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
Mar 10, 2025 - Tariffs Would Raise Home, Auto Premiums
- The Trump administration’s threatened steep tariffs on Mexican, Canadian, and Chinese goods will see ripple effects and price increases downstream into the insurance market, according to industry experts. If lumber, steel, aluminum, and semiconductors from those three countries are subjected to double-digit tariffs, insurance underwriters will pass those costs on in the form of soaring premiums. Canada accounts for half of all US wood imports and 20% of metal imports. Added tariffs will cause home repair costs to soar given the more expensive materials needed, and insurers will raise premiums as a result. The same situation will play out in the auto industry - if the estimated cost of repairs and claims rises due to tariffs, so will customer premiums. Insurify, an insurance comparison site, estimates an 8% rise in auto premiums in 2025 as a result of tariffs.
- Employment for insurance agencies grew by 4.2% year over year in December 2024, according to the US Bureau of Labor Statistics, which continues a steady trend of growth throughout the year. Employment is expected to level off in 2025 as insurers shift focus to revenue growth, per the annual Insurance Labor Market Study conducted by Jacobson Group and Aon. The report surveyed insurers with more than 200K employees and found 74% expect a focus on the bottom line versus 55% who intend to grow staff and 12% who plan to actually cut staff. Looking back on those stats for the past ten years, those numbers typically rise or fall together, but have consistently diverged since the pandemic. The report cites less underwriting from insurers, which translates into less claim processing, and continued climate-driven market exits by insurance companies as threats to hiring in 2025.
- 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.
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