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 123,700 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 7 workers, and generates $1.2 million annually.
- The insurance agency and brokerage industry includes 123,700 companies that employ about 853,400 workers and generate about $153 billion annually.
- For property/casualty insurance, "direct writers" (captive agents, direct sales via Internet, and affinity groups) account for 46% of sales and "agency writers" (independent agents and brokers) account for 54%, according to A.M. Best.
- Direct writers account for about 64% of personal P/C insurance sales, while agency writers account for 76% of commercial P/C insurance sales.
- Independent agents account for 49% of new life insurance sales, captive agents account for 38%, direct marketers for 7%, and others (such as stockbrokers) for the remaining 6%.
- 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
Nov 12, 2022 - Industry Is An Easy Fraud Target
- Insurance fraud can cost up to $309 billion a year, according to the Coalition Against Insurance Fraud (CAIF). Fraud comes in many forms, such as misrepresenting facts on an insurance policy to receive a lower premium, exaggerating an injury in the hopes of gaining additional benefits, and large-scale organized fraud whereby organized international criminal groups and terrorist cells launch highly detailed campaigns targeting specific insurance carriers. CAIF cites the insurance system's gaps in how claims are processed, which make it a very easy target, as a key cause of the high cost.
- Agent satisfaction with insurers of both commercial and personal lines is at an all-time high, according to J.D. Power’s 2022 U.S. Independent Agent Satisfaction Study. Overall satisfaction among personal lines agents is 757, up seven points from 2021, while overall satisfaction among commercial lines agents is 756, up 16 points from 2021. The largest gains in commercial lines satisfaction are in product offerings and risk appetite, support and communication, quoting, and commission.
- The marine insurance industry is preparing for an increase in multidimensional risk across product lines, according to industry experts who spoke at the 2022 Marine Insurance Americas conference. Rising inflation, which increases the cost to settle valid marine casualty and damaged cargo claims, is among the most prominent emerging risks. Another challenge is that the industry no longer benefits from a low interest rate environment that began in 2008. “Money has been free since 2008. It is changing,” said Sean Dalton, executive vice president, head of marine insurance at Munich Re. Mitigating the impact are increasingly successful efforts by insurers to convince appeals courts to overturn or reduce what carrier defendants claim are excessive awards.
- Dozens of state and federal courts have uniformly ruled that an insurance policy’s standard coverage for lost business due to property damage does not apply to pandemic-related revenue loss. Many plaintiffs have alleged that pandemic-related closure orders issued by government officials are tantamount to a physical loss due to the actions of a civil authority, but such arguments have been rejected. Allegations of losses caused by a virus have not fared as poorly. State courts have denied insurers’ motions to throw out a case alleging financial losses caused by the virus more than 20% of the time, according to litigation tracker created by a University of Pennsylvania law professor.
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