ALEXANDRIA, Virginia, Oct. 26, 2016—The number of independent insurance agencies has remained stable, and the system as a whole is dynamic as business conditions continue to improve and embrace technology, according to the 2016 Agency Universe Study (AUS).
Future One, a collaboration of the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) and leading independent agency companies, has released key findings from the recently completed, most comprehensive look at the independent agency system.
“The 2016 Agency Universe Study reveals good news for the independent agency system, including a stable business environment, improving business conditions, and changes in client communication with improved technology and social media,” says Robert Rusbuldt, Big “I” president & CEO. “The independent agency system remains an evolving distribution system that is resilient, growing and prepared to deal with marketplace challenges.”
The study looks at many statistics about independent agencies operating in the U.S. including their numbers, revenue base and sources, number of employees, ownership, mix of business, diversification of products, technology uses, non-insurance income sources and marketing methods.
“The Agency Universe Study confirmed much positive news about the independent agency system, but also revealed some challenges,” says Madelyn Flannagan, Big “I” vice president of agent development, education and research. “For several years there was an increase in minority and women-owned agencies, but the 2016 study revealed that non-white agency principals continue to be under-represented in the independent agency universe. The Big ‘I’ is committed to increasing its outreach efforts and working with others in the industry to address this issue.”
Other key findings of the 2016 Agency Universe Study include:
• The number of independent agencies is stable. In 2016, the estimated total number of independent property/casualty agents and brokers in the United States stands at 38,000. This represents a small decrease relative to 2014 that presumably reflects the current M&A environment as well as the relatively stable rates of exclusive agency conversions and new agency formation. Since 2004, the estimate has fluctuated between 37,500 and 39,000. (All of these estimates are rounded to the nearest 500.)
• Business conditions remain favorable. Business conditions have been favorable for the past several AUS waves. In fact, the 74% of agencies that saw increases in revenues between 2014 and 2015 report higher percentage increases than those reported in 2014 (averaging a 23% increase, versus 19% in 2014).
• More social media; less print marketing. Social media use is on the rise, with less reliance on print marketing strategies. About 56% of agencies included social media/digital marketing in their 2015 marketing activities, up from 48% in 2013. Facebook and LinkedIn are the social media channels used most frequently, although 9% of agencies use Google+ “often” and 6% use Twitter “often.” Digital strategies appear to be particularly prominent among newer agencies, including social media outreach, paperless communication efforts and texting with clients.
The 2016 Agency Universe Study used a combination of sources to arrive at the distribution of agencies by size. Agencies range from one‐person operations with less than $100,000 in insurance revenue to nationwide operations with more than $25 million in insurance revenue. These differences in size are closely related to many other differences among agencies, such as number of carriers, use of intermediaries, and mix of business. For purposes of the analysis, size is defined in terms of self‐reported insurance revenue. Six categories that have proven in prior years to differentiate agencies are used again in 2016.
The 2016 Agency Universe Study is the twelfth in a series that was first conducted in 1983. Subsequent studies were released in 1987, 1992, 1996 and 2000. Since 2002, the study has been completed biennially. Since 2004, the Agency Universe Study has relied on Internet data collection. In total, 1,972 respondents were included in the study—1,420 who completed the entire questionnaire and 552 who completed at least the first two key sections.
To order a copy of the 2016 Agency Universe Study Management Summary, which provides an overview of the highlights from the complete study, click HERE or visit www.independentagent.com.
In addition to the Big “I”, the Future One coalition includes the following company partners: Allstate Insurance, Allstate Independent Agents, Amerisure Insurance, Central Mutual Insurance Companies, Chubb, CNA, Encompass Insurance, Erie Insurance, Foremost Insurance, The Hartford, Liberty Mutual Insurance, Nationwide Insurance, Progressive, Safeco Insurance, Selective Insurance Company of America, Travelers and Westfield Insurance.
Founded in 1896, the Independent Insurance Agents & Brokers of America (IIABA or the Big “I”) is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of approximately a quarter of a million 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, health, employee benefit plans and retirement products. Web address: www.independentagent.com.