Insurance agents are working harder these days to find insurance coverage to meet their clients’ needs. Industry experts claim this is the longest hard market climate affecting large and small commercial lines business and personal lines.
The current hard market conditions in insurance are caused by several factors. The largest single factor is the lasting complications created by the COVID-19 pandemic. There was a reduction in written premiums for many property and casualty carriers when businesses were forced to close or scale back operations. This reduction in written premiums led to temporarily improved surplus ratios as liabilities from unearned premiums decreased. When businesses re-opened, when inflation created rate increased, and when new business grew, the increase in written premiums naturally created a decrease in the carrier’s surplus ratio. This change in the surplus ratio created a constraint on market capacity.
The rise of cybersecurity threats, an increased frequency and severity of claims, and escalating climate change-fueled natural disasters, such as hurricanes and wildfires, are other contributing reasons for this hardening market.
The issues related to surplus ratios will run their natural course and should eventually be nonissues. The issues related to cybersecurity and climate-related disasters are more permanent, long-term issues with staying power.
As a result, some carriers are not accepting new clients or not renewing existing client policies. Many carriers are tightening underwriting requirements, and insurance premium rates have seen significant price increases since the start of the pandemic.
What are agents doing to protect people and business against risk today?
The Excess and Surplus (E&S) Specialty Market Is Providing a Lifeline
The need to utilize the E&S market has seen stellar growth over the past few years. Agents are using the E&S market to bridge the gap in finding options to provide coverage to meet an insured’s specific needs. Premiums for these types of policies do typically run higher than the standard market rates. Coverage forms may also differ. It is important for the insurance agent to understand the coverage differences and make the insured aware of these.
Payment Options in the E&S Market
To help contend with these elevated premium costs in both the standard and E&S markets, many agents are also leveraging premium financing options. With so many services these days being paid for as subscriptions, it is natural for everyone to look to this type of payment plan option.
Duke Williams, the CEO, and founder of Simply Easier Payments (SEP), a longtime industry-leading insurance payment processing company, has been in the insurance business for 40 years as a former agency owner and current insurtech leader. He has weathered several hard markets, including ones with double digit inflation numbers, and knows firsthand the struggles agents are facing today.
“SEP continues to watch market trends and develop innovative technology-driven insurance payment processing capabilities to enhance our client agents’ ability to easily run their business in good times and in bad,” said Williams.
Better Customer Experience = Higher Renewal Retention
Intelligent Invoicing is SEP’s newest technology enhancement for agency billing and premium financing. Intelligent Invoicing can quickly generate a premium finance quote that can be digitally sent to their insurer to electronically sign the agreement along with providing immediate payment options.
“We know how time consuming it is for our agent’s insureds to go through multiple steps to purchase insurance using a premium finance contract,” added Williams. “Intelligent Invoicing provides a more seamless customer experience for both our clients and theirs.”
The insurance industry is more competitive than ever. Agents must continue to find ways to retain and obtain new customers. Improving ways to provide coverage, especially in today’s hard marketplace.