Independent insurance agencies and brokerages posted record-level profitability last year, according to survey results collected by Reagan Consulting.
Median profitability for EBITDA among large and mid-size private agencies grew 21% in 2014, up from 19.3% in 2013 and 18.4% in 2012. Organic growth for agencies stayed at a steady rate of 6.2%, while commercial lines remained the fastest growing segment of business for producers with an organic growth rate of 7.0%.
Comparatively, group benefits grew at 5.7%.
“The agent/broker world grew in profitability for the fifth straight year—while sustaining positive revenue growth for a third straight year,” said Kevin Stipe, president of Reagan Consulting, which has been performing the Organic Growth and Profitability survey since 2008.
“These two metrics drive valuation, largely determine operating health, and are imperative to a firm’s ability to successfully perpetuate.”
Going forward, survey respondents expect a 6.0% organic growth rate in 2015. It would mark the fourth consecutive year brokers have forecast organic growth in that range.
As for profitability, survey respondents anticipate a slight “pullback” this year, forecasting profitability at 20%.
The survey results come as a Bureau of Labor Statistics report reveals the agent/broker insurance segment gained 32,600 jobs in December. That’s up 4.7% from the same period, outstripping the pre-recession peak of 684,500 to 728,500.
The Insurance Information Institute noted that the sector has been “fairly steadily gaining jobs” since September 2010 and, barring any major developments in insurance distribution, will continue to do so.
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