In the 1990s, scoring quality insurance coverage at rock-bottom prices was easy and about as magical as finding a golden ticket to Willy Wonka’s Chocolate Factory. It was a soft market dream: low premiums, generous coverage, and little resistance.
But after too many years of cut-rate pricing, the industry’s profits began to crumble, and underwriting losses piled up. Insurers found themselves on shaky ground—vulnerable during one of the most catastrophic events in U.S. history: the September 11, 2001 terrorist attacks.
The ripple effect of 9/11 was long-lasting. Before the dust could fully settle, Hurricane Katrina slammed into the Gulf Coast in 2005, unleashing destruction on a massive scale and causing an estimated $40 billion in insured losses.
Cradled between those two historic events, the financial sector was blighted with bankruptcies, insolvencies, and widespread market turbulence. To recover, the insurance industry was forced to raise premiums, tighten underwriting, and prepare for even more course corrections.
Events in the early 2000s spurred massive litigation for wrongful death and injury, business interruption, and professional liability claims. This also caused a surge in complex, high-dollar lawsuits.
Adaptability isn't optional in a hard market like this—it’s essential. The businesses that succeed are those that adjust quickly. Let’s break down how to position your business for growth, even when the industry gets rough and before you find yourself in a hard market.
Let's cover a few essentials to maintain business in this hard market.
Preparing your clients for potential rate increases or coverage changes is essential for maintaining your relationships. You can do this by tailoring your services to their specific needs. Also, do regular check-ins using their preferred communication method—calls or emails.
A Best Practice is using your Customer Relationship Manager (CRM) to schedule check-ins, send reminders for renewals, and even send them holiday greetings. This makes them feel valued. Your customers remember you when you remember them.
Don’t be afraid to offer something new or different. Think cybersecurity, identity theft, and other emerging risks. Cross-sell and upsell whenever possible. Bundle packages and add umbrella policies for more comprehensive coverage.
By its own definition, a hard market creates a need for specialty insurance products such as flood or workers’ comprehensive insurance. Consider coverage for areas that have been hard hit by changing climate conditions or environmental issues.
Many insurers offer incentives or discounts for clients who adhere to specific safety standards. If you can show them the financial benefits of installing a security system or fire alarms, they become a partner with you in keeping their interests safe and their expenses down.
Another way to reduce costs is to work with clients to improve their risk management processes. For example, you could suggest safe driving courses for drivers to lower their auto insurance premiums.
Don’t sugarcoat premium hikes or gloss over policy changes—clients value honesty. Be upfront about rising premiums and any potential coverage restrictions. As their advisor, be ready with thoughtful recommendations while still protecting what matters most.
Offering a comparative rate analysis enables clients to assess the value of their current coverage and explore innovative alternatives. When you provide them with clear options, you empower them to make informed decisions, and clients appreciate having a voice in the process.
Utilize your CRM to automate straightforward and efficient processes, such as sending reminders, renewals, and other communications that may affect their coverage. Get a fast comparative quote-and-enroll tool to help your clients find the best options.
Offer business clients complimentary consultations. Let them know that your focus is on assisting them with risk management strategies that may result in lower premiums and fewer claims. Prepare ahead of time to tailor the consultation to their industry and ask about their pain points.
If you’re looking for another tool to add to your toolbelt, here it is. You can sell more, save time, build better relationships, and close more sales when you have the inside knowledge of underwriting.
No! You don’t have to become an underwriter. But you can become a subject matter expert (SME). When you know what the underwriters need, you can collect the right information the first time, explain the risks before they ask, and explain what makes the risk insurable.
The benefits of underwriting education and skills will be helpful when you need to advocate for your clients. Maintaining a respectful relationship with the underwriters is vital, as you are essentially trying to persuade them to approve risks.
Remember, underwriters are looking out for the insurance company's best interests. Continue to work with them, not against them. Make their job easier by gathering all the requested information and addressing potential concerns before the underwriter raises them.
You read that right. In the area of underwriting, rejections can benefit you. Every time you receive a declination, document the details. If you maintain a repository, you’ll have something to refer to in the event of future rejections. Think of this as building your submission strategies.
Data you’ll typically find on a declination document:
Every rejection, every no, gets you closer to a yes. (quote by Mark Cuban)
Let this knowledge be your superpower in the hard market. As you build stronger carrier relationships, you’ll also learn what they want in underwriting and how to package stronger submissions.
You’ll know how to stop pushing for submissions that won’t pass. Underwriters like working with agents who “get it.” When you make their job easier and maintain a respectful relationship, underwriters will see you as trustworthy and easy to work with.
The value of underwriting knowledge will make you invaluable to your clients and insurance carriers. Quicker quoting, fewer back-and-forths, and more approvals will make your work easier and more productive.
Underwriting is more selective in the hard market, so underwriters become more selective about the risks they are willing to accept. This could result in more stringent home insurance requirements or higher property maintenance standards.
This may involve serious discussions with your clients to determine their insurability and potentially increase their property insurance rates. They may consider switching carriers, but in a hard market, it may be a risky move because even new insurers have increased rates.
Clients must consider whether they will have the same or fewer coverage options. The best way to help your client make this decision is to put them directly in the driver’s seat. Equip them with a simple property checklist.
They will check the boxes for the same areas that insurance covers. This allows agents to explain how underwriting will view the submission for coverage. Tools like this make it easier for them to answer questions about premiums and coverage.
Check out Continuing Education (CE) course credits to find underwriting courses. Follow industry trade journals and blogs. Explore online training opportunities and resources from underwriting organizations.
Another approach is to go directly to the source. Insurance carriers house some of this information in their agent portals. You may find specific underwriting guidelines, risk appetite tools, and training videos there. Don’t miss their invitation-only webinars on underwriting knowledge.
Help your clients by offering a branded Home Maintenance Checklist. This seasonal maintenance guide will help you discuss insurability with your clients, and you just may help them discover solutions before issues surface.
Click HERE to download.