Biennial study reveals stability and challenges in independent agency system.
ALEXANDRIA, VA, March 29, 2021—The number of independent insurance agencies has remained stable and business conditions continue to improve, although at a slower rate than 2018, according to the 2020 Agency Universe Study.
Future One, a collaboration of the Big “I" and leading independent agency companies, has released key findings from the recently completed Agency Universe Study, hailed as the most comprehensive look at the independent agency system.
“The 2020 Agency Universe Study reveals good news for the independent agency system, including continued adaption to the digital solutions and innovations that enable independent agents and brokers across the country to serve their clients and communities most efficiently," says Bob Rusbuldt, Big “I" president & CEO. “The study also offers a pulse read on key areas agencies should focus on to better prepare for the future. Women and people of color continue to be underrepresented as agency principals, and the Big 'I' is committed to continuing its outreach efforts to address this issue so agencies can serve all insurance consumers better."
The study looks at many statistics about independent agencies operating in the U.S., including their numbers, revenue base and sources, number of employees, ownership, mix of business, diversification of products, technology uses, non-insurance income sources and marketing methods. For 2020, the study continued to examine those trends, focusing on agency perpetuation challenges and the impact of emerging purchase channels and trends.
“The study provides independent agency principals and managers with insights into how their peers operate, as well as business strategies that may be helpful to them," says Madelyn Flannagan, Big “I" vice president of agent development, education and research. “In particular, as agencies express concern over emerging purchase channels threatening their consumer segment, the study revealed how crucial adaptation to social media and digital marketing strategies are key to agency success. Overall, though, the channel has fared well during the economic upheaval of the last year."
Due to the coronavirus pandemic and related shutdown orders in 2020, the study was halted in its traditional fielding time in March and re-started in September. The study also included survey questions related to COVID-19's impact on the independent agency channel, the results for which have been released separately.
Key findings from the 2020 Agency Universe Study include:
- The number of independent agencies remains stable. In 2020, the estimated total number of independent property/casualty agents and brokers in the United States stands at 36,000. This is consistent with 2018 number of 36,500.
- Business conditions remain favorable but growth slows. Business conditions continue to improve, as they have for the past several waves, but at a slower rate. The majority of agencies (70%) report increases in total revenue between 2018 and 2019, with an average increase of 20%. However, this is slightly lower than in 2018 when 76% reported an increase, with average increases of 25%. Agencies are slightly more likely to report increases in personal lines revenue (67%) than commercial lines (63%).
- Principal aging remains consistent. The aging of the independent agency universe is consistent with 2018 findings as the average age of agency principals is 55 years old, with 17% age 66 or older. Agencies may be starting to consider perpetuation planning. Nine in 10 have a perpetuation plan (on par with 2018), though it often centers around children and family. Four in 10 anticipate some ownership change in the next five years.
- Social media and digital marketing strategies are key. All the top marketing strategies cited in 2020 are digital: social media and digital marketing (58%), creating and maintaining the agency website (49%), portal technology on the agency site (30%), search engine optimization (30%), and e-marketing activities (20%).
- Emerging purchase channels remain a concern. The impact of emerging purchase channels remains a concern, particularly for personal lines, with 35% of agencies believing personal lines direct purchase through the insurance company will have a significant impact on their agency over the next two years—and 27% believing the same issue will emerge with non-insurance website purchases. Approximately 1 in 4 express similar concerns about small commercial direct purchase or purchase through emerging online providers.
- Inclusion continues to be a challenge. Women and people of color continue to be underrepresented in the independent agency universe. Forty-two percent of agency principals are women. Nearly 9 in 10 of agency principals are white. Larger agencies are especially likely to have male principal or senior managers. However, newer agencies are more likely to have at least one African American principal (12% versus 5% of established agencies).
The 2020 Agency Universe Study is the fourteenth in a series that was first conducted in 1983. Since 2002, the study has been completed biennially. Since 2004, the Agency Universe Study has relied on internet data collection. In total, 1,437 respondents were included in the 2020 study, conducted by Zeldis Research in cooperation with Future One.
To order a copy of the 2020 Agency Universe Study Management Summary, which provides an overview of the highlights from the complete study, visit the Big “I" Agency Universe Study webpage.
In addition to the Big “I," the Future One coalition includes the following company partners: Allstate/Encompass, Amerisure, Central Insurance Companies, Chubb, CNA, Foremost, Grange Insurance, Hartford Steam Boiler (HSB), Liberty Mutual Insurance/Safeco, Nationwide, Progressive, Selective, The Hanover Insurance Group, The Hartford, Travelers and Westfield Group.
Founded in 1896, the Independent Insurance Agents & Brokers of America (the Big “I") is the nation's oldest and largest national association of independent insurance agents and brokers, representing more than 25,000 agency locations united under the Trusted Choice® brand. Trusted Choice independent agents offer consumers all types of insurance—property, casualty, life, health, employee benefit plans and retirement products—from a variety of insurance companies.