Skip Ribbon Commands
Skip to main content

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​

 

 ‭(Hidden)‬ Catalog-Item Reuse

A Deep Dive Into the 2024 Agency Universe Study

As the channel moves past the coronavirus pandemic and into the hard market, the 2024 Agency Universe Study examined how agencies are coping with growth, revenue, digitalization and carrier relationships.
Sponsored by
a deep dive into the 2024 agency universe study

The 2024 Agency Universe Study results are in, and it's of no surprise that the hard market has left few areas of the independent agency system undisturbed. While agencies have navigated through some of the most difficult business conditions in a generation, 3 in 4 agencies reported revenue growth amid a galaxy of challenges—and that's not all down to premium hikes. 

The Agency Universe Study (AUS) by Future One, a collaboration of the Big “I" and leading independent agency companies, is hailed as the most comprehensive look at the independent agency system. First conducted in 1983 and completed biennially since 2002, the study is facilitated by Zeldis Research and surveys property & casualty independent agents and brokers.

As the channel moves past the coronavirus pandemic and into the hard market, the AUS examined how agencies are coping with growth, revenue, digitalization and carrier relationships.

Channel Growth Steadies

The estimated total number of independent p&c agents and brokers in the U.S stands at 39,000, a slight decrease from 40,000 in 2022.

Some of the decrease can be attributed to recalibrating after the coronavirus era caused a big bang of new agencies. “We had a pretty big explosion of folks going their own way after the pandemic," says Kristina Witzling, executive vice president and P&C practice lead at Zeldis Research Associates Inc. “Some left larger agencies to start their own, and we had a fairly significant wave of captive conversions."

“After that bump, we may be seeing a bit of normalization as folks leave the market, deciding this wasn't for them or deciding to sell," Witzling says. Mergers & acquisitions is also reducing the headcount, with 45% of jumbo agencies saying they've been involved in an acquisition over the past year. 

Further, 1 in 10 (8%) of 2024's agencies have converted from captive to independent within the past two years. That's down from 2022 AUS's results of 1 in 6 agencies having broken free from captivity in the past two years, but still demonstrates market trends driving agency numbers. Overall, as many as 17% of all small agencies have converted from captive in the past two years.

A Deep Dive Into the 2024 Agency Universe Study

“We're seeing captive agents looking for additional markets to access because, as the market hardens, it's much more challenging for them to make a living and place business when they're constrained by captive partners," Witzling explains.

Fluctuations in the agency numbers of the past 28 years point to the obliquity of the market ecliptic. “We really see the ups and downs of the marketplace," Witzling says. “We were at 44,000 back in 1996, and there was a dip in 2008 and 2010, when there were some serious scares about whether carriers or markets would survive. We saw it slowly come back up and then 2020 brought a lot of opportunity as folks took stock of their careers and made changes."

Agency Revenue Increases

Overall business conditions for agencies continue to be favorable, with 75% of agencies seeing revenue increase from 2022 to 2023—higher than between 2020 and 2021, in which 62% saw gains. Only 12% of agencies saw decreases in revenues, down from 25% in 2022.

Personal lines revenue saw significant growth, with 72% of agencies experiencing personal lines increases. Among those agencies, the average increase was 24%. More than 2 in 3 (68%) of agencies saw commercial lines revenue gains, increasing from 57% in 2022, with an average increase of 21%.

But is this all due to premium hikes? “The hard market certainly has had an impact," Witzling says. “We see that personal lines revenue is up, and we know that personal lines premiums are way up, so it's definitely a factor."

A Deep Dive Into the 2024 Agency Universe Study

“However, in the last AUS wave, agencies told us they were intending to grow in both commercial and personal lines, and we're seeing that," she says. In 2022, 85% of agencies planned to increase sales of personal lines, and 81% indicated plans to increase their commercial lines sales.

“They've also told us they intend to grow into other markets, and we've seen that too," she continues, pointing to 24% of agencies now frequently selling cyber liability as opposed to 17% in 2022, and 21% selling commercial flood in 2024 compared to 16% in 2022. 

In personal lines, “many agencies are expanding to new geographies, especially as the market hardened and it becomes more challenging to place business in certain regions," she says. 

“I think there's a little bit of fear," continues Witzling, who talks to agents across the U.S. in her role at Zeldis. “We hear this across all our qualitative research—in particular, they're worried about being able to place homeowners in the future, so they're looking for more customers. And a significant portion told us that they've grown their business through referrals."

Hard Market Drives Digitalization

The 2024 AUS found that many of agencies' concerns and goals orbit around the hard market. More than half of agencies (56%) identified the most important factor to succeed as “developing talking points for customers about the hard market and coverage," behind only “identifying operating efficiencies" (63%) as most crucial for success.


Three-fourths of agencies have not made staff changes due to the hard market. In fact, 32% of agencies say their employee count has increased in the past two years, up from 24% in 2022, with medium-large to jumbo agencies more likely to say they have hired employees. Of agencies whose staff were affected, smaller agencies were more likely to report reduced hours, furloughs or layoffs (13%).

Meanwhile, jumbo agencies were more likely to offer remote opportunities (38%) and outsource to third-party companies (24%)—indicating their desire to alleviate the market's pressures on their staff, with 61% of jumbo agencies citing attracting and retaining staff as the most important factor for success.

The hard market drove home what the coronavirus pandemic started: accelerated digitalization. One-third (32%) of agencies said they began providing more digital service in response to the market conditions and 27% interacted more digitally with carriers.

To keep reading, log in with your Big "I" credentials.

AnneMarie McPherson Spears is IA news editor. 

To order a copy of the 2024 Agency Universe Study Management Summary, which provides an overview of the highlights from the complete study, visit the Big “I" Agency Universe Study webpage

A Deep Dive Into the 2024 Agency Universe Study

17982
Friday, November 1, 2024
In the News
Digital Edition