Mass. Agents’ Market Share Down Again Says Big I 2016 Market Share Report

This is the 20th year of the Big “I”‘s annual Market Share Report

For the fourth year in a row, premiums for all property-casualty insurance lines grew says the Big “I” in its annual Market Share Report for 2016. The annual study, now in its 20th year, analyzes the state of the Property-Casualty marketplace and the Independent Agency System with data made available by A.M. Best. The 2016 Market Share Report is based upon data from 2014, the latest year for which complete data is available.

According to this year’s report, all property-casualty insurance premium lines increased by $23 billion in 2014 versus 2013.Moreover, both personal and commercial lines also have exceeded their pre-Great Recession levels, generating an estimated $555 billion in annual premiums.

Independent Agents still retain control of the P/C marketplace

Independent agents continue to maintain a majority of the P&C market, writing nearly 35% of all personal lines premiums and nearly 80% of commercial line premiums, representing just over 58% of all property-casualty premiums.

As for the independent agency system, 2014 was a strong year for the independence agency system. Independent agents currently write nearly $8 of every $10 of premiums in the marketplace, writing a total of $225 billion in property casualty premiums.

Nationally, independent insurance agents have also increased their position with commercial insurance sale, writing over 80% of commercial lines premiums. Even more significantly, the Big “I” noted that over the past four years, the commercial lines marketplace has grown by nearly $45 billion.

The overall Premium Distribution in 2014…

National carriers continued to be the big winners in personal lines marketplace. These group of carriers increased their bottom lines by approximately $6.7 billion in 2014.

Here is a look at the 2014 P-C Overall Premium Distribution:

What about the Direct Writers?

In last year’s report, the Big “I” stated that over the past 18 years, Direct Writers have increased their personal automobile insurance share by 11 percentage points. In 2014, the direct channel saw a six percent growth rate.

Commercial Lines

In the Commercial Lines marketplace, the Big “I” says that national agency carriers were the “big winners” in 2014. These carriers saw a huge increase in their share of the commercial marketplace writing almost 16 percent in new premiums resulting in approximately $18 billion dollars.

The following is a breakdown of the Total Commercial Premiums in 2014

Commercial Lines Auto 

The commercial automobile insurance market continued to increase at an accelerated rate. In 2014, it grew by $2.3 billion as compared to $1.7 billion in 2013. In total, the $29 billion commercial automobile marketplace represents 10.5% of the overall commercial market, the majority of which is controlled by the Independent agency system. The following graph from the Big “I” report shows the current breakdown in Commercial Auto:

Personal Lines

As in the Commercial marketplace, national agency carriers also fared the best in terms of Personal Lines growth in 2014.

Personal Lines Auto

National independent agency carriers increased their market share in 2014 by 7% up from 5.4% in 2013. Over all private passenger auto premiums increased for National Independent Agency carriers by a little less than 37 percent.

In comparison, regional independent agency carriers closed out 2014 with a loss of close to 2 percent in market share amounting to $2 billion in premium. As for captive carriers, this group maintained their private passenger automobile market share of 49 percent, all the while seeing a $2-billion-dollar increase. The last group profiled in the report, direct companies, also saw an increase of more than 9 percent, adding $4 billion in premiums.

How are independent agents faring in Massachusetts?

Unfortunately for Massachusetts, it was one of the six states with the largest losses in Independent Agent Personal Market Share from 2013 to 2014. It ranked third out of the six states with a -.049 percent. On a surprising note, four out of the six states with the largest losses were located in New England.

States with six largest losses in the Independent Agency Personal Market Share from 2013 to 2014

1. Oregon: -0.39 percent points lost

2. New Hampshire: -0.39 percent points lost

3. Massachusetts: -0.49 percent points lost

4. Florida: -0.50 percent points lost

5. Vermont: -0.91 percent points lost

6. Maine: -1.07 percent points lost

While this news is not something that most independent agents in the Commonwealth want to hear, it is important to remember that Massachusetts still holds the number one spot for IA market share with Mass. agents retaining their dominance in the personal lines marketplace. Another important fact to note is that while Mass. agents did lose -.49 percent of their market share, this number is half as compared with the 0.9% loss that was seen in the 2014 market share.

In addition to the increased competition in the marketplace, another likely culprit resulting in a loss of market share could be the continuing consolidation of agencies and the growth of mega-agencies in Massachusetts. So while Mass. agents may have lost the most market share in the nation this year, it is important to remember that the numbers are still relatively strong in comparison with the rest of the independent agencies market shares in other states.

View the official Big I 2016 Market Share Report here