Hard Market Silver Linings
Shawn Michael Walker - PGI Senior Vice President
It is no secret, we are in what many have called the “hardest market in 40 years”. Although we are still in the midst of it, with inflation showing little signs of slowing down, interest rates increasing quickly, and almost every carrier reporting rough results on their Q3 earnings. There is some light at the end of the tunnel.
For the first time in over a year, I met with some senior leaders of a carrier that stated, “All our indications suggest next June or July we will begin to see the end of this hard market.”
Less than a week later, The Insurance Journal published this article: (Progressive Easing Up on Rate Hikes; Flo Coming Back to a State Near You - insurancejournal.com ). Many interpreted this as good news the hard market might be closer to ending than previously expected.
“Consumer shopping and quoting has increased more than 20 percent in both the agency and direct channels. In fact, in both channels, we had the best July, August, and September in our company’s history for quote volume," Progressive CEO Tricia Griffith said.
Griffith pointed to the 1.9-point improvement in the non-cat combined ratio as evidence of the significant work the carrier has done to combat inflation. Griffith addressed Progressive's hiked personal auto rates in 20 states.
“Specifically, in personal auto, as we stated after the first quarter, except for a few markets, our major personal auto rate revisions are behind us,” Griffith said.
Additionally, carriers in most markets are getting their indicated rate, more comfortable with the market conditions. Even in California, there is movement in the right direction related to rate increases. Last week the CDOI approved a few rate increases for the first time in 30 months.
Despite the good news, we are still seeing carriers do drastic things to cope with their YTD and Q3 earnings. Some are attempting to cut commissions, pull out of markets completely, go to a moratorium, cap new business, call a time out on appointing new agents, change/increase down payments, others have sold, and some are looking at comp plan changes (See Travelers section – Link to docs). Agents need to know this market is still incredibly dynamic and needs to act accordingly.
So what have agents done to adjust in this market? 75% of the inflationary impact is on personal lines. (Breaking Down Inflation’s $30B Impact on Insurers Line By Line - insurancejournal.com ). Naturally, the hard market is a lot less severe in Commercial lines. So many agents have used this moment to sharpen your commercial lines saw. Congratulations to you! (see Matt’s message on Commercial.)
Other agents have taken dramatic steps to select specific partner carriers and are working harder to treat them as such. Intentionally limiting the number of carriers they have in the office to direct their profitable and potential clients to them. Some have even turned off lead providers that historically have not created a profitable book for them or their carriers.
PGI Agents, there is still no better time to be an independent insurance agent. Great independent agents not only survive, but they also thrive in the face of adversity. As an independent insurance agent, no market condition is insurmountable and offers an opportunity for growth. We are here for you. The market is dynamic, as such, we want to be dynamic too. Let us know how we can best support you.