The insurance coverage business is going through its hardest market circumstances in a technology, with rising charges and stricter underwriting creating complications for brokers within the type of tough renewal conversations and challenges inserting new enterprise.
The 2024 Agent-Buyer Connection Examine, carried out by Liberty Mutual and Safeco Insurance coverage, examined how impartial companies and their purchasers are navigating this tough market atmosphere. The analysis discovered 83% of brokers say it’s the toughest market they’ve ever skilled, whereas 90% of customers reported their insurance coverage charges elevated over the previous yr. Nonetheless, regardless of the tough circumstances, the research additionally recognized alternatives for savvy impartial companies to proceed rising their enterprise.
Communication Hole
A regarding hole exists between insurance coverage brokers and their prospects with regards to understanding and speaking about rising insurance coverage charges. The survey discovered that solely about 20% of shoppers say they perceive the market forces driving fee will increase. The overwhelming majority, 62%, stated it’s vital for his or her agent to coach them on the altering dynamics of the insurance coverage market.
This hole persists regardless of efforts by brokers to handle the difficulty. Whereas 70% of impartial brokers surveyed stated they proactively focus on market circumstances with purchasers, about one in three prospects nonetheless expressed dissatisfaction with their agent’s rationalization of market forces and the impacts on their particular coverage.
Maybe most troubling, prospects usually tend to first study fee will increase from their invoice than from their agent. The survey discovered that solely 20% of shoppers first heard about their fee hike from their agent, whereas 58% stated they seen their invoice quantity change earlier than receiving any communication about it.
So, what do prospects need from their insurance coverage brokers? Overwhelmingly, they’re on the lookout for assist understanding their insurance policies and coverages, the survey discovered. Eighty-five p.c stated it’s vital for brokers to evaluate coverage coverages with them, and 79% need their agent’s assist to raised perceive their coverage. Moreover, one-third of shoppers stated they need extra frequent evaluations of their coverages and insurance coverage wants.
Alternatives to Present Worth
Insurance coverage brokers have clear alternatives to show their worth to prospects, in accordance with survey findings. To construct belief, brokers ought to deal with the traits prospects worth most extremely: expertise with insurance coverage (cited by 79% of respondents), responsiveness to requests (77%), and making insurance coverage choices simple to grasp (75%).
On the similar time, the survey revealed areas the place brokers have room for enchancment. Whereas 67% of shoppers worth proactivity in figuring out their wants, solely 31% of brokers think about this a energy. Equally, 64% of shoppers respect wonderful listening abilities, however simply 22% of brokers self-identify listening as considered one of their robust fits. Closing these notion gaps represents a significant alternative for brokers to raised meet buyer expectations.
“Insurance coverage is a relationship enterprise. In a tough market, these relationships have turn out to be much more vital,” stated Luke Payments, president of impartial agent distribution at Liberty Mutual. He added that “at this time’s prospects are turning to their agent for much more. They need their agent to coach them on altering market circumstances, assist them higher perceive coverage modifications and supply recommendation on threat mitigation.”
Progress Methods
Our analysis examined companies that reported annual income development of greater than 10% and located three methods that set their companies aside. These methods are working to gasoline success at this time and put together for when market circumstances enhance:
- Diversifying ebook of enterprise: Larger-growth companies have been 50% extra seemingly than lower-growth companies (32% vs. 21%) to report that they’re diversifying their ebook of enterprise. This typically means shifting towards markets much less impacted by the onerous market, comparable to industrial traces.
- Investing in new retention applications: Larger-growth companies have been twice as seemingly (14%) as lower-growth companies (7%) to spend money on new retention applications aimed toward retaining current purchasers happy. Whereas retention is all the time vital for sustainable development, it’s much more essential throughout a tough market when carriers limit new enterprise.
- Positioning for future success: Companies experiencing elevated retention charges and development are persevering with to spend money on new shopper acquisition applications and hiring extra employees members. By investing at this time, they’ll be well-positioned for future success.
Rising to the Problem
Impartial brokers preserve a strategic benefit as a result of ease, alternative and experience they supply to insurance coverage prospects.
Many companies have nimbly tailored to the altering market circumstances, implementing methods to take care of buyer satisfaction and preserve their companies afloat. In actual fact, 65% of brokers stated their buyer retention is secure or higher than a yr in the past, whereas 69% reported buying new purchasers on the similar or higher fee. Companies targeted on industrial traces noticed even stronger year-over-year retention and development in comparison with these targeting private traces or with an equal focus.
“Onerous insurance coverage markets are difficult, however they don’t final endlessly. It’s with a way of optimism that I can say – and this analysis validates – that impartial brokers are well-positioned to climate this market and are available out stronger, extra resilient and customer-centric,” Payments stated.
View the complete report from Liberty Mutual and Safeco right here.