Independent Agent Market Positioned for Growth
After years of market contraction, all P&C insurance premium lines grew, and agencies and brokers could capture a substantial piece of the market going forward, according to market share study.
Insurance Networking News, March 12, 2013
After years of market contraction, all property/casualty insurance premium lines grew, and independent agencies and brokers (IAs) are well positioned to capture a substantial piece of the market going forward, according to the Independent Insurance Agents & Brokers of America’s (IIABA) “2013 Market Share Study.” The study, based on 2011 industry market share and company expense data supplied by A.M. Best Company, reveals that many regional and national IA carriers expanded their market shares by double digits, overall IA shares grew in several states and regional IAs outpaced market growth in many business lines across the country.
“This annual study provides the most accurate picture of what is occurring with property casualty insurance distribution because it separates out the direct response companies from the captive agency companies,” said Madelyn Flannagan, IIABA VP of agent development, education and research. “A.M. Best separates out the affiliates of groups which use different distribution systems and places these affiliates in the appropriate distribution category wherever the company group uses separate affiliates for this purpose.”
Personal Lines. IAs still control a majority of the P&C market, writing 57 percent of all premiums, including a third of all personal premiums. IAs outperformed captive agencies carriers in personal lines and grew premiums by nearly the same amount as direct response carriers largely due to impressive performance in homeowners, where IAs outperformed the captive agencies.
Commercial lines. IAs’ commercial premiums climbed by 5 percent in 2011. IA carriers also captured $8.4 billion in additional premiums in 2011, which represents 74 percent of the $11.4 billion growth in that market. IAs’ commercial insurance sales grew $11 billion (5-percent more than 2010).
IIABA acknowledges that while IAs as a group may have higher efficiency ratios compared with captive and direct writers, there are several IA carriers with personal auto efficiency ratios that rival these challengers, concluding that management, not the model itself, is the key driver.
IIABA’s president and CEO, Bob Rusbuldt said this improvement indicates the independent insurance agency system remains stable, strong and growing. “Many carriers that weathered the storm of market contractions for several years were able to successfully bounce back.”
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