5 Ways to Help Commercial Clients Navigate a Hardening Market

The commercial insurance market has reached a crossroads at a time when many aspects of the industry are changing. This change is happening at a pace that has never been seen before. Digital innovations, changing consumer behaviors and consolidation in the independent brokerage channel are all influencing how insurance is sold and the expectations businesses place on their independent insurance agent.

All of this is occurring alongside a hardening market for property-casualty insurance. This market is characterized by stricter underwriting standards, reduced capacity, restricted coverage and less competition among insurance carriers for new business. While the hardening market is largely driven by high-level macro trends—including increasing claims costs, catastrophic losses, reduced investment certainty, social inflation, rising reinsurance costs and more—the net result for most businesses is that they are paying more for their insurance.

Alongside these rising costs, your clients are also facing dynamic short- and long-term trends in their respective industries, as well as the fallout from the COVID-19 pandemic. The bottom line is that businesses need insurance and risk management partners they can trust now more than ever.  

While current market conditions are challenging, they also present an opportunity for insurance brokers and agents to separate themselves from their competition. They play a critical role in helping businesses navigate the insurance market. While this is true in soft markets, it’s especially important when the market is hardening. Those that will fare the best in a hard market are those who focus on quality service and guidance rather than strictly cost.

Here are five strategies to best position your agency and clients for the current market:   

1) Stay informed. Your clients rely on you to provide tailored guidance. This starts by understanding the current market conditions yourself.

The best agents not only have a good sense of high-level pricing trends, but also the conditions that their clients are likely to experience. You need to have a handle on how market conditions are affecting businesses with similar risk profiles. Having this understanding will allow you to provide meaningful advice to your clients on how they can address this market from a coverage standpoint, as well as a risk management perspective.

Now is a great time to think about ways to strengthen your relationship with insurance carriers. Having a good sense of how insurance carriers and their underwriters view the current market will give you a leg up.   

2) Take the time to explain the market to your clients. No one likes bad news. This is especially true for commercial insurance buyers who may see dramatic premium increases. However, bad news is even worse when it comes as a surprise.

In the current market, agents should be transparent with clients when it comes to potential price increases. Doing so will help your clients manage their expectations and allow them to properly budget for increased insurance costs. Providing this information well ahead of renewal has the added benefits of giving you ample time to develop a solid plan for positioning your clients’ risks to underwriters.    

3) Be a true risk management partner. It’s no secret that many insurance carriers are tightening up their underwriting standards due to increased claims cost, poor loss ratios and deteriorating investment income. For your clients, this means underwriters are going to ask more questions than in years past and will be more selective in the risks they are willing to recommend.

In this setting, it’s doubly important to ensure you’re able to provide targeted risk management advice that can improve your clients’ risk profiles. Whether you provide this guidance in-house or connect your clients to this information, it’s important to demonstrate that your clients take a proactive approach to risk management. Remember, best-in-class risks get best-in-class pricing which, in this case, may mean less dramatic premium increases.

4) Start the renewal process early and focus on quality submissions. “Start your renewals early” is the advice that insurance brokers hear every year. This is especially true this year. The earlier you start working with clients on their renewal, the more time you will have to address issues with their submissions.

Whether it's addressing risk management issues or determining how to structure insurance coverage, time is a valuable asset—especially since many insurance carriers are seeing an uptick in submission volume for certain lines of coverage. Many underwriters will outright dismiss incomplete or sloppy submissions.   

5) Leverage technology for improved service. Your clients are going to expect a lot out of you. Businesses today are looking to their insurance agents to help them control their risk, structure their insurance policies and provide timely guidance.

In light of these demands, agencies are increasingly embracing InsurTech solutions to find efficiencies in their workflows. Doing so helps agents focus on their core responsibilities while still delivering best-in-class insurance and risk management advice.

What’s more, given recent shifts toward digitization in the industry, technology is sure to play an even larger role in your everyday operations in the coming years. Now is the time to examine available InsurTech solutions that allow your agency to enhance its value proposition and be a partner that your clients can rely on. 

Now more than ever, your clients are leaning on you for expertise, guidance and support. Stay informed, communicate with them early and often, and be there as their business consultant during this challenging time, and you’ll secure your position as their essential long-term partner in the years to come. 

Brendan Zyvoloski is a senior market analyst specializing in p-c products at Zywave.