Farm Bureau Insurers Navigate Underwriting Challenges, Geographic and Business Concentration Challenges

Farm Bureau Insurers Navigate Underwriting Challenges, Geographic and Business Concentration Challenges


OLDWICK, NJ, January 18, 2024–(BUSINESS WIRE)–Personal auto, homeowners and landlord lines of business have contributed to a 13% increase in premiums in the US property/casualty (P/C) brokerage segment over the past two years. new AM Best report.

This Best’s Market Segment Report notes that growth among a group of P/C business bureaus rated by AM Best has been in line with growth in the P/C industry overall. Over the past decade, direct premiums (DPW) among this P/C segment have grown from $12.6 billion to $17.3 billion in 2022. Most of the risks of business offices are focused on short and medium personal business. This segment has also faced underwriting challenges in recent years due to adverse weather events and inflation, which put pressure on earnings for these organizations in 2022 as well as the first nine months of 2023.

The report notes that despite overall premium growth, business bureaus have shown a trend of declining market share in key business areas. One-third of single-state farm bureaus have double-digit market shares in their line of business; only two have double-digit market shares in both of their two main lines of business.

“Geographic and business lines remain concentrated, although companies typically benefit from policy retention rates above 90%, which is better than the industry overall,” said Christopher Lewis, chief financial analyst at AM Best.

Through 2022, the historically favorable net income of AM Best-rated P/C business offices has led to consistent increase in policyholder surplus, which has increased by an average of 4.9% since 2013. Overall, most of this segment is well capitalized, with 82% achieving the two highest levels on AM Best’s balance sheet strength rating.

However, these P/C business offices are geographically concentrated, with two-thirds of rated companies receiving their premiums from a single state. Having such a concentration of financial rewards in one state can increase exposure not only to disaster risk but also to regulatory pressures.

The report notes that single-state farm bureaus are beginning to write more cases outside their home states. While this can be beneficial in the long run, premium growth is often slow and insignificant based on alternative distribution strategies such as direct-to-consumer sales. To further complicate matters, farm bureaus are required to establish separate subsidiaries to distribute business outside the state and comply with marketing and licensing requirements. “With these considerations in mind, some farm bureaus are diversifying their premiums by acquiring smaller insurers outside their territories,” Lewis said.

For dual-focus business offices, troubled profitability experienced in some P/C lines was partially mitigated by underwriting life/annuity lines of business. “This can provide additional advantages in terms of distribution, pricing and management expertise, as well as capital support,” Lewis said. “Such relationships can strengthen farm bureaus over many personal lines and life carriers who write just such work.”

AM Total direct premiums among the organizations that make up the top-rated life/annuity business office population have ranged from $2.7 billion to $3.2 billion annually over the past ten years. The overall split between ordinary life, annuity, investment and accident and health products has been relatively consistent over the past decade. Ordinary life products have historically accounted for about 70% of business and 20% of individual annuities. “In recent years there’s been a bit of a shift away from annuities and more focus on protection products,” Lewis said.

To access a full copy of this special report, visit

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Christopher Lewis
Senior Financial Analyst
+1 908 882 2014
[email protected]

Christopher Sharkey
Deputy Director, Public Relations
+1 908 882 2310
[email protected]

Al Slavin
Senior public relations specialist
+1 908 882 2318
[email protected]

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