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
Recent Developments
Nov 15, 2023 - Firms Have Increased Prices
- Insurance agencies and brokerages began cutting prices in late 2023 after slightly increasing them earlier in the year. Labor costs have increased, as industry employment and wages for nonsupervisory employees increased slightly during the first eight months of 2023.
- The global cyber insurance market is set to witness substantial growth, estimated at $42.81 billion from 2022 to 2027, according to research and advisory firm Technavio. North America is expected to lead the growth, accounting for 57% during the forecast period. The high adoption of technologies, the upsurge in online transactions, and the expansion of the e-commerce sector are the primary catalysts propelling the cyber insurance market in North America.
- Rising building material costs, continuing supply chain issues, rising insured losses related to extreme weather, and ongoing labor shortages are driving up home insurance costs, according to the Insurance Information Institute (III). These trends and population shifts into disaster-prone locales predate the pandemic and are unlikely to go away after COVID-19 and its disruption of the global economy fades into history, according to the III. Damage from tornadoes, hurricanes, severe storms, wildfires, floods, and other natural disasters reached $92 billion in 2021, bringing the total from 2017 through 2021 to more than $400 billion, according to the III. Average insured natural catastrophe losses have risen nearly 700% since the 1980s.
- There were 359 announced insurance agency mergers and acquisitions in the first half of 2023, down 24% from 475 in the same period in 2022, according to OPTIS Partners' M&A database. It was the lowest first-half total since 2020 but was equal to the previous five-year average. "The drop-off in deal count continues as we move through 2023, which isn't surprising anyone if for no other reason than the cost of capital has increased so much," said Steve Germundson, a partner at OPTIS Partners, an investment banking and financial consulting firm specializing in the insurance industry.
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