Insurance Agencies & Brokerages
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 123,000 insurance agencies and brokerages in the US act as the “sales arm” of the insurance industry. Insurance agencies represent insurance carriers and sell policies to customers looking to minimize risks. “Captive” agents are affiliated with a single carrier. Independent agents may represent a variety of carriers. Brokers represent customers, and work with multiple carriers to determine the policy that best fits customer needs.
Cyclical Sales
The insurance industry is cyclical and premiums vary considerably depending on market conditions.
Government Regulation
Government regulation can affect insurance premiums, coverage, and commissions.
Industry size & Structure
A typical insurance agency or brokerage operates out of a single location, employs about 8 workers, and generates $1.6 million annually.
- The insurance agency and brokerage industry includes 123,000 companies that employ about 963,000 workers and generate about $191 billion annually.
- "Direct writers" (captive agents, direct sales via Internet, and affinity groups) account for 51% of total property/casualty insurance sales and "agency writers" (independent agents and brokers) account for 49%, according to A.M. Best.
- Direct writers account for about 67% of personal P/C insurance sales, while agency writers account for 74% of commercial P/C insurance sales.
- Independent agents account for 52% of new life insurance sales, captive agents account for 38%, direct marketers for 6%, and others (such as stockbrokers) for the remaining 4%.
- The industry is highly fragmented with the top 50 firms accounting for 28% of industry sales.
- Large companies include Marsh & McLennan Companies, Aon Corporation, and Arthur J. Gallagher.
Industry Forecast
Insurance Agencies & Brokerages Industry Growth
Recent Developments
Feb 10, 2025 - Revenue Up But Profits Squeezed
- Revenue for the insurance agency and brokerage industry surged 14.5% in the third quarter of 2024, according to the US Bureau of Labor Statistics. It is a familiar tune in the industry with quarterly revenue increasing each year since the lows of the pandemic in mid-2020. Profits, however, have been harder to come by. Increased claim losses from natural disasters brought on by climate change - and the propensity of consumers to keep building in disaster-prone areas - have hammered insurance companies across the industry. According to reinsurer Swiss Re, losses related to storms in the US have increased 8% each year for more than a decade. Policyholders who live in areas with increased threats of hurricanes, thunderstorms, or wildfires face continued rising premiums, possible policy cancellations, and stricter policy conditions.
- The devastating Los Angeles wildfires in January 2025 brought to light coverage gaps in the insurance industry resulting from increased natural disasters across the US. Estimates from the University of California put the total damage costs at about $20 billion, which could affect the profitability of the entire industry in 2025. California is the country’s largest insurance market, but with wildfires, earthquakes, and flooding becoming more frequent, insurers such as State Farm have either stopped offering coverage altogether or capped coverage amounts. Insurers cancelled almost 3 million California homeowner policies between 2020 and 2022, almost half of them in LA county per the state insurance commission. This forced many property owners to rely on the publicly-run California FAIR Plan Association, the insurer of last resort in the state. Unfortunately for displaced homeowners, FAIR has a history of insufficient reimbursement amounts and a lack of transparency.
- Traditionally regulated insurers are leaving the market high-risk areas, and thinly capitalized companies that don’t meet normal regulatory standards are filling the gap, according to former Federal Reserve governor Sarah Bloom Raskin. Banks, which require homeowner insurance, accept this form of insurance because banks and other mortgage lenders seldom hold onto the mortgage paper, according to The American Prospect. The market share of homeowner insurance in Florida provided by these lightly regulated insurers grew to 50 percent by 2018, according to a Harvard Business School (HBS) report titled When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets. A new, nontraditional rating agency called Demotech gives these companies high ratings. At least 15 of these Demotech-approved insurers became insolvent during the period of the HBS study, according to Professor Ishita Sen, one of the report authors.
- US juries ordered companies in 47 different industries to pay a nuclear verdict — a jury award exceeding $10 million — in 2023, according to Marathon Strategies. There were 89 cases with verdicts of more than $10 million in the US, the highest in 15 years and a 27% increase since 2022. Of those, 27 cases topped $100 million, eight topped $500 million, and two were in excess of $1 billion. The latter are referred to as “thermonuclear verdicts.”
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