2002 Agency Universe Study Reveals Trends in Industry

September 25, 2002

The Independent Insurance Agents & Brokers of America (IIABA) released preliminary results of the Future One 2002 Agency Universe Study, highlighting current demographic trends among independent agents.

The study was previously conducted every four years, and now is conducted biennially to reflect the ever-changing trends of the market.

“The increased frequency will allow us to better gauge and respond not just to the dynamic changes in the industry but also to the subtle new trends,” IIABA CEO Robert Rusbuldt stated in a press release. “As we have known for years, the independent agency system is in the midst of resurgence. The influx of new products, carrier innovation and consolidation trends have helped establish solid, technology-driven financial services firms that offer consumers the products they want with the personal approach and customer service they desire.”

Among the most significant findings of the study is the
increasing size of agencies, both in staff and in revenue,
according to Madelyn Flannagan, IIABA vice president of education
and research. “We’re seeing the agencies in the $2.5 million
revenue range become sort of middle-of-the-road. Where that used
to be the beginning of our larger agencies, that is now sort of
the middle,” Flannagan told Insurance Journal.

Flannagan attributed the increase to the many mergers and
acquisitions taking place in the industry and over the last couple
of years, which she said was a good thing. She noted the
trend has been consistent over the past six years or so, as shown
in the past two Agency Universe Studies.

Another prominent finding in the study was the increase in
transitions of ownership, which reported one in seven agencies had
changes in ownership over the past two years, including four
percent that both added and lost principals. Flannagan saw this
increase as a positive move for the agencies. “I do think that for
small towns, it makes sense for agents to merge together,” she
said. “There are only so many markets that can be available in any
small town.” The mergers allow for agencies to offer their
consumers a variety of markets.

The study also rated agents’ satisfaction with customer
service centers, and the response was neutral when measuring the
agents altitudes with regards to the center. Fifty-two percent of
personal lines agents said they were satisfied with the call
centers, versus only 46 percent of commercial lines agents.

“I think from an efficiency standpoint the companies believe [call
centers] are a great thing,” Flannagan said. “I think they’re
discounting the fact that consumers want to deal with somebody
they know and they feel comfortable with. Service centers can’t
provide that warm, fuzzy feeling you get with our own agent. I
think their [agents] client reactions’ have sort of gauged their
reactions.”

Finally, the study revealed an increasing presence of younger individuals leading independent agencies, and within those
agencies, almost 40 percent are involved in niche or target
marketing. “I don’t think we’ve found any surprises in the young
agents attitudes,” Flannagan added. “They, of course, were much
more geared towards technology and growth. We are also very
pleased to see that more women are entering the agency ranks,
especially as agency owners.”

“With the niche and target markets, a lot of agents are
involved in that, and have been for many years. They’ve become
specialists, and that’s a good thing,” Flannagan said.

A full report of the study will be available next month.

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