It’s Time to Concentrate  on Commercial

Feeling the squeeze from inflation, claim settlement increases, and competition from the big national personal lines carriers? It’s time to concentrate on commercial insurance.

Now, writing commercial insurance does face its own headwinds (I’ll explain more about those in a moment), but compared to increasingly competitive personal lines market, commercial insurance offers more opportunity. 
Unlike personal lines, small commercial has not been commoditized. Commercial policies are more complicated to write, and customers want to have a relationship with their commercial insurance agent. For these reasons, the large, national carriers have ignored this market. And that’s why commercial insurance is so profitable for independent agents who put in the effort to learn how to write it.

Advantages to Writing More Commercial Business

Here’s one advantage to writing commercial: rates are up, which means you get paid more. But the advantages to writing commercial insurance extend far beyond your wallet.

If you take a look at your current book of business, chances are most of your losses at the time of renewal are for personal lines customers. Personal lines customers shop more on price than commercial lines customers do. They believe most personal lines policies are the same, and they are more interested in saving a buck or two than sticking with their current carrier (or agent).

A commercial insurance customer, on the other hand, is looking for a relationship with you. They want stability and to know that their insurance policy fully covers their business, whether they are a self-employed professional, contractor, or manufacturer. If you can provide stability and add value, they’ll stick by you. Every salesperson knows that it costs less to keep a current a customer than to onboard a new one. With more commercial customers in your book of business, you’re more likely to keep your costs lower than your personal lines peers.

How to Excel as a Commercial Agent

Exceling as a commercial agent comes down to two key performance indicators: know your carriers and follow a lead generation strategy.

Writing commercial lines is more complicated than personal lines. Fortunately, your Smart Choice® carriers are here to help you understand their appetites and learn how to write business with them. The Smart Start™ Commercial and Express Markets™ programs are two other great resources for you. If you get appointed with several commercial carriers, you’ll be able to offer customers a broader range of solutions, even for non-standard business.

Lead generation is just as important for pursuing commercial lines customers as it is for personal lines customers. You can’t just wait for your phone to ring. You need to create a plan for how you’ll reach out to the types of businesses you’re most interested in writing. Then, hit the pavement. Post-COVID, people are anxious to meet with you in person. Don’t rely on your phone to generate leads.

A Few Potholes to Look Out For

Commercial insurance is affected by weather and the economy just like personal lines insurance is. Claims settlements have pushed rates up across the board, and especially for excess and umbrella business. It’s wise to be aware of this as you start quoting commercial lines so you can set realistic expectations for your customers. Be prepared with several solutions.

Another challenge? Inflation. A $1 million umbrella simply doesn’t cover as much as it used to just a few years ago. You’ll need to be prepared to explain to your customers why you’re recommending additional coverage, even if their general liability or property risks haven’t changed.

If you’re new to commercial lines insurance, you may not be prepared for the amount of business you may gain from writing commercial. Many agencies are struggling to hire producers and CSRs. Make sure you have the team in place that you’ll need to service your new commercial lines customers.

What’s Hot in Commercial

Before you go back to your desk and start quoting your local dry cleaner or convenience store, take a moment to learn what’s hot in the commercial market. Our Smart Choice® carriers tell us that personal care, pet services, transportation, contractors, manufacturing, and hospitality are all hot markets this year. So is non-standard business, which is easy to write with a few appointments with our Express Markets™ carriers. Focus on three to five target markets and learn their business. You’ll quickly become the local expert and build a diverse book of commercial customers. Ready to concentrate on commercial this year? Get in touch with your State Director today. They can share all the opportunities you have through Smart Choice® and help get you started.