As agencies receive their contingency checks in Q1 2024, IA Valuations is cautiously optimistic agencies will see larger paydays than they saw in 2023 but expectations should be tempered by the fact that 2023 was another poor performing year for the industry. Credit: kentoh/Adobe Stock
It's contingency season and like any bonus, it can either bring excitement or disappointment. With that said, agencies should not sit idly, cross their fingers, and hope they receive good contingency numbers year to year. Take matters into your own hands! One way to do so is by understanding what's happened in the past and trying to gauge what will happen in 2024 and beyond. We've tried to take that work off your plate and dig up some insights for you.
In 2023, IA Valuations saw agencies receive less in contingencies than in 2022, with exception of the 2mm-5mm revenue group. This trend is not shocking since in 2022 the property and casualty insurance industry experienced a net underwriting loss of $24.9 billion according to AM Best and 2022's results are the basis for 2023's contingency bonuses. For context on this poor year for insurance, automobile insurance reported its worse losses in over two decades. Catastrophic events created $165 billion in costs, which is the third highest annual price tag for catastrophic events behind 2005 and 2017. So, carriers were left with much less profit in 2022 and agency's felt the impact with their 2023 contingency checks.
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