Study shows promising trends for independent insurance agencies
The number of independent insurance agencies, as well as the revenue they produce, is on the rise, according to a new study from Future One, a collaborative group comprised of the Independent Insurance Agents & Brokers of America and a group of independent agency companies. The study, called “2012 Agency Universe Study,” shows that independent agencies are becoming more popular throughout the U.S. The study provides some insight on why agencies may be growing more popular and what that could mean for the country’s insurance markets.
Agencies benefit from diversity of larger insurance companies
The study suggests that the growth of independent agencies around the country proves that the insurance system is both dynamic and adaptive to volatile situations. Much of this growth is due to diversity. Some large insurance groups are looking to diversify their portfolios by entering into new markets or returning to those they left behind in the past. To establish a powerful presence in these markets, insurance companies root independent agencies that sell policies on their behalf. These agencies are largely responsible for the success of their representative insurance companies in new markets and are highly valuable to larger corporations.
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Number of agencies, and revenue they produce, are up
The study found that the number of independent insurance agencies has grown to 38,500 over the past two years, up from the 37,500 they had been in 2006. Business conditions for independent insurance agencies have also improved since 2010. The study shows that 60% of these agencies reported a significant increase in revenue in 2012. Some of the growth in revenue is due to cuts being made to administrative costs. Agencies are beginning to make better use of the Internet and other digital services to conduct work, thus eliminating much of the costs associated with physical administration and record keeping.
Beneficial trends expected to continue
The study highlights more information concerning the growth of independent insurance agencies around the country in more detail. Future One suggests that independent agencies are experiencing a favorable business climate in the U.S. due to new regulations and the growing demand for insurance coverage. As long as insurance companies continue to show interest in new markets and diversity, these agencies are expected to continue to see major growth in the coming years.