This market is unprecedented – one of the hardest since 2004. Due to higher risks and decreasing profitability, many insurance agencies and their clients are experiencing unique challenges and struggling to find ways to thrive in hard markets. Even if you’ve experienced unfavorable conditions in the past, this one is unlike other hard markets.
Maybe you’re tired of hearing about the hard market, but the good news is there are opportunities in these tough times. Here are the top five things that agencies should be doing today to prepare for tomorrow:
1) Win the Talent Competition
Get ahead of the other agencies by analyzing the elements that attract top performers. Do you have an attractive culture? Is your hiring process clear and easy? What about onboarding, training, and talent retention strategy – could anything be done to improve these strategic areas? Evaluate if you have the right people in the right places so you can hit the ground running when it comes time to hire.
2) Create a Growth Strategy
Strategic planning can help you prepare for the market shift, such as adjusting your marketing strategy, developing producer training, or seeking new business. Instituting a growth culture is a valuable way to inspire the right focus in your people. Things like setting new goals and expectations, along with incentives, can help you and your team uncover sources of revenue when the economy recovers.
It’s important to note that growth strategies should align with your business’s unique strengths, resources, and long-term goals. Successful growth strategies often require careful planning, market research, and adaptation to changing market conditions, so start planning today.
3) Update Your Perpetuation Plan
If you don’t have a short-term or long-term plan to transition your business, this should be at the top of your list. Consider perpetuation planning, selling, or merging with another agency. Each approach has risks and benefits, but there’s also a lot of misleading information. For example, did you know that the “three-generation rule” (a belief that family businesses don’t last past three generations) is a myth? On average, family businesses last far longer than typical companies do. A good plan can take years to build and implement. Education on the best options for your firm’s future is a good first step.
4) Improve Your Use of Data
Well-run agencies use data to influence their business decisions. By working with the right agency network, you can get financial comparisons to your peers, data on year-over-year premium and revenue growth, and production data by carrier. Benchmarking is essential to not only measure the performance of your firm’s current performance but also set realistic goals compared to peers of similar size. Data is also useful to gain insights and help producers understand their selling environment and make shifts that drive growth. Embrace a culture of continuous improvement, where you regularly evaluate your business processes, strategies, and performance metrics to identify opportunities for optimization.
5) Improve Your Compensation Models
A hard market may mean you can’t give raises and bonuses like in a soft market, but there are options to keep your producers engaged and productive. Competitive compensation packages can entice talented individuals to join the company and discourage them from seeking opportunities elsewhere. Review compensation reports and industry trends to understand better how compensation is evolving. Understanding data on the average salaries and benefits packages for different positions is particularly useful during salary negotiations or when making job offers.
The market will eventually make the turn. If you’ve solidified your role as a trusted advisor and executed the right things, you’ll thrive in a competitive market and capitalize on new opportunities. Because when hard markets turn soft, you don’t want to be left behind.
Is FirstChoice, a MarshBerry Company, right for you?
At FirstChoice’s annual member conference, experts will go deeper on all these topics with specific action items to help your agency thrive. This event is about education – with expert speakers, diverse topics, and specific solutions for agencies of all sizes.
FirstChoice was just ranked the #1 Top Agency Partner by Insurance Journal.
