Insurance Agencies Industry Profile

The US insurance agencies and brokerages industry includes about 135,000 establishments (single-location companies and branches of multi-location companies) with annual revenue of about $110 billion. Large companies include Marsh, Aon, Arthur J Gallagher, and State Farm Insurance. Despite the prominence of large companies in the commercial segment, the industry remains highly fragmented: the largest 50 firms only hold 20 percent of the total market. Many companies that primarily offer insurance products to businesses function mainly as brokers. Captive agencies operate as a sales agent for a single insurer, working on its behalf; independent brokers sell products from several providers.

See the Insurance Carriers profile for coverage of insurance providers and the Managed Healthcare profile for coverage of group health insurance providers.

COMPETITIVE LANDSCAPE

Demand is related to consumer income and commercial business activity. When the economy grows, so does the demand for personal and business insurance. When the economy contracts, as it did in the late 2000s, demand for insurance falls.

The profitability of individual agencies depends on effective marketing, client referrals, and customer service. Large agencies have advantages in name recognition, connections with more insurers, and the ability to craft more complex insurance packages. Although small agencies formerly competed by specializing in a specific product line, they are increasingly diversifying to build business.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major insurance products, excluding group health insurance, sold by agents and brokers are primarily of two types - property ...