Secrets of an Insurance Agent........

6 Steps For Agents to Take Before Soft Market Hardens

By Scott Chang
May 11, 2009

Most insurance professionals detest a soft market due to the increase in competition, unreasonably low pricing and increased market vulnerability. Some, however, may appreciate a softening precisely because of the change in underwriting and pricing philosophies.

No soft market (or hard one) lasts forever. I'm no economist or fortune teller but I'm confident the hard market will arrive. Just like the "real estate bubble" had to end, carriers cannot sustain both underwriting and investment losses.

What does this mean to retail agents and brokers?

Agencies with a majority of their book placed with preferred carriers may spend additional, unanticipated time trying to re-market those accounts because of the crises being faced by these carriers.

Carriers know that if they continue to entertain risks as they have during the soft market, they could wind up insolvent.

This commentary is not intended to scare; just to remind agents to prepare for the return of the hard market. When the market does turn, the burden once again will be on agents to adapt to the new market-- to which some may not be accustomed or even ever experienced.

Underwriting complacency and pricing latitude will disappear in the next hard market, as in all hard markets.

Additionally, clients accustomed to the current market conditions are going to complain, asking why their renewal offers are so much higher, or why the incumbent carrier is not renewing the policy despite a clean claims history. Being able to satisfactorily answer these questions and successfully retain clients will soon be the mission of every agent.

Don't Be Left Behind
How do agents avoid being left behind when the shift happens? I'm an underwriter and this is not about soliciting business. It's about the reality of the coming marketplace and the need to be prepared. I offer a few suggestions:

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http://www.insurancejournal.com/news/national/2009/05/11/100390.htm

LOL they are already planning the answers to give you when they screw you in the future!