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How Specialization Can Help Independent Agents Survive the Hard Market

As agents look ahead to 2024 and work through budget planning and new client outreach, considering new avenues of business may be crucial to surviving in today's market.
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There seems to be no break in sight from the hard market. In fact, data released earlier this year by the American Property Casualty Insurance Association (APCIA) shows that this may be the hardest market the insurance industry has faced in a generation.

As agents look ahead to 2024 and work through budget planning and new client outreach, considering new avenues of business may be crucial to surviving in today's market. Agents can add new lines of revenue by diversifying their portfolios and considering new business sectors.

But how should independent insurance agents prepare to enter a new market? Taking the time to find what specialty best fits their teams, finding the right business partners and studying the latest in industry trends are just a few steps to consider.

Find Your Niche

Finding the right niche to specialize in can be as simple as following your passions. Our business, PAK Programs, started because I had an interest in hospitality and fine dining. I pursued that interest and now we service wineries, breweries and similar businesses across the country.

Geography is also an important factor. For example, if you want to break into the winery niche as an insurance agent, it could be difficult if you live in Maine. The climate and soil are not known for producing fine wine. Do not let geography stop you from following your passion but consider the space you would work in and how abundant that business may be in your area. This will help determine the economic viability of expanding into new niches.

Once you have identified a specialty market that aligns with your interests and makes financial sense, you can consider how to break into a new market.

Become a Leader in a New Market

Becoming an expert is critical to bringing in new clients. There are certain risks and issues that only independent agents who take the time to study the niche and visit businesses will know how to address. This can set you apart from the competition.

For example, let's look at wineries and wildfires. During a fire, we often see evacuations and road closures, which prevent customers and staff from getting to the business. This often leads to a business income loss. An agent without winery experience may assume they just need to look at the sales of wine the business would have received that day to calculate the loss.

However, an agent who knows the wine niche would consider more than just missed on-site sales. For many wineries, sales generated through wine club members is a major revenue stream. An agent who recognizes and understands the effect a prolonged closure would have on all the winery's profit avenues will be in the strongest position to serve their client.

Taking the time to study and learn about your industry of choice is crucial. Some steps to consider include:

1) Attend trade events. Events present a great opportunity to study emerging industry trends and make connections with industry business leaders and vendors.

2) Study industry news sources. Read the major industry publications. These publications will be a key resource for staying up to date on news and trends, which means you can always speak with your clients from a position of expertise.

3) Follow the right social media accounts. Stay active on social media, even just by checking the accounts of businesses in your area. This will help you gain inside knowledge of local businesses and keep up with clients, while also learning about the latest events, technology or equipment in the industry. 

Building expertise is important, as is identifying new clients. One of the best tactics for becoming a player in your market of choice is to experience the business. Take the brewery niche as an example. We met with agents earlier this year who were interested in working with breweries. One of the first steps we suggested to them was to go to local breweries, participate in tastings and get to know the business. 

Later that week, they took our advice and attended a few beer tastings. They quickly built a strong rapport with the staff and the brewery soon became a client.

It's also important to find the right partners. Working with a specialty insurance program can go a long way. A specialty program administrator will know your client's operations inside and out and have plenty of experience tackling unique claims.

Recently, we had an agent come to us with a winery client who lost power during a fire and did not have a generator on hand. Due to recent shortages, they could not find a generator. We were able to use our connections as a specialty insurer to help find a backup. Working with a specialty insurer can give the agent access to resources and insights that will better position them as a knowledgeable and trusted resource to clients.

Specializing can be a smart move to build out your book of business for 2024. As we wrap up 2023, independent agents should take time to consider if a specialty niche is right for them.

Larry Chasin is president and CEO of PAK Programs, which provides insurance programs for wineries, vineyards, breweries, wine and liquor retailers, cideries, meaderies, distilleries, liquor and wine importers, and distributors. 

Thursday, December 7, 2023
Commercial Lines