Insurance is often touted as a recession-proof industry, but an economic downturn still presents significant risks for independent agents and brokers, who may lose clients, see their incomes shrink, or struggle to build their book of business during a challenging cycle.
But a well-prepared agent or broker can find and retain clients even in the most difficult of times, according to Steve Tombarelli (pictured), senior vice president of programs and services at SIAA, the largest alliance of independent agents in the US.
“The constant theme is communication,” Tombarelli said. “They need to be communicating with their clients about where insurance fits in this current economic environment and the reasons insurance costs are going up.
“The better that an agent can educate their clients around the economic impacts on insurance, the less time they’re going to spend reacting when someone sees an increase in their policy.”
SIAA empowers its member agencies to grow and write more quality commercial lines businesses through various programs and services.
The organization boasts of 30 partnerships with top carriers, providing agencies with direct access to a wide array of markets.
Tombarelli shared with Insurance Business four key steps to improving client relationships and growing an independent agency during an economic downturn:
Independent agents need to switch their communication style from a reactive to a proactive approach, the SIAA leader said.
Many agents are reactive, meaning they’re reacting to their clients calling in. But the economic downturn is an opportunity for agents to market themselves to new clients and nurture relationships with existing ones by reaching out first.
Additionally, having multiple touch points with clients will make communication as easy as possible.
“A lot of our members are small, community-based agencies, so if they’re keeping their name in the community, they’re better able to their clients informed,” said Tombarelli.
Many agencies will look to pull back on investments during a recessionary environment to save on costs. But for Tombarelli, it’s the right time to invest in their marketing and social media strategies.
“Agencies need to ramp up whatever form of marketing they’re comfortable with, whether it’s mailers, social media, or videos,” he said.
Tombarelli also highlighted videos as a particularly potent way of delivering important messages to potential and existing clients.
“The more they can do videos to show that human element and personal connection, the better,” he said. “Sprinkling in content that isn’t business-related, such as things they may be doing in the community, along with topical items that will inform people will also help create the right balance.”
Strong relationships with carriers will also be key to navigating the challenges in today’s market.
Tombarelli stressed agents should be increasingly aligning with their carrier partners to understand the economic impacts on costs and capacity.
“Carriers are looking to grow in certain areas or certain lines of businesses, while looking to get out of some that are not as profitable for them,” he said.
“Agents need to be aligned with the carriers that they’re working with, understand their appetite and know where carriers are moving forward.”
The SIAA holds seminars and webinars on selling amid the insurance hard market. “We’re constantly feeding information to our members about what an insurance carrier is looking for in a particular state or a particular industry,” Tombarelli added.
Finally, carriers are a great resource for materials to help agents initiate tough conversations with clients.
“There’s a lot of tools on social media that can help the agent talk about what’s going on with the carrier and the industry,” Tombarelli said.
Artificial intelligence and machine learning have created more opportunities for independent agents to leverage data insights in their business.
But many agencies aren’t making full use of the technology available to them, according to Tombarelli.
“Agencies typically don’t use their agency management system (AMS) to the extent that they should. In this marketplace, you need to look at your own client base and look at where you can cross sell,” he said.
“If you write one client’s homeowner’s [insurance policy] but you’re not writing their auto, life, or business insurance, then you’re not using data to maximize touch points.
“All these things are going to create an opportunity for independent agents to grow their business right now.”
What other ways can independent agents grow their business during a recessionary period? Let us know your thoughts below.