Disruption in the World of Independent Insurance Agents

March 11, 2022

Unprecedented Disruption within the Insurance Agency Sector

Disruption is changing the landscape for thousands of independent and captive agents. Within the last 5 years, the industry has witnessed 3,248 agency acquisitions, with a high of 791 in 2020.i According to the annual tracking by Optis Partners, year-end figures for 2021 are anticipated to exceed the 2022, with 553 acquisitions completed within the first 9 months.ii This level of M&A would suggest that 1 in every 150 agents have experienced a form of ownership disruption in the last 5 years.iii

Agency Mergers & Acquisitions 

A bar chart showing the number of agency mergers and acquisitions that took place between 2011 and 2021.

For smaller P/C agencies, competition for markets and carrier appointments is intensifying as the largest, most influential agencies continue to consolidate the sector. A review of Insurance Journal’s Annual Top 100 P/C Agencies Ranking over the last 5 years illustrates the impact of M&A activity within the top tier. The same Top 10 agencies jockey for position through aggressive acquisition strategies while annually, an average of 10 agencies are displaced from the Top 100 Ranking due to rapid growth among peers. Review of 27 acquired agencies, we see impact to over 5,000 agency employees who experienced ownership change.

Top P/C Agencies

A table showing the top P/C agencies, their rank in 2021, rank in 2017, 2020 total revenue, and 2016 total revenue

Carrier distribution model disruption furthers change for captive and independent agents. In the last year alone:

  • Nationwide completed the transition of approximately 2,000 formerly captive agents to its independent agency channeliv
  • Allstate continued along its Transformative Growth Plan, which includes changing commission structures and intention to expand its independent agency network, following its purchase of National Generalv
  • Liberty Mutual Insurance announced plans to transition its more than 2,200 exclusive insurance agents in 200 offices across the country to working for a new digital agency of exclusive agentsvi

The M&A disruption and new distribution models alter agency working environments, increase competition in many markets, impact compensation, job satisfaction, geographic opportunity and growth. While unplanned change can be for the better, for many agents, being in control of the change is preferred.

Cover of a whitepaper titled "When the pace of change accelerates — be prepared to change or get left behind." What's the best thing to do when the pace of change accelerates? Be prepared to change — or get left behind. Download this whitepaper to read more on what's causing the industry shakeup and how agents can flourish in a time of uncertainty and challenge.

Making the Next Move as an Insurance Agent

In response to market trends, many agents are creating new opportunities for themselves and their families by:

Many of these endeavors require resources and access to markets that hinge on the receipt of appointments by carriers. It can be said that the odds are stacked against start up and small agencies to receive appointments, given the requirements of proof of historical performance and ability to meet certain volumes. 

Typical Requirements for Carrier Appointments:

  • Quality of location and appearance of agency
  • Have access to ‘desirable’ clientele
  • Consistently profitable with good collection practices
  • Have an established history of profitable growth
  • Report premium volumes, carriers, target markets
  • Have a business plan and review annually
  • What technology and platforms are used and what are their plans for the future
  • Have a strong community presence
  • Have a spirited drive for acquisition
  • Ability to write $1 million in new business premiums within the succeeding 12-24 months

Finding Success as an Independent Insurance Agent

There are success stories of individuals taking risks to change their circumstances. Working with a leading insurance network can help agents overcome the barriers to becoming successful independent agents or agency owners. The Smart Choice® network partnership brings the combined strength of over 9,000 agents, offering financial resources, industry expertise, and appointment support to elevate the opportunity for agents to succeed, whether starting up or acquiring an agency. 

Get Started

What's the best thing to do when the pace of change accelerates?

Be prepared — or get left behind.

It's more important than ever to adapt to the changing landscape of the insurance industry. Disruption is happening daily and presents a critical need for agents of all shapes and sizes to anticipate and pivot. Read more on what's causing the industry shakeup and how agents can flourish in a time of uncertainty and challenge. 

Download the Whitepaper