How to Thrive in a Hard Insurance Market

Finding cost-effective insurance solutions has become more crucial than ever. Unfortunately, it is also becoming more difficult. More than $50 billion in weather-related losses were reported through September of last year. Natural disasters like winter storms, wind and hailstorms, wildfires, and extreme temps are wreaking havoc on the industry. But the reason for this hard market goes much deeper than that. Let’s dive into this topic together to learn how to thrive in a hard insurance market!

What is a Hard Market?

A “hard insurance market” refers to a time in which the majority of premiums are increasing, underwriting standards are more strict, and coverage availability has shrunk. Fewer insurance companies are willing to take on new business unless it meets very specific criteria. And the clients they do accept often pay more than they had previously. The consumer is left to feel the effects as carriers attempt to recover from costly payouts.

What is Causing the Current Hard Market?

  • Increased Catastrophic Events: Natural disasters, such as hurricanes, wildfires, or severe weather events, can result in a higher number of insurance claims. This can strain the financial reserves of insurance companies, leading to increased premiums and stricter underwriting.
  • Pandemic-Related Losses: The global COVID-19 pandemic has caused significant economic disruptions, and insurers may face increased claims related to business interruptions, event cancellations, and other pandemic-related issues. This could contribute to a harder insurance market.
  • Low Interest Rates: Insurers often invest the premiums they collect to generate income. Persistently low interest rates can reduce investment returns, impacting the overall profitability of insurance companies and prompting them to seek additional revenue through higher premiums.
  • Loss of Reinsurance Capacity: If reinsurers, which provide insurance to insurance companies, face significant losses or capacity constraints, primary insurers may have to bear a larger portion of the risk. This can lead to increased premiums and a more challenging market for insurance consumers.
  • Regulatory Changes: Shifts in regulations, such as changes in accounting standards or risk management requirements, can influence the insurance industry. Compliance with new regulations may increase operational costs for insurers and contribute to a hard market.
  • Cybersecurity Risks: As cyber threats become more prevalent, insurance claims related to cybersecurity incidents can increase. Insurers may respond by adjusting underwriting practices and raising premiums to account for these emerging risks.

Reliable Agency, Inc. is here for you!

Independent insurance agencies, with their flexibility and personalized, local approach can be a beacon of support for clients seeking to navigate these turbulent waters while keeping their budgets intact. As an independent agency, we assist clients in saving money, drawing insights from industry experts and reputable sources.

Eight ways we can help:

  • Rate Comparisons:
    Independent agencies have the advantage of representing multiple insurance carriers, allowing them to compare and contrast policies from various providers. On occasion, your independent agent can find better rates with another carrier. Keep in mind, however, that cheaper rates may not be possible. If another agency promises you something cheaper, be sure to read their quote very carefully and compare it to your current policies before agreeing to switching companies.
  • Bundling Policies:
    Many insurance providers offer discounts for bundling multiple policies. Independent agents can analyze clients’ needs and bundle home, auto, and other policies, potentially resulting in significant savings.
  • Risk Assessment and Mitigation:
    Independent agencies specialize in understanding clients’ unique risk profiles. By conducting thorough risk assessments, they can tailor insurance coverage to match specific needs, avoiding unnecessary expenses. Working with a local agency bridges the gap between you and your insurance company and helps you find solutions that fit your needs.
  • Regular Policy Reviews:
    Markets evolve, and so do clients’ needs. Independent agents regularly review policies to ensure they remain aligned with clients’ current circumstances. This proactive approach can prevent overpayment for coverage that is no longer necessary. Ask your agent how frequently they review your policies, so you understand just how close they’re watching your rates. Be sure to communicate with your agent any changes to your insured property so they can adjust your policies accordingly.
  • Advocacy During Claims:
    Independent agents act as advocates for their clients during the claims process. This can lead to quicker and fairer settlements, potentially reducing the financial impact on clients. Once again, communication is a key component here as well. Cooperation with the insurance adjuster and your agent will ensure that the claims process is as smooth as possible.
  • Utilizing Technology for Efficiency:
    Many independent agencies leverage technology to streamline their operations, reducing overhead costs. These efficiencies can translate into more competitive pricing for clients and give you better access to your insurance information.
  • Leveraging Industry Relationships:
    Independent agents often have strong relationships with insurance carriers. These relationships can be leveraged to negotiate better rates for clients, especially commercial clients. One of Reliable Agency’s strongest relationships is with Auto Owners. Here is what they have to say about this hard market.
  • Mitigating Risks:
    Empowering clients with knowledge on risk management can help them make informed decisions. Independent agents educate clients on risk reduction strategies, which may lead to lower premiums. The less claims you are involved in, the lower your premiums remain. Be proactive and take steps to minimize risk to help combat premium increases.

Turn to local industry professionals for trusted, reliable advice!

In the face of a challenging insurance market, Reliable Agency, Inc. is a valuable ally for clients seeking to save money without compromising on coverage. By employing a range of strategies, from comparing rates and bundling policies to leveraging technology and advocating during claims, we can navigate the complexities of the insurance landscape, delivering cost-effective solutions tailored to individual needs. With a burning desire to see each of our clients succeed in their chosen market, we invite you to contact us today, commercial and personal clients alike! We help clients all across northern Minnesota and Wisconsin learn how to thrive in a hard insurance market. From Hermantown to Cloquet, Proctor to Moose Lake, and Superior to Island Lake and beyond, we are your trusted source of reliable insurance advice.

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