For independent agency owners benchmarking their own performance in a softening commercial market, the 2026 update of the Best Practices Study from the Independent Insurance Agents & Brokers of America (Big "I") and Reagan Consulting delivers a split verdict: margins held, but the investment needed to sustain future growth is running below what the study considers healthy.
Organic growth decelerated in six of the study's seven revenue bands in 2025, ranging from 6.2% to 10.2% - down from 8.7% to 11.3% in the prior year, and a meaningful step back from the 10.7% average Best Practices agencies posted in 2024, which had been a record. Reagan Consulting attributed the slowdown primarily to cooling commercial property and casualty rates, with organic growth tied to four underlying drivers: new business, account retention, P&C rate movement and GDP growth.
Despite the slower top line, profitability barely moved. Pro forma EBITDA margins ranged from 23.2% to 30.7% across revenue categories, with the top-performing quartile of agencies under $1.25 million in revenue posting margins as high as 42.5%. The Rule of 20 - a Reagan metric combining organic growth with half of pro forma EBITDA margin to gauge overall agency health - dipped from a prior median range of 19.0 to 29.5, to a current range of 19.3 to 26.1, still above the 20-point threshold associated with top-tier performance in most bands.
The softening documented in this study matches what other benchmarks have shown. The Council of Insurance Agents and Brokers reported average commercial premiums falling 1.2% in Q1 2026, ending a 33-quarter streak of increases running nearly nine years, with commercial property premiums down 5.5% in the same period. Large public brokers have reported similarly, with Aon and Arthur J. Gallagher both guiding to mid-single-digit organic growth for 2026 after Reagan's own quarterly survey data showed four consecutive quarters of deceleration industry-wide. For brokers placing commercial property, that rate environment is already visible in renewal conversations; the Best Practices data confirms it is compressing growth figures at the agency level too.
Webb Milward, a partner at Reagan Consulting, said top agencies are responding by investing in producer development rather than waiting out the cycle. "We expect most Best Practices agencies to adopt new strategies including additional investment in producer recruitment and development that will help them continue to grow and thrive in the softer market," Milward said.
The data tells a more complicated story. Net unvalidated producer payroll - Reagan's measure of how much agencies are spending to recruit and develop new producers - ranged from 0.0% to 1.7% of revenue across bands, below the 1.5% to 2.0% range the study considers healthy. Most Best Practices agencies, even those meeting the Rule of 20 threshold, are under-investing in precisely the pipeline that will determine how quickly they can capture growth when commercial rates firm again.
Sales velocity held up better, exceeding the 12% threshold associated with a healthy sales culture in five of seven revenue bands. But producers aged 36 to 45 generated the largest share of new business in most bands - an age skew that raises questions about next-generation pipeline depth as that cohort ages into the next decade.
The margin resilience in this study is real, but it is partly a function of the hard market years that preceded this softening - premium growth inflated revenue bases that are now supporting EBITDA margins even as organic growth slows. The question agency owners should take from this data is not whether their current margins are acceptable. It is whether net unvalidated producer payroll is sitting at 1.5% to 2.0% of revenue - and if not, what that under-investment will cost when the next hard market arrives and producers are in short supply. Soft markets are where future production capacity is either built or missed. This study's own data suggests most Best Practices agencies are currently missing it.
