The 2023 Best Practices Study — year two of the three-year cycle, reporting 2022 results across 286 designated agencies — read very differently from its predecessor. The 2022 edition worried about producer flight and disruption; 2023 declared the industry "healthier today than it has ever been." For anyone citing the study as a source, the shift in tone is itself the signal. The how-to-read companion is the BPS variance analysis; this is the 2023 strategic context.
§ 01 · The recordEvery tier cleared the bar.
Organic growth accelerated in five of six revenue tiers, with several mid- and large-tier medians landing near 10–11%. Profitability held at near-record levels. And the headline composite — the Rule of 20, organic growth plus half the profit margin — cleared 20 in every single tier, which the study reads as shareholder returns at record highs. The one exception to the growth story was the smallest tier (under $1.25M), which decelerated to 6.4% while every larger tier captured the rate-driven, post-pandemic tailwind. That divergence becomes a recurring character in the three-year arc.
§ 02 · The warningSales velocity, and what it foretells.
Sales velocity — current-period new business written as a share of prior-period commissions and fees — is the study's read on whether a firm has a true new-business engine, with a healthy floor around 12–13%. In 2023 it fell in five of six tiers. The study's own framing: "If there is a cautionary tale in this year's study, it may reside in this year's sales velocity results." The logic is forward-looking — when the economic recovery stalls and hard-market rate increases cool, new business becomes the only growth lever left, and a decelerating engine is a liability waiting for its moment.
| Sales velocity (median) | 2022 | 2023 | Direction |
|---|---|---|---|
| Under $1.25M | 17.4% | 15.4% | ↓ |
| $1.25M–$2.5M | 15.8% | 13.7% | ↓ |
| $2.5M–$5M | 15.3% | 14.6% | ↓ |
| $5M–$10M | 15.5% | 15.1% | ↓ |
| Over $25M | 13.1% | 15.7% | ↑ |
The mitigant arrived in the same study: producer investment surged. Net unvalidated producer payroll — the dollars an agency spends developing producers before they pay their own way — rose in five of six tiers, led by the smallest tier at 3.1% of net revenue. The two metrics tell a coherent story: the engine cooled, and agencies responded by paying to rebuild it.
The most dangerous number in a record year is the one going the wrong way. Sales velocity is a leading indicator dressed as a footnote — it tells you what next year's organic growth will look like once the rate tailwind stops doing the work.
§ 03 · The new watchlistAI joins the megatrends.
The 2023 conclusion named five challenges in an otherwise optimistic narrative: InsurTech, industry consolidation, a new emphasis on value-added resources, the systemic young-talent deficit, and — for the first time in the study's history — artificial intelligence. The producer-mobility framing that dominated 2022 was gone, folded into the talent-pipeline concern: where 2022 framed talent as a poaching risk, 2023 framed it as a supply problem. That reframing aligns directly with the broader industry talent deficit.
§ 04 · The valuation anchorInternal versus external, in revenue terms.
The 2023 conclusion offered unusually explicit valuation framing, expressed as revenue multiples rather than EBITDA. Internal perpetuation transfers were anchored at 1.5×–2.0× revenue (up from roughly 1.0× a generation ago); third-party sales at 2.5×–3.5× revenue (up from 1.25×–1.75×). The implied external premium runs roughly 70–125% at the midpoints — directionally consistent with the prior year's stylized 150% illustration once margin expansion is layered on. These are the study's directional ranges for a typical high-quality broker, not tier-specific prices, and they should be read as the baseline a deal starts from, not the number it lands on. The next chapter — whether the records held — is the 2024 context.
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Terminology on this shelf
- Sales velocity
- Current-period new business ÷ prior-period commissions and fees; a healthy new-business engine reads ≥12–13%.
- Rule of 20
- Organic growth % + ½ × Pro Forma EBITDA %; a score of 20 indicates roughly 15–17% expected shareholder returns.
- NUPP
- Net unvalidated producer payroll — the investment in developing producers before they reach validation, as % of net revenue.
- Revenue multiple
- Valuation expressed as a multiple of revenue rather than EBITDA — the study's chosen frame for internal-vs-external comparison.
- Designated agency
- A firm completing the in-depth study survey and recognized as a top performer; 286 in the 2023 cycle.