Independent P&C insurance agencies in the US – how are they doing?

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Independent P&C insurance agencies in the US – how are they doing? | Insurance Business America

Insurance News Independent P&C insurance agencies in the US – how are they doing?

Comprehensive study examines top concerns and challenges, and how firms are coping Insurance News By Terry Gangcuangco

US independent property and casualty insurance agencies are experiencing positive business conditions, even amid market challenges, according to the 2024 Agency Universe Study.

Conducted biennially, the study noted a significant rise in agencies reporting revenue gains, although the total number of agencies has slightly decreased since the 2022 report.

Released by Future One, a collaboration between the Independent Insurance Agents & Brokers of America (Big “I”) and major independent agency partners, the study offers a look at the independent agency system. It covers a range of metrics, including agency size, revenue sources, product diversity, and technology adoption.

According to the report, the number of independent P&C agencies in the US dropped to 39,000 in 2024, down from 2022’s 40,000. The reduction was partly attributed to mergers and acquisitions, as well as perpetuation challenges, with one-third of agencies anticipating ownership changes within the next five years.

Meanwhile, even with a challenging market, 75% of agencies reported revenue gains in 2024, up from 62% in 2022. Personal lines saw notable growth, with 72% of agencies reporting increases (up from 60% previously), while commercial lines also rose, with 68% of agencies reporting growth, compared to 57% in the previous edition.

The study revealed that 56% of agents identified the hard market and the need to develop effective customer communications around coverage changes as a top priority. Identifying operational efficiencies was deemed the most important factor, with 63% of agents emphasizing it.

With independent agencies working with an average of 17 carriers, 68% of respondents felt that carriers were managing market challenges moderately well, while 21% expressed dissatisfaction with carrier performance. Moreover, 56% said finding committed carriers was their top challenge, significantly up from 31% in 2022.

The 2024 study also showed a marked increase in digital tool adoption, with 70% of agencies now using e-signature tools, up from 61% in 2022. Other tools, such as direct bill commission statements, also saw an uptick in usage. However, technology challenges remain, with agents frequently citing difficulties in managing multiple carrier interfaces and effectively marketing their agencies online.

Social media remains a significant marketing tool, with 56% of agencies using it primarily for brand building (87%) and attracting new prospects (79%). Despite a slight dip from 62% in 2022, platforms like Facebook, LinkedIn, and Instagram are still widely used.

Notably, agencies are increasingly concerned about competition from direct-to-consumer channels, with one-third expressing worries over how direct purchases of personal and small commercial lines from insurers or online platforms could affect their business. Nonetheless, nearly half of the respondents believe that independent agencies are resilient to such marketplace changes.

Big “I” president and chief executive Charles Symington stated: “The 2024 Agency Universe Study once again shows the independent agency channel’s capability to adapt and overcome challenges, as agents across the US continue to improve operations and client communications during the hard market, even with the difficult headwinds they have confronted.”

First launched in 1983, the Agency Universe Study has been conducted biennially since 2002. For the 2024 edition, 1,269 independent agency respondents participated. The research was carried out by Zeldis Research in collaboration with Future One.