A theme has emerged in some of the recent pieces that thought leaders have written for me at Insurance Thought Leadership on the world of agents and brokers: that it's especially important this year to know the risk appetites and goals of your carriers.
That's hardly a new idea. To work effectively with carriers, you have to be sending them the sort of business they want to write. What's different is that those goals and appetites have been changing, sometimes rapidly, and likely will continue to change as the year progresses.
We've seen this most dramatically in homeowners insurance, where some carriers have pulled out of big markets because wildfires, convective storms or hurricanes have made them money-losers. It's wasted effort for everybody if you send prospective business to a carrier right before it leaves a market.
We've also seen rapid changes in auto insurance – though rates are catching up with costs faster there than in homeowners – as well as in cyber and many other lines. And who knows where we go from here?
To get a handle on how to plan for 2024, I turned to James Keane, a vice president at SIAA, a national network of independent insurance agents, and asked him to update us on a smart piece he wrote for me on the topic in November.
He says:
Things are "probably a little different this year than... in the past. Carriers’ expectations have changed so much, so fast. In the past, their expectations were simple. They wanted you to write business, they wanted it to be profitable business, and they wanted you to write as much of it as you could, as often as you could. Now, their appetites are changing. But how quickly are they changing? How are their appetites different now than they were three or four or five months ago? Appetites are continuously evolving. Being able to have those conversations with your carrier partners is critical so you know exactly what's changing throughout the year.
"And you have to be able to measure everything so you understand what you're trying to accomplish. If your goal is to write X number of policies from new business, are you able to build that in backward by saying, If I want to write 100 policies, and I have a 50% close ratio, that means I need to quote 200 policies? So what do I need to do to quote 200 policies? How many leads do I need to speak to get to those two hundred quotes?
"And what's the value of a policy? Even though your goal might be to write 100 policies, what if you can write 50 policies that are each twice as profitable? Is that better?"
He lays out a very thorough road map. I think you'll find the interview enlightening.
Cheers,
Paul
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