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Study Reveals State of Property-Casualty Insurance Market

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ALEXANDRIA, Va., March 9, 2009 — The results of the 2007 market share study by the Independent Insurance Agents & Brokers of America, Inc. (the Big “I) reveal that independent agents and brokers continued to hold their market share despite the weakened economy.

This is the 13th 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 assess the state of the independent agency system.

 “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, Big “I” 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.”

The overall property-casualty 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% in 2006, on the heels of less than 2% 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% overall.

Independent agents and brokers (collectively “IAs”) are responsible for generating nearly $6 of every $10 in the industry’s overall p-c premium revenue. 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 IAs held steady at just under 60% of the overall property-casualty premium pot. 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,” notes 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.

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.
           
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