If the hope for 2022 was a return to some sense of “normal” in America, the reality for the new year includes a return to higher auto and home insurance rates.
Allstate, Progressive, Geico and State Farm are just some of the insurers that announced auto insurance rate increases. Some of these rate changes took effect at the end of 2021, while others will be implemented in the first quarter of 2022. At the same time, homeowner insurance rates are also rising across the U.S. and some insurers are withdrawing entirely from pricier, high-risk markets.
While these rising rates might appear to be a threat to client retention, independent insurance agents may find opportunities to secure and even grow their business in this environment. Agents who explore options, provide information, and identify strategies to mitigate the impact of increased rates can find opportunity in the face of rising rates.
Exploring Options. Rising rates can create more challenges for captive agents than their independent counterparts. Independent agents have market access and options these exclusive agents lack. This can translate into opportunities to capture some of the resulting runoff through substantive marketing programs targeting prospects seeking to better navigate rising rates.
Providing Information. A good agent can hedge against sudden market shifts by demonstrating they are a reliable information source for their clients. Prior to renewal dates or confirmation from carriers of planned rate increases, these independent agents will have spoken to their clients about market trends, explained the likelihood of potential rate increases and shared other industry news that could impact the client. By relaying this information, independent agents not only demonstrate their value, but they also create a trusted relationship beyond the policy itself. A customized insurance agency newsletter can play a major role in supporting this effort. When it becomes clear rate changes are imminent, it’s important to have a prompt discussion with clients to explain what’s happening. Often, these types of client engagements can make the difference in retaining or losing business.
Identifying Risk Mitigation Strategies. While clients see tremendous value in agents who provide up-to-date industry insight, those who provide solutions on how to mitigate the impact of higher rates rise to the top. Whether they offer usage-based policies, bundling, quote-to-effective date (early quote), paperless policies, discount and payment options, or policies with telematic solutions, clients appreciate agents who don’t merely present problems – or in this case, a higher bill. Clients value agents who offer practical solutions to help manage their risk while respecting their wallets. Clients also value being informed and avoiding surprises.
Rising insurance rates don’t have to signal an end to an agent-client relationship, particularly where trust has been established. Using the three approaches above will help build trust and assure clients that agents who follow this approach are trusted resources who will bring them the best the market has to offer.