Taking a Look at Insurance Vertical Specialization
In today’s on-demand and instant solutions world, consumers expect more personalized and tailored services from their goods and services providers – and insurance is no exception. Vertical specialization – where insurance producers focus on specific industry sectors, niches, or lines of business – is quickly gaining ground as an approach for accelerating growth. Examples of vertical specialization for insurance niches include healthcare, technology, construction, hospitality, real estate, or manufacturing.
This approach helps brokers enhance their skills and knowledge to better serve a specialized industry or niche. Many brokers are considered “generalists” in that they serve a variety of clients, but that approach comes with limitations.
5 Benefits of Specialization for Niche Insurance Markets
The insurance industry is still facing headwinds with a hardened market, and challenging market access to protect the insured from escalating risks, like climate change or cybercrime. In addition, the insurance workforce is declining and there’s an ongoing battle for talent. Here are some benefits of niche insurance markets and why more brokers are using them to help drive growth and expand their business.
- Improve client relationships: When you choose a specific niche, you’ll move from being perceived as a vendor – to someone who is a strategic resource. Specializing allows you to better understand your clients’ needs, risks, and questions and be better at recommending coverage, risk management strategies, and implementation of tools and resources that address their unique needs. As your expertise grows, you’ll also attract the right clients and offer a better overall client experience.
- Drive organic growth: When your clients are satisfied, they are more likely to retain your services, buy additional products and recommend you to others. You can also target your marketing to more specific industry publications, trade associations, and network groups. With specialization comes endless opportunities to showcase your authority and expertise.
- Increase efficiency: Spending time in one sector saves time and money since you can focus on those industries that yield the best results. When all your clients are similar, you tend to work with just a few carriers, policy types, resources, or contacts. This efficiency also leads to better productivity in your producers and other staff.
- Strengthen industry relationships: Focusing on a singular niche can strengthen communication and relationships with carriers who specialize in specific types of businesses. For example, carriers might be more willing to create a special program for an agent due to the amount of business they bring in. Building positive relationships with industry associations and groups also generates more business.
- Stay competitive: Serving specific industries (instead of all industries) means competing with a smaller pool. Differentiating your business by delivering tailored products can enhance your place in the broader market. If you remain a generalist while others are specialized, it may be tougher to bring in new business. In fact, most of the insurance brokerage world has already shifted towards this model and, according to MarshBerry’s proprietary financial management system, Perspectives for High Performance (PHP), specialists grow at a faster pace than generalists.
Vertical specialization is beneficial for both brokers and their clients, as some business lines are unsure about their coverage needs or risk profile. Specialization will offer more tailored solutions and can help increase your book of business.
How Brokers Can Find a Niche Insurance Market
When planning your insurance specialization, you can build business in certain industries, or in specific businesses in a targeted geographic area. In looking at your existing book of business you may find you already write 5-6 firms in a similar industry. This could be a good place to start. Alternatively, what business is in your footprint to write? Restaurants? Agriculture? Hospitality? Not for profit? Other growth industries?
Consider your company’s strategic goals, expertise, and market opportunities in order to choose a niche insurance market where you can make a difference. Then, look for patterns. Find sectors that have more consumers, emerging risks, or unique needs.
Perhaps you’re passionate or personally experienced in a particular niche. Look at the unique talents, interests and backgrounds of your producers. Do they possess any unique skills or knowledge, like language or cultural background? This can energize your producers, making them more satisfied in their specialized roles for bringing in new customers.
Most importantly, assess your progress as you go to ensure you’ve selected the right industry. Don’t feel committed to one area permanently, you can adjust based on results, or if another vertical presents an opportunity that better fits your skills.
Best Practices for Insurance Vertical Specialization
Shifting your business to a niche insurance market will take some careful strategizing. The first step is to build your knowledge in your targeted industry or line of business. Reach out to carriers who specialize in those areas and get their insights on the industry. Some carriers prefer to work with specialized agents and offer training seminars on industry topics. Get the right talent onboard to service these clients and credentialize your business even further. Then, create a targeted marketing strategy by placing ads on the platforms your clients use most.
Staying knowledgeable long-term is also key. Explore events, compliance changes, and new challenges currently impacting your vertical. Staying one step ahead will demonstrate your expertise to clients.
In the near future, specialization will be the norm. Vertical specialization offers customized solutions, deeper expertise, and improved results. This approach will help your business move from a transactional relationship to a consultative business partner that clients can trust.
