Biennial study reveals gains and challenges in independent agency channel
Independent property and casualty (P&C) agencies are proving resilient in a challenging hard market, with most agencies reporting significant revenue gains, even as the total number of agencies in the U.S. has declined slightly, according to the 2024 Agency Universe Study. The biennial study, released by Future One, which is a collaboration of the Big I” and leading independent agency companies, offers an in-depth look at the independent agency system, highlighting strong revenue growth in both personal and commercial lines, despite the pressures of a difficult market.
The 2024 Agency Universe Study once again shows the independent agency channel’s capability to adapt and overcome challenges, as agents across the U.S. continue to improve operations and client communications during the hard market, even with the difficult headwinds they have confronted,” says Charles Symington, Big I” president & CEO.
According to the latest iteration, the number of independent agencies fell to 39,000 in 2024, down from 40,000 in 2022, representing a 2.5% decrease. The report cites the decline as mostly driven by mergers, acquisitions, and perpetuation challenges. Looking ahead, it states that one in three agencies expects an ownership change within the next five years.
Independent agencies are essential partners in the insurance distribution ecosystem and the Big ‘I’ is proud to support them with the resources and guidance they need to serve their communities,” Symington says.
Despite this decline, 75% of agencies reported revenue gains, a notable increase from 62% in 2022. Personal lines revenue surged, with 72% of agencies reporting growth, compared to 60% in the previous study. Similarly, 68% of agencies saw growth in commercial lines, up from 57% in 2022.
Agencies are also navigating the hard market by prioritizing customer communications and operational efficiencies. More than half (56%) of agencies cite developing talking points about the hard market as essential, while 63% emphasize the importance of improving operations. Additionally, 70% of agencies have adopted e-signature tools, up from 61% in 2022, and more than half have shifted to digital billing systems.
This year’s study provides a valuable look at the independent agency ecosystem as it gains distance from the coronavirus pandemic and navigates the obstacles presented by the hard market,” says Jennifer Becker, Big I” senior director of agent development, research and education. Technology adoption continues to prove itself as a key strategy for success.”
This year’s study saw significant increases in adoption of digital communication tools, with many changes in service and operations prompted by the hard market and its impact,” Becker says.
Technology challenges persist, particularly with multiple carrier interfaces, and concerns about emerging purchase channels, such as direct sales from insurers and online platforms, continue to grow. However, nearly half of agencies remain confident that the independent agency channel will continue to be resilient amidst these marketplace changes.
A list of key findings from this year’s report
The number of independent agencies dropped slightly. In 2024, the estimated total number of independent p&c agents and brokers in the U.S. stands at 39,000, a decrease from 40,000 in 2022. Mergers & acquisitions activity and perpetuation challenges continue to impact the agency channel with 1 in 3 agencies expecting an ownership change in the next five years.
• Most agencies make revenue gains despite business conditions. Three in 4 agencies (75%) saw revenue gains in the 2024 study significantly higher than the 2022 study, in which 62% saw gains. Meanwhile, 12% of agencies saw decreases in revenue, with an average decrease of 24%. Personal lines revenue has grown significantly more in the 2024 study than in 2022, with 72% of agencies reporting an increase compared to 60% in 2022. Commercial lines revenue grew as well, with 68% of agencies reporting an increase compared to 57% in 2022.
• The hard market is top of mind for agencies. More than half (56%) of agents say that developing talking points for customers about the hard market and coverages is the most important factor to succeed, surpassed only by identifying operating efficiencies (63%). More than 1 in 4 agencies have made digital service and digital interaction operating changes due to the hard market.
• Agencies outline market challenges. Agencies are appointed with an average of 17 carriers. As many as 21% of agencies say carriers are meeting the market challenges extremely poorly, while 68% believe carriers are meeting the market challenges moderately well. However, 11% percent of agencies believe carriers are meeting the challenges of the hard market extremely well.
- When asked what their No. 1 challenge is, 56% of agencies said it was finding carriers that will maintain their commitment to their market, up from 31% in 2022. The second most pressing challenge was having carriers that are addressing new personal lines risks by adding new products, services or coverages” at 49%. Finding and screening job candidates with strong potential was the third most challenging issue at 46%.
• Agencies continue to adopt technology. The use of electronic communication tools has increased significantly, with the use of agency e-signature tools increasing to 70% in 2024 from 61% in 2022. The use of direct bill commission statements has also risen since 2022, at 52% in 2024 versus 45%. More than half of agents are likely to agree that insureds are just as likely to accept e-documents as paper. Nearly half—46%—agree they have seen significant cost savings by using carriers’ paperless communication options.
- However, challenges with technology continue. Dealing with multiple carrier interfaces was the No. 1 technology issue for agents, followed by marketing their agency effectively on the internet.
• Social media continues to be an important marketing activity. More than half of agencies (56%) say social media is a top marketing activity, a slight decrease from 62% in 2022. Agencies most often rely on Facebook, LinkedIn and Instagram. Social media is primarily used to build the agency’s brand (87%) and attract prospects (79%).
• Emerging purchase channels remain a concern. Agencies continue to express concern about emerging purchase channels and their impact on their business. One-third believe their agency will be impacted by personal lines and small commercial lines products purchased directly through insurance companies, non-insurance websites and emerging online channels. However, nearly half of agencies believe the independent agency channel is extremely resilient to marketplace changes.
First published in 1983, this year’s study featured data from 1,269 respondents. For those interested in obtaining a copy of this year’s study it can be purchased on the Big I Agency Universe webpage here.
