Insurance Brokers & Agencies

BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $ 0.333 of capital to $ 1 of labor; medium is $ 0.125 to $ 0.333 of capital to $ 1 of labor; low is less than $ 0.125 of capital for every $ 1 of labor.

CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

CONTINGENT COMMISSION ARRANGEMENT
An arrangement in which an insurance broker is paid by the insurer for the placement of business. These arrangements have been deemed inappropriate because of the conflict of interest that they cause.

HARD MARKET
A market in which insurance prices are increasing. Insurance markets harden when demand for insurance overshoots supply. The supply of insurance depends on insurers' capital positions.

INSURANCE AGENT
An individual who is licensed by a state to sell insurance products and services for one or more specific insurance carriers or companies.

Over the five years to 2022, the industry has grown for numerous reasons. One such reason has been rising premium prices on policies sold to consumers. Despite rising premium prices, consumers have not decreased their consumption of insurance products due to rising disposable income levels and favorable legislative trends.
Moreover, despite the COVID-19 (coronavirus) pandemic in 2020 and 2021, which has led to heightened unemployment levels and business closures, aggressive countercyclical policies adopted by the federal government, in addition to various consumer and business trends in response to the pandemic, benefited the industry, leading industry revenue to grow in 2020. Overall, industry revenue has risen, rising at an annualized rate of 2.2% to $196.3 billion over the past five years, including a decrease of 0.5% in 2022. Industry profit has increased as well, since operating cost inflation has kept pace with the rise in premiums with profit margin at 17.5% in 2022.