Many people believe that direct marketing – fueled by anticipated growth in Internet sales – spells doom for independent insurance agents. But not Patricia Borowski, vice president of research and technical affairs for the National Association of Professional Insurance Agents (PIA).
Borowski projects that ongoing industry consolidation will thin the present universe of independent agents by 20% at most. “Many say independent agents are on the way out,” she adds. “To me, all this talk is like being invited to a funeral where the hearse never shows up.”
About 20,000 of the estimated 54,000 independent insurance agents in the United States are PIA members. And some 40% of independents belong to other trade groups, such as the Independent Insurance Agents of America.
Start-ups on the Rise.
Borowski says that, despite years of downsizing and mergers and acquisitions, since 1996 there has been evidence of a resurgence of agency start-ups, with each new agency typically owned by two investors employing seven to nine independent agents.
New agencies are being formed by insurance professionals who lost their jobs due to downsizing and by newcomers to the insurance field. Borowski also says she believes that independent agents use direct marketing media more than agents employed by insurance companies.
– The insurance industry employs 2.3 million people, including agents and brokers selling policies for a particular insurance company or as independents. Overall, about 610,000 work for property and casualty companies and 926,000 for firms offering such products as life or health insurance. Some 724,000 are engaged in other agency or brokerage operations.
– State insurance departments license agents and brokers, who typically begin their careers in one of four key industry segments: health, life, property and casualty or surety. Experienced agents and brokers often are licensed to sell multiple lines of insurance.
– Agents and brokers are increasingly branching out to provide financial and retirement planning services to their clients. They’re obtaining licenses to offer mutual funds, annuities and other securities.
– Demand for insurance services is growing faster than the need for new agents and brokers. Little job growth is anticipated as new agents and brokers replace others leaving the field. The trends of corporate self-insurance, group policy sales and agents selling multiple lines are blamed for industry employment rising slower than insurance sales volume.
– Membership among agents and brokers in insurance trade associations has declined as much as 50% during the last 10 years, along with attendance at conferences and seminars.
– The number of insurance agency owners over age 65 has dropped dramatically since the mid-1980s. Owners over 65 used to make up 20% to 25% of the market. Now only 10% or less are 65 or older. A growing number of agency owners are under 40.
– Independent insurance agents specializing in niche markets work with seven insurance companies on average. The United States has an estimated 7,900 insurance companies, but many are owned by a few holding companies.
Sources: Insurance Information Institute; Insurance Journal; National Association of Professional Insurance Agents
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