What is the strongest P&C distribution channel in the US?

Of the $765 billion in total premium written in the US in 2021, personal lines accounted for approximately 50% to the total premiums, commercial lines accounted for just over 38%, and the remaining 12% was “unclassified” coverage that cannot be easily categorized as either personal or commercial lines.

IAs showed total dominance in commercial lines distribution, placing nearly 88% of all commercial lines written premium, according to the Market Share Report. In personal lines, IAs placed 37% of written premium, and in the “unclassified” business, IAs placed 85% of written premium.

“We own commercial lines,” Boggs told Insurance Business. “And our placement in personal lines is pretty strong, considering that there are four major distribution methods within the system – the IAs, the captive agencies, the direct writers, and the insurtechs. On that side, we’re placing over a third of the business in what is a four-party race.”

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This distribution dominance from IAs is not a story well told. Boggs, who’s been in the industry for almost 32 years, said he’s been hearing about the imminent demise of the IA for the entirety of his career. This is because there’s always something new and exciting that comes along – for example, insurtech – that threatens to take away market share.

“Insurance is a financial mechanism where people transfer their risk to an insurer in exchange for a promise of a fix if something bad happens,” said Boggs. “It is a very social and relationship-driven business, which centers around being able to talk to somebody and seek advice. The IA system, while it may get dented from time to time, it won’t be destroyed because it’s built on relationships.”

While the underlying concept of insurance is quite simple, it is often overshadowed by the complexity of insurance contracts. Understanding and explaining insurance contracts, coverage nuances, and risk management requirements to clients is at the core of the IA value proposition.

“You can probably create an algorithm for that, but I don’t think it works as well as having an individual on an insured’s property, talking to them, and listening to their wants and needs,” Boggs commented. “Again, it’s all about the relationship.”

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The Big “I” 2022 Market Share Report shows that nine of the top 10 lines written by IAs saw some growth over the five years ending in 2021, with the exception of workers’ compensation which remained flat, potentially due to impacts of the COVID-19 pandemic, such as business shutdowns, layoffs, and remote work.

Boggs said he thinks this positive momentum in IA distribution will continue, partly due to the market conditions and the inflationary rating environment in commercial property coverage. Regardless of causation, he encouraged IAs to dispel any rumors about the demise of the agent, and to realize that it is a strong distribution channel.

“This is a place where you can have a career and a future,” he reiterated. “The past five years are proof that IAs are not dying out. We are not in danger of extinction next year, barring something really weird happening. This is a career distribution channel. The information in our Market Share Report is just information. How IAs apply it to their lives and their daily lives is what’s important.”