When it comes to dealing with a recession, independent agents in Michigan carry the dubious distinction of having more experience than their counterparts in other Midwestern states. Michigan has been knee deep in a recession for at least the last 18 months, according to Jim Crawford, seasoned agent and owner of the Insurance Center of Monroe in Monroe, Mich.
Crawford paints a bleak picture.
“The state’s dependency on manufacturing has resulted in lost jobs six years in a row. Well over 120,000 jobs have been lost in the auto industry alone,” he said. “The unemployment rate in December was 7.4 percent in the state and 6.5 percent here in Monroe County. Thousands of graduating college seniors are leaving the state to find work. The housing market here is as bad or worse than anywhere in the country, in fact I think we’ve led the country in mortgage foreclosures until Nevada took over first place recently.”
Requests to insure vacant properties backup Crawford’s assessment. He used to cover vacant property about three or four times a year.
“We’re now quoting three or four every month. Some prominent builders in our area here in Southeast Michigan are going out of state to find work. Others have filed for bankruptcy. Some small contractors we insure are taking jobs as far away as Kentucky and Pennsylvania to stay afloat,” Crawford said.
At the same time they are dealing with the recession, Michigan independent agents are also being asked to absorb a big tax hike.
“I can provide all the gory details if you’d like, but the net result is last year we paid $11,025 under the old single business tax and this year, our CPA estimates we will pay over $25,000 under the new Michigan business tax. The shift was intended to help manufacturers, which now pay less or no tax at all,” Crawford said. “I’m totally in favor of helping others, but ouch! No wonder the state has a hard time attracting businesses to move into Michigan.”
To add to all this dreary economic activity, the soft insurance market continues to get softer — especially in personal lines. Crawford says he hasn’t seen things this soft in 30-plus years in the business.
“Competition is fierce,” Crawford added, “and we’re moving more in house policies between carriers just to retain the business we have. This of course results in decreasing revenues in the short term. New business sales and growth results have been pretty flat for the last two years.”
Amid the difficult economic times, Crawford has nevertheless managed to carve out a strategy.
“Our focus in 2008 is on retention, up-selling and account rounding. We’re investing in resources to touch our customers more often to remind them that we love ’em,” Crawford said. “I doubt we’ll see any improvement in the economy in 2008. In the meantime, we’ll continue to tighten our belts and look for innovative ways to keep and attract more business.”
Note: This is an edited version of an article on how Midwest agents are handling the recession that ran in Insurance Journal magazine’s Midwest edition April 7.
To read the national story on how agents are faring in the recession see:https://www.insurancejournal.com/news/national/2008/04/21/89307.htm
Topics Agencies Pricing Trends Michigan Market
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