8.5% organic growth through the second quarter is down from 11.2% a year ago.
Looking at the midway point of 2024, the performance of property and casualty insurance brokers suggests a robust year, though unlikely to reach the record-setting organic growth and profitability levels seen in 2023, according to the latest Growth and Profitability Survey from Reagan Consulting.
“The outlook for 2024 points to a strong year, just not as strong as 2023,” stated Kevin Stipe, partner and CEO of Reagan Consulting.
Personal Lines Take the Lead
For the first time, personal lines emerged as the fastest-growing product line for GPS brokers, with an impressive 9.7% growth in Q2. “Personal lines, which has lived in obscurity for decades, is suddenly enjoying its moment in the spotlight,” Stipe explained. Factors driving this surge include a hard market exacerbated by natural disasters and significant man-made events like nuclear jury verdicts and litigation financing.
Commercial Lines See Slower Growth
Commercial lines, which have experienced a hard market for nearly seven years, saw growth decelerate in Q2 to 8.0%. From 2021 to 2023, this sector had been the fastest-growing business line for GPS firms. While still a substantial contributor, it is no longer leading the charge. “Nobody knows when this hard CL market will end, but when it does, we’ll likely see CL organic growth rates return to mid-single digits, as they’ve been in the past,” noted Stipe.
Employee Benefits on the Rise
Employee benefits saw its highest Q2 growth rate (8.0%) since Reagan Consulting began its survey in 2008. This marks the third consecutive year of rising growth in this segment, positioning employee benefits as a key growth driver to counterbalance the slowing pace of commercial lines as premium growth cools.
Source: Reagan Consulting Growth and Profitability Survey, Q2 2024 results.
Profitability Remains Strong
Broker profitability remained solid in Q2, with EBITDA margins slightly down at 26.8%, compared to 27.1% in 2023. “Broker profitability hit unprecedented levels during COVID-19 and has remarkably stayed elevated,” Stipe commented. “It seems brokers have recognized the profitability they can achieve and are determined not to lose the ground gained.”
Optimism for 2024
Despite some economic concerns, brokers remain optimistic for the second half of the year. GPS survey participants project 10% organic growth for 2024, though Stipe questioned whether that is “wishful thinking.” Regardless, he emphasized, “2024 is shaping up to be another strong year for brokers, even if it doesn’t match the high-water mark of 2023.”
Source: Reagan Consulting Growth and Profitability Survey, Q2 2024 results.
