As commission and brokerage expenses continue their steady climb, new data shows some insurers are struggling to maintain sustainable underwriting economics – with sales expenses outpacing premium income by wide margins.
In 2024, US property and casualty (P&C) insurers spent a collective $93.8 billion on commission and brokerage costs, or 11.6% of all direct premiums written, according to the latest IB+ dashboard. That figure marks a 5.5% increase over the previous year, continuing an upward trend that could pose challenges for insurers with high broker dependence or aggressive customer acquisition strategies.
While most firms managed to keep distribution expenses in check, a handful of outliers spent far more on commissions than they earned in premiums, suggesting deeper pricing, structural, or strategic issues.
Insurers with the highest broker expense ratios in 2024:
Farmers Mutual Protection Association Group
Leading the pack by a significant margin, Farmers Mutual Protection Association Group reported a commission and brokerage expense ratio of 204% in 2024. That means the company spent over 15 times more on broker-related costs than it collected in direct premiums.
The insurer recorded $102 million in direct premiums written last year but paid out $208 million in broker and agent commissions. This marks a sharp departure from prior years, during which the ratio hovered at a much more sustainable 13%.
Such a steep increase could point to pricing miscalculations, an underestimation of distribution costs, or even broader financial distress. A heavy reliance on brokers or legacy commission structures may also be weighing on the firm’s balance sheet.
Farmers Mutual provides a broad portfolio of products including farm, auto, renters, and mobile home insurance – all of which can incur complex or multichannel distribution costs.
Security Group
Coming in second, Security Group spent $212,498 on commission and brokerage expenses in 2024, well in the range of the $311,904 it earned in premiums. This translates to a ratio of 68%, the highest the firm has recorded in five years.
Ratios in previous years have been significantly lower, sitting between 56% and 57%, meaning the firm earned more than twice as much in premiums than it spent. The fluctuation may be partly due to the timing of revenue recognition: while commissions are often booked upfront, premiums may be recognized over time, distorting year-on-year comparisons.
Steep increases could also point to pricing miscalculations, underestimation of distribution costs, or even broader financial distress. A heavy reliance on brokers or legacy commission structures may also be weighing on the firm’s balance sheet.
The company primarily provides employee benefits, including health, dental, vision, life, and disability insurance, alongside its other core products such as personal loans.
First Tower Group
First Tower took third place with a broker expense ratio of 61%. The company paid just over $13 million in broker commissions in 2024, compared to $21.5 million in earned premiums. The ratio remained stable compared to previous years.
A steady ratio result each year could mean that the company’s cost structure related to selling insurance is consistent and that there is no major change in sales strategy or channel mix. For example, if a company shifted from using agents to more direct-to-consumer online sales which are often cheaper, we could expect the ratio to decrease. Investors and regulators may also see such a steady ratio as a sign the company is managing its distribution costs predictably, suggesting operational stability.
First Tower, operating under the brand Tower Loan, primarily offers lending services alongside certain insurance products such as credit life insurance, credit disability insurance, and accidental death and dismemberment insurance.
Explore the Data: A full breakdown of broker expenses, loss ratios, and litigation trends across the property and casualty market is available now through the Property and Casualty Financial Insights dashboard from IB+.
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