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

                              Mar 9, 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.
                              • 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.
                              • About 95% of 381 metropolitan statistical area (MSA)-level commercial health insurance markets were highly concentrated in 2022, according to the US Department of Justice and the Federal Trade Commission. One health insurer held a market share of at least 50% in 48% of MSAs. “High market concentration tends to lower competition among health insurers, which can harm patients by raising insurance premiums above competitive levels,” said AMA President Jesse M. Ehrenfeld, MD, MPH.
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