INDEPENDENT AGENTS AND BROKERS SHOW GAINS IN P-C LINES
Figures reveal growth, potential for future development
ALEXANDRIA, Va., March 20, 2006—The results of the 2004 market share study by the Independent Insurance Agents & Brokers of America, Inc. (IIABA), reinforces the consumer and business acceptance of the independent agency and broker distribution model, and emphasizes the very real opportunities for growth that are present for independent agencies and brokers.
This is the 10th year IIABA has contracted with A.M. Best Company to supply it with year-end industry market share and company expense data. IIABA analyzes this data annually to asses the state of the independent agency system.
During 2004, the property-casualty market grew to $457.68 billion in direct written premium, with the overall market increasing by $20.69 billion. During this time, the independent agency system amassed a nearly $12 billion increase in production, accounting for almost 60 percent of the national increase.
“The results of this report clearly show that the independent agency system is flourishing,” says IIABA CEO Robert A. Rusbuldt. “Independent agents and brokers continue to build on their market share, and if they keep working towards adopting new, efficient technology, strong marketing and branding strategies, and use their commitment and knowledge of their communities to their advantage, they will continue to build upon their present success. Independent agents and brokers have proven time and time again that they are innovative, resilient, and diligent in serving their customers and growing their businesses.”
Following recent trends, research revealed that there are efficient companies using each type of distribution system. More importantly, efficient independent agency writers are able to deliver insurance just as cost effectively as the captive agent writers and many of the direct companies, and in some cases, even more so.
Independent agents and brokers and their carriers were again able to increase their personal lines market share slightly in 2004. However, they continue to control only slightly more than a third of this huge market. The direct companies will remain aggressive competitors for both the captive agent writers and the independent agency companies, but independent agencies should experience their best opportunity in decades to continue to gain a larger market share.
“Independent agencies have the advantage of their community connections to counter this competition, especially if they focus on personal lines as a separate profit center, and not merely as an accommodation,” says Madelyn Flannagan, IIABA vice president of education and research. “Growth can be achieved with focus, marketing strategies, improved technology, and new innovations.”
The independent agency system continues to have a dominant position in commercial lines in many states and has done a good job maintaining this position for much of the past decade. The big variances among the states, however, indicate that there are many opportunities for independent agents and brokers to continue to grow their commercial lines share in wide variety of commercial markets.
Even though growth in both commercial lines and personal lines has slowed from the growth of the past three years, independent agents and brokers are reaping a significant dividend from this growth. The larger the market share they have in a particular market, the larger the dividend they accrue. The growth in commercial and personal lines premium and market share in 2003 and 2004 resulted in $39.52 billion of new premium written by the independent agency distribution system. This fact speaks volumes about the continuing opportunities for today’s independent agents and brokers and the power of increasing market share.
The 2004 study once again showed there are market share winners and losers each year. Each competitor will seek to exploit the weaknesses of the others to capture a larger share of the market. In this environment, it is vital for independent agencies and brokers and their carriers to position themselves as aggressive competitors by making the needed investments in people, technology, branding, advertising and a disciplined sales processes.
All of the data in IIABA’s report comes from A.M. Best and is printed with its permission.
Big "I" members can obtain a copy of the full report on the Big "I" Virtual University . If you don't know your User ID or Password, e-mail your name and agency name and address to logon@iiaba.net. We will be happy to provide you with the necessary login information. For non-IIABA members, subscriptions to the Big "I" Virtual University are available. Please click here for information about obtaining a subscription.
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.
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