Firms with niches in areas hit hard by the pandemic might make you think that niches might be an unreliable model. Not so fast.
While most insurance agencies and brokers have seemingly weathered the COVID-19 storm well, some specializing in harder-hit industries may have not been so lucky. Though niches in areas such as travel and leisure, oil and gas, and retailers are likely still recovering from the pandemic, firms with niche business models are far from unreliable.
Growth & Efficiency
According to MarshBerry research, specialist firms are outperforming generalists. According to MarshBerry’s proprietary financial benchmarking database, Perspectives for High Performance (PHP), specialist firms experienced moderately higher organic growth in 2020 than their generalist peers (4.9% compared to 3.8%).
In addition, the average commissions & fees per producer among firms in the specialist category are outperforming generalists while also experiencing a more efficient staffing model across service and support employees.
MarshBerry recommends firms take a closer look at their book to anticipate how clients and industries could continue to be impacted by the pandemic. This can be accomplished in two fairly quick steps.
- Review the commissions and fees realized from your top 20 accounts. If within this analysis, 20% or more of the commissions and fees are made up of a geographical, industry, product line, or specific coverage, your firm may have a niche.
- Take a closer look at where your production personnel are spending most of their time. For example, if your production team has experienced an influx of marina exposures in the last six months, and built an understanding of the various risks presented and coverages needed to adequately insure these client’s businesses, your team has been building a marina niche that could present your firm as a market expert for future clients in need of similar coverages.
Through the identification of an existing niche, recognizing the need to create one, or by strategizing to focus resources on building value for clients through the expansion of niche product offerings, you are looking at an area of opportunity to create significant differentiation from your competition, and influence stronger organic growth.
Regardless of where you stand in building a niche, MarshBerry recommends encouraging your production staff to focus their prospecting efforts on businesses or individuals in this area, as well as encouraging necessary education among service and support staff who are critical to client retention through account servicing. As you build success in your chosen niche or niches, your agency has a tremendous opportunity to differentiate itself from the competition by demonstrating superior industry expertise and top-notch customer service. Think your agency brings a better offering to the table than the competition down the street? Get in the niche game and prove it.
If you have questions about Today’s ViewPoint or would like to learn more about PHP and the impact it can have for your firm, please email or call Doug Jones, Senior Financial Analyst, at 616.214.3148.
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Source: Perspectives for High Performance, 12/31/20; TC&F: Total Commissions & Fees
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