Direct writers increase personal lines market share by more than 100%

A new study from the Big “I” reveals movement in the market share of different distribution channels in commercial and personal lines.

Insurance News

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Though still writing a miniscule portion of the overall insurance market, direct writers made impressive gains in personal lines insurance in 2013.

According to a new study from the Independent Insurance Agents and Brokers of America (The Big “I”), direct writers more than doubled their market share during 2013 and are now responsible for 14.9% of premiums written in the personal lines market.

Captive agents, meanwhile, still write a little more than 50% of the market.

However, this is no death knell for independent agents. On the contrary, the Big “I’”s report suggests independent agents have actually grown market share in both personal and commercial lines, and continue to be the dominant distribution channel in insurance.

In fact, independent agents and brokers wrote nearly 57% of all premiums in 2013. Commercial lines continues to be particularly lucrative, with independents taking 80% of the market for $210.9 billion—an increase by $35 billion since 2010.

Agents with regional carriers gained an edge in the commercial market in 2013, picking up 1.4 percentage points in market share with independents with national carriers saw their share decrease 1.2 percentage points to 45% of the market.

Workers’ compensation premiums were particularly strong, increasing 8.1% during the study’s timeline, with much of the growth coming from independent agent writers. Regionals grew 15.6%, while nationals increased 4.8% in premiums.

Captive carriers in commercial lines now account for between 18% and 20% of the market, while direct writers make up less than 1% of premiums, writing just $2.5 billion on average.

Even in the heavily commoditized personal lines market, independent agents continue to succeed. According to the study, regional agents actually increased their market share by $5.5 billion in 2013, writing 35% of the personal lines market.

Personal auto is still dominated by captive agents, who write 52.6% of the market, but independents still grew their share by $1.8 billion during the study’s timeline.

Overall, Big “I” President and CEO Bob Rusbuldt is optimistic about the performance of and prospects for independent agents and brokers.

“The independent insurance agency system continues to be stable, strong and growing,” Rusbuldt said. “Among the many pieces of good news the study revealed are that all property/casualty insurance premium lines grew for the third year in a row, bouncing back from their recession-driven low points in 2010.

“After three years of strong growth, both personal and commercial lines have exceeded prerecession volumes, and combined are now generating $532 billion in annual premiums.”
 

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