How Independent Insurance Agents Can Win in a Hard Market

Katie Wilmoth | September 14, 2022

Race cars crossing the finish line with a checkered flag in view.As we advance into the second half of 2022, we continue to see the ripple effects of economic instability wrought by the pandemic. Although we’ve been seeing indications of a hardening market for some time now, the state of the insurance industry shows no signs of shifting directions and continues to tighten from a risk perspective. 

Carriers are planning rate action and slowing down appointments access across the country. Historic inflation is dramatically affecting repair costs, putting loss pressure on our carrier partners’ underwriting margins, and a market correction is coming. Raw material costs have skyrocketed, as industries shut down by the pandemic try to recover. Further compounding economic troubles is the price of oil, which has averaged $100 per barrel in recent months and driven transportation costs of materials through the roof. Independent insurance agents will be feeling the squeeze when it comes to being able to provide coverage for clients.

So, What Does This Mean for Independent Agents? 

Independent insurance agents are at a distinct advantage in this type of industry, as they’ll have a broader range of market options at their disposal. These new guidelines and restrictions from the carriers will mean several things for independent insurance agents across the industry:

  • Deceleration of new company appointments
  • Companies focusing on agencies that can bring value and results to the company
  • Companies tightening qualifications and guidelines on agencies regarding low production, high Loss Ratios, bad retention, and poor quality of business (low limits, credit, prior insurance) 
  • Large rate increases and tightening of class codes, more inspections, and audits of books of business
  • Carriers will be focused on profitability rather than just new business growth

Today's hard market is due to a multitude of factors — from the COVID-19 pandemic to record-high inflation to material shortages. It's affecting not only your customers but also carriers' premiums and willingness to provide coverage. Access our latest webinar to hear how our partner agents have overcome these obstacles and found success placing coverage through Smart Choice® programs.

How To Be a Successful Independent Insurance Agent in This Market

Prepare Clients:

Independent insurance agents can and should be a resource and offer valuable counsel to struggling insureds during this time. Prepare your clients for rate increases and counsel them on why and how things are changing. As an independent agent, you will be uniquely positioned to serve your clients better than most captive agents — especially with the arsenal of market and product options with which Smart Choice can provide you.

Clients need to understand that as replacement costs rise, their homes could be dramatically underinsured and will need reassessment. Parts and materials shortages are creating long delays in restorations. This coupled with premium rate hikes could come as a surprise to many buyers, so preparing them for the coming changes will be in your best interest. Your customers may also need to understand some of their risk needs may no longer be covered by standard market options. This is where independent agents can truly differentiate themselves – being able to offer coverage options through E&S and specialty markets.

Partner and Plan With Your Carriers

Regularly engage with the carriers you’re appointed with, and actively quote and write business with your top partners. Now is the time to leverage and enhance your relationships, know your go-to markets inside and out, and especially prepare to utilize partnerships with Excess, Surplus and Specialty markets. Those types of markets will be able to fill any gaps left by rejections from standard carriers. 

It's important that you understand what your carriers want, need, and will be looking for from your agency and book of business in the coming months. Communication will be essential to remain profitable and keep valuable appointments in this market.

Partner With an Insurance Agency Network

Agency networks can and will be an enormously helpful avenue for many independent insurance agencies faced with increasingly restrictive guidelines from the carriers. These programs will be able to provide several different options to help you access all the markets you need in the current climate. Agencies who are partnered with a network may be viewed more favorably, as they know you’re working together to build profitable, solid books of business. 

Additionally, an insurance agency network will work with agents to understand any new carrier guidelines in advance and help them create plans to maintain quality books that are desirable to carriers. Some agency networks offer programs with underwriting assistance to help agents secure coverage with top carriers even without having appointments. This type of program can help agents maintain profitable books of business in hard markets.

How To Succeed in Insurance Despite Today's Hard Market

Smart Choice’s “Smart Start” program offers this underwriting assistance. It also offers a way to access a number of E&S and Specialty carriers to fill gaps in your product suite and provide coverage options for your clients that you may not have through other standard markets. Independent agents even get access to a search tool in our online Agency Business Center if you’re having a tough time securing coverage.

Ultimately — this market will be challenging for many independent insurance agents — even established and experienced ones. The time to prepare is now, and networks working hand-in-hand with carriers are actively making plans to help agencies navigate these changes.

Only independent insurance agents who can be both profitable for their companies and continue to grow, will be able to thrive in this environment. Reach out to get started with Smart Choice’s “Smart Start” program or to explore our other services for independent agents.

Get Started

Katie Wilmoth