The independent insurance channel is breaking records, with a recent survey revealing that agents and brokers had their best Q2 since 2013.
According to Reagan Consulting’s quarterly Organic Growth and Profitability (OGP) survey, the channel saw a 6.4% organic growth rate across all business lines, alongside a hot M&A market that just won’t quit, which together are pointing to an optimistic outlook for the future of the industry. In fact, Mark Crites, VP of Reagan Consulting, forecasted that “2019 could be a historic year.”
On the back of the good news, agents and brokers have “lifted their full-year 2019 growth expectations to 7.0%, up from 6.0% after Q1 results were posted,” added Crites.
Key drivers of growth in the independent insurance channel included the following:
- A rebound in the benefits sector, which posted a 5.5% growth rate in Q2 2019 that trails only slightly below its nine-year historical average.
- Personal lines show no signs of slowing down, with a 4.1% organic growth rate that was the second highest since the start of the OGP study in 2008, in spite of the competition from insurtechs in this space.
- Commercial lines continue to boom, as nearly four in 10 firms (37%) that experienced growth in commercial lines for Q2 reported double-digit organic growth, and the entire sector saw a growth rate of 6.4% (compared to the historic high of 6.9% in Q1 2019).
- Increases in premium pricing, with expectations that Q2 premium pricing will have grown again, making it the eighth consecutive quarter of rate increases across most P&C lines.
Mergers and acquisitions likewise played a key role in Q2 growth. Reagan Consulting reported that 2017 and 2018 were record years for M&A. This trend isn’t likely to stop in 2019, with 328 deals announced during the first half of the year and M&A activity up by 6.5% from last year.
“Even at record-high valuations, buyers can still complete accretive deals,” commented Crites, adding that the buying “frenzy” continues. “We see no slowdown in M&A activity for the foreseeable future.”
Reagan Consulting relies on confidential submissions from around 200 mid-size and large agencies and brokerage firms for its OGP survey. Around half of the industry’s 100 largest firms participated in the Q2 survey.