The hard market in personal lines and some commercial lines continues to plague independent insurance agents throughout the country. However, those who belong to agency networks may be faring better than their peers.
One reason for that is the strong relationships a network might have with carriers. “Fortunately, we’ve been able to mitigate some of (the hard market effects) just by virtue of the relationships we have with those carriers that are pulling back,” said Steve Anderson of Insurance Associates of America, a network based in Wisconsin and founded nearly three decades ago. “We’ve been able to solve most of it for most of our member agencies, certainly better than an agent that … only has normal access to one state and then tries to cross into another state.”
Dan Bruck, chief marketing officer for Smart Choice, a North Carolina based network with more than 10,000 agency members, said that they have weathered the storm by adding new niche relationships, including with insurtech companies. They’ve also been able to expand their product offerings in commercial lines; they have a new commercial trucking unit. “Our broad market access,” he said, “in both personal and commercial, in both standard lines, and most especially with our Express Markets division, has led to the expansion of our partnership within agencies.” More than 1,200 agencies have joined in the past three years.
Personal lines remains a challenge, however, even for the networks. “Some states, some lines have (not) been affected at all. Other states (are) more of a challenge,” Anderson said. “So for example, California isn’t as easy to address that capacity tightening as easily as it is for a Wisconsin or Illinois or even an Arkansas.”
With personal lines remaining in such a difficult state, networks seem to be following Smart Choice’s approach by putting more focus on commercial lines. That was the strategy described by Dan Garzella of Darkhorse Insurance, a network based in Arizona. They implemented a commercial lines first onboarding process, leaned on commercial lines subject matter experts, and used a formal referral program to generate qualified leads for members.
Networks offer market access to members, but less tangible assistance during the hard market has been just as important. Bruck pointed to the advice and counsel Smart Choice provides to members based on their field teams’ years of experience. “They assist agents in finding the best value, securing the right coverage, and saving money, all while dealing with the pressures of rising prices due to inflation and other factors impacting the insurance market, such as extreme weather events and high repair costs,” he explained.
Anderson observed that many agents have never experienced a hard market if they’re not in catastrophe-prone states like Florida, Louisiana, or California. His network works with agents to prepare them for difficult client conversations. They explain how to educate the client on the factors driving higher premiums or lack of availability and to reassure the client that they’re not being singled out.
Garzella thinks agents should see this time as an opportunity to shift gears and prepare for the market to turn. “In the areas you are having success in, double down on your marketing efforts. If you are not having much success in the areas you typically have focused on, look for new ones,” he said.
Bruck advises agents to get creative. “For example,” he suggested, “instead of conventional auto insurance, you might recommend telematics or usage-based auto insurance.” Anderson stressed the importance of an agency diversifying its book of business. With a diversified book, “You’ve certainly got some struggles, but diversification is, I believe, one of the things that most agencies should try to achieve and do a better job at.”
If your agency is struggling with the hard market and it has not joined a network, these or some of the many others may make that struggle a little easier. Agencies who belong to networks should take full advantage of what they offer. The help might give you the edge you need to succeed during a very difficult time.
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