Market Shares

Independent agents rule. This was again confirmed by the latest report from the Independent Insurance Agents & Brokers of America (IIABA) on market share.

Independent agents dominate in commercial lines, writing more than 79 percent of the market nationwide. In personal lines, where independent agents write slightly more than 36 percent of the business, there is room for improvement. Their share is still impressive, however, given the competition from State Farm, Nationwide, Geico and the like with their multi-million dollar advertising and branding campaigns.

While the figures are impressive nationwide, they border on the unbelievable in some individual states. Independent agents and brokers write more than 80 percent of the commercial lines market in Hawaii, Rhode Island, Massachusetts, District of Columbia, Maryland, Connecticut, Maine, Illinois, California, Pennsylvania, Nevada, Indiana, Kentucky, New Jersey and Ohio.

As with the commercial lines market, personal lines market share varies by state. In Massachusetts, independent agents write an amazing 79 percent of the market. Of course, they aren’t competing with the State Farms of the world. But in Maine, Vermont, Connecticut and Ohio agents and brokers also manage to write between 50 to 61 percent of the market. In New Hampshire, Rhode Island, Pennsylvania, New York and New Jersey, among others, independent agents capture between 40 and 50 percent. Not too shabby either.

Madelyn Flannagan, one of the IIABA researchers who pulls together the market share report every year, is not sure why the Northeast in particular is such fertile ground for independent agents, although she suggests that tradition and the closeness of communities may have something to do with it.

Of course, independent agents have not achieved this success alone. Their company partners deserve credit as well. Part of the stunning success of agents in commercial lines is due to the variety and quality of the products their company partners provide. As a rule, direct writers do not offer the comprehensive portfolio in commercial lines that agency companies offer, Flannagan notes.

That same company-agency partnership will be a key as agents work to translate their strength in small commercial lines to a bigger share of personal lines. Some agency companies are experimenting with personal lines product designs and pricing options. They are breaking away from the one-size-fits-all approach to auto and homeowners coverages. If insurers are given regulatory freedom to develop these products—and the freedom to price them appropriately—more consumer choices will result. Independent agents and their customers may find themselves overwhelmed at first by all the new options. It won’t be easy to compare policy X with policy Y. But in the long run, agents will have value-added products to sell along with their own value-added service. This partnership should be rewarded with added personal lines market share in the years to come.