Despite a weak economy, heightened competition and soft insurance prices, independent agents wrote $6 out of every $10 of property/casualty revenue in 2007 and continued to represent just under 60 percent of the overall P/C premium market share.
Even so, regional and national independent agency companies together wrote $800 million less in premium in 2007, compared with a $5 billion and $4 billion gain in P/C premium in 2006 and 2005, respectively.
A new study analyzing the current state of the independent agency system by the Independent Insurance Agents & Brokers of America Inc. (IIABA) says independent agents and brokers continued to hold their overall market share in the P/C industry even with the reduced premium written.
“While the weakening economy dominated headlines in 2008, the property/casualty insurance industry has actually been feeling the impact of relentlessly soft pricing for the past several years as reflected in the 2007 analysis,” says Bob Rusbuldt, IIABA president and CEO. “The independent agency system continues to be the leader in commercial lines, holds a significant share of personal lines, and dominates both lines in some states.”
In its 13th annual market share study, the IIABA contracted with A.M. Best Co. to supply it with year-end industry market share and company expense data. The IIABA analyzes this data annually to assess the state of the independent agency system.
The overall P/C market was relatively flat in 2007 with total direct written premiums of $489.0 billion, vs. $488.4 billion in 2006, according to the data. The P/C market had grown by only 2.5 percent in 2006, on the heels of less than 2 percent in 2005 and preliminary year-end results coming in for 2008 indicate continuing weak pricing. Only the homeowners insurance line increased by any measure, up 3 percent overall.
Independent agents and brokers are responsible for generating nearly $6 of every $10 in the industry’s overall P/C premium revenue, the study found. They produced $288.5 billion of the total $489 billion market in 2007 (compared with $289.3 billion in 2006, $284.1 billion in 2005, and $276.11 billion in 2004).
The market share of independent agents and brokers held steady at just under 60 percent of overall P/C premium, the study said. With the market shrinking slightly, regional and national independent agency companies together wound up writing $800 million less in premium in 2007, compared with a $5 billion and $4 billion gain in 2006 and 2005, respectively.
“This annual study provides the most accurate picture of what is occurring with property/casualty insurance distribution because it separates out the direct response companies from the captive agency companies,” said Madelyn Flannagan, IIABA’s vice president of research and education. “Unique to the IIABA study, A.M. Best separates out the affiliates of groups which use different distribution systems and places these affiliates in the appropriate distribution category wherever the company group uses separate affiliates for this purpose. A.M. Best’s regularly published industry reports do not take either of these two steps, and thus, do not give as accurate a picture of the market shares of the various distribution systems.”
All of the data in IIABA’s report comes from A.M. Best and is printed with its permission.