The Agency Universe
Independent agencies are holding steady but continue to have concerns about emerging competition in personal lines, an aging workforce and lack of diversity in leadership.
That’s according to a new study that found the number of independent insurance agencies has remained stable at 36,000, but fell slightly below the last tally of 36,500 in 2018. The 2020 Agency Universe Study from Future One is a collaboration of the Big “I” (Independent Insurance Agents & Brokers of America) and major independent agency companies.
The study also discussed critical areas that agencies should focus on to better prepare for the future.
Overall, the survey revealed “good news for the independent agency system,” including the continued adaption of digital innovations by agents, said Bob Rusbuldt, Big “I” president and CEO. Business conditions continued to improve in 2019 although at a slower rate than 2018, and agents do have concerns, especially regarding direct purchase trends.
Selected findings from the 2020 Agency Universe Study include:
Business conditions remain favorable but growth slows. 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 somewhat more likely to report increases in personal lines revenue (67%) than commercial lines (63%).
Emerging purchase channels remain a concern. Thirty-five percent of agencies believe personal lines direct purchase through the insurance company will have a significant impact on their agency over the next two years — and 27% believe the same issue will emerge with non-insurance website purchases. About 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. Forty-two percent of agency principals are women, and 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).
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%).
The study looks at statistics about independent agencies operating in the U.S., including their numbers, revenue base and sources, number of employees, ownership, mix of business, and more.