By David Dawson
One might say it’s not news that New England agents continue to face an uphill battle when it comes to renewing policies in 2024. What is news, however, is that the market factors creating those conditions don’t seem likely to abate anytime soon – and agents need to bear this in mind.
While some types of coverage are harder to secure than others, all lines remain under pressure due to several factors: frequency and severity in claims; the inflationary impact on replacement materials, which make every claim more costly for insurers; backlog and/or rejection of carrier rate filing requests through state insurance departments; higher reinsurance costs; and the disturbing, continued trend of nuclear verdicts in favor of policyholders.
Carriers report that nearly all lines of business are still under stress (with the exception of Workers’ Comp, in which many carriers are eager to gain market share due to improvement in this line). It’s a situation that will remain challenging for insurers that persist in trying to get rate increases despite uphill battles with state regulators to achieve rate adequacy.
Adjusting Expectations
What this means for independent agents is that carrier appetite for various risks is more limited and focused – and with claims up and pricing still short of where it needs to be, renewals will continue to be challenging as ever throughout the end of the year.
One example of this type of atypical coverage scarcity is in the Umbrella/Excess Liability space. In previous years, agents found it much easier to get standalone Umbrella/Excess policies, or were at least able to build towers. Now, carriers may be hesitant to provide limits at all – and if they do, you can bet they’ll prove more expensive than agents are used to. It’s incredible to consider that Umbrella/Excess coverage is impossible to secure for some clients, but this is the reality of the current market.
Underwriting around coastal property has been tightening for some time, and where those guidelines used to be more lenient, getting coverage for both personal and commercial property in shoreline areas – or even as far as five miles inland – has become tougher and a great deal more expensive. Carriers are also known to be hesitant to write older homes in New England, which puts pressure on agents who for years had little trouble securing coverage.
Armed with the knowledge that most carriers want to take on the Workers’ Compensation for commercial clients, savvy agents can offset requests for policies that are harder to place, if they can sweeten the deal with that commercial client’s comp or another benign risk – for example, a light auto exposure.
As communication with your clients is key, it’s especially prudent to reach out to them ahead of renewals this year and explain that they will likely see a rate increase due to hard-market conditions. The more context they are given for their rate pricing, the more receptive some customers will be.
Align With Your Underwriters
In 2024, the insurance industry remains short on talent when it comes to underwriting. Tasked with delivering more with less, most carriers’ underwriting departments are short staffed. With this in mind, agents would do well to concentrate on two things: the quality and timeliness of their submissions, and mindfully managing relationships with their underwriter partners.
Remember that underwriters are primarily evaluated on two things: production/premium, and file documentation – the amount of premium they deliver, and the degree to which they document the decisions to take on certain risks. The more you can assist them in achieving those goals, the more receptive they’ll be.
Two of our members recently requested presentations on how to best manage their underwriter relationships. While an entire blog could be devoted to that topic, here are some thoughts:
- As an agent, you quickly develop a reputation with your carrier partners. Your actions will determine how you (and by extension, your agency) will be regarded by their underwriting departments. It’s your responsibility to present yourself as a trustworthy, detail-oriented partner with every submission.
- These days, underwriters are under pressure to verify the information in applications, so always bear in mind that the risks you submit could face further scrutiny. Is there a pool on the property you’re submitting for coverage? Are there fences? Is the roof safe? Anticipate the type of detailed questions that you might not have been asked in years past. You’re not operating in the same market you once did.
- When it comes to follow-up, don’t be overly demanding. Understand that being rude to your underwriter is not going to get what you want. Put the time in and build relationships with your underwriters whenever possible. Remember the fact that insurance is a “relationship business” also extends to your underwriters.
Finally, be sure to not hesitate in putting together highly detailed, thorough submissions early, even for risks that in past years would have proven a sure thing. The more time you give your underwriters, the higher your likelihood of success. Be proactive – when it comes to renewals, time is your friend.
Aligning with an agency network can afford you the added strength of placement specialists dedicated to providing you insight into which carriers have the most appetite for the risks you’re looking to place. Agencies that leverage the knowledge of placement professionals will have a distinct advantage in a market that only continues to harden.
David Dawson is Regional Executive Vice President, New England, for Renaissance.