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 2011 to 2020, but have lost some ground to affiliated agents and direct response companies, as shown in the charts below.




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Worksite Life Insurance Sales By Line Of Business, 2020


(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 $7.46 billion in 2020, down 15.5 percent from 2019.

Annuity distribution

Total U.S. individual annuity sales fell by $23 billion in 2020, or 9.5 percent, after growing 3.4 percent in 2019. Independent broker-dealers were the largest single distributor of annuities, with 25 percent of sales, higher than in 2016 when they accounted for 21 percent of the market. Independent agents accounted for the second-largest share of annuity sales by channel with 19 percent in 2020, about the same as in 2016.

Sales Of Individual Annuities By Distribution Channels, 2016 And 2020


Source: U.S. Individual Annuities, 2020 Year in Review, LIMRA, 2021.

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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 roughly half of the property/casualty (P/C) market. There is a degree of overlap as many insurers use multiple channels.      

AM 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 2020 agency writers accounted for 53.8 percent of P/C insurance net premiums written and direct writers accounted for 45.8 percent, according to AM Best.*
  • In the personal lines market, direct writers accounted for 64.4 percent of net premiums written in 2020, and agency writers accounted for 35.5 percent. Direct writers accounted for 62.4 percent of the homeowners market, and agency writers accounted for 37.4 percent. Direct writers accounted for 65.5 percent of the personal auto market, and agency writers accounted for 34.5 percent.*
  • Agency writers accounted for 76.1 percent of commercial P/C net premiums written, and direct writers accounted for 23.1 percent.*

*Unspecified distribution channels accounted for the remainder.

  • There were an estimated 36,000 independent agencies in the United States in 2020 (latest data available), about the same as in 2018 when the previous study was conducted, according to the Independent Insurance Agents and Brokers of America’s (IIABA) 2020 Agency Universe Study.
  • In 2020 small agencies (less than $150,000 in revenue) accounted for 32 percent of all agencies, and medium-small agencies (with $150,000 to $499,000 in revenue) accounted for 27 percent of all agencies. Medium agencies (with $500,000 to $1.25 million in revenue) accounted for 24 percent of all agencies. Large agencies (with $1.25 million to $9.9 million in revenue) held a 15 percent share of all agencies. Jumbo agencies that have revenues of $10 million and above accounted for 2 percent of all agencies.
  • The proportion of agencies in small towns and rural areas rose to 23 percent in 2020, up from 19 percent in 2018. Agencies in small metro areas also grew, to 15 percent of all agencies in 2020 from 9 percent in 2018. Agencies in medium metro areas remained at 21 percent but agencies in large metropolitan areas were down to 40 percent from 51 percent in 2018.
  • In 2020, 10 percent of the agencies in the study were involved in acquisitions, 1 percent merged with another agency, and 2 percent converted from exclusive or captive agencies to independent agencies.
  • About nine out of ten agencies are owned by principals, about the same proportion as in 2018.

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