The agency landscape continues to undergo a series of fundamental changes based upon the impact of scale, private equity and insurance carrier capital flowing into the sector, increasing demands of insurance carriers for volume and the ongoing capital needs and complexity of the business. As agencies grow in size, it becomes exponentially more difficult to perpetuate internally. Given the limited flow of entrepreneurial and driven talent, even a reasonably successful insurance sales professional with a book of business typically doesn’t have the capital and willingness to provide the requisite cash, individual personal guarantees and debt financing required to engage in a transaction in excess of $1 million. Today, the industry has become dominated by size. 20 years ago, an agency would have needed $5 million of annual revenue to appear on Business Insurance’s top 100 broker list. Today, that number exceeds $25 million!
To achieve scale, profitably as you increase in size is the key to survival. It is critical that an agency focus on a these eight key success factors.