Smaller Agency Offices Closing Doors as Consolidation Continues its Rise
According to BestWeek, after years of insurance distribution consolidation, small agents and brokers are feeling the greatest impact of this trend as they struggle to find a way to grow, are bought or are forced out of business.
"Consolidation on the distribution side is continuing to happen, and it's happening very, very aggressively," said Ken A. Crerar, president of the Council of Insurance Agents and Brokers. "This industry has long been ready for consolidation. It's driven by the need to be more efficient, by the need for stronger balance sheets."
Crerar cites an analysis by industry consultant Marsh-Berry that says of a total of 38,000 agencies in 2000, 22,754 agencies earned under $500,000 in commercial property/casualty revenue. More than 19,000 of those will be out of business by 2015-a decline of approximately 75%.
The number of agencies doing $10 million or more in revenue will have more than tripled, to more than 600, during the same time period.
The study said that market share is following the same trend line.
Published on June 2, 2008
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