Once again our readers gave it to us with both barrels when we asked them in an online poll what they thought about the fracas in Florida between State Farm and the coastal property insurance market.

Our question centered on what will happen to the current State Farm agency force when the company pulls out of the state–and, if they’re allowed to compete as independent agents, whether they present a threat to independent agents.

When asked if State Farm agents in Florida should compete with independent agents, 37.5% said yes, while 62.5% said no.

When asked if they would be worried about the competition if they were doing business in Florida, 31.25% said yes, and 68.75% said no.

As usual, the individual comments are the best:

“I wouldn’t even think of living there. State officials are nuts.”

“Maybe they could all get contracts with Allstate.”

“Florida CFO: butt out. The State Farm agents signed the contract.”

“State Farm AND its agents have both made a fortune from the clients they ’served.’ Get the company out of Florida and let their agents resign from the company.”

“If this really does happen, most State Farm agents will find a way to open an independent agency, whether licensing their spouse or other trusted person, and move the business. I feel they have had a good run with State Farm in the past and never paid attention to the independent market because they enjoyed favorable pricing. You live by the sword, you die by the sword.”

Although the pundits are still predicting the end of the soft market, most agents and brokers responding to CIAB’s Commercial P/C Market Index Survey reported an average 6.4 percent decrease in commercial rates for fourth-quarter 2008. Forty-three percent of respondents said premiums for small accounts were down from 1 to 10 percent, with 35 percent reporting no change compared with the third quarter. For medium accounts, 50 percent said premiums were down between 1 and 10 percent while 17 percent saw decreases in the 10 to 20 percent range. Eighteen percent saws no change in rates compared with last quarter.

Not surprisingly, one of the few exceptions was in D&O coverage, where 17 percent of respondents reported a 1 to 10 percent increase in premiums, while 36 percent reported no change and 21 percent said rates declined between 10 and 20 percent. Other lines that show single-digit signs of tacking upward included business interruption, broker E&O, commercial property (especially in coastal areas), flood insurance, EPL, marine and workers’ compensation.

For the complete survey, click here.

God knows our economy and the property-casualty industry are engulfed by what seems like an endless bank of dark clouds. But the Big I’s new “Agency Universe Study” suggests that there may be a silver lining in there somewhere (or as the optimistic kid said on finding a pile of horse manure under the Christmas tree, “There must be a pony somewhere!”).

First off, the number of independent agencies has stabilized since the 2006 study. Although down from an estimated 44,000 agencies in 1996, this year’s 37,500 is roughly the same as 2006, suggesting that many of the dire predictions about the demise of the small to midsized independent agent may be premature — and that the M&A boom of recent years is bottoming out.

But the real surprise is not the slowdown in M&A activity, but the increase of small (revenues of $150,00 and under),  start-up agencies — 11 percent of survey respondents were founded in 2004 or later (including 4 percent that launched in 2007 and 2008).

Another interesting point that quantifies what I’ve been hearing from agents is that a lot of this growth is around personal lines, especially in the South Atlantic and West South Central coastal areas where direct writers are reluctant to tread (we’ll tackle the personal lines issue in the February AA&B). These new agencies are deriving 48 percent of their insurance revenue from personal lines commissions.

The survey’s other major findings include:

• Declining revenues due to the soft market and shifting premiums, more common among medium-small and medium agencies (with $150,000 to $1.2 million in revenues), with 23 percent reporting average decreases of 10 percent
• More efficient operation through use of technology with fewer employees, with agencies employing 9 full-time employees in 2008 versus 11.2 in 2006
• Improved satisfaction with carriers, with more than one-third finding business planning with their No. 1 carrier very valuable
• Reduced usage of customer service centers, with only 24 percent of agencies using them
• More carrier representation for personal lines, with an average of 6.2 carriers
• Increased concern about controlling expenses and reinvesting

It seems to me that the really good news in these varied findings is that agents are finding creative ways to get around the problems of the economy and the soft market by providing consumers with a viable alternative to the ducks and the cavemen through more efficient service, increased personalization, and a choice of carriers. And that indeed means a pony is in the wings.

To hear a more in-depth perspective of the Agency Universe Study findings, listen to our interview with  Madelyn Flannagan, Big I’s vice president, education and research, at the podcast portion of the AA&B Web site at http://www.agentandbroker.com/Media/PodcastItems/FlannaganFinal.mp3.