Independent agents and brokers are capturing an increasing share of both the personal lines and commercial lines markets, the Independent Insurance Agents & Brokers of America’s (IIABA) annual market share study confirmed.
“The premium growth of the independent agency system is steadfast and dynamic,” IIABA President Cloyce Anders said. “These latest figures confirm independent agents and brokers’ continuing domination of the commercial lines market and the reverse of previous trends in personal lines, where the agency system is generating its most significant market gains in recent years.”
IIABA contracts annually with A.M. Best Company to assess the state of the independent agency system with year-end industry market share and company-expense data. A.M. Best’s 2001 figures depict that “the market share trends and company-expense comparisons point to a time of unprecedented opportunity for independent agents and brokers,” IIABA concludes in its report.
The independent agency system finished 2001 with a 74.96 percent share of the commercial lines market, up 1.71 points from the previous year. The increase yielded $2.9 billion in additional premium volume to the independent agency system. Independent agents and brokers wrote 82.22 percent of the commercial auto and 80.70 percent of the commercial multiple-peril markets, both up from 2000 figures.
The independent agency system’s share of the overall commercial market is actually even higher, but is artificially reduced due to A.M. Best’s categorization of the California State Compensation Fund as a captive-agent company despite placement of most of its premium volume ($3.6 billion) by independent agents and brokers. Even without this amount factored into their data, independent agents and brokers still captured 68.85 percent of the workers’ compensation market.
In personal lines, independent agents and brokers added 1.47 points of market share, taking them above the 35 percent mark for the first time in several years. This growth added $2.5 billion in written premium at the expense of captive-agent writers.
“Independent agents and brokers have done an extraordinary job winning back market share in personal lines, especially during this period of vulnerability for captive-agent companies,” IIABA CEO Robert Rusbuldt commented. “Consumers are increasingly recognizing that independent agents and brokers are the best when it comes to taking the time and energy to help them understand their policies and the options available to them.
“Independent agents and brokers offer clients a wider choice of personal lines products, consistently recommend cost-cutting ideas, and stand by their clients when a loss occurs,” Rusbuldt continued. “Factor these attributes along with independent agents and brokers’ keen ability to work closely with a variety of insurance companies, and we believe the independent agency system should realize even more personal lines market share growth in future years.”
State-by-state data shows that Massachusetts independent agents and brokers have the highest shares in both commercial lines (85.73 percent) and personal lines (77.89 percent). In the commercial lines market, independent agents and brokers write more than 80 percent of the policies in nine states and the District of Columbia, and hold between 75 and 80 percent market share in 23 other states.
Vermont, Maine, Ohio and New Hampshire round out the top-five state personal lines market shares for independent agents and brokers, each writing between 50 and 61 percent. An additional 11 states have more than a 40 percent share. However, opportunity for growth exists in 23 states where independent agents and brokers have only 20 to 30 percent of the personal lines market share.
The personal lines and commercial lines markets as a whole showed steady growth in 2001. Commercial lines grew 16.5 percent to $169.9 billion in direct written premium, surpassing personal lines for the first time in several years. Personal lines realized 8.2 percent growth to finish the year at $169.4 billion.
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