By George Williams, Associate Editor
From AA&B May 1985
More computers, fewer companies and a renewed emphasis on personal lines. These in a nutshell, are some of the more prominent trends suggested by the responses to the 1985 American Agent & Broker Readership Survey. For the first time, a majority of our survey respondents indicated they have an in-house computer of some kind. Meanwhile, the percentage of respondents representing 10 or more companies took its steepest drop in years, and the percentage of respondents who work in the predominantly commercial-lines agencies slid by more than 10 points.
Each year, American Agent & Broker polls its readers to maintain an accurate profile of their business operations and to keep up with their varied and changing interests. The findings help the editors select features for the magazine and provide feedback for its columnists. The 1985 survey was sent to 1,180 readers selected at random from our total circulation. Two follow-up mailings were conducted to reduce non-response bias. These efforts resulted in 609 returned questionnaires, a 51.6% response.
The effect of the tight market was evident in many of the survey's findings. Readers, as always, indicated they were looking for ways to write more business. This year, 83% of the respondents expressed "great" (as opposed to moderate or no) interest in articles dealing with property-casualty selling techniques. That topic has drawn an 80% or larger "great interest" response since 1979.
But readers obviously are concerned about finding markets for the business they want to write. The percentage of respondents expressing great interest in information about underwriting and placing business shot up to 52% in this years survey, up from 41% last year. The percentage of respondents with great interest in risk management subjects rose by three points to 31%.
The personnel and demographic characteristics of the readers' agencies changed little from last year. The great majority of respondents, 89%, are agency owners, partners or officers. Almost half of them, 46%, run agencies employing from three to six persons. Another 22% operate firms with seven to 15 employees. Fifty-two percent of the respondents work in agencies with three or more producers, up slightly from 48% last year.
The 1985 survey found 53% of the respondents doing business in marketing territories having 100,000 or more persons, including 20% who work in areas having populations of 1 million or more. At the other end of the scale, 36% of the respondents are located in markets with populations under 50,000.
Now let's take a look at what kind of year these agents had in 1984.
P-C production
Business appeared to be quite good for most readers last year. As rates rose, agents' volumes appeared to rise with them. Premium volume increases were noted by 73% of the respondents in 1984, up from 63% in 1983. But if companies were charging higher rates, they also were offering fewer incentives. This seemed to be reflected in the percentage of respondents who obtained bonus or contingency income in 1984. The figure fell slightly to 79% from 83% the year before.
The 1985 survey indicates that almost half our readers now state their premium volume in seven or more figures. Forty-nine percent of the respondents reported premium in excess of $1 million, up from 45% last year. The percentage reporting premium volume under $500,000 fell slightly to 27% from 29% a year earlier.
One of the more interesting findings concerned the respondents' mix of business, where a shift toward personal lines appeared evident. In this year's survey, 37% of the respondents indicated that commercial-lines business makes up more than half their volume, down from 49% last year. The percentage of respondents who indicated that commercial lines accounts for 20% to 50% of their volume jumped to 56% from 43% a year earlier. It includes the 9% of all respondents who said their book was "50/50."
Life Production
In 1984, agents continued to increase their sales of life and health insurance and related products, the survey indicates. Ninety percent of the respondents said they wrote some amount of life insurance, up from 87% last year. The 78% of respondents who said they wrote some kind of health coverage also represents a slight increase from last year. Almost a third of the respondents reported they sold employee benefits products in 1984, and 14% sold some kind of equity product.
The larger agencies, in particular, appeared to profit from life sales in 1984. Fifty-six percent of the respondents reported writing at least $100,000 of life business last year, about the same percentage as in 1983. But the percentage of respondents who generated $1 million or more in new life business rose to 29% from 20% a year earlier.
Agency Automation
The rapid pace of agency automation continued unabated in 1984. More than half of this year's respondents, 52%, said they now have some kind of in-house computer system, up from 40% last year. The leap of 12 percent age points nearly matched the record 13 percentage points increase registered between our 1983 and '84 surveys. In 1980, the first year we polled readers about automation, just 12% of the respondents said they had in-house systems.
Not surprisingly, the percentage of respondents using outside batch processing services was down this year (28%) from last (34%). The percentage has decreased steadily from a peak of 42% recorded in the 1981 readership survey.
This year's survey was the first in which we asked our automated readers how they were using their systems. The most popular uses, noted by 76% of the respondents with computers, were word processing and rating. Other uses noted were accounting (68% of those with computers), maintaining customer files (62%), and processing such documents as applications and renewals (37%). A third of the respondents with computers reported they were interfaced with at least one company.
To automated or not to automate? That is the question we put to those respondents (48% of the total) who do not have computers now. About 45% of them (21% of the total) indicated they plan to obtain an in-house computer this year. Another 45% reported they do not. Ten percent of these respondents apparently were not sure. They left the question blank, wrote question marks by it or took the time to write such comments as "maybe," "undecided," and "possibly." Some of the automated respondents volunteered they planned to upgrade or replace their present system this year or buy a second computer system.
Company representation
For the past few years, companies have been telling agents they should do business with fewer insurers. With the onset of the tight market last year, many agents - either voluntarily or involuntarily - apparently did trim their company rosters. The percentage of respondents representing 10 or more carriers fell five points to 17% in this year's survey. The size of the change was particularly large when compared with those of recent years. From 1981 to 1984, the percentage of survey respondents representing 10 or more companies stayed between 22% and 25%.
A plurality of respondents, 46%, said they represent two to five companies. The percentage was up three points from last year. A total of 34% of the respondents, almost unchanged from 1984, said they do business with six to nine carriers. Those agents limiting themselves to just one market accounted for 4% of this year's survey respondents, up from 2% last year.
Other survey findings indicated that agents' interest in continuing education remains strong. The CIC designation was held by 19% of the respondents. Nearly as many, 18% were CPCUs or were working toward that designation. The CLU designation was held or sought by 6% of the respondents, and 5% have completed or are taking part in the new Accredited Adviser in Insurance (AAI) program. Nine percent of the respondents indicated they had or were pursuing various other designations.
Most of the respondents are long time readers of the magazine; 73% have received it for six or more years. Forty-four percent reported that they spend an hour or more with each issue, then generally pass it on to other people in the agency. Thirty percent of the respondents said they copy is read by three or more additional persons; 23% said it was read by two other people; and 29% reported sharing their copy with one other person.
We wish to thank all those agents who took part in the 1985 survey. They information they've shared will help us provide a better magazine for all readers. Their responses depict an insurance environment that has changed considerably over the past year. And they suggest that agents, in general, are coping successfully with these changes and moving ahead.
