“More and more insurance agents are adding risk management services to their value proposition. Now that the market is finally hardening, those agencies need to react to capitalize on their investment.”
“The Hard Market Changes Everything,” Rough Notes Magazine
After nearly 7 years of soft market conditions, property and casualty rates went up ever-so-slightly in November 2011. The same thing happened the next month. And the next. And in every month since.
But despite more than 18 consecutive months of rising premiums, the current conditions don’t quite fit the definition of a true hard market. Instead of the double-digit rate increases and greatly diminished capacity that characterized the hard markets of 1975, 1984 and 2001, there has instead been a gradual but steady firming of rates over the last two calendar years.
Without the traditional hard/soft dichotomy to fall back on, insurance analysts have been left scrambling for the nearest thesaurus in an attempt to describe what’s going on. But whether you call it a hard market, a hardening market or go with the current term du jour, firming market, the bottom line is this—rates are going up. The question then becomes, “Are you prepared for the changing marketplace?”
If you’re a little unsure how to use the current market to your advantage, follow these steps to capitalize on the unique market conditions and take your business to the next level.
1. Be proactive in educating your clients on the new market realities
Don’t wait until renewal rolls around to start communicating with your clients about the larger market forces affecting their insurance costs.
After years of soft market conditions, the prospect of rising premiums may come as a shock to insurance buyers accustomed to flat or declining rates. Eliminate any potential surprises and set the groundwork for a more pleasant and productive renewal conversation by educating your clients proactively. Zywave Partners have educational resources at their fingertips in Broker Briefcase, such as:
2013 P&C Market Trends and Conditions Report
Risk Insights: Navigating the Hardening Market
Preparing for the Hard Market
Risk Insights: The Insurance Pricing Cycle
2. Address your clients’ specific pain points
Rates are up across the board, but insureds with a less-than-stellar loss experience are feeling the sting of the firming market most acutely. Shift the conversation from price to value by providing these potentially at-risk renewals with risk management solutions specifically tailored to their unique business needs.
Review their claims history to identify trends or recurring sources of loss. Once you identify your clients’ pain points, implement targeted risk management and safety campaigns to help your clients reduce losses and lower their risk profile. (If you’re a Broker Briefcase user, make sure you’re taking advantage of our custom campaigns to deliver targeted money-saving solutions to clients all year long.)
3. Embrace the hardening market as a prospecting tool
The hardening market rewards producers who aren’t relying on price alone to grow their book of business. Insureds facing substantial premium increases often feel frustrated and helpless at renewal—especially if their broker has failed to implement the strategies we’ve discussed thus far. Even if the rates you quote are similar to those of the incumbent broker, you have something unique to offer that will help you win the account: hope. By presenting tailored risk management and education solutions – above and beyond quoting a rate – you can offer prospects a concrete plan for improving their loss experience and lowering their future premiums.
The Bottom Line
Although the firming market brings new challenges, it also represents a tremendous opportunity for brokers to demonstrate their value. Seize that opportunity to differentiate yourself, exceed client expectations and grow your business.