Adaptability, communication, learning
can drive success in a tough market
By Stephen Hicks
It seems that the start of every new year brings new challenges and opportunities and, so far, 2024 has proven no different. We continue to navigate a hard market, with rising loss costs putting pressure on rates and reinsurance pricing, but there is room for growth for those who are open to exploring new avenues and to doubling down on customer service.
Exploring change
Considering a specialty can be a smart strategy to diversify your book of business and find new clients. Brokers may find their way to specialties differently, including considering their own personal interests or examining popular niches within their region. For example, brokers who work in rural Indiana might want to consider specializing in lumber, given the high quantity of lumberyards in the region.
Partnering with a specialty insurer can make this transition much easier. Specialty carriers can be a valuable tool for brokers to lean on while finding and learning about a new niche. They have developed expertise over time and can be valuable partners for brokers and policyholders alike.
A specialty carrier can bring tremendous insight on the niche to the table, helping to build the best program possible to support insureds. In a new niche, brokers may be unaware of the unique risks and exposures in that space.
In the lumber industry, for instance, a specialty carrier can help to uncover the many fire exposures that threaten lumberyards or can identify potential forklift safety threats so that when a broker is onsite with the insured, they can provide them with solid safety tips to keep their business operating safely.
Furthermore, a specialty carrier can help a broker develop their own knowledge base, which they can grow by attending trade shows and joining associations.
Enhancing customer service
In a difficult market, it may be helpful to schedule
more frequent conversations with insureds to
ensure they are satisfied with their coverage
and do not have any questions or concerns.
At the moment, inflation and supply chain constraints have placed direct pressure on loss costs. As the cost to rebuild and replace has risen, we have seen higher payments from insurance companies and higher premiums to secure coverage. These challenges have placed a strain on the relationships between insureds and brokers.
We have seen brokers struggle to communicate pricing changes with their clients. These conversations are essential though and require a delicate touch and a vast array of expertise. Insureds need to understand why their costs are rising.
Such a conversation can be an opportunity to demonstrate a broker’s value to the insured and should go beyond a simple pricing discussion. Brokers should provide a comprehensive overview of market conditions and share steps and best practices insureds can take to improve their risk profile and change their rates.
For example, I have personally seen accounts switch brokerages just based on valuation alone. A competitor broker reached out to the client and showed them replacement cost estimates in the event of a loss, and the insured immediately switched.
To avoid such a situation, brokers should communicate openly and frequently with clients on their limits and values so they can see their expertise and how it translates to better coverage for their business.
If a team is not in a position to talk about climate change, social inflation, rising reinsurance costs, or any other factor impacting insurance, they need to get there so they can have an informed conversation with customers.
Looking ahead
Summing it up, what are a few things brokers can do to foster continued growth in a hard market? Consider these:
Explore new avenues of growth. Consider new strategies to grow your business, like a specialty, and work with experts such as a specialty carrier to make the transition a seamless one.
Plan for more frequent client communication. In a difficult market, it may be helpful to schedule more frequent conversations with insureds to ensure they are satisfied with their coverage and do not have any questions or concerns.
Get educated. Study up on current events that are impacting insurance pricing so you can demonstrate your expertise to clients and keep them happy with their coverage.
The hard market will likely continue throughout this year, but that does not mean independent brokers cannot build out their book of business. Opening your eyes to new specialties, as well as a renewed focus on customer service and relationship building, could be a recipe for success for your agency as the year progresses.
The author
Stephen Hicks is an assistant vice president of underwriting at Pennsylvania Lumbermens Mutual Insurance Company (plmins.com). Reach him at shicks@plmins.com or (267) 825-9138.
