A Macquarie Bank survey of brokers and underwriting agencies has found more than half achieved net profit margins above 30% last year, although the “golden era” of abundant growth may be coming to an end.

The poll of 187 insurance intermediary businesses across Australia found 54% grew gross revenue in the year to June – down from 90% in 2023. Average revenue and gross written premium have also fallen, indicating “premium inflation tailwinds” are easing.

Macquarie warns rate-driven revenue expansion may no longer be sufficient.

“A multiyear, revenue-lifting hardening cycle is losing momentum as clients reach an affordability ceiling and revenue growth begins to slow ... The insurance intermediary industry remains highly profitable, and though the squeeze of a softening market is beginning to appear, there is an abundance of opportunity to grow, thrive and capitalise on a new wave of opportunity,” the research report says.

All businesses reported net profits, but Macquarie says there is “a slow push down from the highest-performing cohort reporting over 30% profit. We may be starting to see a divergence between agencies building clear strategies to adapt to market conditions and those that are continuing with business as usual.”

Macquarie business banking national head of insurance Sarah Petzel says organic growth is dominating because of a “persistent imbalance” between buyers and potential sellers.

“While about a third of the industry is looking to acquire, only about 15% of businesses have plans to sell externally in the near future,” she said. “This is a vote of confidence in the industry.”

The report says increased interest from private equity buyers is a marker of the sector’s growth potential, with most businesses “well placed to harness it”.

See the report here.