You’re the 65-year-old owner of an independent agency. None of your kids or grandkids want to take the reins—and yet, you haven’t laid any plans anticipating a major agency ownership change at some point in the next three years.

Sound familiar? According to new data from the 2014 Agency Universe Study, that story is becoming all too common.

When Future One, a cooperative effort of the Big “I” and independent agency insurance companies, conducted the first Agency Universe Study in 1983, the primary goal was to provide information on the size and characteristics of the independent agency system in order to develop more effective marketing and business practices moving forward. Here are the top 10 findings of the 2014 Agency Universe Study—and what they mean for your agency.

1) The number of independent agencies remains stable.

After declining from 44,000 in 1996 to 37,500 in 2006 and remaining stable until 2010, the number of independent agencies grew to 38,500 by 2012. That number holds steady for 2014.

It’s not growth, but it’s still cause for optimism. “I view it as good news—there was certainly no further drop,” says Courtney Robertson, senior research director at Zeldis Research Associates, which has worked on the study since 2012. “We’re still coming out of the recession. Agencies seem to be continuing their recovery.”

2) The independent agency system is dynamic.

About 10% of agencies surveyed in 2014 were established in the past five years—down from an abnormal high of 18% in the 2012 study. “If you go back and look at what took place between 2010 and 2012 when the number of new agencies was up, one of our assumptions was that a number of producers who had been part of the captive agency system had chosen to start their own businesses,” explains Gerald Chiddick, vice president of marketing at Amerisure Insurance Company and Future One Research Task Force member.

And while new agency growth is slowing, mergers and acquisitions continue to grow—13% of agencies were involved in one in the past two years, compared to 11% in the 2012 study. “The data would point to a continuance of that trend, driven by where we are within the economic cycle from an opportunity and growth perspective,” Chiddick says.

3) The number of medium-small agencies is increasing.

The Agency Universe Study used a different approach to calculate size distribution in 2014, reflecting a decrease in the proportion of small agencies (from 28% in 2012 to just 15% in 2014) but an increase in the proportion of medium-small agencies (from 46% in 2012 to 57% in 2014). Since industry premiums increased so substantially between 2011 and 2012, many agencies likely moved from the small to medium-small category.

“There has been growth in the industry with industry p-c premiums rising and industry surplus being at all-time highs,” Chiddick says. “Over the last few years, we’ve seen a firming of rates. It’s also important to note that with the economic recovery, even though it’s been slow and steady, there has been increased exposure growth—which contributes to an increase in premium.”

4) Business conditions are improving.

This year, 70% of agencies reported increased revenue, compared to 60% in 2012. Between 2012 and 2013, 69% of agencies reported an increase in personal lines revenue and 62% reported an increase in commercial lines revenue.

“There is a correlation between economic factors such as declines in unemployment, the recovery of the housing market and the creation of not just jobs but even some of these newer smaller businesses and more personal lines exposures and improving fortunes of commercial businesses,” Chiddick explains.

5) Agency principals are getting older—but perpetuation remains a startlingly low priority.

The average age of principals with 20% or more ownership in their agencies is 56 years old, with 18% of those principals age 66 or older compared to just 10% in 2012. Nevertheless, the vast majority (82%) of agencies does not anticipate a major ownership change for at least three years—and 60% do not anticipate a change for more than five years.

Chiddick calls it a timing issue. “These  entrepreneurs have built these agencies oftentimes preparing to hand them down to family members, but now are finding in many cases the family members don’t want to take on the business going forward,” he says. “Transition can be hard. Their agency is a part of who they are, it’s part of a culture they helped create and in many cases, the business is part of their identity. I think we have to be careful in our assessment. It’s easy to broadly assess based on age and life stage, but what may not be as easy to assess relative to timing decisions is the emotional connection.”

But at some point, “a changing of the guard” will be inevitable whether you like it or not, says Ken Zeldis, partner at Zeldis. “They’re either going have to sell their agencies to then make bigger agencies, or they’re going to have to figure out who the next-in-commands are going to be,” he says. “Otherwise, they’re just going to fall off the map at some point. When you start hitting 70 or 72 or whatever the magic number is, you’re just not going to be able to do it anymore.”

6) The independent agency system does not yet reflect shifting demographics.

An overwhelming 92% of agency principals and senior managers are white and 86% are men. Similarly, 91% of non-principal agency managers and 92% of non-principal producers are white.

 “I don’t know that in the Agency Universe Study itself we’ve seen any great shift toward greater representation of minorities, despite the fact that minority consumers are a growing percentage of our population,” Robertson says. “We also haven’t really seen a huge shift in terms of the way in which they’re targeting their marketing toward specific demographic groups.”

Agencies with one or more minority principals tend to be younger and smaller than agencies with majority principals. For these agencies, personal lines revenue is growing more rapidly, and serving a broader range of commercial accounts is more likely.

7) Across all revenue sizes, maintaining experienced producers is a significant challenge.

Perpetuation and minority representation are related to the biggest challenge agencies of all sizes face today: 40% of agencies, regardless of size, list maintaining experienced producers as a top challenge.

“Producer development gets to the dollars and cents of the operation,” Chiddick says. “Talent is what fuels the engine. We’re competing with not just others within the insurance industry, but also other industries to attract the best and the brightest. Agency principals are no different from other executives running a business—they want A players.”

Chiddick believes the struggle to attract and retain top talent relates directly to many of the other top challenges this year’s study identifies, including growing commercial and personal lines business and building your brand. “You need the right talent to help you grow your business,” he explains. “Having the resources and the right value proposition and service model requires the right people to help your agency set itself apart from its competition.”

8) More agencies are focusing on specialization and target markets.

For 70% of agencies serving middle-market commercial accounts, specific industries have become a major focus, causing agents to demand more specialty coverages from carriers.

“There’s movement in that space as agencies move their customer acquisition model up the food chain—the larger the agencies become, there’s more of a focus around segmentation and specialization,” Chiddick says. “Larger agencies tend to be dominated by commercial lines, which really afford the opportunity to get into industry segments. The ability to differentiate and create a niche for yourself based on your knowledge of certain industry segments can be a huge driver of success.”

“I think you’re going to see as time marches on that folks are going to look for deep content knowledge in specific industries,” Zeldis agrees. “You become an expert—people come to rely on you.”

9) Market access providers play an overwhelming role in placing new business.

Chiddick expects ease-of-doing-business solutions to pick up steam moving forward. “Agencies representing a significant number of carriers continue to be faced with interacting with each carrier in its own particular way of doing business,” he says. “So where these technology solutions manage to carve out a niche for themselves is their ability to aggregate data and information and then present it on one hand to the carrier and on the other hand back to the agent.”

10) More independent agencies are incorporating social media strategies.

In their 2013 marketing activities, 43% of agencies included social media—with the primary goals of building brand equity (91%), finding new prospective customers (89%) and providing clients with insurance information (61%).

Among social media outlets, Facebook and LinkedIn appear to be the prime vehicles for marketing purposes, with 59% and 34% of agencies using these sites, respectively. “All forms of digital marketing in that context really provide a low cost of entry to help you build your brand, get to your constituent base and communicate a message to people in a succinct fashion,” Chiddick says.

But 21% of agencies indicate marketing their agency effectively on the Internet is their top technological challenge, and 46% rank it among their top three challenges. To maximize the effectiveness of social media, Chiddick says independent agents will need to think of social media as just one of many marketing tools available to them.

“The study cites that personal visits and regular telephone calls are still the leading means of engaging prospects and customers,” Chiddick says. “You need a multi-touch strategy—agencies would be remiss to not include social in that strategy. But social media is not a replacement for the importance of developing a personal relationship and the rapport with an independent agent through that trusted advisor status.”