Top trends impacting P&C insurance agents in 2022

The events of the last two years have increased the adoption and innovation of technology in our industry. From shifting to more virtual interactions to complying with new safety policies, agents and brokers had to make rapid transitions in a business that heavily relied on in-person interactions in the past.

As 2022 unfolds, being aware of the trends that will dominate insurance in the coming year will keep agents ahead of the pack.

Generalists will move toward specialization.

While most agents have a broad range of offerings, they also have to compete with thousands of agents across the country that are making the same pitch to potential customers. As lines of business reach beyond regional boundaries, going niche can draw in customers regardless of geography. For instance, an agent that specializes in agribusiness insurance has the ability to gain the in-depth insight that would otherwise be unknown to a generalist. These individuals are able to become experts and identify coverage gaps that create vulnerabilities for clients.

Although being a specialized agent requires more research and knowledge, agents are able to provide their clients with more personalized and precise information based on their clients’ needs. By specializing, an agent can build closer relationships with industry professionals and become more trusted by the group they serve. Those who chose to go down this route enjoy less competition and often are able to increase their revenue by upselling services because of their unique insights.

As changes to the industry continue and generalists are faced with an influx of agents fighting for the same type of customers, offering specialized coverage will make an impact on agents’ business.

Prioritizing customer experience will take the lead for agents.

Increasing a book of business has been a primary focus for most agents, but reducing churn on existing clients can be a lucrative endeavor.

Here’s a specific scenario: An agency with $4 million in revenue could see a $120,000 increase by 2023 if the business focuses on improving retention by just 3%. And, maintaining that 3% increase over the next five years (meaning the agency goes from 87% to 90%, then holds at 90%) would result in an estimated $642,000 in additional revenue in year five! Those not taking proactive measures to maintain existing clients are losing out on huge revenue opportunities.

This is why in 2022, Agency Revolution predicts that 25% of agents are likely to focus more on customer experience rather than new business to increase referrals and retention. While retention can be seen as a tactic that doesn’t actively grow the business, our industry knows well the power of referrals. Customers who are experiencing great service are more likely to stay with you as well as recommend you to their friends, family and colleagues. Focusing on bringing value to your customers via active communication and innovative business offerings will have a resounding impact. Although new business is always going to be a priority for agents, now their priorities must include improving customer experience in order to increase retention within businesses.

More carriers will release captive agents.

In 2021, we saw Nationwide become the first large carrier to successfully release all captive agents. In the coming months, we expect more carriers to follow suit.

One of the motivating incentives for carriers is the operating-cost reduction. Beyond the cost savings for carriers, the move is also good for agents as more consumers are flocking to independent agents because of the perception that they are more likely to be objective about advice and coverage guidance. These agents aren’t locked down to one carrier so they can work with multiple insurers to provide clients with a custom coverage mix.

Carriers other than Nationwide that likewise want to reduce costs while capturing more of the market will likely make a similar staffing shift in 2022. Agents should welcome this change as Nationwide reports that its former captive agents increased net written premiums by 35%.

The benefits of releasing captive agents will create improvements for clients, agents and carriers. The shift will progressively happen over the coming months, whether spurred by carriers or individual agents who decide to go independent, this change is coming in 2022.

Insurance technology will receive massive carrier investments.

A few years ago, insurance companies began launching or scaling up venture arms. The trend has been accelerating and breaking records with massive investments flowing into new insurtech companies. A recent report found that USAA made the most new startup investments in 2021 followed by American Family (primarily through its venture arm American Family Ventures).

Carriers are investing in startups and supporting the independent agency distribution channel as well as pure play digital insurtechs. Insurance businesses are among those futuristic organizations that take advantage of the latest technological innovations to boost efficiency and drive customer satisfaction. This could lead to the entire industry shifting to digital transformation in order to remain competitive.

As we look at things now, for investors, the key benefit is that they receive a return of 100% of their investment capital while also gaining a competitive advantage in the market.

Adapting to the times

The insurance industry has experienced massive changes over the last couple of years. Forward- looking agents and brokers must keep your fingers on the pulse of the industry and watch the these trends in order to executive effective business goals.

Joel Zwicker is the “insurance evangelist” at Agency Revolution and formerly an agent at one of Canada’s largest independent insurance agencies. He now works to provide independent insurance agents with the best marketing tools for their unique needs. Contact him at info@agencyrevolution.com.

These opinions are the author’s own.

Also by Joel Zwicker: How independent agents can stand out as competition grows