INSURANCE
printer friendly formatemail this page

DISTRIBUTION CHANNELS

Property/casualty insurance was once sold almost exclusively by agents — either by captive agents representing one insurance company or by independent agents representing several companies. Insurance companies selling through captive agents and/or by mail, telephone, or via the Internet are called “direct writers.” In the 1990s, these distinctions blurred as insurers began to use multiple channels to reach potential customers.

In the 1980s, banks began to explore the possibility of selling insurance as independent agents, usually buying agencies for that purpose, see page 70. Other distribution channels include sales by direct writers and agents to groups through professional organizations and workplaces.

The sale of insurance via the Internet, either at proprietary Web sites or at so-called “insurance malls,” remains a very small portion of total sales. Most Internet sales are of “commodity” insurance products, i.e., auto, some homeowners, term and whole life, and other relatively simple coverages that do not require much explanation or customized risk analysis.

The Independent Insurance Agents & Brokers of America says that in 2000 (latest data available) on average personal property/casualty insurance accounted for 53 percent of agencies’ insurance revenues. Commercial lines accounted for 39 percent of revenues, life and health insurance for 5 percent, and employee benefits for 3 percent.
MARKET SHARE: PERCENT OF ALL PROPERTY/CASUALTY LINES, 1997-2001 (1)



 

1997

1998

1999

2000

2001
National agency cos.29.39%29.23%28.67%28.09%28.05%
Regional agency cos.22.0422.2022.9223.4223.19
Total agency cos.51.4351.4251.5951.5151.25
Direct writers48.5748.5848.4148.4948.75
(1) Based on direct premiums written.

Source: A.M. Best Company, Inc., Best’s State/Line Reports and Databases, P/C.
  • In 2000, the average agency represented 7.3 personal lines insurers, 6.7 commercial lines insurers and 4.8 life and health carriers, according to the Independent Insurance Agents & Brokers of America. The total number of insurers represented by agencies has grown since 1996.