New study reveals the pandemic's impact on insurance agencies
The Big "I" surveyed independent agencies to uncover the effects of COVID-19 on operations, revenue and more in 2020.
The 2020 Agency Universe Study, produced by Future One, a cooperative effort of the Independent Insurance Agents & Brokers of America (Big “I”) and leading insurance agencies, examines agency revenue trends and agency technology use, marketing strategies, and carrier relationships. For 2020, the survey was modified to include questions related to the coronavirus pandemic. The results from these questions were recently published by the Big “I” in its COVID-19 Impact Summary.
“Independent agents and brokers emerged as truly essential anchors in their communities during the challenges of 2020, helping their clients and neighbors find security and peace of mind even as they themselves were impacted by the uncertainties,” said Bob Rusbuldt, Big “I” president & CEO, in a statement. “The 2020 Agency Universe Study highlights how agencies can best tackle the continues obstacles and trends in the post-COVID world.”
More than 1,400 agencies participated in the 2020 study, with small agencies generating less than $150K in revenue annually comprising the lion’s share (32.1%) of the group. Medium-small agencies with between $150K – $499K in revenue made up 27.2% of businesses surveyed.
COVID’s impact on agencies
The study found small agencies were more likely to report a significant impact on their revenue and personal lines customer base. Newer agencies were also more likely to have their revenue streams impacted.
These findings mirror a Big “I” study in August 2020 that revealed that nearly 50% of independent agencies reported decreased revenue for the year, and 46% said they lost commercial clients during the pandemic.
One possible contributing factor to why these agencies bore the pandemic’s brunt was a lack of disaster recovery plans. The study found that only 1 in 20 agencies surveyed had a disaster recovery plan that accounted for pandemics. Moreover, smaller agencies (33%) and newer agencies (22%) were least likely to have such a plan in place.
Despite the pandemic moderately or significantly impacting most agencies during the pandemic, less than 25% reported changes to staff or pay as a result. According to the study, small agencies were more likely to report reduced staff hours, while jumbo agencies (more than $10M in annual revenue) were more likely to report reduced or canceled bonus payments.
Agencies need support
Finding resources and support during a global crisis such as the COVID-19 pandemic can be crucial to a business’s survival.
Agencies large and small admitted to needing some sort of support within the past year. Small agencies were more likely to need support with handling personal lines clients’ calls and service requests. Jumbo agencies were more likely to need support leveraging risk control services to identify new areas of exposure due to the pandemic and providing guidance about the crisis and coverage.
“The study uncovered some key areas in which independent agencies need further support, including finding new business opportunities and offering digital tools and servicing,” Madelyn Flannagan, Big “I” vice president of agent development, education and research, said in a press release. “As the Big ‘I’ continues supporting its members, we look forward to partnering with the brightest minds in the industry to provide the critical resources, tools and solutions needed to adapt to the current business environment.”
For more highlights from the complete 2020 Agency Universe Study, visit the Big “I” Agency Universe Study webpage.
Related: