Agents Hang Onto P/C Market But Lose Ground in Personal Auto: Study

By Andrea Wells | March 11, 2013
Market Share - Words on Pie Chart Graph

After experiencing dwindling premiums for years, the property/casualty insurance industry managed to grow substantially in 2011. Independent agents and brokers hung onto their share of the market with some independent agency carriers gaining in market share by double digits, according to the newly-released “2013 Property & Casualty Insurance Market Share” study published by the Independent Insurance Agents & Brokers of America (Big “I”).

Independent agents still control a majority of the property/casualty market, writing 57 percent of all premiums. Independent agents dominate over other distribution systems in commercial lines, while also writing a third of personal lines premiums, the Big “I” report reveals.

Where agents appear to be falling short is in the personal auto market where direct writers managed to grow their personal auto premiums 10 times faster than independent agency carriers.

This challenge remains a concern and opportunity for the independent agency channel, says Madelyn Flannagan, co-author of the Big “I” report that tracks how the independent agency channel is doing compared with other distribution systems.

Regional independent agency carriers fell slightly in market share in personal auto from 26.4 percent in 2010 to 26.3 percent in 2011, Flannagan said. National carriers lost more. “They’ve dropped down from 7 percent of the market to 6.7 percent of the (personal auto) market,” she said. “Those are insignificant percentages, but they represent billions of dollars in premiums.”

That premium is moving straight to the direct response channel, she said.

Direct response carriers managed to grow personal auto premiums in 2011 by $2 billion, according to the report. “That’s a significant amount of money in this marketplace,” Flannagan said. “Certainly, independent agents have got a lot of work to do to make up their losses.”

There is some good news for independent agents in the homeowners insurance market, where independent agency carriers made significant gains in market share, the study revealed.

“The national independent agency companies saw gains of about $350 million over 2010,” Flannagan said. “Regional carriers wrote $1.4 billion more in 2011 than they did (in 2010) and increased their volume by 7.8 percent.” Regional and national independent agency companies retained about 53 percent of the growth in the last year across all channels, Flannagan said.

“There was a really impressive result in the homeowners market by the independent agency system,” she said. “While we don’t have the majority of market share, we’re gaining market share in homeowners insurance.”

Overall the commercial insurance market made a huge rebound, which greatly benefited the independent agency system.

Independent agency carriers’ commercial premiums grew by 5 percent in 2011 compared to 2010 figures. Those same carriers captured $8.4 billion in additional premiums in 2011, which represents 74 percent of the entire $11.4 billion growth in that market, according to the study.

The report shows that commercial auto saw tremendous growth, growing  about 2.9 percent. Workers’ compensation also saw significant gains. “Those are two lines that have been sort of stagnant over the past several reports — they show a resurgence in our economy, we hope, and a growth for independent agents in the next couple of years,” said Flannagan.

Independent agency carriers grew premiums and/or market share in several states, the report said.

In commercial lines, independent agents are seeing some but not huge improvement in many states, Flannagan added.

Maine and West Virginia are the leaders in independent agency share of the commercial lines market. Maine and West Virginia had the highest market shares, at 86.2 percent and 85.7 percent respectively, and Delaware had the lowest share of commercial lines, at 60.2 percent.

While some states posted gains for independent agency carriers, it is a different story for some others.

“We’re beginning to see several states over the past couple of years beginning to lose some of their market share,” Flannagan said. The independent agency market share decreased by more than 1 percent in 11 states, including three states that were down by 2 percentage points or more.

Vermont was down 5 points to 79.7 percent, Kansas was down 2.1 percentage points to 72.1 percent, and Oregon dropped 2 percentage points to 63.9 percent. “They are dropping some market share in commercial lines,” she said.

In personal lines, independent agency carriers are losing ground in some northeast states where they have long enjoyed dominance.

“Independent agency companies had the largest market share (in the northeast),” she said. But now, “we’re beginning to see some declines in those areas brought on by regulatory changes in the marketplace and many more competitors.” States feeling the impact include Delaware, Maryland, Massachusetts, and Rhode Island.

States seeing some growth in personal lines market share include Florida where independent agents gained 1.2 percentage points to 41.1 percent, and Utah where they gained 1 percentage points to 28.2 percent. Minnesota was the only other state to gain 0.5 percentage points or more in personal lines, up 0.7 percentage points to 33.0 percent.

To listen to a podcast interview with Flannagan on the results of the “2013 Property & Casualty Insurance Market Share” visit www.InsuranceJournal.tv.

 

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Latest Comments

  • October 21, 2013 at 10:05 am
    Agent says:
    I guess Uncle Warren has never heard of Tier 1 & 2 in Texas. Carriers are avoiding that area like the plague. Anyone ever heard of Ike & Rita? Maybe GEICO will just... read more
  • October 19, 2013 at 7:17 am
    Christopher Paradiso says:
    you are spot on!Time to come together
  • October 19, 2013 at 7:16 am
    Christopher Paradiso says:
    Its amazing how we agents just sit back,well we should ban together and do something about as a good friend of mine says I will not let Progressive and or Travelers or any oth... read more
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