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
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Jul 10, 2024 - Revenue Increases
                              • Insurance agency and brokerage revenue increased 9.8% year over year and 1.8% quarter over quarter in the fourth quarter of 2023, according to the US Census Bureau. Insurance agencies and brokerages slightly increased prices during the first four months of 2024, according to the US Bureau of Labor Statistics (BLS). Insurance agency and brokerage industry employment increased slightly during the first four months of 2024 while wages for nonsupervisory employees increased moderately, according to the BLS.
                              • A majority of agency employees who responded to a survey conducted for Vertafore's 2024 Insurance Agency Workforce Report said that they plan on staying in insurance at least six years. Many workers have already had a long career in the industry, with just over half having been in the industry more than 20 years. More than half of agency workers said that they are experiencing increased stress and a heavier workload.
                              • The US homeowner insurance segment posted its worst underwriting results in over a decade in 2023, according to S&P Global Market Intelligence. Homeowner insurers saw net underwriting losses of about $15 billion in 2023 compared to about $5.9 billion during the prior year, excluding state-backed insurers of last resort. The net underwriting losses occurred despite higher rates across the US. Inflationary pressures, a major wildfire in Hawaii, and a record-breaking number of billion-dollar loss events from convective storms negatively impacted industry results, according to S&P.
                              • A record number of auto insurance customers are in the market for a new policy, according to the J.D. Power 2024 US Insurance Shopping Study. Increased premiums and lackluster customer satisfaction scores are driving customers to actively shopping for a new plan. US auto insurance prices have jumped 22.2% year-over-year through the end of February, more than any other category of household expenses measured in the US Department of Labor Statistics Consumer Price Index. About 29% of the 49% of auto insurance customers who have actively shopped for a new policy in the past year have switched carriers. Switch rates are highest among members of Generation Z, those aged 29 and younger, according to the J.D. Power report.
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