Soft market conditions and slumping oil prices continue to make the insurance business in Texas a challenging one, but a focus on diversification can stave off some of the decline, industry figures say.
The Texas economy has faced pressure this year from lower crude oil prices, now about 60% below where they were at their recent peaks of above $110 per barrel in mid-2014. While the biggest hit has obviously been taken by the energy sector, other industries are beginning to feel the effects of the slump as well.
That’s trickling in to the insurance business, among wholesale and retail agents who advise these firms, say executives with San Antonio-based Quirk & Company.
“It’s the price of oil. It’s not economical for drillers to try to get the oil out of the ground, so they’re closing up and they’re not drilling,” said Gary Jackson, an account executive with Quirk. “It’s causing a trickle-down effect to all the economy in Texas, and everybody’s feeling it. [Insurance] agents are feeling it.”
That doesn’t mean agents and other industry professionals are held hostage until the economic tide turns, however.
“You have to adapt in other lines and try to grow other segments of your business,” Jackson advised. “The market will rebound, and you’ve got to rid it out until it does.”
Karen Quirk, chairman and chief operating officer with the company, added that agents can follow the lead of Quirk & Company, which has managed its savings accounts well enough to sustain the company, and has been increasingly proactive in safeguarding renewals. Both efforts have kept the company performing well, despite the oil slump and softening market.
“Renewal retention is key,” Quirk said. “We’ve also added some necessary people with different skillsets to our team to continue handling business and maintaining our position.”
Quirk & Company has also pared down its agency force to what it considers a “manageable size,” taking a close look at retail agencies and their businesses to ensure it is finding partners who will continue to benefit the company down the road. From a retail perspective, Quirk believes agency principals should similarly fine-tune their partnerships by working with three solid managing general agents.
“If they have three MGAs, then they’re going to be able to get everything they need,” she said. “If they have more, a lot of MGAs have the same market – and MGAs don’t want to be one of many in your shop, either. So that goes both ways.”
Quirk added that the most important aspect in thriving during a rough patch is falling back on the core values of the insurance profession – strengthening relationships and maintaining your position as a trusted advisor.
“I even struggle with the hard market, soft market concept because it is what it is, so you just ignore it and you keep moving forward,” she said. “You look at your numbers, you visit your clients and you touch people that way.
“You make sure the relationships are good with your clients on both sides of the fence, and you’ll weather it. We just have to work with what we have, and we’ll always be okay.”
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