Current State of Insurance Industry 2022

Impact on Agents and Clients

Your Smart Choice Virginia Team has put together information about the “Hard Market” that the US insurance industry has entered.  Many of our new agencies have not experienced a Hard Market, thus we provide a brief overview below of what to expect along with some suggested actions that should be beneficial.

On Thursday, June 23rd, 2022 we held a webinar on “How to Sell and Retain Business in a Hard Market”. Here is the recording of that webinar:

WHAT IS A HARD MARKET?

A  “Hard Market in the Insurance Industry happens as uncertainty and risks increase.  Rising prices — Inflation — causes the cost of claims to increase.  Challenging economic times–potential recession with increasing interest rates to fight inflation–makes it difficult for Insurance companies to earn returns on their investments.  Carriers must adjust which causes issues for agents and clients–Restrictive access to sell for agents and rate increases for clients.

During Hard Markets over the last five decades, Carriers have typically slowed new appointments and new business production during times of rising cost and uncertainty.  Their actions range from more restrictive underwriting, halting new agent appointments, halting book rolls, raising rates, cutting commissions, to halting production, and terminating agencies that are not meeting production requirements or have loss ratio issues.  We are entering a potentially major Hard Market.

Per Ashley Wingate, Smart Choice Senior VP:

We continue to receive an increase in notifications from carrier partners regarding planned rate action and slowing down of appointment access across the country. Inflation is driving repair costs of everything through the roof, putting loss pressure on our carrier partners’ underwriting margins. We are entering a hardmarket, and we should expect an increase in the number of carriers slowing NB flow and new appointments, as they wait for rate approvals at the state level.

During a “Hard Market”  Standard and Preferred PL Carriers that do not halt NB, may restrict binding to only highly preferred packaged business.  Standard and Preferred CL Carriers may follow–reduce or halt monoline business and reduce credits or eliminate credits. All carriers will begin to terminate appointments with agencies that do not meet the Minimum Production Requirements.

Smart Choice agents have the advantage of being part of a network that has large aggregate production volume with many carrier partners.  This large and growing volume with the close working relationship with carriers, allows Smart Choice to manage a better outcome for our agents and softens the restrictive measures during hard markets.  This is one among many of the benefits Smart Choice provides.

Below are some suggested actions:

• Agents with sub-codes appointments should enhance quoting and writing business to meet production requirements; not doing so will likely lead Carriers to  terminate appointments  in this type of environment.  New Business growth is important; however, Quote Activity is also important–even if NB falls, carriers consider quote activity positively in their decision.
• Explain the “Hard Market” issues with your clients, and let them know all the things you are doing to help them have the best value for the coverages they need.  We will provide talking points during the Webinar on June 23.
• Try to write only packaged, quality personal lines business.  The package discounts will help as rates increase.  All preferred carriers desire quality (higher coverages & deductibles), packaged business. Some Carriers will require packages–no monoline policies.
• Proactively work renewals and provide all discounts available–especially the Advance Quote, Package discounts, and Telemetric programs for PL auto.  Create a Discount Sheet for all Carriers.
• Offer PL auto Telemetric programs to offset increases in renewal premiums.
• Take advantage of your appointments with Core Carrier Partners and the National Incentive Deals we have in place. Travelers PL/CL, Safeco, Liberty, Nationwide, Allstate/Encompass/Nat Gen.   Focus on not losing your Top Carrier appointments and build long term relationships with them.
• Take advantage of our robust portfolio of Express Market opportunities as preferred and standard markets tighten.
• Take advantage of our SSPL & SSCL Programs to access non appointed carriers via Smart Start PL and CL.  These programs provide potentially additional carrier access and possible better value to save business or to write business.
• Contact our Smart Choice Virginia Team for support.  We stand ready to help you.

Also check out a related Article by Smart Choice Founder Doug Whitcher in the lastest Smart Choice Agents Magazine.