Property-Casualty Market Study Shows Massachusetts IAs Still Are No. 1
The Big “I” issued it’s 17th annual 2013 Market Share Study this month which has good news for independent insurance agents this year. After years of market contraction, property-casualty insurance premiums lines are growing and independent agents and brokers are well-poised to capture a larger piece of the market pie in 2013. The Big “I” contracts A.M. Best to provide it with an in-depth look at year-end industry and company expense data. The Big “I” then analyzes that information, in this case data from 2011, in order to assess the current state of the independent agency system.
“This annual study provides the most accurate picture of what is occurring with property casualty insurance distribution because it separates out the direct response companies from the captive agency companies,” explains Madelyn Flannagan, Big “I” Vice President of agent development, education and research. “Unique to the Big “I” study, A.M. Best separates out the affiliates of groups which use different distribution systems and places these affiliates in the appropriate distribution category wherever the company group uses separate affiliates for this purpose.
Overall, this biggest revelation of this year’s study is that many regional and national independent agents and brokers have expanded their market shares with double digit increases. In many cases, these “IAs”, as the Big “I” calls them, outpaced market growth in many business lines across the country.
The following is a list the Big “I” compiled of the other major findings in the study:
- IAs outperformed captive agencies carriers in personal lines and grew premiums by nearly the same amount as direct response carriers largely due to impressive performance in homeowners, where IAs outperformed captive agencies;
- IA carriers also benefited greatly by a huge surge in commercial premiums, which climbed by 55 in 2011. IA carriers also captured $8.4 billion in additional premiums in 2011, which represents 74% of the entire $11.4 billion in growth in that market;
- IAs still dominate commercial insurance sales, which resurged in 2011, growing $11 billion or 5% more in 2010;
- IAs grew premiums or market share in several states and IA share remains strong in many states overall. In many states, IAs dominate both personal and commercial lines;
- IAs are as efficient as other models. While IAs as a group may have higher efficiency ratios compared with captive and direct writers, there are several IA carriers with personal auto efficiency ratios that rival these challengers.
Although showing a decline in share, Massachusetts IA’s still control the state’s personal lines marketplace
Massachusetts independent insurance agents and brokers hold 77.5% of the personal lines market. Overall, IAs in the Commonwealth have seen a 3.1 percent decline in their control of the personal lines marketplace, and more than seven percentage points since the introduction of managed competition. Even with this retraction, however, Massachusetts independent agents and brokers continue to hold the largest share of this market in the country.