Insurance Agencies & Brokerages

The 120,430 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.

Aug 10, 2026 - Auto Insurance Claims Increasingly Close Without Payouts

• Auto insurers are increasingly closing claims without making payments, particularly for liability and medical coverage, according to the Wall Street Journal. In 2025, 45% of resolved auto liability and medical claims resulted in no payment, up from 35% in 2016, based on analysis of regulatory filings. Liability and medical claims are more complex, costly and prone to disputes than vehicle-damage claims, which have maintained stable payment rates. Insurers attribute rising nonpayment rates to fraud, litigation, higher deductibles and tighter claim controls, while consumer advocates say carriers are becoming more aggressive in limiting payouts. Insurers are also increasing scrutiny of policy requirements, such as whether all regular or household drivers have been disclosed. State Farm recently strengthened its policy language after estimating that undisclosed driver accidents cost the company nearly $1.5 billion annually. Nonpayment rates vary by insurer and state, reflecting differences in policy terms, deductibles, regulations and litigation environments.
• After nearly nine years of steadily rising commercial insurance premiums, agencies and brokerages are entering a much different market. The Council of Insurance Agents & Brokers reported that average commercial property and casualty premiums fell 1.2% in the first quarter of 2026, the first decline since the third quarter of 2017 and the end of a 33-quarter streak of increases. Large commercial accounts saw premiums fall 2.7%, while medium-sized accounts declined 1.9%; small business accounts posted a modest 1.1% increase, down sharply from the previous quarter. Commercial property premiums dropped 5.5% as carrier capacity expanded, and cyber insurance rates fell 3.5%, while commercial auto remained an outlier with premiums rising 5.8% for a 59th consecutive quarter. As insurers compete for business, agencies can no longer rely on premium inflation to boost revenue and are refocusing on new business development, retention, and cross-selling additional coverage.
• Insurance carriers that trim claims staff to reduce expenses may save money initially, but the strategy can drive up costs over time. According to Insurance Thought Leadership, experienced adjusters are central to an insurer's financial performance because they investigate losses thoroughly, negotiate fair settlements, and resolve claims more efficiently. When adjusters are overloaded, claims often take longer to close, settlement decisions become less consistent, and the risk of litigation and bad-faith allegations increases. Those delays can also frustrate policyholders and make it harder for insurers to retain customers and employees. AI can help automate routine administrative work, but it cannot replace the judgment, communication, and negotiation skills needed to handle complex claims. As a result, investing in skilled claims professionals remains one of the most effective ways to control long-term claims costs and improve customer outcomes.
• State Farm is overhauling how it pays its roughly 19,000 captive agents, replacing a compensation model built on renewals with one that ties pay to new sales and production goals. It’s also eliminating or reducing longstanding benefits, although it softened some of the cuts after agents warned earnings could fall by 30% to 40%. The shift reflects a broader push across the industry to lower costs and rely more heavily on technology, but it raises questions about the future of the traditional captive-agent model. The changes come as State Farm is already under intense scrutiny after securing approval for a major California homeowners insurance rate increase following billions of dollars in wildfire losses. The company also continues to face criticism over its underwriting decisions, financial challenges, and claims handling, leaving it to navigate a difficult balancing act between restoring profitability and maintaining the trust of agents, regulators, and customers.

Industry size & Structure

A typical insurance agency or brokerage operates out of a single location, employs about 7 workers, and generates $1.7 million annually.

• The insurance agency and brokerage industry includes 120,430 companies that employ about 807,000 workers and generate about $207.1 billion annually.
• Direct writers account for about 37% of personal P/C insurance sales, while agency writers account for 62% of commercial P/C insurance sales.
• Independent agents account for 53% of new life insurance sales, captive agents account for 38%, while direct marketers and others (such as stockbrokers) make up the rest.
• 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.