The challenging economy and the soft insurance market have taken their toll, and consolidation continues to impact distribution, but the independent insurance agency system is alive and well. While consolidation continues to reduce the number of independent agencies, insurance agents continue to demonstrate their entrepreneurial nature by starting new agencies and brokers at a steady clip. According to a new study (see here & here), the number of independent agencies has remained steady – there is approximately the same number of agencies today as there were in 2006 - 37,500. Approximately 11 percent or 4,000 of today's independent agencies were started within the last three years. The 2010 Agency Universe Study (AUS) was conducted by Future One, a collaboration of the Independent Insurance Agents & Brokers of America and insurance companies working with independent agencies.
Of note, the cost of technology has become less of a critical issue for independent agencies. This may be because robust web-based agency systems are available at low cost for small and new independent agents.
This bodes well for insurance entrepreneurs. At the worst point in the cycle, with sales challenges high and valuations low, a large number of new agents and brokers are getting off the ground successfully.
Specialty Insurance Expertise: Tennant Risk Services
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