Five years ago, Massachusetts introduced its “managed competition” program — and since then, there has been an influx of direct writing and direct response companies coming into Massachusetts and competing with independent insurance agencies.
But despite the challenge, independent insurance agencies in Massachusetts continue to control both the personal and commercial lines markets by wide margins and continue to have a significant impact on the state’s economy, according to a new report.
The report, commissioned by the Massachusetts Association of Insurance Agents (MAIA) and conducted by Towers Watson, was released on Nov. 9.
Results of the study revealed that the 1400 member agencies of MAIA continue to play a significant role in Massachusetts as employers, taxpayers, consumer spenders and charitable contributors. The study found that financial contribution of MAIA’s property/casualty member agencies in Massachusetts during 2011 was $1,077,000,000.
There are also some 200 property/casualty agencies in Massachusetts that are not members of MAIA. Towers Watson estimates that these non-member agencies produce an additional financial contribution in Massachusetts of at least $46.1 million.
The total number of full time equivalent employees of MAIA member agencies is 10,951. The average independent agency employs 7.8 employees, with approximately 87 percent of the agencies having ten or fewer employees.
Massachusetts independent insurance agencies provided the state’s economy with a payroll of over $747 million in 2011. In addition to providing jobs for thousands of Massachusetts residents, independent insurance agencies expended over $100 million in 2011 for employee benefits, including health insurance, pension and profit sharing and training costs.
These expenditures are evidence of independent agencies’ commitment to their employees and their families and to the consumers of Massachusetts who benefit from well trained insurance professionals. MAIA stated.
In addition to almost $850 million in wages and benefits paid to their more than 10,000 employees, Massachusetts independent insurance agencies contributed over $76 million in state and local taxes during 2011. This amount reflects property/real estate taxes, unemployment taxes and state income taxes. Federal income taxes and social security taxes were excluded from the study.
Also, approximately 80 percent of MAIA members rented, rather than owned, property for at least one agency location. During 2011, these agencies paid rent totaling in excess of $55 million. These rent payments provide additional income to local communities throughout the state.
Massachusetts independent insurance agencies are also significant spenders in the economy when it comes to technology, office furnishings, supplies, equipment, advertising, legal and accounting services, repairs/maintenance/security and remodeling and construction. In 2011, over $87 million was spent by independent insurance agencies in these areas of the economy.
Traditionally, independent insurance agents have been very involved in their local communities, volunteering their time, talent and dollars to numerous charitable, religions, civic and cultural activities. In 2011, independent agencies contributed over $9.6 million to charities, an average of over $6,900 per agency. The average charitable contribution by MAIA’s 184 largest agencies (more than 10 employees) was almost $17,000.
The MAIA also said that independent insurance agencies continue to write and service the great majority of personal and commercial lines insurance written in Massachusetts.
The Independent Insurance Agents & Brokers of America’s most recent property-casualty insurance market study (2010-2011) shows that Massachusetts independent agencies write 79 percent of the personal lines (first in the nation) and 84 percent of the commercial lines (fifth in the nation) in the state.
These percentages reveal that Massachusetts independent insurance agencies lead the nation in market share when compared with independent agencies in other states. Nationally, independent agencies write an average of 35 percent of the personal lines, and 80 percent of the commercial lines.
Source: Massachusetts Association of Insurance Agents