“Less than 40,000” was the number two answer, when I began asking (last year) how many independent insurance agencies there were. The subject came up as I was collecting Web site URLs of independent agencies. “I don’t know,” was actually the number one answer, usually with an appended “but it’s probably less than 40,000.”
It was clear: The “conventional wisdom” was that the number was 40K or less, and heading south. That shrinking trend began back in the 1950s or ‘60s, when the independent agency ranks — then called the American Agency System — hit its peak of 80,000. It lost its virtual monopoly on selling property/casualty insurance with the advent of the direct writers, and began a decades-long decline in the number of agencies. Over the last decade, other industries also had high-visibility mergers and shrinkage in the number of firms, so it was easy to assume that the trend was continuing.
Yet there were a lot of signs that it wasn’t continuing, and that it was, in fact, turning around. Companies like Progressive and GMAC were signing up new agents at a prodigious rate, and auto insurance is where most new agents start. Producers were leaving Allstate, Farmers, and State Farm in record numbers. Some left the industry, but many were becoming independent agents. Wholesalers like Superior Access, Insurance Noodle, and AgentSecure were providing markets, filling the void left by larger carriers who wouldn’t deal with these agents one at a time.
So, late last year, I began a project to identify all the independent insurance agency offices in the country. The emphasis was on physical offices, because that’s where the vast majority of buying and placing decisions are made. It’s also easier to identify offices than to ferret out the ownership. By definition, an independent agency is one that represents independent agency carriers, so we began cross-referencing the list by the carriers they represented. We assembled lists from over 100 carriers, many from their Web sites but also from several other sources.
What we found
First, there are a lot more agencies and agency offices than most people thought. As of late April, 2003, we have identified almost 60,000 unique P&C agency offices. As best we can tell, about 6,000 are branches, leaving about 54,000 agency entities (it gets a little murky when dealing with ownership).
Secondly, we found that there seemed to be three main “kinds” of agencies. The most visible ones are the larger ones, often representing two or more national carriers and some “super-regional” carriers. As expected, we found an astounding number of personal lines — predominantly auto-writing agencies. There’s at least one in virtually every corner strip mall in America, it seems.
The most surprising part was the large number of agencies that represent primarily small mutual carriers. We believe these are “traditional” agencies, but just small. Many are in smaller towns, i.e., lower premiums, slower pace, and profitable business. From all indications — and many have Web sites extolling their virtues and especially their local roots — these folks seem to be doing well.
Based on what we’re seeing, the independent agency business is actually growing.
Barry can be contacted at barry@barryklein.com
…we have identified almost 60,000 unique P&C agency offices.
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