April 20, 2020,
Premier Agency Owners, Please give this announcement a full review. It is very important.
Backdrop and Outlook – The P&C Carrier and Agency response to the Covid-19 Pandemic has been strong for our business sector. The in-office & virtual essential work you are doing along with what our insurance carrier partners are providing in the form of a combination of financial relief and flexibility to policyholders makes one proud to be engaged in the business we are in. Our industry again, in a time of financial hardship for many, is weathering the storm, sustaining, and being there. Taking a look at the road ahead, the below points are based on feedback from a number of carriers, industry councils we participate in, and many you, so that at this point in time we can update you on what we are hearing about our mutual P&C business and the outlook…
April Trending
- Auto New Business (NB) nationally is down 10-15% - more so in non-standard to mid-market business. (Of our top 3 states, CO and TX have better #s, but CA a bit worse…)
- + Home NB nationally is holding steady as many of those transactions have a longer lead time…
- Commercial Lines NB is seeing greater reductions as are Financial Services. Commercial retention is also impacted as are premium reductions due to payroll/sales adjustments…
- + Personal Lines NB #s by Geography show less impact in Auto NB reductions in the West, Midwest, South, and South East. CA, WA, some mid-Atlantic and certainly the NE states have been hit harder.
- + PL Retention is holding steady and in some cases even improving as a result of carrier flexibility on payment terms and reduced non-renewal action.
Overall for Personal Lines, it is expected the current month of April and into the first part of May will have the greatest impact to Personal Lines. As the economy begins to safely re-open, the 2nd half of May and into June should set the stage for a much stronger Q3.
For Commercial lines, the projections are a bit fuzzier as the funding piece for small and medium businesses is so important.
On that note, Congress is close to passing what appears to be a 2nd wave of PPP funding to support businesses impacted by the Covid-19 Pandemic. The first round of funding went out the door in record speed with many small business not receiving funds and some even not able to submit their application. Please give attention to the Plan A, Plan B, and Premier Plan funding considerations below.
Plan A:
- If you anticipate a need for funds based on having a smaller renewal book, or a high engagement in commercial lines, NOW IS THE TIME TO GET IN LINE for PPP, by reaching out to your bank again or to another bank. Yes, this is a loan, but it is A LOAN WITH FORGIVENESS. That means FREE MONEY to help your business with no re-payments if you qualify and follow the terms for forgiveness. Note - Banks that participate in the PPP programs are many, but not all. The bank must be a bank that does SBA loans.
- Most banks are working with their existing bank clients first. So reach out to your own bank(s) first.
- In addition try other banks, both smaller and larger.
- In some cases, the banks may not accept your application for this new funding period until it is approved and open. But at least have your application ready. At this time we do not know if those applications already submitted will be next in line, that would seem to make sense.
Here are important links to information on programs and banks that participated in PPP funding for the 1st round and an attachment about the PPP Program distributions.
https://smartasset.com/insights/ppp-loan-lenders (4/16 list)
https://www.zenefits.com/workest/the-list-of-ppp-application-status-among-the-top-100-sba-lenders/ (4/15 update to 4/7 list)
Plan B:
- Apply for other Federal and State disaster loans, and those managed through the SBA lenders for low interest loans. They may not have the loan forgiveness feature but the money is low interest rate money.
Premier $ Program:
- For agencies that have need of funds based on smaller renewal books or high engagement in Commercial Lines, after the April Production month’s commissions have been paid in May, Premier is taking extra efforts to help you as we can;
- We are developing a temporary funding program to help agencies on a case by case basis. Additional information will come in May. Please hold up on your inquires until after our next notice on this subject.
- One of the requirements will be that you exhaust your efforts on Plans A and B above.
- In some cases the funding may be an advance against your approval for Plans A and B, as we don’t know how fast those Plan A and Plan B funds would be provided to you.
On the day to day front, for now, we encourage you to continue to enhance your client outreach, including social media and digital marketing. Later today you will receive a launch of Premier’s New Digital Toolkit. For agencies that sign up in April, the online Learning Management classes will be discounted substantially for you. And if there is a hardship situation we can certain work with you on the commission deductions for the LMS costs until Q3.
Also, later today you will receive an update to the Profit Sharing and other Premier Extra Compensation Programs, to be followed this week by Shawn’s Part 2 of 3 in How to Optimize Your Carrier Loss Ratios.
To Your Sustainability, Your Safety, & Your Success!
Rex, Young, and Shawn
Rex Hickling, President
Cell: (303) 818-6218
600 17th St. Suite 1425N
Denver, CO 80202
