Buckle Up, Insurance Agents: It's Still a Hard Market Out There!

The ReFocus Team -

Remember that lemonade stand you ran as a kid? Setting the price of your sugary concoction was pretty easy, right? Not so much in the grown-up world of insurance, especially these days. We're in a hard market for many lines of business, which means placing risk with insurance companies is more challenging than usual. Let's explain what that means for you, the insurance agency, and brokerage rockstars!

The Great Insurance Price Hike:

Here's a quick snapshot of recent price hikes across different coverage types (remember, these are averages and can vary depending on where you are):

  • Property Insurance: Upwards of 17%
  • General Liability: Ouch! Around 8% increase
  • Commercial Auto: Zooming up at 9% ️
  • Workers' Compensation: Not as bad, but still rising – around 5%
  • Cyber Insurance: This one's skyrocketing – think 30% or more!

Not All Coverage is Created Equal:

Just like some lemonade might be tastier (and more expensive!), some insurance is easier to sell in this challenging market. Here's why:

  • Lower-risk businesses: Think accountants or bakeries – they generally have fewer claims, so insurers are more open to covering them at a reasonable price.
  • Established businesses with good safety records: These folks are like the responsible kids who never spilled their lemonade – insurance companies love them!

A Glimpse into the Future:

Remember that seesaw analogy? Nobody knows exactly when the market will tip back to a softer state (lower prices, more options). Some experts say things might ease up in a few years, while others predict the hard market will stick around for a while longer.

One thing's for sure: change is constant. Like lemonade recipes evolve (think strawberry-banana!), the insurance market will too. Here's what you can expect:

  • More focus on risk management: Insurance companies will want to work with businesses to prevent accidents and losses – think installing sprinklers or offering cybersecurity training.
  • Technology will play a more significant role: Expect more use of data and analytics to assess risk and price coverage more accurately.

The Great Insurance Geography Quiz:

Why are lemonade prices higher in some neighborhoods than others? It depends on things like the availability of lemons and the competition from other lemonade stands! Similarly, insurance rates can vary greatly depending on your location.

Here's where state governments come in: Each state has a Department of Insurance that acts like a referee in the insurance game. They review rate increases proposed by insurance companies and ensure they're fair and justified. 

So, why are some areas seeing more extensive hikes than others? It depends on factors like:

  • Natural disaster risk: Living in hurricane alley? Expect to pay more for property insurance.
  • Lawsuit climate: States with many lawsuits tend to have higher insurance costs for liability coverage. 

The Bottom Line:

The insurance market might be sour right now, but with a little extra effort, you can still help your clients get the coverage they need. Remember, lemonade can still be delicious, even if it costs a bit more during a dry spell!

Bonus! Four Lines of Business with (Relatively) Stable Rates:

  • Life Insurance: Rates haven't gone up as drastically as other types of coverage. ‍‍‍
  • Professional Liability (for doctors, lawyers, etc.): Increases have been moderate compared to others. 
  • Directors & Officers: Rates haven't jumped as much as other business coverage options.
  • Workers’ Compensation (for specialty risk): Rates are actually trending down in many states, and the market is soft overall.