Independent Agents’ and Brokers’ Market Share Holds Steady

The results of the 2005 market share study by the Independent Insurance Agents & Brokers of America, Inc. (the Big “I), again show that the independent agency system remains strong with plenty of growth opportunities.

During 2005, the market saw softening prices; however, the property-casualty market grew to $473.32 billion in direct written premium, an increase of $8.74 billion over the 2004 figure. During 2005, the independent agency system amassed an additional $4 billion in production, accounting for almost half of the national increase.

“Independent agents continue to hold their own in terms of market share despite unprecedented advertising campaigns from direct writers,” says Big “I” CEO Robert A. Rusbuldt. “The independent agent distribution model is viable, flexible and entrepreneurial. Opportunity exists for independent agents and brokers in every market and in every product line.”

The commercial lines market continued to grow in 2005, showing a 1.5 percent increase to $250.28 billion, with written-premium growth of just under $4 billion. Though their commercial lines market share dropped slightly (from 80.22 percent to 79.97 percent), independent agents and brokers booked increased premium of $2.48 billion.

Independent agents and brokers and their carriers were again able to increase their personal lines market share slightly in 2005 to just below 40 percent, adding $1.7 billion in personal lines premium. Direct writers gained a half point in the personal lines market while national independent agency companies lost 2.3 percent of that market. However, regional independent agency carriers showed gains in personal lines.

“The research shows that efficient companies are leveraging each type of distribution system,” says Madelyn Flannagan, Big “I” vice president of education and research. “Well-managed independent agency writers can distribute and service insurance products just as cost effectively as captive agent writers and direct companies — and in some cases, more so. Educating consumers about what independent agents offer will bear fruit in terms of market share; when exposed to the independent agency model, consumers typically see the added value.”

The 2005 study once again showed that the market continues to be competitive. The Big “I” advised that 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.

This is the 11th year the Big “I” has contracted with A.M. Best Company to supply it with year-end industry market share and company expense data. The Big “I” analyzes this data annually to assess the state of the independent agency system.

Source: IIABA, www.independentagent.com.

Topics Agencies