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Independent Agencies On the Rise Again, Survey Shows

Are you an experienced Insurance Customer Service Rep looking to take the next step in your career, or a frustrated captive insurance agent or perhaps looking to make a career change? The Independent Insurance Agency market is alive and thriving!

It would appear reports of the demise of the independent agent were greatly exaggerated, as a new survey shows the independent-agency system is growing again and is financially healthier than it has been in the past few years.

Future One—a collaboration of The Independent Insurance Agents & Brokers of America and a coalition of insurance carriers that distribute through independent agents—announced the release of its bi-annual Agency Universe Study for 2012, showing that the number of independent agencies has grown to 38,500, up from 37,500 reported in the surveys from 2006 to 2010.

The number of agencies climbed to 44,000 in 1996 before declining in subsequent surveys.

Business conditions also improved for the majority of agencies in the latest survey, with 60 percent reporting increased revenues in the 2012 study compared to 40 percent in 2010.

Concerning ethnic diversity, the number of new small (revenues of less than $150,000) and medium-small (revenues of less than $500,000) agencies with minority principals remained unchanged from 2010. That year marked an increase in the number of those agencies, especially agencies owned by African-Americans which grew from 1 percent of all agencies to 4 percent in 2010.

The study, which surveyed 2,500 agencies, examines revenue base and sources, number of employees, ownership, mix of business, diversification of products, technology uses, non-insurance income sources and marketing methods for independent agents.

“The 2012 Agency Universe Study revealed much good news for the independent-agency system, including an increase in the total estimated number of independent agencies, and there are patterns indicating that agencies are growing, adding further proof that the system as a whole is dynamic,” says Robert Rusbuldt, IIABA president and chief executive officer in a statement.

He adds that the survey results are “great news” for independent agents “reflecting a stable and growing distribution system” that remains “resilient” in the face of economic challenges.

Madelyn Flannagan, IIABA vice president of agent development, education and research, says the survey found that agents are focusing on marketing “to a more diverse clientele and developing a more diverse staff.”

She says that half of independent agencies say they have developed plans to meet the needs of emerging markets, including women, ethnic markets and the lesbian, gay, bisexual, transgender community.

One consultant to independent agents found the growth in the number of agencies surprising.

Al Diamond, president of Cherry Hill, N.J.-based Agency Consulting Group, Inc. says, “It isn’t that we are losing people, but we are losing entities; not because they are failing, but because they are getting older and they don’t have good succession planning.”

He adds, “Eventually, they merge and sell and cluster with others. So it is a little surprising that [the number of agencies] didn’t go down.”

He says the increase may be due, in part, to more captive agents moving onto the independent-agency system.

“I’m happily surprised,” says Diamond. “I think it’s great. I’ll stay in business for a while.”

The report, which has been produced since 1983, will be available in E-Version for $79 beginning Nov. 1.

The survey was sponsored by the IIABA Contact Kevin Krupka for a career opportunity at Mountain Insurance Brokers. (720)974-1702 or kkrupka@mountaininsurance.com

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