Crisis: An opportunity for agent and broker growth
Real staying power awaits agents and brokers who conceive the distinct products customers expect from today's insurance innovators.
Resilience has been one of the core themes to emerge out of 2020 and the global pandemic. The crisis has motivated many businesses to reexamine their operations to fortify against future disasters, including adding new products and services, broadening expertise and leveraging technology.
Related: How to expand your book of business through existing clients
Insurance agents and brokers also have used this time to grow their books and offer new value to existing clients. But in today’s climate of social distancing, some agents may wonder how to grow their business with so many restrictions in place.
For Doug Coombs, executive vice president and CMO at SIAA (Strategic Insurance Agency Alliance, Inc.), the answer to the question of where agents can start is simple: “Anything to do with conducting business online or virtually would be a growing market to consider; they’re not going to disappear when the COVID-19 crisis passes. Some of the changes we are experiencing will be with us for a while, if not for the long haul.”
Jeff Rommel, senior vice president of property and casualty sales and distribution at Nationwide, agrees that agents should turn to digital resources to pursue growth in 2020. “Agents who are embracing digital and other creative approaches to marketing are the ones we see that are best positioned to grow,” says Rommel. “Digital tools can help to build a pipeline of potential sales, streamline quoting and sales, and improve an agency’s visibility online and on social media.”
Identifying new markets
There is a school of thought in insurance that bolsters niche specialization — as opposed to generalization — as the way agents and brokers can maintain their competitive edge. Coombs subscribes to that belief and sees niche market expertise as a way for agents and brokers to broaden their client base, strengthen their business and differentiate themselves. But contrary to what many may think of as ‘niche,’ Coombs explains that building a niche market doesn’t always mean pursuing hyper-focused segments.
“Let’s clarify that a niche market can truly be any market. It’s simply one that you choose to be a focus for your agency — a distinct segment of a market,” Coombs says. “It doesn’t have to be a boutique shop or exotic pets.”
He adds this word of caution about insurance carriers: “Check to be sure the companies you are writing with are focused on the markets you are contemplating pursuing. It does little good to chase any class of business if you don’t have a carrier underwriting that market.”
When identifying new business markets, Coombs suggests agents and brokers utilize a business database resource to determine the depth of a particular market in their area, including how many potential clients exist in their territory. Agents and brokers also should look at current trends to pinpoint areas in need of insurance expertise. For example, home-based businesses and gig companies have boomed in the months since the start of the pandemic, presenting clear market opportunities.
Coombs suggests that insurance professionals who are more interested in personal lines look at the areas of personal insurance that have become critical as 2020 unfolded. “Thinking along those lines, when travel picks up again, travel insurance might be a niche market to consider,” he says. “But, there will have to be a clear disclosure of whether or not pandemics or virus outbreaks are covered.”
Growth opportunities
Rommel sees other ways for agents and brokers to grow their books beyond branching out into new markets. “For businesses, loss control services and risk management resources are a great way to add value and make a real difference for customers by helping them mitigate risks and prevent costly interruptions,” he says.
Cybersecurity, identity theft protection, logistics/distribution, and telematics are all gaining interest among insurance customers. Consider a recent study from Nationwide that shows 91% of business owners with fleet vehicles believe telematics has a positive impact on their business’s operations, and 93% would pay more to ensure a safer driving experience.
Potential pitfalls
While focused on growing their business, agents and brokers are prone to fall into basic traps that can stand in the way of complete success.
“A common mistake is failing to connect with customers where they prefer to do business,” Rommel says. “Digital tools offered by carriers present a great opportunity for agents to increase touchpoints with clients, reach new prospects and build their credibility in the industry.”
He adds: “Another common mistake is limiting growth potential by not taking the extra step to understand an account’s needs deeply enough to be able to provide guidance on supplementary protection needs like cybersecurity, employee benefits and loss control.”
Jim Burns has seen several agencies and brokerages launch successful products in his years as a business attorney. He’s also seen some fail.
Burns is a partner at Genova Burns, a law firm specializing in a broad range of practice areas, including insurance.
Genova Burns has partnered with insurance businesses through the years to launch specialty programs. These ideas usually come from agent entrepreneurs who go the extra mile to create a unique product for a new or existing customer base. Although exciting, Burns cautions that these ideas don’t always pan out as expected.
“When you are not an insurance company or big brokerage,” Burns says, “you have to deal with all these issues you may not have dealt with before.”
For a new product to succeed in the market, agents must strike the right balance of policy terms, price, and claims ratio. The good news is, today’s business environment is rife with opportunities for agents to be creative and form products with insurers.
“The opportunities are where there is already a customer base that has extreme loyalty or willingness to buy products and services,” says Burns. But the concept must have real risk transfer capabilities, he adds.
In spite of the challenges, real ‘staying power’ awaits the agents and brokers who conceive of the distinct products that customers need and expect from today’s insurance innovators.
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