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Special Report: PIA National’s Annual Independent Agent Study

Posted By Administration, Tuesday, February 13, 2018

The 2018 National Underwriter/PIA Independent Agent Study has just been released. It’s a team effort started in 2016 between PIA, National Underwriter and NMG Consulting. The results are published in the February issue of the National Underwriter. Though we have all the stats in this story, we have link to the article.

Click here to read the National Underwriter article. 

The study is designed to get the pulse of independent insurance agents. It looks at the demographics, the book of business, challenges faced by independent agents and how they rate carriers.

PIA National says this one is building on 2017’s highly successful survey. You can see last year’s study by clicking here.


Here are some highlights:

  A big concern from the study is the exodus of agency talent with 45% of principals and agency owners planning to retire in the next nine years.

  Only 24% of PIA members said their relationships with carriers is improving. A big percentage — 19% — said relationships are declining.

  Agencies report that 56% of their employees have smartphones but only 41% of that 56% could send out a quote with one.

 

Here's a breakdown of who participated:

  83% have worked in the P&C business for 15 years or more

  90% of respondents said they were an agency principal or owner though most in this category say they are owners

  Most responders are 50 and older

  37% are in the age group of 50 to 59

  23.4% write or manage brokers and agents who write commercial lines only

  73.8% of respondents write or manage brokers or agents who write both commercial and personal lines

 

A breakdown of the lines they write:

  P&C commercial — 83.3%

  P&C personal lines — 58.0%

  Employee benefits — 11%

  Life & health — 20.5%

 

The capacity in which respondent's firms do business:

  Agency — 86.2%

  Brokerage — 23.2%

  MGA — 2.6%

  Other — 1.3%

 

Annual revenues:

0 to $500,000 — 29.3%

$500,000 to $1 million — 18.1%

$1 million to $5 million — 30.2%

$5 million to $10 million — 7.9%

$10 million to $25 million — 7.6%

$25 million or more — 6.8%

 

The total % of premiums the firm controls:

0 to $500,000 — 28%

$500,000 to $1 million — 13.8%

$1 million to $5 million — 29.7%

$5 million to $10 million — 10.9%

$10 million to $25 million — 8.6%

$25 million or more — $9.0%

 

The target market of the firm:

9.7% — Large corporate risk $750 million or more

27.4% — Middle market with revenues from $250 million to $750 million

87.5% — Small commercial of up to $250 million

 

The percentage of P&C business the agency writes in commercial lines:

Agencies with $1 million to $5 million write 18%

Agencies writing $10 million to $25 million write 24%

Agencies writing $500,000 to $1 million write 37%

Agencies writing 0 to $500,000 write 30%

 

Of note:

  64% of agencies say their commercial lines commissions dropped by 1% to 5%

  9% of agencies said those commissions fell by 6% to 10%

 

The percentage of P&C business the agency write in personal lines:

Agencies writing 0 to $500,000 — 48%

Agencies writing $500,000 to $1 million — 30%

Agencies writing $1 million to $5 million — 4%

Agencies writing $10 million to $25 million — 14%

 

Of note:

  48% of respondents said the P&C personal lines products they write is 60% or more

  37% of respondents said their personal lines commissions have dropped

  71% say commissions fell by 1% to 5%

  17% said their commissioner are down 6% to 10%

 

Life & health coverage including accident and health offerings

6% — none

56% — sell both

34% — sell life only.

2% — health & AH only

2% — other

 

The percentage of agency revenue that is life & health:

10% or less — 79%

11% to 20% — 15%

21% to 30% — 5%

31% or more — 1%

 

Of note:

  33% of agents selling life & health saw commissions fall

  32% of agents selling life & health say commissions increased

  32% of agents selling life & health say commissions remained the same

 

Do agencies selling life & health plan to increase revenue in the next 5 years:

51% — Yes

26% — No

23% — Don't know

 

Agents and agencies:

Smaller agents and agencies want to see their carrier producers offer lower to no cost producer training. And they want something that is more than just product training. Larger agencies say they can access programs and even get financial assistance to incentivize them. Smaller agencies say they can't afford the programs and can't get the assistance they need to grow.

  39% of PIA members say they have changed carriers in the last three to five years.

  Of those changing carriers, 53% said it is their decision to do so and not the carrier's.

  16% said it is the carrier's decision

  24% called it a mutual decision

  7% had other responses

 

The biggest challenge for P&C agencies in the next five years is passing ownership and relationships from the current business and agency owners to the next generation.

 

Over the next 12 months agencies intend to:

42.2% — Keep the same carriers they have now

24.1% — Keep the same number but add some and delete others

22.6% — Add additional carriers

9.7% — Consolidate business to just a few carriers

1.4% — Other

 

This question was for PIA members only. In the last three years have relationships with carriers improved?

24% said their relationships have improved

19% say the relationship has declined

58% say things have stayed the same

 

The best carriers

Travelers — 35% said it's the best

2. The Hartford

3. Liberty Mutual

4. Auto-Owners Insurance

5. Chubb

6. Progressive

7. Philadelphia Insurance Companies

8. Nationwide

9. CNA

10. Cincinnati Insurance Companies

 

Best carriers by key factors to producers — 1 is poor and a 9 is excellent

Price competitiveness — Erie Insurance — rating: 7.73

Underwriting process — Auto-Owners Insurance — 7.63

Financial strength — Auto-Owners Insurance — 8.58

Response service — Auto-Owners Insurance — 7.86

Claims management — Auto-Owners Insurance — 7.82

Risk management & loss control programs — Travelers — 7.70

Compensation program — Auto-Owners Insurance — 7.68

Products and coverages — Chubb — 7.87

Strong, positive brand and reputation — Chubb — 8.32

Relationship management — Auto-Owners Insurance — 7.56

 

Best carriers by line of business

Business interruption

1. Travelers — 53.6%

2. The Hartford

3. Liberty Mutual

4. Auto-Owners Insurance

5. Chubb

 

Commercial auto

1. Progressive — 55.8%

2. Travelers

3. Liberty Mutual

4. The Hartford

5. Auto-Owners Insurance

 

Construction & Engineering

1. Travelers — 42.4%

2. Liberty Mutual

3. Auto-Owners Insurance

4. Nationwide

5. The Hartford

 

Cyber liability

1. Travelers — 46.7%

2. Chubb

3. The Hartford

4. Philadelphia Insurance

5. Lloyd's

 

D&O, E&O, PL, ELPI

1. Travelers — 40.0%

2. Philadelphia Insurance

3. Chubb

4. The Hartford

5. CNA

 

General liability

1. Travelers — 45.8%

2. The Hartford

3. Liberty Mutual

4. Auto-Owners Insurance

5. Nationwide

 

Boiler & machinery

1. The Hartford — 53.5%

2. Travelers

3. Liberty Mutual

4. Chubb

5. CNA

 

Inland marine

1. Travelers — 35.9%

2. Liberty Mutual

3. The Hartford

4. Auto-Owners Insurance

5. Nationwide

 

Product liability

1. Travelers — 40.9%

2. Liberty Mutual

3. The Hartford

4. Chubb

5. Auto-Owners Insurance

 

Property

1. Travelers — 47.3%

2. Liberty Mutual

3. The Hartford

4. Auto-Owners Insurance

5. Nationwide

 

Surety bonds

1. CNA — 59.2%

2. Travelers

3. Liberty Mutual

4. RLI

5. Auto-Owners Insurance

 

Umbrella & excess liability

1. Travelers — 41.9%

2. Liberty Mutual

3. Auto-Owners Insurance

4. The Hartford

5. Chubb

 

Workers' compensation

1. Travelers — 46.2%

2. The Hartford

3. Liberty Mutual

4. Auto-Owners Insurance

5. Berkshire Hathaway

 

Known commercial insurance providers that are not currently being used but an agency would consider using:

Cincinnati Insurance — 33.7%

Auto-Owners Insurance — 22.8%

Liberty Mutual — 15.8%

Chubb — 15.6%

The Hanover Insurance Group — 15.3%

Travelers — 13.4%

The Hartford — 13%

Erie Insurance — 12.7%

Berkshire Hathaway — 11%

Selective — 10.5%

 

Key factors on a scale of 1 to 9 on how important each of these factors are when selecting and evaluating a commercial carrier:

Ease of doing business — 8.44

Responsive service — 8.40

Products and coverages — 8.34

Price competitiveness — 8.20

Underwriting process — 8.13

Claims management — 8.05

Financial strength — 7.92

Relationship management — 7.70

Compensation program — 7.48

Strong/positive brand recognition — 7.47

Innovation 7.33

 

Question: Which carriers on the agency approved list?

Progressive — 65.8%

Travelers — 63.3%

The Hartford — 52%

Liberty Mutual — 48%

Market — 41.7%

Berkshire Hathaway — 41.3%

Philadelphia — 41.3%

Nationwide — 41.1%

Lloyd's — 39.8%

CNA — 38.4%

Chubb — 36.9%

AIG — 33%

Zurich North America — 31.1%

RLI — 26.5%

Great American — 23.7%

Auto-Owners — 23%

W.R. Berkley — 22.1%

Hanover — 21.9%

Allianz — 19.1%

QBE — 18.7%

XL Catlin — 16.7%

Arch — 16.2%

Crum & Forster — 16.2%

State Auto — 16%

Ironshore — 14.6%

OneBeacon — 12.9%

Cincinnati — 11.5%

Selective — 11.4%

Munich Re — 10.1%

Swiss Re — 8.1%

Aspen — 7.6%

FM Global — 6%

Zenith National — 5.9%

Erie — 5.2%

 

Besides price, what indications of quality do agencies value most in a commercial PC carrier?

64.3% — Ease of doing business

46.1% — Fair, timely claims handling

38.7% — Strong, knowledgable underwriting

37.4% — Superior customer service

36.5% — Consistent underwriting

 

How do agencies rate the overall level of satisfaction with commercial carriers used?

36.8% — Very satisfied

52.5% — Somewhat satisfied

8.0% — Neither satisfied nor dissatisfied

2.4% — Somewhat dissatisfied

0.4% — Very dissatisfied

 

Overall the relationships with carriers are:

42.6% — Improving

49.8% — Not really changing

7.6% — Declining

 

Technology used or allowed by the agency:

Electronic document retention system — 75%

Agency wireless Internet connection — 78%

Third party mobile network to access agency documents or network — 33%

Agency laptops — 58%

Agency smartphones — 56%

Agency flash drives — 16%

Agency website — 82%

Agency social media pages — 69%

Remote Desktop connection — 50%

 

How important are these to expansion plans from 1 to 5 with 5 being the most important and 1 the least important:

Security new customers through the current agency

89% — 5 (Very important)

10% — 4

 

Retaining current & increasing the number of policies insured per customer portfolio through my current agency

89% — 5

11% — 4

 

Buying an available book for business from another agency

29% — 5

17% — 4

31% — 3

10% — 2

10% — 1

4% — N/A

  59% of respondents say they cannot provide quotes to prospects while in the field.

 

Does the agency allow employees to use their own devices (smartphones etc.) to conduct agency business

53% — Yes

47% — No

 

When asked how agencies rate their overall level of satisfaction with commercial lines insurance providers they use

36.8% said very satisfied

52.2% said somewhat satisfied

 

What will make them more satisfied?

Higher risk appetite — 46.7%

Greater ease of doing business — 40.4%

Better rates — 32.6%

Faster response time — 30.4%

Higher commissions — 23.9%

Better online systems to get quotes and manage claims — 23.7%

Better relationships and communication — 21.1%

Better underwriting — 20.3%

More products — 15%

More innovation — 8.5%

Better claims service — 8.3%

More accurate quotes — 3.2%

 

Last and maybe most important:

Are you going to retire:

  23% in less than 5 years

  22% in the next 5 to 9 years

  44% in 10 or more years

  11% don't know

 

Do you have a perpetuation plan in place

  52% — Yes

  48% — No

 

Source link: National Underwriter

Tags:  Insurance Content  Insurance Industry  Insurance News  Special Report: PIA National’s Annual Independent   Weekly Industry News 

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