Author: Nancy Germond
2023 challenged today’s insurance agents, both new and experienced. Higher losses from catastrophes and weather, nuclear verdicts, increasing demands from certificate holders, hiring and retention challenges, rapidly rising premiums and the need to “justify” rate increases – all these and more challenged today’s insurance agents.
What will 2024 hold? While we aren’t sure, and certainly neither are the reinsurers, we know that focusing on the challenges you can control can help agency owners and their team improve their performance and ensure all are marching on the same parade ground. In the two years I’ve been with the Big I as the director of the Virtual University, agencies consistently face the same problems, so we can all benefit from many of the risk management issues that arise.
Where Should We Start in 2024? Here are some suggestions for your risk management to-do list for 2024. - Consider completing a SWOT analysis of your agency. What is a SWOT analysis? A SWOT simply outlines the strengths, weaknesses, opportunities and threats your agency faces. Using a free downloadable SWOT grid, you can work with key team members (don’t forget a frontline employee or two) to develop the analysis. While it’s natural for us to think “I know my organization,” this evaluation of your agency may surprise you. When team members provide insights, we have to avoid the temptation to become defensive and truly listen to their thoughts and consider their implementation. Remember, as leaders if we don’t listen, they stop talking, and that’s hazardous to your organization.
- Review your marketing plan. Take a two-pronged approach. First, ensure that you aren’t making promises on your website, blog, or in your marketing materials that hold you out as an expert or use “puffery” that could come back in errors & omissions (E&O) litigation to haunt you. Next, remember that marketing is not just about selling, it’s about educating and entertaining. Remind your audience about safety, nudge them to review their insurance to value, talk about the increasing need for flood insurance, or just entertain them with some trivia or fun and appropriate memes.
- Review a certain percentage of your clients’ property values. Incorrect property valuations and undervalued business income coverage and inadequate liability limits are a major lagging indicator of E&O claims. Don’t stop with just the building values. Review liability limits, ensure that all limits of underlying policies (especially uninsured motorist coverages) comply with the terms of your clients’ umbrella policies, review law and ordinance coverage, and other areas where limits may be inadequate in today’s environments. This is a big job, but undoubtedly one of the most important tasks performed by your team.
- Prepare for policy audits. Additional premium charges post audit are a leading cause of negative outcomes with clients. Set diaries on your commercial accounts to quarterly, or at least twice yearly, email your clients to remind them to update payroll and revenue numbers. Post COVID, many contractors were swamped and had much higher payroll with bonuses and overtime. Things are slowing down a bit with many contractors, so payroll and income may change. Don’t rely on your insured to keep you updated. If a dispute arises at audit, you can remind your insured that you asked about these numbers several times with either their or no response.
- On larger accounts with claims frequency, resolve to meet quarterly with claims personnel to review loss runs. We’re hearing stories about carriers not “taking down” reserves due to lags internally, which hurts your clients at renewal and in their e-mods. We can accomplish a lot with a phone call, or perhaps more with an online meeting via Teams or Zoom and can ask tough questions about reserving changes and takedowns.
- Plan to meet annually, at least, face-to-face with your carriers and ask an underwriter to attend whenever possible. You’ll want to know what types of accounts they’re successfully writing, and how you can tap into any special programs they may offer. Most importantly, you want honest feedback about how you can improve the relationship and write more business. In exchange, it’s a great time for you to review with them your expectations of your agency’s key carrier performance indicators and how they’re stacking up. Do they issue renewals within an acceptable timeframe, are the renewals right, or are they often lacking requested endorsements or placing restrictive endorsements on renewals? According to one agent, “While we used to be able to rely on the standard lines carriers to issue and renew policies correctly, that is no longer the case.” Relationships are a two-way path, so hold your carriers feet to the fire, as well as your own.
- Institute a development plan with your staff members. The majority of employees want to learn and grow, and with Big I and other training resources, you can help develop a customized training and development plan with all your employees. This helps with employee retention and improves the servicing of all your accounts. A well-trained employee is at the forefront in providing stellar customer service and helping your agency avoid an E&O claim.
- Review compensation, both internal and external. It’s clear that carriers are adjusting commission levels, and not in your favor. Talk to your friendly competition to see if your agency commissions are in line with others. Additionally, review your agency’s employees’ current compensation. Even larger agencies are finding retaining talent a challenge with other agencies swooping in and offering big increases. Candid talks and “stay interviews” can help.
We all hope that things will smooth out a bit in 2024 as recent premium adjustments may start to decrease and underwriting capacity improves.
While this is not an exhaustive list, your SWOT analysis will help uncover more areas you can enhance and risks you can mitigate or avoid entirely. We understand how busy agency personnel are with the hard market. However, we don’t know what challenges lie ahead. To stay prepared for today’s volatile climate, we can borrow an old saying: “If not now, when?”
Last Updated: March 8, 2024
Publication Date: January 26, 2024
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