It starts with the housing market. Then it seeps into construction, typically residential followed by commercial. Then it travels to manufacturing, then retail, then hospitality. It differs by region. It might be worse in Detroit or Jacksonville than in Boston or Charlotte. It may even vary within a state, downstate versus upstate, urban versus suburban.
It shows up in layoffs and hiring freezes, fewer car and home sales, increased foreclosures and credit denials, less travel and dining out, reduced payrolls and receipts. It spreads. Some contend talking about it makes it worse.
It is, of course, the “R” word. Recession.
Eventually, it affects insurance agents or, more accurately, their customers. Main Street agents are hurt perhaps more than big agencies but it really depends upon their book of business. As upstate New York agent Steven Spiro says, “An agent’s business is a direct reflection of his clients’ business, so if clients are affected by it, the agents are as well.”
Agents are well aware of what’s happening in their local economy. They know it well—because they see it in their customers’ eyes.
A Massachusetts agent notes, “We’re seeing a marked increase in what I call ‘just-in-time’ visits from personal lines clients at 5 O’clock at night to stop a pending cancellation.”
“I have a client who is a painting contractor who has only worked two days since Christmas. That kind of thing can lead to recession,” says a West Virginia agent.
A Georgia owner adds, “I have clients who were paying subcontractors more than $10,000,000 in building costs last year, who this year, are probably going to build less than half to a third of that.”
And a metro-Washington, D.C. agent who considers himself lucky says, “The recession hasn’t seemed to affect our guys just yet. It depends on where you are. There is a still a fair amount of that (construction) still being finished up.”
Many of their customers are feeling the recession but agents just can’t get their minds off another topic. While the rest of the universe is talking about and around the “R” word, property/casualty insurance agents remain fixated on the “S” word. For the most part, agents are clearly more concerned about the soft market continuing to eat into their books and profits than they are about any harm from a recession at this time. If allowed to choose, most would take a recession over a prolonged soft market any day.
But they know they can’t choose so they are taking note of what happens on those rare “double whammy” occasions when a recession coincides with a soft market, which for an increasing number of agencies is becoming the reality.
Are agents equipped to handle both a soft market and a recession? This issue of Insurance Journal explores how agents are faring in this economy and market and what strategies might help.
One of the soundest pieces of advice is from Pennsylvania agent G. Greg Gunn who cautions about making major changes or cutbacks just because there is a recession. Stick to your plan and take advantage when competitors panic, he advises fellow agents.
And remember, true independent agents never lose sight of the positive. As Florida agent Stephen Riemer says, “It’s putting people on the street whom we want to hire.”
Topics Agencies Pricing Trends Market
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