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 122,000 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 $1.4 million annually.

    • The insurance agency and brokerage industry includes 122,000 companies that employ about 927,600 workers and generate about $172 billion annually.
    • For property/casualty insurance, "direct writers" (captive agents, direct sales via Internet, and affinity groups) account for 54% of sales and "agency writers" (independent agents and brokers) account for 46%, according to A.M. Best.
    • Direct writers account for about 65% of personal P/C insurance sales, while agency writers account for 77% 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

                              Apr 1, 2024 - Firms Cut Prices
                              • Insurance agencies and brokerages began cutting prices in late 2023 after slightly increasing them earlier in the year, according to the US Bureau of Labor Statistics (BLS). Labor costs have increased, as industry employment and wages for nonsupervisory employees increased slightly during 2023, according to the BLS.
                              • The US property and casualty insurance industry entered 2024 with strong momentum, according to Swiss Re Institute. Profitability was below insurers' cost of capital in 2023 but strong premium increases, easing claims cost inflation, and higher investment returns began boosting industry results by the second half of the year. These trends are expected to continue in 2024, supporting profitability improvement. The loss ratio on personal lines was 21 percentage points higher than on commercial lines during the first 9 months of 2023 but the gap is expected to narrow in 2024. Personal lines premiums are growing faster and easing economic inflation primarily benefits personal lines claims costs, while social inflation mostly impacts commercial lines. Swiss Re Institute forecasts industry return on equity at 9.5% in 2024 and 10.0% in 2025, supported by premium growth of 7.0% and 4.5% respectively in these years.
                              • Agents are prioritizing communication and investing in educating clients during the current insurance hard market, according to a survey conducted by the Trusted Choice network of independent insurance agents and brokers. Some 65% of agencies have increased their communication to policyholders, 85% of those through email and 77% by phone. About 21% are increasing paid advertising spending, 47% are putting more effort toward community involvement, and 75% are offering more educational content to clients. About 27% of agencies put more resources into marketing, although 18% cut their marketing expenditure, saying that they are using other ways to reach clients and prospects.
                              • All 10 of the top US auto insurers raised rates by double digits in 2023, according to S&P Global Market Intelligence’s RateWatch. All but two—GEICO and Allstate—ended the year with higher rate increases than the prior year. The duo was among insurers that raised auto rates the most in 2022, however. It was the second year in a row that nationwide rate changes were above an average of 10%, pushed by increases above that mark in 43 states and the District of Columbia. The nationwide rate hike for 2023 averaged 14% after an average increase of 11.4% for the US in 2022.
                              Get A Demo

                              Vertical IQ’s Industry Intelligence Platform

                              See for yourself why over 60,000 users trust Vertical IQ for their industry research and call preparation needs. Our easy-to-digest industry insights save call preparation time and help differentiate you from the competition.

                              Build valuable, lasting relationships by having smarter conversations -
                              check out Vertical IQ today.

                              Request A Demo