ALEXANDRIA, Va., May 7, 2007—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.
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 asses the state of the independent agency system.
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 % to $250.28 billion, with written-premium growth of just under $4 billion. Though their commercial lines market share dropped slightly (from 80.22% to 79.97%), 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%, adding $1.7 billion in personal lines premium. Using the strength of huge advertising campaigns, direct writers gained a half point in the personal lines market. While national independent agency companies lost 2.3% of that market, regional independent agencies 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. Each model will try to capture a larger share of the market at their competitor’s expense. In this environment, 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.
All of the data in IIABA’s report comes from A.M. Best and is printed with its permission.
Big "I" members can obtain a copy of the full report on the Big "I" Virtual University . If you don't know your User ID or Password, e-mail your name, agency name and address to firstname.lastname@example.org to obtain log in information. For non-IIABA members, subscriptions to the Big "I" Virtual University are available.
Founded in 1896, the Big “I” is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.