Marketing the agency effectively over the Internet, security,and ease of use of new real-time functionality have become the topthree technology issues for owners of independent agencies,according to a study conducted by the Independent Insurance Agents& Brokers of America (IIABA).

Carrier Web sites have gained ground as the preferred method foragencies to do business, according to the IIABA, while technologycosts have become less important to agency owners than in thepast.

The bi-annual 2010 Agency Universe Study, a collaborationbetween IIABA and Future One, a coalition of insurance companypartners, was released last month and indicated that the number ofindependent agencies remains stable at approximately 37,500 after asteady, decade-long decline that ended in 2006.

When the decline began in 1996, there were 44,000 agencies, thestudy said.

“The 2010 Agency Universe Study reflected the combined effect ofthe recession which began just as the 2008 study was underway, aprolonged soft insurance market, and declining revenues,” saysRobert Rusbuldt, IIABA president and CEO. “Despite all thesechallenges, many new agencies are forming, typically with a morediverse and younger leadership, demonstrating the strength of theindependent agency system and the potential for growth.”

Madelyn Flannagan, IIABA vice president of agent development,education, and research, says, “As the [IIABA] continues toincrease its diversity efforts, the 2010 Agency Universe Studyfound some progress with an increase in the number of new small andmedium small agencies with minority principals.

“In addition to the increasing ethnic diversity of agencyownership, albeit from a very low base, these agencies are alsosolidifying the position of women as principals in over a third ofagencies.”

Among other findings the IIABA shared:

• Of the 37,500 agencies that exist today, 11 percent,or around 4,000, were founded between 2008-2010. That figure isequal to the number of agencies lost through mergers andacquisitions.

• Since 2005, 50 percent of new agencies were locatedin the South; 24 percent were founded in the South Atlantic statesand 19 percent in the West South Central portion of the countrythat includes Louisiana and Texas. By contrast, only eight percentof new agencies were located in the Northeast, compared to 18percent of older independent agencies. IIABA said the result mayreflect the flexibility of the agency system that allows it toserve markets captive agencies have abandoned.

• The combination of the soft market and the recessionof 2008 caused a decrease in revenue overall for independentagencies, particularly in commercial lines. This hurt largeragencies that are more dependent on commercial lines business.However, 55 percent of small agencies saw increases in revenue from2008 to 2009, while 25 percent suffered decreases in revenue.

This report is the 10th in a series of studies on independentagencies that dates back to 1983. Approximately 2,100 agencies wereincluded in the study, which was conducted electronically.