Facts + Statistics: Distribution channels

Life insurance distribution channels

Life insurance was once sold primarily by career life agents, captive agents that represent a single insurance company, and by independent agents, who represent several insurers. Now, life insurance is also sold directly to the public by mail, telephone and through the Internet. In addition, in the 1980s insurers began to market annuities and term life insurance through banks and financial advisors, professional groups and the workplace. A large portion of variable annuities, and a small portion of fixed annuities, are sold by stockbrokers. Independent insurance agents have held over half of the individual life insurance market over the 10 years from 2008 to 2017, but have lost some ground to affiliated agents and direct response companies, as shown in the chart below.

Life Individual Market Share By Distribution Channel, 2008 And 2017

(1) Includes brokers, stockbrokers and personal producing general agents.
(2) Includes career, multiline exclusive and home service agents.
(3) No producers are involved. Excludes direct marketing efforts involving agents.
(4) Includes financial institutions, worksite and other channels.

Source: LIMRA’s U.S. Individual Life Insurance Sales survey results and LIMRA estimates.

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(1) Short-term and long-term disability.

Source: Eastbridge Consulting Group, Inc.

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  • Worksite marketing is the selling of voluntary (employee-paid) insurance and financial products at the worksite. The products may be on either an individual or group platform and are usually paid through periodic payroll deductions.
  • Worksite sales of life and health insurance totaled $6.89 billion in 2014, up about 3.7 percent from 2013.

Annuity distribution

Insurance agents, including career agents, who sell the products of a single life insurance company, and independent agents, who represent several insurers, accounted for 40 percent of annuity sales in 2016. State and federal regulators require sellers of variable annuities to register with NASD and the Securities and Exchange Commission.

Sales Of Individual Annuities By Distribution Channels, 2012 And 2016

Source: U.S. Individual Annuity Yearbook - 2016, LIMRA Secure Retirement Institute.

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Property/casualty insurance distribution

Agency writers, whose products are sold by independent agents or brokers representing several companies—and direct writers, which sell their own products through captive agents by mail, telephone, or via the Internet and other means—each account for about half of the property/casualty (P/C) market. There is a degree of overlap as many insurers use multiple channels.                                

A.M. Best organizes insurance into two main distribution channels: agency writers and direct writers. Its agency writers category includes insurers that distribute through independent agencies, brokers, general agents and managing general agents. Its direct writers category includes insurers that distribute through the Internet, exclusive/captive agents, direct response and affinity groups.

  • In 2016 direct writers accounted for 51.6 percent of P/C insurance net premiums written and agency writers accounted for 45.6 percent, according to A.M. Best.*
  • In the personal lines market, direct writers accounted for 70.6 percent of net premiums written in 2016 and agency writers accounted for 27.5 percent. Direct writers accounted for 68.6 percent of the homeowners market and agency writers accounted for 28.0 percent. Direct writers accounted for 71.5 percent of the personal auto market and agency writers accounted for 27.1 percent.*
  • Agency writers accounted for 66.6 percent of commercial P/C net premiums written, and direct writers accounted for 25.3 percent.*

*Unspecified distribution channels accounted for the remainder.

  • There were an estimated 38,000 independent agencies in the United States in 2016, down from 38,500 in 2014, according to the Independent Insurance Agents and Brokers of America’s (IIABA) 2016 Agency Universe survey.
  • The IIABA says the 2016 decrease reflects the increase in mergers and acquisitions along with stable rates of exclusive agency conversions from captive to independent and new agency formation.
  • Between 2014 and 2016 the estimated percentage of small agencies (less than $150,000 in revenue) rose to 21 percent from 15 percent, while jumbo agencies (revenue of $10 million or more) now account for 1.6 percent of agencies, compared with 0.8 percent in 2014.
  • The proportion of agencies in small towns and rural areas fell to 9 percent in 2016 from 19 percent in 2014 while the proportion in large metropolitan areas with 1 million or more in population grew to 52 percent from 47 percent.

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