This year, we asked readers for the first time if they have document imaging/management systems, another relatively new technology for most agents and brokers. Forty-two percent of the respondents said they have such systems.

Production

The survey results appear to confirm that the hard market is indeed over. The percentage of respondents who reported their volume increased last year was down 4 points, to 79%, from the 2004 survey. Furthermore, the percentage of respondents with more than $20 million in volume was unchanged at 18%, after increasing 7 points in last year's survey.

The shift toward commercial-lines business that we've seen during the recent hard market continued, however. In this year's survey, a majority of the respondents, 52%, for the first time indicated such business makes up 50% or more of their premium volume. Reflecting the growth in commercial-lines premiums during the hard market, that figure was up from 49% in the 2004 survey, 46% in 2003 and 39% in 2002. Now that commercial-lines premiums are beginning to fall for some products, it will be interesting to see what happens to that figure in next year's survey.

Contingent commissions have been in the news a lot lately–so much in fact that even many people in the insurance business must think all agents and brokers get them. That's never been the case, however. In this year's survey, 69% of the respondents said they qualified for a contingency bonus last year. That was unchanged from the 2004 survey and up 3 points from 2003.

Staffing

With volume showing little change last year, it was not surprising that staff size didn't either. As in last year's survey, 30% of the respondents work in agencies with 15 or more employees. In contrast, the figure was 20% in the 2003 survey and 13% in 2002. Twenty-six percent of the respondents work in shops with four or fewer employees. That was down a point from last year and 10 points from the 2003 survey. The median average staff size was seven, with three of those employees active in sales. Both figures are unchanged from last year.

Markets

In this year's survey, 38% of the respondents represent 10 or more insurers. That was up 2 points from last year and up 9 points from the 2003 survey. Meanwhile the percentage representing five or fewer carriers dropped 3 points to 33%. The percentage of respondents who access additional markets through MGAs, surplus-lines brokers or program administrators was unchanged at 85%.

Miscellaneous

Insurers have been getting more selective in granting claim draft authority. In this year's survey, 46% of the respondents said they have such authority. That figure has fallen steadily since 2000, when it was 63%. Last year, it was 52%. Forty-two percent of the respondents, down 3 points from last year, work in agencies with one or more full-time life or health producers. Twenty percent of the respondents said their agencies were member of clusters or networks, compared with 22% in last year's survey and 17% in the 2003 survey. Four percent of the respondents said they work in bank-owned agencies or sell insurance for banks under the terms of a joint venture. That was down from 8% last year and 6% in 2003.

As always, we thank the readers who were willing to share their information with us. We hope this presentation of it provides a useful snapshot of the American Agency System as it exists in 2005.