The Rise of Consolidation
The U.S. independent insurance agency landscape has undergone a profound transformation over the past five years. Fueled by private equity and strategic consolidations, the market has shifted from a fragmented ecosystem of small, family-run agencies to a concentrated network dominated by regional and national brokerages. This shift is reshaping how P&C carriers engage with agencies and has significant implications for both personal and commercial lines.
Over the past five years, the agency landscape has evolved significantly, with notable shifts in agency size distribution and satisfaction. In the J.D. Power 2024 U.S. Independent Agent Satisfaction Study, the proportion of respondents who work at (or own) an agency classified as small (10 or fewer employees) has substantially declined. In 2019, nearly three out of four respondents were with a small firm but now that group makes up less than half of respondents.
A similar trend has occurred in the Commercial side of the study. Those working at large agencies (50+ employees), for example, now make up nearly the same portion of responses as those at small agencies.
In addition, the quality of the experiences reported by individuals at different size agencies has dramatically changed during this time period. In 2019, in Personal Lines the difference in overall satisfaction was relatively limited with a 36-point difference between the average of the smallest and largest agencies. Today, that difference has grown nearly 4X to 143 points, with the satisfaction among large firms increasing 75 points and satisfaction at small firms falling 32 points.
Among respondents rating their relationship with their Commercial line insurer, we see a similar trend with the gap between small and large going from 2 points in 2019 to 123 points in 2024. What stands out in Commercial is that while the smaller agencies report very little change in satisfaction, the larger agencies are reporting significant increases in overall satisfaction.
Even though large agencies are reporting better experiences, that is not universal for all brands. Among large agencies in Personal, the top two insurers' scores were 904 and 874, with the bottom two scoring 761 and 751. Among large agencies in Commercial, the top two insurers' scores were 889 and 872, with the bottom two scoring 758 and 749 respectively. While larger agencies are reporting better experiences with their insurers, some brands are outpacing the competition and building a strategic advantage that could be a point of differentiation in the future.
Key Implications:
The independent agent channel has been quietly undergoing a systemic shift that has implications for both agencies and carriers. For carriers, the consolidation of independent agencies presents both strategic opportunities and significant risks. Larger, consolidated agencies offer carriers efficient access to scale, more sophisticated data capabilities, and the potential for deeper, streamlined partnerships. These benefits come with heightened agent expectations around service, technology, and commission structures. Carriers that underdeliver risk being deprioritized or dropped altogether. As carriers shift resources toward supporting large agencies, smaller agencies may be left underserved, eroding agent loyalty and weakening market reach in local and niche segments.
Carriers must carefully consider not only what may seem to be the most attractive opportunities but also where they are best positioned to succeed in the future. If carriers fail to meet the demands of the large companies while alienating smaller ones, they face a lose-lose scenario: diminished influence across both ends of the distribution spectrum. Strategic alignment, tailored support models, and segmentation will be critical to balancing these competing pressures.
About the Author: Craig Martin is Executive Director of the Global Insurance Intelligence Practice at J.D. Power. His decades of experience in the financial services sector, customer experience, market research and data analytics provide him with a unique perspective that helps insurance organizations evolve with consumer expectations.
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