IIABA Study Says Independent Agent Market Spurs Growth

Independent agents significantly helped fuel growth in the insurance property-casualty business in 2004, accounting for $12 billion of an overall market increase of $21 billion in premium written.

That statistic was among the findings in the Independent Insurance Agents & Brokers of America Inc.'s annual market share study for 2004.

"The results of this report clearly show that the independent agency system is flourishing," said Robert A. Rusbuldt, chief executive officer for the Alexandria, Va.-based association.

Mr. Rusbuldt commented that, "Independent agents and brokers continue to build on their market share, and if they keep working toward adopting new, efficient technology, strong marketing and branding strategies, and use their commitment and knowledge of their communities to their advantage, they will continue to build upon their present success.

"Independent agents and brokers have proven time and time again that they are innovative, resilient and diligent in serving their customers and growing their businesses," he added.

IIABA said this is the 10th year the association has contracted with Oldwick, N.J.-based rating service A.M. Best Company to supply year-end industry market share and company expense data. IIABA said it performed the analysis of the data to assess the state of the independent agency system.

In 2004, the property-casualty market grew to $458 billion in direct written premium, with the overall market increasing by $21 billion, IIABA said. During this time, the independent agency system amassed a nearly $12 billion increase in production, accounting for almost 60 percent of the national increase.

Following recent trends, research revealed there are efficient companies using various distribution systems. More importantly, efficient independent agency writers are able to deliver insurance just as cost effectively as the captive agent writers and many of the direct companies--and in some cases, even more so, IIABA said.

Independent agents and brokers and their carriers increased their personal lines market share slightly in 2004. However, they continue to control only slightly more than a third of this market.

The direct companies will remain aggressive competitors for both the captive agent writers and the independent agency companies, IIABA noted, adding that independent agencies should experience their best opportunity in decades to continue to gain a larger market share.

The independent agency system continues to have a dominant position in commercial lines in many states, maintaining a position it has held for much of the past decade. Big variances among the states, however, indicate that there remain many opportunities for independent agents and brokers to continue to grow their commercial lines share in a wide variety of commercial markets, according to IIABA.

Despite slowing growth in commercial and personal lines over the past three years, independent producers are reaping a significant dividend from this growth, IIABA said.

The larger the market share producers have in a particular market, the larger the dividend they accrue. The growth in commercial and personal lines premium and market share in 2003 and 2004 resulted in $39.5 billion of new premium written by the independent agency distribution system.

"This fact speaks volumes about the continuing opportunities for today's independent agents and brokers and the power of increasing market share," IIABA said.