The linchpin of the brokerage distribution channel is the wholesale brokerage agency that serves as an intermediary between insurers and producers who sell their products. More than three-quarters (77 percent) of producers have written business through a wholesale insurance brokerage agency in the past year. Although the majority of producers across all categories are more likely than not to work with a brokerage agency, female producers and producers under the age of 50 are somewhat less likely to work with a brokerage agency than their respective counterparts.
On average, producers wrote business through 2.72 brokerage agencies in the past year. That number tends to increase with producer earning levels, so that producers earning at least $100,000 in income have worked with an average of three brokerage agencies in the past 12 months.
The average amount of time that producers have been working with their primary brokerage agency is seven years. In the study, we defined “primary brokerage agency” as the agency with which respondents wrote the most business.
In terms of the perceived value of working with a brokerage agency, producers cite access to products clients need, high-quality sales and service support and administrative support as the most important attributes of the brokerage relationship (Figure 10; click to enlarge). Access to leads ranks below other factors in terms of importance, though lead offers figure prominently when producers were asked what factors would influence them to work with a new brokerage agency.
Figure 11 (click to enlarge) lists the most commonly offered forms of support from brokerage agencies, along with a measure of the perceived value by producers. As the table indicates, there is some disparity between how common some support services are and the value derived by producers. For example, although 9 out of every 10 brokerage agencies offer training, just over half (55 percent) of producers who receive training from their primary brokerage agency find it to be extremely or moderately valuable. Similarly, only 61 percent of producers find at least moderate value in the marketing and point-of-sale material they receive from their primary brokerage agency, though more than 90 percent of brokerage agencies offer this form of support.
The apparent lack of value producers derive from some of the support they receive from their primary brokerage agency raises the question of how loyal producers are to the brokerage agencies with which they work. While only 6 percent of producers report having definite plans to move their business to a different brokerage agency, little more than half (52 percent) state that they are “very unlikely” to move their business away from their primary brokerage agency. Forty-two percent of respondents say they would consider moving their business to a different brokerage agency “if a better offer comes around,” suggesting a good deal of potential churn at this segment of the brokerage distribution channel.
Nearly two out of every three (64 percent) producers have immediate plans to contact a new brokerage agency to inquire about their products or services. According to respondents, factors that would likely motivate them to work with a new brokerage agency include a lead offer, new product offer or a higher-commission offer.