A Hard Market is Our Time to Shine
It’s no secret that our industry is experiencing a major upheaval. There’s never been a better time to shine as insurance professionals.
Price will always be part of the equation when buying insurance. But in the hard market we’re experiencing, with prices that are rising across the country, paying for advice and professional service becomes ever more essential. There is no better time than now to show your customers why a well-educated insurance professional is essential, and why price should not be the main reason to buy.
But first, let’s take a look at what the market’s doing.
Earlier this year, State Farm and Allstate announced they are leaving the California personal lines market due to losses stemming from extreme weather, increased construction costs, and inflation. Fourteen other carriers have left the state of Florida for similar reasons. You may have noticed that several of your own carriers have raised their rates and pulled back on appointments. What’s going on?
What Is a Hard Market?
According to IRMI, a hard market occurs when premiums increase, coverage shrinks, and the capacity for different types of insurance decreases. In other words, costs go up and coverage gets skimpier or disappears altogether, depending on the location and type of property you’re trying to insure.
For carriers, writing insurance has always been a balancing act between reducing losses while offering a competitive product that produces premium growth. Predicting future losses helps carriers plan for solvency and growth.
Hard markets occur when losses over time exceed a carrier’s expectations. Historically, hard markets have been caused by catastrophic weather events, inflation, and the high costs of construction materials. In the current hard market, we’re facing all three of these causes at once. Recently, claims have been more expensive and occurring more frequently than in the past, causing carriers to exhaust their surpluses. If carriers don’t raise rates now, they may not be in business to protect customers in the future.
How Does a Hard Market Impact My Insureds?
The most obvious effect a hard market has on your customers is an increase in policy premium. Renewing customers may experience a jump in rates, even when they have not filed claims.
You may also find that business you have written with a standard carrier is no longer bindable in the standard market, forcing you to quote through your Express Markets™ excess and surplus carriers.
Similarly, for new customers, you may find that most quotes come back high and that some of your go-to standard carriers are no longer options. The increase in price and difficulty you have placing coverage can be confusing for your customers, which is why a hard market is truly your time to shine as an independent agent.
How Can I Shine in This Hard Market?
First of all, don’t get discouraged. It can be frustrating to see rates increase on your loyal customers or struggle to place personal lines business that you used to write with ease. As a Smart Choice® agent, you’re in a prime position to expand your carrier offerings so you can find a competitive solution for your insureds. The best thing you can do in a hard market is become a resource for your customers. They are looking for reassurance and advice on how to protect their families and their property, and as an independent agent, you are in a great position to build trust with your insureds.
Be proactive and reach out to your current book of business to explain what a hard market is and how it may affect their insurance policies. Then, discuss your strategy to beat the hard market. Review their limits and claim histories and offer them solutions that minimize price increases without losing coverage. In a hard market, it is important to develop your relationships with your carriers, too. Reach out to your underwriters and your carrier representatives to understand their current appetites and learn of any upcoming changes to coverages and premiums. Quote coverage with the carriers you want to maintain appointments with to show you are interested in writing with them. Consider adding carriers to your offerings to offset carriers that have become uncompetitive.
It doesn’t have to be difficult to grow your agency during a hard market. Embrace this opportunity to prove your worth to your customers, even when rates and coverage are in flux. If you’re a solutions provider in a challenging market, you’ll earn the trust of your customers for years to come.