Every industry experiences market cycles, and insurance is no exception. When premiums rise, customer retention drops, and commissions take a hit, the industry calls it a hard market—and right now, we’re deep in one. For most agencies, this means struggling to stay afloat. But some agencies are not just surviving—they’re thriving. The question is, how?
Before we explore the strategies that help top agencies succeed, let’s first see what makes this hard market special.
Why Is This Hard Market Different?
A hard market can occur for several reasons:
- Natural disasters
- Higher claims costs
- Insurer exits
- Rising reinsurance costs
- Changes in regulations
- And more.
All of these factors could be disruptive. Today’s market faces them all at once, causing constant premium hikes and ongoing uncertainty.
To put it in perspective, property insurance rates have been climbing for 24 consecutive quarters as of Q3 2023, according to Marsh. That means customers are facing premium increases year after year, making retention tougher than ever.
How do some agencies keep growing their business every year? They maintain retention rates above 95% and earn more commission per policy. It all boils down to four critical strategies:
1. Elevating Customer Experience
Customers don’t just choose an insurance agency based on price; they choose relationships. The value of a personal connection is what sets agents apart from direct-to-carrier insurance options.
Consider how professionals like CPAs or private bankers build relationships with their clients. A good CPA doesn’t just file taxes; they understand your financial goals and offer personalized advice. A trusted banker helps businesses secure the best financing options, tailored to their unique needs.
Insurance is no different—except in a hard market, customers need their agents’ expertise more than ever. Top agencies don’t only aim for retention. They also engage customers early, offering helpful advice well before renewal. This means:
- Getting ahead of difficult renewal conversations
- Helping clients explore options to minimize costs
- Offering a seamless, stress-free experience
Unfortunately, most agencies go into survival mode, focusing solely on keeping existing clients. The smartest agencies, however, strike a balance between retention and new business acquisition. They know that in a hard market, customers shop around—and if you’re not engaging them, another agency will.
The challenge? Scaling personalized service across a growing book of business. That’s where automation and data-driven strategies come into play.
2. Cross-Selling: The Key to Long-Term Retention
Cross-selling isn’t just about increasing revenue—it’s about customer stickiness. Bundled policyholders have a high retention rate of 91%. In contrast, single-policy customers have a much lower rate of 67%.
That’s a game-changer. At around 85% retention, an agency is simply replacing lost customers. To actually grow, agencies must push beyond that threshold.
So, how do top agencies execute effective cross-selling strategies? They:
- Use data to identify cross-sell opportunities
- Leverage automation to personalize offers
- Proactively engage clients with relevant solutions
There isn’t a single solution for everyone. Tools like InsuredMine, Snowflake, SQL, and in-house analytics help agencies turn raw data into insights. These insights can then boost revenue. If you need help setting this up, you’re welcome to book a call with me.
3. Data Integrity: The Foundation of Smart Decision-Making
Data is only valuable if it’s accurate. Many agencies track important performance metrics and make decisions based on this data. But later, they often discover that the information was flawed.
Poor data integrity is a widespread issue, especially in mature agencies with outdated systems. Leadership teams might make big decisions with incomplete or wrong data. This can lead to serious problems.
Top agencies use integrated systems to link their CRM, AMS, rating tools, and analytics platforms. This allows agents to:
- Work more efficiently
- Automate repetitive tasks
- Focus on selling and retention
It also helps leaders see how the business is doing. This clear view lets them make smart choices to boost growth.
4. Carrier Optimization: Adapting to Market Shifts
The best agencies don’t put all their eggs in one basket. They diversify their carrier relationships strategically—favoring the carriers that support their agents.
Insurers and reinsurers have their own challenges. Still, agencies must focus on their business needs. If a main carrier raises rates or cuts commissions, agencies need to move their business to other options.
Additionally, agencies should optimize for carrier incentives. Agencies can boost profits by using data to plan and allocate resources wisely. This helps them offer the best options for their clients.
The Key to Thriving in a Hard Market
Agencies with record growth, retention, and profits aren’t just working harder; they’re working smarter.
They focus on their customers. They use data to make smart choices. Also, they automate to grow their efforts. As a result, they’re perfectly positioned to attract and retain the disgruntled clients of agencies that fail to adapt to the hard market.
If you’ve made it this far, thanks for reading! I hope you found these insights valuable. If you’re looking for more detailed, actionable strategies to implement in your own agency, feel free to book a free strategy session with me. Let’s talk about how to position your agency for success—even in a challenging market.
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Frequently Asked Questions (FAQ)
What is a hard market in insurance?
A hard market happens in insurance when premiums go up. It also means stricter underwriting, fewer customers staying, and lower commissions for agents. It is often triggered by factors like increased claims, regulatory changes, and economic downturns.
Why are insurance premiums rising?
Premiums are going up for several reasons. First, catastrophe rates are higher. Second, claims costs are rising. Also, some insurers are leaving the market. Then, reinsurance costs are increasing. Lastly, there are changes in regulations. These forces have extended the hard market, making recovery slower.
How can agencies improve customer retention during a hard market?
Agencies that use proactive customer experience strategies keep clients longer. This includes early renewal talks, personalized service, and policy shopping. Strong relationships before renewals are key. They help keep loyalty, even with rising costs.
Why is cross-selling so important in a hard market?
Reliable data is essential for making informed business decisions. Agencies that link their CRM, AMS, and rating platforms can gain clear insights. This helps them improve workflows. Also, it ensures their sales and retention strategies use clean, useful data.
What is carrier optimization, and why does it matter?
Carrier optimization means choosing the right insurance carriers. You want those that provide good rates, fair commissions, and helpful incentives. Agencies can analyze data to spread risk across different carriers. This helps them boost revenue and keeps clients safe from big premium increases.
Conclusion
Surviving a hard market is challenging, but thriving in one requires a shift in mindset and strategy. The most successful agencies are not simply working harder; they are working smarter. They prioritize customer experience. They also use cross-selling and maintain strong data. Plus, they optimize partnerships with carriers. This strategy sets them up for long-term growth.
In times of uncertainty, clients need more than just a policy—they need an advocate. Agencies using automation, personalization, and data-driven choices will keep their clients. They will also draw in clients unhappy with competitors.
If you’re looking for actionable ways to implement these strategies in your agency, I’d love to help. Feel free to book a free strategy session with me, and let’s explore how you can turn this hard market into an opportunity for success.