Life and health insurance products will recover faster than property and casualty products.
Los Angeles, CA (PRWEB) June 24, 2013
The Global Insurance Brokers and Agencies industry is a critical part of the insurance market, distributing policies and providing advisory services to insurance underwriters and consumers. The industry comprises independent brokerages and agencies that act as intermediaries during insurance purchases. Because the majority of income is associated with insurance transactions, industry revenue generally depends on three factors: policy pricing, demand for insurance and the popularity of using agents and brokers in distributing and purchasing insurance. According to IBISWorld Industry analyst Eben Jose, “over the past five years, the industry has grown at an average annual rate of 2.4%”. The industry is forecast to generate revenue of $584.6 billion in 2013, a 5.9% increase from 2012. North Asia's presence in the industry is significant considering the underdeveloped nature of most economies in the region. The unique gatekeeper role of agents in the Japanese insurance market and the growing importance of agents and brokers in China has provided ample opportunity for expansion. Such markets have provided the industry with avenues for growth and, as a result, enterprises and employment have increased consistently.
Over the next five years, the industry is expected to receive a boost. “Demand for insurance products in developed nations will slowly return to prerecession levels and emerging markets will continue to provide opportunity for expansion”, says Jose. From 2013 to 2015, life and health insurance products will recover faster than property and casualty (P&C) products due to sluggish growth in disposable income levels, but the industry's focus on pushing its risk assessment and online distribution products will account for P&C's slow growth. Furthermore, profitability is projected to improve as industry participants increase insurance premiums.
The Global Insurance Brokers and Agencies industry is highly fragmented and exhibits low market share concentration. The industry is dominated by small players, with the majority of industry participants being sole traders or partnerships. The entry of smaller players has been particularly evident in emerging insurance markets, which have been going through the early stages of life cycle growth. A decrease in concentration has occurred as an outcome of the major players eliminating market services agreements with insurers (i.e. contingent commissions). Major players were driven to terminating these agreements by investigations into such arrangements, undertaken by a number of state attorney general offices in the United States. These investigations resulted in the other major players incurring substantial fines. Consequently, major player revenue relating to market placements has declined since. However, many of the smaller players operating in local insurance markets continue to operate market services agreements, decreasing the competitiveness of the major players. All of the major players have been unable to keep pace with the industry, subsequently diluting their collective share.
For more information, visit IBISWorld’s Global Insurance Brokers and Agencies industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Industry participants act as brokers or agents in selling annuities and insurance policies. Brokers act on behalf of clients, whereas agents represent insurance companies. Insurance brokers and agents earn commission income that is calculated as a percentage of the premium of policies sold. They also earn some fee income for risk-management consulting and other value-added services, including insurance program administration.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on nearly every US and Global industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.