How to Succeed in a Soft Insurance Market

By Garrett Sprowls | July 24, 2017

It’s no secret that the insurance marketplace right now is extremely soft. The amount of capacity in the industry continues to rise as new entrants are coming into the market or existing carriers are either opening up their underwriting guidelines or entering into new areas. Agents and brokers know that lower premiums are to be had, so unless it’s an extremely difficult risk, there is almost always stiff competition.

Insurance carriers are trying to grow their book by adding new business, but they are also willing to cut their premium or add coverage to retain an account. This leaves agents and brokers in a situation where they have to continually take more accounts to market to generate a certain premium level. They are working twice as hard to make less money.

That being said, how do agents and brokers find ways to grow their business despite decreasing premiums and increased competition?

Provide Elite Service

Providing a high standard of service is always a requirement for success, but it becomes even more important in a soft market. With so much competition, if you don’t respond quickly and accurately to your client (whether it be the insured, the agent or the broker) someone else will. In a soft market, typically there is more than one good option on any risk, so the first one on the table is usually going to win. The soft market and increased competition shrinks the margin for error, so make sure you are providing a high level of service or you will get left behind.

Building Relationships

The best way to combat the difficulties of a soft market is by building relationships both above and below. Agents and brokers need to be a trusted source to their clients rather than a vendor just pushing to sell them a policy. They need to be counselors and consultants to provide honest advice about how to best cover a risk.

The true value provided must not be the product; it must be showing a concern for clients’ insurance needs rather than always seeking just the lowest price. Solely focusing on price commoditizes your services. The agent or broker needs to be able to offer options for coverage enhancements when appropriate, and to provide enough information for the insured to make an informed decision on what coverage fits their needs.

One of the more difficult things to do is to tell your client that they should take someone else’s policy, but that’s the right thing to do in order to preserve and build the trusting relationship that will benefit you over time. Compete as hard as you can, but know when it’s time to move on to the next one. Preserving that trust will make sure that you are the first call for the next account or opportunity that the agent sees.

It’s also important to maintain an honest and open relationship with insurance carriers, too. In a soft market, underwriters see a huge volume of submissions and have the mandate to write as many new accounts as possible. If an agent or broker inundates an underwriter with submissions that either don’t have enough information to be properly evaluated, or simply don’t produce any hits, then the underwriter will not be as likely to put you at the top of their priority list, or be willing to be flexible when needed to win an account. Full and complete disclosure will help an underwriter determine whether a risk is a real opportunity for them.

The key to good market relationships is honesty and openness. Agents, brokers and carriers all need to provide value beyond the product itself to serve their clients. Over time, professionalism and objective counseling will pay long-term dividends.

The soft market does bring a number of difficulties, but it also offers opportunity. If you are able to provide elite service and build and maintain good relationships with your partners, then you have the opportunity to grow despite the soft market.

About Garrett Sprowls

Sprowls is general counsel and managing broker at Austin, Texas-based Professional Lines Underwriting Specialists Inc. (PLUS Inc.). He also serves as vice president of the Texas Surplus Lines Association.

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Insurance Journal West July 24, 2017
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