Study Reveals Stability and Growth in P-C Insurance Market

Independent insurance agents continue to outperform captives in several areas.

This is the 19th year the Big “I” has contracted with A.M. Best Company to receive 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.

“The Big ‘I’ is pleased to announce that the independent insurance agency system continues to be stable, strong and growing,” says Bob Rusbuldt, Big “I” president & CEO. “Among the many pieces of good news the study revealed are that all property-casualty (p-c) insurance premium lines grew for the third year in a row, bouncing back from their recession-driven low points in 2010. After three years of strong growth, both personal and commercial lines have exceeded prerecession volumes, and combined are now generating $532 billion in annual premiums. Combined, the market grew by $25 billion in 2013 over 2012 levels.”

The Market Share Study revealed that at both the state and carrier level, independent agents and brokers were well poised to capture their share of the market or more. Also, IAs grew faster than the overall market and thus increased market share in about half of the states and the District of Columbia. Furthermore, several IA carriers increased their market shares by substantial amounts. However, there was a significant divergence between the national and regional carriers in terms of growth.

“This annual study provides the most accurate picture of the state of p-c insurance distribution for several reasons,” says Madelyn Flannagan, Big ‘I” vice president of agent development, education and research. “We separate the direct response companies from the captive agency companies which offers the most accurate picture of changes in p-c insurance distribution year after year. As well, we look at each line on a state-by-state basis, and also segment the IA system by national vs. regional carriers. This thorough analysis of the data continues to offer a very detailed view of the overall p-c marketplace and provides insight into areas of opportunity for the IA channel.”

Other findings from the Market Share Study include:

IAs still control a majority of the entire p-c market, writing nearly 57% of all premiums.
IAs write nearly 35% of all personal lines premiums.
IAs still dominate commercial insurance sales, writing nearly 80% of a market that has grown by more than $35 billion over the last three years.
IAs grew market share in 23 states and the District of Columbia. In many states, they dominate both personal and commercial lines. That suggests IAs in other states have an opportunity to add share in more lines if they put a renewed focus on it.
IAs can be as efficient as other models. In the lucrative personal auto market, both regional and independent insurance agency writers average better expense ratios than the captive agency model. Furthermore, nearly a dozen IA companies rival or beat direct response writers on this key expense efficiency metric.
Personal auto premiums written by IAs grew nine times more in both 2013 and 2012 than they did in 2011. IAs increased premiums by $1.8 billion in both 2012 and in 2013—versus the mere $200 million growth figure reported in 2011.
Many Big “I” Best Practices agencies continued to grow in the face of the weak economy and are doing well now that the p-c market appears to have turned around. Agencies that are easy to do business with, leverage technology, focus on market segments and emphasize the Trusted Choice® brand, have the potential to enjoy robust growth in every state and every product line.

All of the data in the Big “I” report come from A.M. Best and is printed with its permission. More information on the study is available by request or online at: www.independentagent.com/Resources/Research/MarketShareReport?.

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 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. www.independentagent.com?.