This is the most challenging marketplace for insurance agents in recent memory. In some lines of business, carriers willing to offer coverage are offering it at prices much higher than those of a few years ago. Or the coverage they offer is skimpier. Or both.
Policygenius.com reported that homeowners insurance premiums rose an average of 21% between May 2022 and May 2023. Auto insurance premiums jumped 16% from July 2022 to July 2023. Commercial property insurance premiums climbed 18.3% in the second quarter of 2023. Commercial auto rates were up 10.4% in the same quarter. Increases were higher in some areas of the country and for certain types of businesses.
Anyone faced with large price increases – whether they’re buying insurance or gasoline – will shop for a better deal. It should not be a surprise when clients look for alternatives. Don’t let the lack of available options lull you into a false sense of security. Even if a client’s present carrier is the only option, that client can sign a broker of record letter and switch to another of that carrier’s agents.
Agents should resign themselves to losing business because of the current premium and coverage environment. There are steps they can take to keep good clients from heading for the exits.
The most important thing is communication. Surprise large premium increases will only make clients angry and cause them to call competing agents. That’s why you should consider proactively starting the renewal process earlier than you used to. Let them know well in advance about what is happening in the market.
During these conversations, it can be helpful to raise points such as:
- If the client can afford higher deductibles, they may reduce the size of the premium increase.
- Taking reasonable measures to prevent losses or to make them less severe will make clients more attractive to insurance companies.
- Keeping you informed of changes such as new business operations, new drivers, or changes to a home will help you find the coverage most appropriate for them. In addition, they might now qualify for premium discounts that did not apply before.
- Switching insurance companies right now might not be the best decision. They might take a dim view of potential customers who appear to be chasing lower premiums.
You may be able to help some clients save money through multi-policy discounts. This makes the current moment an excellent opportunity to cross sell policies to existing accounts where, for example, you write the auto coverage but not the home.
What you do not say can be just as important. Avoid making promises about pricing that you may not be able to keep. Set realistic expectations.
At the same time, this is when you can put your advantage as an independent agent to good use. Be constantly aware of your carriers’ appetites (to the extent they will tell you) and be ready to market your accounts to those who might be a good fit. It’s never a good idea to move accounts unnecessarily, but the current conditions may make it increasingly necessary.
Excellent service, particularly when a client has a claim, may be your most effective way to retain accounts. Respond quickly when they need to add new vehicles to policies. Answer their questions about a planned birthday party with inflatable rides and a dozen small kids. Be the gentle voice of reason when they’ve received a summons.
Empathetic communications are vital. To paraphrase Maya Angelou, your clients may eventually forget what you said and did, but they will never forget how you made them feel. This is a rough time for both insurance agents and buyers. Your ability to address all their problems is limited (you can’t force a carrier to bring the premium down to last year’s level,) but responding to their problems with empathy and understanding will make them feel listened to and cared for.
The insurance business is cyclical. The current hard market will eventually fade and competition will intensify. The things you do and say at this difficult time may earn you a lot of good will for a more competitive market. Rising premiums will never help you retain accounts, but how you handle them with clients will.
