | 11.70 | 16.90 | 12.13 | 18.95 |
(Small Sized Agencies) Collection Efficiency on Remaining Agency-Billed Accounts Has Worsened: Even more telling, the Average Age of Receivables has climbed to 54.40 days, meaning it takes much longer to collect premiums than it did in the past. This suggests that the remaining agency-billed business may be more complex or that collection practices for this shrinking portion of business have become less of a focus.
(Medium Sized Agencies) Excellent Collections Efficiency: Medium agencies have become highly efficient at collecting premiums. The Average Age of Receivables Ratio has fallen to a 30-year low of just 12.06 days. This is a dramatic improvement from highs in the 20s and 30s and indicates very strong collection practices for their agency-billed accounts.
(Large Sized Agencies) Excellent Long-Term Management of Collections: Large agencies have demonstrated highly effective and improving management of their receivables over the long term. The Average Age of Receivables has trended downward significantly from over 27 days in the 1990s to consistently being under 20 days in recent studies. This shows a strong ability to collect premiums in a timely manner, which is crucial given their large volume of agency-billed commercial accounts.
Agency Productivity Trends—Number of Personnel (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 1.6 | 1.5 | 1.5 | 1.4 | 1.5 | 1.4 | 1.2 | 1.3 | 1.2 | 1.2 | 1.3 |
| Medium | 3.1 | 2.8 | 2.9 | 2.5 | 2.2 | 2.0 | 1.9 | 1.8 | 2.1 | 1.7 | 1.6 |
| Large | 4.9 | 4.2 | 3.9 | 3.1 | 3.0 | 2.5 | 3.0 | 3.8 | 3.0 | 3.0 | 2.2 |
Agency Productivity Trends—Number of Personnel (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 1.2 | 1.1 | 0.9 | 0.9 | 0.8 | 1.0 | 0.9 | 0.6 | 0.6 | 0.9 | 1.1 |
| Medium | 5.7 | 5.2 | 4.0 | 4.3 | 4.3 | 3.8 | 3.2 | 3.0 | 3.0 | 2.9 | 1.8 |
| Large | 8.3 | 9.5 | 9.3 | 8.3 | 10.9 | 7.9 | 8.5 | 9.0 | 7.8 | 10.4 | 6.8 |
Agency Productivity Trends—Number of Personnel (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 0.9 | 0.9 | 1.0 | 0.8 | 0.9 | 0.9 | 0.8 | 0.5 | 0.5 | 0.8 | 1.0 |
| Medium | 4.6 | 4.5 | 4.4 | 4.5 | 4.3 | 3.3 | 3.4 | 2.7 | 2.7 | 3.1 | 1.6 |
| Large | 10.8 | 10.8 | 10.8 | 8.7 | 11.2 | 7.5 | 9.3 | 10.8 | 8.4 | 11.3 | 9.6 |
Agency Productivity Trends—Number of Personnel (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 1.7 | 1.6 | 1.4 | 1.4 | 1.4 | 1.6 | 1.3 | 1.4 | 0.8 | 1.0 | 0.9 |
| Medium | 4.1 | 4.1 | 3.8 | 3.8 | 3.6 | 3.4 | 3.7 | 3.4 | 2.5 | 3.1 | 1.9 |
| Large | 7.6 | 7.5 | 6.9 | 5.2 | 5.9 | 4.9 | 5.1 | 5.9 | 4.2 | 4.8 | 5.4 |
Agency Productivity Trends—Number of Personnel (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | 0.1 | 0.0 | 0.1 | 0.0 | 0.1 |
| Medium | – | – | – | – | – | – | 0.4 | 0.4 | 0.7 | 0.4 | 0.3 |
| Large | – | – | – | – | – | – | 1.3 | 1.6 | 1.9 | 2.8 | 1.7 |
Agency Productivity Trends—Number of Personnel (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 0.9 | 0.9 | 1.2 | 0.9 | 0.7 | 0.8 | 0.5 | 0.5 | 0.4 | 0.3 | 0.4 |
| Medium | 6.3 | 6.6 | 5.4 | 5.8 | 4.9 | 3.6 | 2.8 | 3.1 | 2.4 | 2.8 | 1.1 |
| Large | 17.7 | 15.8 | 12.6 | 10.9 | 14.1 | 9.3 | 9.1 | 12.3 | 7.9 | 7.3 | 7.5 |
Agency Productivity Trends—Number of Personnel (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 6.3 | 6.0 | 6.0 | 5.4 | 5.3 | 5.7 | 4.8 | 4.3 | 3.7 | 4.2 | 4.8 |
| Medium | 23.8 | 23.2 | 20.5 | 20.9 | 19.3 | 16.1 | 15.4 | 14.3 | 13.4 | 14.1 | 8.3 |
| Large | 49.3 | 47.8 | 43.5 | 36.2 | 45.1 | 32.1 | 36.3 | 43.4 | 33.1 | 39.5 | 33.2 |
(Small Sized Agencies) Doing More with Less (A Clear Efficiency Gain): The total number of personnel in small agencies has decreased over the last 30 years, from over 6 employees to just 4.8 in the latest study. Despite having smaller teams, their Revenues per Person have steadily increased, rising from $47,000 in the late 80s to a stable $64,000 in recent years. This demonstrates a significant long-term improvement in operational efficiency.
(Medium Sized Agencies) A Shift to a Leaner, More Efficient Staffing Model: The Total Number of Personnel has fallen dramatically over 30 years, from nearly 24 employees to just 8.3 in the most recent study. While the report notes this sharp recent drop may be partly due to the specific agencies in the survey sample, the long-term downward trend is undeniable. Agencies are operating with significantly leaner teams. This reduction has occurred across all roles, including producers, account managers, and support staff, pointing to a systemic increase in efficiency, likely driven by automation and improved workflows.
(Large Sized Agencies) Leaner Staffing and a More Corporate Structure: Large agencies are operating more efficiently with fewer people. The Total Number of Personnel has trended down from nearly 50 employees in the late 1980s to just over 33 in the most recent study. The composition of the team has also evolved. The number of owners has been cut in half (from 4.9 to 2.2), while the number of non-owner producers and support staff has been managed to support a larger book of business. This points to a more leveraged, corporate structure.
Agency Productivity Trends—Personnel Standards (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | $61 | $61 | $72 | $58 | $60 | $58 |
| Medium | – | – | – | – | – | $73 | $82 | $89 | $94 | $94 | $102 |
| Large | – | – | – | – | – | $83 | $99 | $124 | $127 | $136 | $156 |
Agency Productivity Trends—Personnel Standards (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | $47 | $50 | $51 | $55 | $56 | $67 | $64 | $79 | $64 | $64 | $64 |
| Medium | $64 | $65 | $73 | $74 | $79 | $81 | $90 | $100 | $104 | $101 | $112 |
| Large | $73 | $71 | $74 | $81 | $90 | $93 | $108 | $145 | $142 | $149 | $176 |
(Small Sized Agencies) Doing More with Less (A Clear Efficiency Gain): The total number of personnel in small agencies has decreased over the last 30 years, from over 6 employees to just 4.8 in the latest study. Despite having smaller teams, their Revenues per Person have steadily increased, rising from $47,000 in the late 80s to a stable $64,000 in recent years. This demonstrates a significant long-term improvement in operational efficiency.
(Medium Sized Agencies) Massive Increase in Employee Productivity and Profitability (The Spread): The most important trend is the surge in the Spread, which jumped to a 30-year high of $44,000. This metric (Revenues per Person – Compensation per Person) is a direct measure of the profit generated per employee before overhead. Its significant growth indicates a major improvement in overall agency profitability and efficiency. This was achieved by growing Revenues per Person to a record $112,000 while keeping Compensation per Person stable at $71,000. Agencies are successfully generating more revenue without a corresponding increase in labor costs.
(Large Sized Agencies) Massive Gains in Employee Productivity and Profitability: The clearest trend is the dramatic increase in efficiency. Revenues per Person has more than doubled over 30 years, from $73,000 to $176,000. Critically, this efficiency translates directly to the bottom line. The Spread (the profit per employee before overhead) has also doubled, from $27,000 to $55,000. This shows that large agencies have been highly successful at scaling their business in a profitable way.
Agency Productivity Trends—Personnel Standards (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | $28 | $30 | $31 | $35 | $35 | $41 | $40 | $48 | $42 | $40 | $44 |
| Medium | $40 | $41 | $47 | $48 | $52 | $55 | $59 | $65 | $71 | $67 | $71 |
| Large | $46 | $45 | $49 | $55 | $59 | $63 | $72 | $99 | $97 | $102 | $121 |
(Medium Sized Agencies) Massive Increase in Employee Productivity and Profitability (The Spread): The most important trend is the surge in the Spread, which jumped to a 30-year high of $44,000. This metric (Revenues per Person – Compensation per Person) is a direct measure of the profit generated per employee before overhead. Its significant growth indicates a major improvement in overall agency profitability and efficiency. This was achieved by growing Revenues per Person to a record $112,000 while keeping Compensation per Person stable at $71,000. Agencies are successfully generating more revenue without a corresponding increase in labor costs.
Agency Productivity Trends—Personnel Standards (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | $19 | $20 | $20 | $20 | $21 | $26 | $31 | $31 | $22 | $24 | $20 |
| Medium | $24 | $24 | $26 | $26 | $27 | $26 | $31 | $35 | $33 | $33 | $44 |
| Large | $27 | $26 | $25 | $26 | $31 | $30 | $31 | $46 | $44 | $47 | $55 |
(Small Sized Agencies) The “Spread” Reveals the Profit Squeeze: This is the most critical insight. While revenue per employee has risen, so has compensation per employee. The Spread—the crucial figure representing the dollars per employee left over to cover all overhead and generate profit—has remained almost completely flat for 30 years, hovering around $20,000. This explains the shrinking profit margins seen in the Income & Expense tables. The efficiency gains agencies have made are being consumed by rising compensation costs, not translating into higher profitability.
(Medium Sized Agencies) Massive Increase in Employee Productivity and Profitability (The Spread): The most important trend is the surge in the Spread, which jumped to a 30-year high of $44,000. This metric (Revenues per Person – Compensation per Person) is a direct measure of the profit generated per employee before overhead. Its significant growth indicates a major improvement in overall agency profitability and efficiency. This was achieved by growing Revenues per Person to a record $112,000 while keeping Compensation per Person stable at $71,000. Agencies are successfully generating more revenue without a corresponding increase in labor costs.
(Large Sized Agencies) Massive Gains in Employee Productivity and Profitability: The clearest trend is the dramatic increase in efficiency. Revenues per Person has more than doubled over 30 years, from $73,000 to $176,000. Critically, this efficiency translates directly to the bottom line. The Spread (the profit per employee before overhead) has also doubled, from $27,000 to $55,000. This shows that large agencies have been highly successful at scaling their business in a profitable way.
Agency Productivity Trends—Personnel Standards (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | – | $67 | $52 | $53 | $69 |
| Medium | – | – | – | – | – | – | – | $162 | $156 | $155 | $110 |
| Large | – | – | – | – | – | – | – | $312 | $260 | $275 | $360 |
Agency Productivity Trends—Personnel Standards (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | – | – | – | – | $33 |
| Medium | – | – | – | – | – | – | – | $66 | $58 | $71 | $73 |
| Large | – | – | – | – | – | – | – | $134 | $116 | $135 | $182 |
Agency Productivity Trends—Personnel Standards (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | $16 | $16 | $17 | $18 | $18 | $23 | $23 | $24 | $24 | $24 | $24 |
| Medium | $19 | $20 | $24 | $25 | $25 | $28 | $31 | $33 | $37 | $37 | $41 |
| Large | $20 | $21 | $26 | $26 | $29 | $33 | $32 | $44 | $47 | $52 | $59 |
Agency Productivity Trends—Commercial Lines (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | $369 | $375 | $327 | $412 | $392 | $408 | $394 | $517 | $506 | $500 | $562 |
| Medium | $630 | $617 | $922 | $834 | $757 | $665 | $735 | $797 | $804 | $912 | $800 |
| Large | $1,085 | $1,075 | $1,257 | $1,151 | $1,408 | $1,155 | $1,173 | $1,793 | $1,634 | $1,942 | $1,553 |
(Small Sized Agencies) A Successful Shift to Higher-Value Accounts: Small agencies have been highly successful at increasing the value of the accounts they write. The average Personal Lines (PL) Commission per Account has nearly tripled, growing from $88 to $240. The Commercial Lines (CL) Commission per Account has also seen healthy growth, increasing by over 50% from $369 to $562. This shows a clear strategic focus on writing larger, more profitable policies in both major categories.
(Large Sized Agencies) Successfully Moving Upmarket to Higher-Value Accounts: Agencies have consistently increased the value of the clients they serve. The Personal Lines (PL) Commission per Account has more than tripled, from $94 to $333, indicating a successful focus on more affluent clients. While more volatile, the Commercial Lines (CL) Commission per Account has also seen significant long-term growth, rising from around $1,100 to $1,553.
Agency Productivity Trends—Commercial Lines (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 339 | 329 | 386 | 267 | 299 | 339 | 294 | 245 | 169 | 190 | 198 |
| Medium | 1,352 | 1,338 | 911 | 979 | 1,058 | 947 | 956 | 814 | 792 | 743 | 500 |
| Large | 2,081 | 1,938 | 1,560 | 1,626 | 1,689 | 1,428 | 2,013 | 2,094 | 1,658 | 1,721 | 2,022 |
Agency Productivity Trends—Commercial Lines (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | – | – | – | – | 198 |
| Medium | 295 | 297 | 206 | 218 | 246 | 290 | 285 | 301 | 291 | 239 | 320 |
| Large | 192 | 179 | 145 | 187 | 151 | 189 | 217 | 195 | 198 | 152 | 211 |
Agency Productivity Trends—Commercial Lines (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | – | – | – | – | – | – | – | – | – | – | $111 |
| Medium | $186 | $183 | $190 | $182 | $186 | $193 | $209 | $240 | $234 | $218 | $256 |
| Large | $209 | $193 | $182 | $215 | $212 | $219 | $255 | $349 | $323 | $296 | $327 |
(Medium Sized Agencies) Stable, High-Value Commercial Lines Productivity: While the total number of commercial accounts has decreased, the productivity of the commercial lines staff remains high. The CL Commission per CL Account Manager has climbed to a near-record high of $256,000. This indicates that while the commercial book of business may be smaller, it is highly valuable and managed efficiently by a leaner team.
(Large Sized Agencies) Explosive Growth in Account Manager Productivity: The efficiency gains are starkly visible in the performance of the service staff. The PL Commission per PL Account Manager has nearly tripled, soaring from $82,000 to $238,000. Likewise, the CL Commission per CL Account Manager has grown by more than 50%, from around $200,000 to $327,000. This shows that individual account managers are handling much larger and more profitable books of business, likely driven by technology and specialization.
Agency Productivity Trends—Personal Lines (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | $88 | $89 | $101 | $107 | $112 | $128 | $129 | $143 | $196 | $182 | $240 |
| Medium | $94 | $101 | $116 | $132 | $139 | $139 | $162 | $169 | $203 | $239 | $298 |
| Large | $94 | $99 | $123 | $123 | $152 | $164 | $156 | $225 | $259 | $281 | $333 |
(Small Sized Agencies) A Successful Shift to Higher-Value Accounts: Small agencies have been highly successful at increasing the value of the accounts they write. The average Personal Lines (PL) Commission per Account has nearly tripled, growing from $88 to $240. The Commercial Lines (CL) Commission per Account has also seen healthy growth, increasing by over 50% from $369 to $562. This shows a clear strategic focus on writing larger, more profitable policies in both major categories.
(Medium Sized Agencies) Strong Growth in Higher-Value Personal Lines Accounts: Medium agencies have successfully shifted their personal lines focus to more valuable clients. The PL Commission per Account has more than tripled, from $94 to $298. This strategy is paying off in employee productivity. The PL Commission per PL Account Manager has also more than doubled, from $88,000 to $202,000. This shows that personal lines are a growing source of profitable, high-value business for these agencies.
(Large Sized Agencies) Successfully Moving Upmarket to Higher-Value Accounts: Agencies have consistently increased the value of the clients they serve. The Personal Lines (PL) Commission per Account has more than tripled, from $94 to $333, indicating a successful focus on more affluent clients. While more volatile, the Commercial Lines (CL) Commission per Account has also seen significant long-term growth, rising from around $1,100 to $1,553.
Agency Productivity Trends—Personal Lines (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 1,441 | 1,432 | 1,276 | 1,349 | 1,193 | 1,404 | 1,191 | 1,131 | 585 | 749 | 596 |
| Medium | 3,489 | 3,742 | 3,248 | 3,401 | 2,909 | 3,165 | 2,746 | 2,839 | 2,103 | 2,307 | 1,264 |
| Large | 6,650 | 6,387 | 4,968 | 4,350 | 4,204 | 4,035 | 4,902 | 4,132 | 3,087 | 3,157 | 3,873 |
Agency Productivity Trends—Personal Lines (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | 865 | 895 | 942 | 964 | 852 | 887 | 911 | 812 | – | 760 | 647 |
| Medium | 939 | 913 | 845 | 895 | 808 | 929 | 736 | 838 | 854 | 733 | 677 |
| Large | 873 | 852 | 719 | 836 | 713 | 829 | 962 | 700 | 730 | 662 | 714 |
Agency Productivity Trends—Personal Lines (1988-2019)
| Agency Size | ’88-’89 | ’90-’91 | ’92-’93 | ’94-’95 | ’96-’97 | ’99-’00 | ’02-’03 | ’06-’07 | ’10-’11 | ’13-’14 | ’18-’19 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Small | $77 | $80 | $95 | $103 | $95 | $113 | $118 | $116 | – | $138 | $156 |
| Medium | $88 | $92 | $98 | $118 | $112 | $129 | $119 | $141 | $173 | $175 | $202 |
| Large | $82 | $84 | $88 | $103 | $108 | $137 | $150 | $158 | $189 | $186 | $238 |
(Small Sized Agencies) Productivity Growth is Driven by Personal Lines: The data confirms a strategic pivot towards a more productive personal lines business. The PL Commission per PL Account Manager has doubled over 30 years, from $77,000 to $156,000. This indicates that staff members dedicated to personal lines are generating significantly more revenue for the agency than in the past, validating the increased focus on higher-value personal accounts.
(Medium Sized Agencies) Strong Growth in Higher-Value Personal Lines Accounts: Medium agencies have successfully shifted their personal lines focus to more valuable clients. The PL Commission per Account has more than tripled, from $94 to $298. This strategy is paying off in employee productivity. The PL Commission per PL Account Manager has also more than doubled, from $88,000 to $202,000. This shows that personal lines are a growing source of profitable, high-value business for these agencies.
(Large Sized Agencies) Explosive Growth in Account Manager Productivity: The efficiency gains are starkly visible in the performance of the service staff. The PL Commission per PL Account Manager has nearly tripled, soaring from $82,000 to $238,000. Likewise, the CL Commission per CL Account Manager has grown by more than 50%, from around $200,000 to $327,000. This shows that individual account managers are handling much larger and more profitable books of business, likely driven by technology and specialization.