Economy and its influence on insurance market

[Odessian]

I think it's pretty clear that US Economy worsens. Yet, Insurance is experiencing a Soft Market... In your opinion, how the economical situation will effect Insurance Market as a whole and your agency particularly?

[scott]

Some clients will see payrolls and sales drop. Some will see sales and payroll go up.

Some people will go out of business and some will start new businesses.

Some agents will lose clients and others will gain clients.

Some insurers will be aggressive and others will pull in their horns.

So what?

We can not control the economy. The fundamentals of our business, however, stays the same... Building quality relationships with clients and communities, based on providing great value.

[Shagster12]

As a Ca. construction specialist I've seen near or total devastation for clients.
Clients across the board are reducing reducing reducing. Staff, jobs and even operations are being effected.
Residential tract builders are the most devastated right now since virtually no new builds are releasing with the economy where it is. Larger builders are even turning over their land options because they payed too much and now the new home sales price won't support the cost of land.
I've seen clients go from 100 employees to 10 almost overnight.
Of course that also has a major impact on premiums and agency revenues. So for construction brokers this is a very difficult time. I've had clients go from $400,000 premiums last year to $75,000 this year and complain about that!
This is a tough economy for Contractors to survive and I've seen many go under. I don't know if there's an end in sight for them but I don't see one any time soon.
So being in a soft insurance market is even worse for the broker, who is now moving clients to carriers at reduced premiums of well over 50% on average.
So for my money it's time to look into other markets and classes of client!

[insray]

I too am in California and have been severly impacted with the dying construction industry. Yes, we can look for other clients and markets, however, we are now seeing a downturn in many other industries from furniture stores to hair salons to various mercantile risks. This is just the tip of the iceberg if you ask me. Brace yourselves, I think it going to get much worse.

[wlunday]

Where I live in the Pacific NW, we went through a tight time 20 years ago when the spotted owl all of a sudden became rare and the mountain blew it's top. Logging and timber industries ground to a halt. Of course, I was focused on loggers! Ouch!

Adverse market conditions are another good reason to be in the life and disability income insurance field. With all the depression going on in CA, the clients are going to need it! (Just joking!)

Seriously, take this as an opportunity to diversfy. Most life companies have finished re-pricing their products, now based on the 2000 census data... much lower rates! If a prospect or client bought coverage in the past five years or so, and are still healthy, they should be able to greatly enhance their coverage for the same premium they now pay.

You "commercial" producers need to look outside the box. Good luck.

Swymmer

[meytai]

I'm out in Riverside, many of my clients are people that work in construction, which obviously has been the most impacted. Many of them are selling their homes, selling whatever they have here, and moving back to Mexico. We have seen a slow down. It doesn't make it any better to listen to the media, they are fear-mongerers. Just keep at it and look for different markets.

[Shagster12]

I don't think finding different markets is going to help. When the client is in a position of no work, having $100s of thousands of outstanding receivables they can't collect because the properties haven't sold so they can't get paid, and not enough money left to pay any premiums, new carriers are not the solution.
There are numerous markets available for Construction at this time, the problem is finding a contractor that's still working enough to pay the bills.
I have several clients in the Inland Empire that are getting very creative about money management to the point of trying to finance final audits.... This is just not a good time for contractors nor the agents that handle them.
Shagster

[LadyBroker]

Now is the time to look for new opportunities...for instance, lately I have seen and quoted and bound several new operations....janitorial services that are focused on cleaning up homes that have been foreclosed. Debris removal contractors are now getting into the same niche....tree trimmers have tons of new work in San Diego county as homeowners realize they can control some of their own Fire destiny. I agree alot of construction workers, and mortgage bankers, and realtors, and everyone associated with them, are in dire straits...but you have to remember, what goes up really, always, inevitably and usually painfully, comes back down...so you can't put all your eggs in one basket.