The independent insurance agency world does not usually throw confetti for benchmarking reports. There are no marching bands, no halftime shows, and definitely no mascot tossing T-shirts into the crowd. But when the Big “I” and Reagan Consulting released the 2022 Best Practices Study results through IA Magazine, the numbers deserved attention. For independent agencies trying to understand growth, profitability, hiring, perpetuation, technology, and long-term value, the study offered something better than noise: a clear view of what top-performing agencies were actually doing.
The headline was simple but powerful: Best Practices agencies were growing fast, staying profitable, and proving that the independent agency channel remained remarkably strong after the disruption of the pandemic. Organic growth reached a record 9.2%. Profitability stayed near all-time highs at 26.2%. The Rule of 20, a widely watched measure of agency health, climbed to 24. Sales velocity improved, mergers and acquisitions gained momentum, and the study reminded agency leaders that today’s strong results should not become tomorrow’s excuse for underinvesting in talent.
In plain English, the 2022 Best Practices Study told agency owners: “You are doing well, but do not fall asleep at the wheel.” The market was favorable, yes. Premium increases helped, yes. But the best agencies were not simply lucky passengers riding a hard-market elevator upward. They were measuring performance, recruiting producers, improving client service, managing expenses, and thinking seriously about perpetuation.
What Is the Big “I” and Reagan Consulting Best Practices Study?
The Best Practices Study is one of the most respected benchmarking resources in the independent insurance agency system. It began in 1993 as a joint effort between the Independent Insurance Agents & Brokers of America, commonly known as the Big “I,” and Reagan Consulting, an Atlanta-based management consulting firm focused on insurance distribution.
The study examines leading independent agencies across the United States. Agencies are nominated by state associations, insurance companies, and other industry organizations, then evaluated using financial and operational data. The goal is not simply to hand out a shiny badge for the office wall. The larger purpose is to identify what high-performing agencies are doing differently so other agencies can learn from them.
The 2022 study was especially important because it marked the first year of a new three-year study cycle. Newly qualified Best Practices agencies were analyzed across six revenue categories, ranging from smaller firms under $1.25 million in annual revenue to agencies above $25 million. That matters because a small town agency with a lean team and a large regional broker do not face the same staffing, technology, carrier, or perpetuation challenges. Comparing agencies by size makes the data more practical and fair.
Why the 2022 Study Results Mattered
The 2022 results arrived at a strange economic moment. Agencies were moving beyond the most intense stage of the coronavirus pandemic, but they were also facing inflation, labor shortages, rising client expectations, hard-market pricing, and uncertainty about whether the broader economy would slow down. In other words, the industry was doing wellbut everyone had one eyebrow raised.
For independent agencies, the study offered both reassurance and warning. Reassurance came from the fact that top firms posted record-level growth and profitability. Warning came from the talent and perpetuation metrics. Strong revenue can hide weak pipelines. A profitable agency can still be vulnerable if its producer bench is thin, its shareholder group is aging, or its technology cannot support modern client expectations.
That is why this study should not be treated as a victory lap. It is better read as a management dashboard. The numbers celebrate what is working while pointing directly at what needs attention next.
Key Finding 1: Organic Growth Hit a Record 9.2%
The most eye-catching number in the 2022 Best Practices Study was organic growth. Best Practices agencies reached 9.2% organic growth, more than double the prior year’s 3.7% result. Organic growth improved across all six revenue groups, which is important because it shows the trend was not limited to one agency size or one market niche.
Organic growth is a cleaner measure than total growth because it focuses on growth from existing operations, not just acquisitions. If an agency buys another book of business, revenue may rise, but that does not necessarily prove the core sales engine is stronger. Organic growth asks a tougher question: Is the agency winning, retaining, and expanding business through its own people, systems, relationships, and strategy?
In 2022, the answer for Best Practices agencies was a loud yes. Hard-market conditions helped because rising premiums often increase commission revenue. But the study also showed improvement in sales velocity, meaning new business activity contributed materially. That distinction matters. Premium increases may lift the boat, but new business proves the agency knows how to row.
Key Finding 2: Profitability Stayed at an All-Time High
Best Practices agency profitability reached 26.2%, slightly above the prior year’s 25.9%. For agency owners, that is not just a nice accounting detail. Profitability affects cash flow, compensation flexibility, shareholder returns, acquisition capacity, and agency valuation.
Strong profitability also gives agencies strategic options. A firm with healthy margins can invest in producer development, technology, account management, marketing, and leadership training. A firm with thin margins may know exactly what it needs to do but lack the fuel to do it. In this sense, profitability is not merely the money left over after expenses. It is the oxygen for future growth.
However, profitability can also become a trap if leaders protect it too aggressively. An agency that refuses to hire, modernize, or train because it wants to preserve today’s margin may create tomorrow’s stagnation. The smartest agencies treat profitability as a resource to be managed, not a trophy to lock in a glass case.
Key Finding 3: The Rule of 20 Reached 24
The Rule of 20 is one of the most useful agency health metrics because it balances growth and profitability. It is calculated by adding organic growth to 50% of profitability. In the 2022 study, the Rule of 20 reached a record 24, compared with 18 in the prior year.
Why does this matter? Because agencies can look healthy in two very different but incomplete ways. One agency may grow quickly while spending so much that profits disappear. Another may show impressive profitability while growth slowly fades. The Rule of 20 helps owners avoid being fooled by one-dimensional success.
A score above 20 generally suggests a strong combination of growth and profitability. At 24, Best Practices agencies were not just surviving. They were creating value. For shareholders, that can translate into better long-term returns. For employees, it can mean more career opportunity. For clients, it can support stronger service capacity and broader expertise.
Key Finding 4: Sales Velocity Improved to 15.5%
Sales velocity rose to 15.5%, compared with 13.2% in the previous year. This is one of the most practical numbers in the study because it points toward the health of an agency’s sales culture. Strong sales velocity suggests that producers are not merely renewing old accounts and waiting for the phone to ring. They are generating new business.
For agency leaders, sales velocity should spark useful questions. Are producers focused on the right market segments? Are account executives and service teams supporting growth efficiently? Is the agency tracking leads, close ratios, cross-selling, and lost business? Are younger producers getting enough coaching to validate?
The agencies that win over time usually do not treat sales as a heroic solo sport. They build repeatable processes. They define target accounts. They use data to improve conversations. They coach producers before small problems turn into expensive turnover. In a competitive insurance market, “just go sell more” is not a strategy. It is a motivational poster with a coffee stain.
Key Finding 5: Mergers and Acquisitions Continued to Shape Growth
The study found that 22.3% of Best Practices agencies acquired business, up from 16.4% the previous year. That reflects a broader reality in the insurance distribution marketplace: mergers and acquisitions remain a major force.
For some agencies, acquisition is a way to enter new markets, expand carrier relationships, add specialty expertise, or solve perpetuation challenges for smaller firms. For others, selling or merging may be the most realistic path when internal ownership succession is unclear.
But acquisition growth is not magic. Buying revenue does not automatically create value. Integration matters. Culture matters. Retention matters. Technology conversion matters. A poorly integrated acquisition can turn into a very expensive group project, and everyone remembers how much fun group projects were in school.
The best agencies approach M&A with discipline. They evaluate whether the acquired book fits their target markets, service standards, carrier strategy, and long-term financial goals. In other words, they do not buy agencies the way hungry people shop for groceries. They use a list.
Key Finding 6: Producer Recruitment Needed More Investment
One of the most important warnings in the 2022 study involved producer recruitment and development. Net unvalidated producer payroll, often shortened to NUPP, remained around 1.1% of net revenues, slightly below the prior year’s 1.2%. The study suggested that a healthier investment level would be closer to 1.5% to 2.0%.
This may sound like a technical compensation metric, but the message is straightforward: agencies need to invest more consistently in the next generation of producers. A strong market can make current results look excellent, but if an agency is not building future sales capacity, growth may slow when conditions become less favorable.
Recruiting producers is difficult. Training them is even harder. New producers need mentoring, market knowledge, sales discipline, emotional resilience, and enough runway to develop a book of business. Agencies that expect immediate miracles often end up frustrated. Producer development is not a microwave meal. It is more like barbecue: slow, intentional, and easy to ruin if you keep opening the lid every three minutes.
Key Finding 7: Shareholder and Producer Ages Deserved Attention
The 2022 study reported a weighted average shareholder age of 53.2 and a weighted average producer age of 48.6. These numbers were steady, but they should still matter to agency principals.
Age metrics are closely tied to perpetuation. If ownership is concentrated among older shareholders and the next generation is not being prepared, the agency may face a difficult transition later. Likewise, if the producer group is aging without enough younger talent entering the pipeline, long-term organic growth can become harder to sustain.
Perpetuation is one of those topics agency owners know they should discuss, much like cleaning out the garage or finally reading the software terms and conditions. But delaying the conversation can reduce options. The best agencies treat perpetuation as a strategy, not an emergency.
How the Study Connects to the Wider Independent Agency Channel
The Best Practices Study focuses on top-performing agencies, so it should not be mistaken for a snapshot of every agency in the country. Broader research, such as the Agency Universe Study, showed a more mixed picture in the same period. Many agencies reported revenue gains, but a meaningful portion also experienced declines. Technology challenges, carrier interface frustrations, talent shortages, and changing client expectations continued to pressure the channel.
This contrast is useful. It shows that while the independent agency system was strong overall, performance gaps were real. Top agencies were not necessarily operating in a different economy. They were often operating with better habits: clearer goals, stronger financial management, better use of data, more disciplined hiring, and more intentional client service.
For agency owners reading the 2022 results, the point was not to copy every tactic from the largest or fastest-growing firms. The point was to benchmark honestly. If a similar-sized Best Practices agency has stronger profitability, better sales velocity, or a younger ownership pipeline, that gap becomes a management opportunity.
Practical Lessons for Independent Agency Owners
1. Track the Numbers That Actually Explain Performance
Revenue matters, but it is not enough. Agencies should monitor organic growth, profitability, sales velocity, retention, producer validation, operating expenses, technology costs, and book composition. A dashboard should explain what is happening, not simply decorate a leadership meeting.
2. Reinvest During Strong Years
When profitability is high, it is tempting to distribute as much as possible to owners. That may be appropriate in some cases, but agencies should also ask whether they are investing enough in people, platforms, automation, marketing, and analytics. Strong years are the best time to strengthen the foundation.
3. Build a Producer Development System
Hiring a producer without a development plan is like buying a treadmill and assuming fitness will happen by osmosis. Agencies need clear expectations, mentoring, training, accountability, market focus, and compensation structures that support validation without creating dependency.
4. Treat Technology as an Operating Strategy
Technology should help agencies reduce friction, improve client communication, strengthen data visibility, and free staff from repetitive tasks. The goal is not to own every shiny tool. The goal is to create a cleaner, faster, more consistent experience for clients and employees.
5. Start Perpetuation Planning Earlier Than Feels Necessary
Ownership transition takes time. Internal perpetuation requires future owners who have the financial capacity, leadership ability, and desire to buy in. External perpetuation requires careful positioning. Either way, the agency that starts early has more choices.
What the 2022 Results Mean for Clients
Although the study is written for agencies, clients benefit when agencies become stronger. A financially healthy agency can attract better talent, invest in service tools, expand expertise, and respond more effectively during difficult market cycles. Strong agencies are also better positioned to advise clients when premiums rise, underwriting tightens, or coverage needs become more complex.
For commercial clients, this can mean better risk management conversations and more strategic renewal planning. For personal lines clients, it can mean clearer explanations of coverage changes, better account reviews, and more help navigating a challenging property insurance environment. For employee benefits clients, it can mean stronger guidance around plan design, compliance, and cost control.
In other words, agency performance is not just an internal scorecard. It affects the quality of advice real people and businesses receive.
Experience Section: What the 2022 Best Practices Results Look Like Inside an Agency
To understand the real-world value of the 2022 Best Practices Study, imagine a mid-sized independent agency reviewing its own performance after a strong revenue year. On the surface, everything looks great. Commission income is up. Producers are smiling. The principal is finally considering replacing the conference room chairs that have been making suspicious noises since 2008.
Then the leadership team compares its numbers with Best Practices benchmarks. The mood changesnot negatively, but seriously. Revenue growth looks solid, but organic growth is lower than the top-performing peer group. Profitability is healthy, but expenses are creeping upward in service operations. Sales velocity is acceptable, but most new business comes from two senior producers. The agency has a perpetuation plan, technically, but it lives in a folder called “Final_Final_Updated_REAL” and has not been discussed in months.
This is where the study becomes useful. It moves the conversation from vague feelings to measurable priorities. Instead of saying, “We need to grow,” the team can ask, “Why is our new business rate below benchmark?” Instead of saying, “We should hire young people,” the team can ask, “How much are we actually investing in unvalidated producers?” Instead of saying, “Our service team is busy,” the team can ask, “Which workflows are consuming time without improving the client experience?”
One common experience for agencies is discovering that growth hides operational strain. A hard market can increase revenue, but it can also increase remarketing work, client questions, underwriting friction, and employee stress. Staff may feel busier even when the income statement looks better. That is why the best agencies do not celebrate growth without also examining workload, retention, and process efficiency.
Another practical lesson is that producer development requires patience. Many agencies want younger producers, but fewer build the infrastructure needed to help them succeed. A new producer may need help choosing a niche, learning coverage language, handling rejection, using the agency management system, preparing renewal strategy, and building referral relationships. Without that support, the agency may blame the hire when the real problem is the development model.
The study also encourages better ownership conversations. In many agencies, perpetuation planning is emotionally complicated. Founders may struggle to let go. Younger leaders may want opportunity but lack clarity. Family dynamics may enter the chat wearing muddy shoes. Benchmarking does not solve all of that, but it gives everyone a common language. Shareholder age, producer age, profitability, and growth are not personal accusations. They are business indicators.
Finally, the 2022 Best Practices results show that excellence is usually built from ordinary habits repeated consistently. The best agencies are not perfect. They still deal with carrier delays, difficult renewals, talent competition, and clients who send urgent emails with the subject line “Quick question” when the question is absolutely not quick. But they measure what matters, act on what they learn, and invest before problems become emergencies.
For an agency owner, that may be the biggest takeaway. The Best Practices Study is not saying every firm must become a giant broker or chase every acquisition opportunity. It is saying that agencies of every size can become more intentional. Better data leads to better decisions. Better decisions lead to stronger firms. Stronger firms serve clients better and create more durable value for employees and shareholders.
Conclusion
The Big “I” and Reagan Consulting 2022 Best Practices Study results showed an independent agency channel with impressive momentum. Record organic growth, high profitability, stronger sales velocity, and a record Rule of 20 score all pointed to a group of top-performing agencies operating from a position of strength.
But the deeper message was not simply “business is good.” The deeper message was that strong agencies must keep building. Producer recruitment, leadership development, perpetuation planning, technology adoption, and disciplined benchmarking remain essential. Market conditions can change. Premium trends can cool. Competition can intensify. Agencies that use strong years to prepare will be better positioned when conditions become less generous.
For independent insurance agency leaders, the 2022 study remains a valuable reminder: growth is wonderful, profitability is powerful, but intentional management is what turns a good year into a durable business.
Note: This article is written for web publication as original editorial content based on publicly available industry information, with unnecessary source-link elements removed from the HTML body.
