The property-casualty insurance markets for the last two years have been among the most difficult in the careers of many insurance professionals. High combined ratios in many lines of coverage have caused insurers to cut back or stop writing new business, non-renew policies regardless of loss ratios, and impose large premium increases on the policies they renew. Experts do not anticipate improvements until late 2024.
However, even in a bad market there may be coverages where independent insurance agencies can focus their efforts and grow.
Some lines are still profitable. According to a March 2024 report from A.M. Best, combined ratios for Workers’ Compensation coverage have ranged over the last six years from a low of 87% to a high of just 92.2%. Compared with Commercial Auto, which has had just one year with a combined ratio below 100% during that period, Workers’ Comp is an attractive coverage for insurers and agents alike to grow in.
Gloria Thompson of North Risk Partners in Minnesota has found that insurers are increasing commission rates on policies with premiums under $25,000. “Everyone is begging for more Workers’ Compensation,” she says. “Carriers may mandate they write the Work Comp to offset other less desirable lines of business.”
The Insurance Information Institute reported in February that Cyber insurance global premium volume tripled from 2017 to 2022. They expect it to grow from $13 billion in 2022 to $23 billion in 2025. Loss ratios have fallen substantially the past two years, enhancing the line’s profitability. Agents may also find that a lot of businesses and organizations do not presently have this insurance. There are a great many prospects waiting to be sold what is an increasingly necessary coverage.
Another alternative for agencies may be life and health insurance. Health insurance premiums tend to rise each year and are not susceptible to the cost drivers that affect P&C. Life insurance premiums have set records the last three years.
Even for troubled lines, underwriting appetites still vary from carrier to carrier. Tim Wahl, an agent for Gallaher Insurance Group in Missouri, has been able to write business that some carriers have cast off. For example, his agency has been able to write coverage for condominium associations, multi-family homes, and hotels who have seen their policies non-renewed.
Conversely, Thompson is not finding success with those classes, but she is with others. “Schools are doing well, although the property insurance is getting a little tighter,” she says. The markets for restaurants, food trucks, low-hazard activity non-profits, professional services, and manufacturers of low-hazard products are in good shape.
One coverage that many agents might overlook is Technology Errors and Omissions Liability. “Technology E & O coverage for software companies is open with the players that specialize in (it,)” she reports.
Still, the overall market is poor. Wahl was expecting it to improve and instead saw wind and hail deductible percentages jump on renewals. Thompson believes the solution for agencies is specialization. “From my perspective, it is best to choose two or three classifications and become a specialist in those,” she says. Agents who can demonstrate knowledge and expertise in a specific class will get referrals from clients they’ve helped.
Agents who can specialize and identify coverages that carriers are still pursuing will position themselves for future success. Thompson says the difficult market has opened doors that were closed before. “Prior to things tightening, people were happy with their current agent (and) would not always give you an opportunity. Now that premiums and deductibles are increasing and the worth of the product is decreasing, we have interested prospects.”
This hard market will eventually turn, but until then it will be painful for insurance buyers, carriers, and agents alike. Agents who can find specific products to grow in right now will find it to be a little less painful and maybe even a source of success.
