NATIONAL INSURANCE GROUP’S 2022 STATE OF THE UNION ADDRESS
from the desk of Charlie Downey
Stringent and difficult underwriting are signs that the hard market is here. Be prepared—know what to do and how to react—with these few insights into the current state of the insurance industry.
The Economist
Insurance companies have hit the ultimate roadblock: Claims have increased by 30% almost overnight!
This sudden shift in policy change has insurance carriers scared and running to profitability, and they
should be. If the ink on paper or daily premium and claims payments weren’t enough of a hurdle, changes
in outside factors continue to impact the insurance industry as a whole.
These outside factors vary and include:
● The cost of wood and its adverse relation to a coverage’s replacement cost value.
● The cost of auto parts relative to partial and total loss actual cash values.
● The lack of personnel to build and repair cars as well as the length of time to repair.
● Longer loss of use and/or rental of property.
● Supply chain issues and transportation costs.
And the list goes on. The increased cost of materials, labor shortages, and supply chain issues all lead to
one thing—increased premiums for consumers. Ready for a little salt on that wound? Welcome to our
relatively sudden and fairly new 8% inflationary trend. Now factor that in with the rest of the
industry-related changes we’ve touched on and you’ve got one big insurance headache.
All dramatically and adversely affect the dollar amount expended for claims. What’s more, carriers
cannot increase insurance premiums, nor were they fully prepared to, fast enough to keep up. This is one
of the quickest transitions from a soft to a hard market that I’ve ever seen in my 33-years working in the
insurance industry. It’s also one of the quickest, largest, and maybe one of the most dramatic inflationary
trends we have seen in over 50 Years. Can it get worse? Yes, it can.
Adding a little more salt to the mix is the systemic increases in loss frequency, with a dash of severity,
nationally. Neither of which decreased due to COVID, as predicted. The cost to repair suddenly becomes
a far-fetched goal. You try to fix a Tesla or Mercedes after collecting a hefty $2,500 auto premium. With
all the makings of an insurance carrier perfect storm, do we need more salt?
No, but here it is. The previous 8+ years of our expansionary economy allowed for a lot of folks across
the country to upgrade their lifestyle. New cars, homes, furniture, investments. This is all great and all
until you look at the grander scheme of things—mass lifestyle upgrades mean mass repairs.
Real-life examples of this real-downer issue? Where it used to just be the repair of one Mercedes is now
the repair of 15 or a $2.5-million home with full replacement costs that is now $3.8-million to replace.
Ouch! The coverage-premium formula just broke and shattered.
I call this the ‘insurance carrier perfect storm’. Carriers are now scrambling to address production,
strategize ways to keep their lines efficient and assess pricing models, all while improving their return on
investment (ROI) for the fiscal year. Don’t be surprised when you see carriers start to quickly
re-underwrite books of business. We’ve already noticed this happening with some of our most valued
partners—Progressive, Safeco, and Travelers, to name a few.
Progressive is pulling out of Florida and asking for huge rate increases country-wide. Safeco is halting
many new agency appointments nationally. Travelers garnered an average of 8-10% increase in premiums
over the last 1.5-years. In some instances, like Travelers’ underwriting changes, carriers are fortunate
enough to maintain their market share and retain accounts, but this is not always the case.
With everything from bread to gas costing more, people are struggling to find enough money to pay the
increasing premiums. However, the US economy is resilient and hardy. We can bounce back.
Despite the conflicting information that may try to somewhat refute the above—from the stimulus checks
distributed in 2020 and 2021 to insurance carrier consolidation, work from home careers, and less
electricity—numbers don’t lie. A hard market is a sure sign of a rocky ride.
The Optimist
It’s a great time to be an Insurance Agent! How so? Your budding relationships with your clients.
This is especially beneficial in a hard market. Rather than risking their loss of business to another agent,
you can reach out to them when their premiums go up. Show them some love and look out for both them
and their wallet. They’ll appreciate an agent who truly cares.
If you’re new to the insurance scene, it’s the perfect time to start building new relationships. Get out there,
create a connection, and start underwriting insurance plans. A hard market may present more obstacles
than a soft market, but there’s still ample opportunity to grow your business.
Once you start to solidify and expand your consumer base, assuming you are also retaining your clients,
you’ll be one step closer to successfully navigating a hard market. You’ll become the trusted insurance
agent that your clients can rely on. As for the increase in renewal premiums, the trending spike in
miscellaneous costs such as travel and rent can make it easy to explain the rising cost to clients. More
understanding of premium changes, more business. More business, more sales growth.
Pro tip: I’ve been comparing rising insurance costs to the cost of bread and gas my entire career.
Thanks to the carriers that effectively, continually, and successfully reduce commissions to the levels,
essentially pushing their agents out of business. They’ve positioned valued agents into a numbers game.
Write more! Renew more! It’s a treadmill of underwriting just to remain level.
There are a few gains agents can make such as:
1. Being consistently more efficient for our clients. Utilize a product- or carrier-set that exceeds
expectations—procure policies faster, minimize technical mistakes, and better serve clients.
2. Becoming a client’s trusted advisor. Go beyond transactional interactions and start building a
relationship with your clients. This will go far when considering retention rates.
3. Referrals from past and current clients. Ideally, you’d want all clients to be current clients, but
5-star referrals of any kind are the ultimate key to growing your business.
There’s an immediate need for insurance agents right now. The world is topsy-turvy. There are a myriad
of ideas and product options. It’s pure mayhem when you think about it, but don’t fret, embrace the chaos.
This is a great thing! Regardless of the generation—Baby boomers, Millennials, Gen Z—there’s a demand
for clear, no-frills, honest, down-to-earth salesmanship, and that could be you.
Now is your time to shine! More than ever before, the insurance industry needs agents who can explain
the ins and outs of coverage in layman’s terms to their clients, agents who can relate.
But don’t just shine to shine. Know your worth as an agent too! Let me just point out that many insurance
agents do a lousy job at promoting their value to clients and carriers—allowing others to devalue them as
sales professionals. This could include letting a client dictate the rules and treat you as a ‘quote machine’
or taking less commission from a respective carrier when in fact, your salesmanship and customer service
are both top quality. They deserve top-quality respect.
As a Licensed Insurance Professional, you possess something the majority do not which is the
understanding and knowledge of what’s within that 1 ½ inch policy packet. This is the single most unique
selling position (USP) of all time and it’s at your disposal. The interactions, iterations, available
endorsements, exclusionary language, and the working knowledge thereof—you’re the vault. Get my
point? It’s up to you to convey that USP to your clients and you can do so efficiently.
Don’t be shy. BE BOLD. Highlight your USP and outdo your past or projected sales goals.
Want to further improve your USP? It’s a great time to join a national aggregate!
National Insurance Group is a national insurance agency alliance made up of top-performing agency
partners with a focus on salesmanship and profitable growth. Our goal: procure the exact product set for
clients at the most affordable price. We align to demonstrate that we are BETTER TOGETHER.
Our aggregators are top-tier because:
● They bring products to the table. The delicate product mix balance of too many or too few
carriers available to fulfill obligations needed to close deals is easier in the aggregator model.
● They are able to negotiate with insurance carriers. I hear it all the time, “I don’t want to talk to
carriers. I just want to do my job, help people, support my family, and run a profitable business.”
Lucky for you, negotiating with carriers is something we do daily. Let us help.
● They provide as well as encourage consultancy and reference. It’s important that we all feel
connected as professionals because we are more than the sum of our parts. Collectively, we are
better. At National Insurance Group, we share, advise and promote the whos, whats, and wheres of
our industry. We learn and perform in an exemplary manner. We are a unit.
● We offer online Ninja Sales Training courses. COVID, and now sky-rocketing gas prices, have
posed several travel-related restrictions on growing your professional skill set. This is why
National Insurance Group decided to go digital and offer virtual sales training sessions. Ninja
Sales Training can be accessed through Teachable and is available in silver, gold, and platinum.
Improve your sales strategy from anywhere, anytime while learning the tried and true art of sales,
specifically designed for an insurance professional. This means improved sales, closing ratios, and
retention rates. Pro tip: Make it a habit to ask for more referrals early on.
● We help to balance out the results and spread of risk. Claims frequency and severity correlate
to agencies just as they do for insurance carriers. Loss ratios can increase unexpectedly. As a
national insurance agency alliance, we have strength in numbers. We see the answer to high loss
ratios by way of continued production of profitable businesses to help stretch the cost of claims
and counter the impacts of the higher ratios. BETTER TOGETHER. Please note that carriers will
document and complain about your high loss ratios. It’s important to clarify the anomaly of
inflationary and post-COVID times for 2022 and moving forward.
Additionally, National Insurance Group is proud to partner with new agencies. We are there from day one.
Sure, the barriers to entering into the insurance profession are low—get your license—but operationally,
they’re quite high. There are the carrier contracts, best practices, need for efficiency, operational prowess,
advertisement placement, and sales training. When you work with an insurance agency alliance such as
National Insurance Group, you start off with all the tools needed for success.
We vet out the best in the industry and take pride in working together to ensure we are all successful. We
even tackle the unique challenges of insurance tech startups that most might shy away from.
To close, I’d like to commend all of you for your patience, fortitude, and focus on helping your clients.
All of which lead to results and most importantly, the greater good. I’d encourage you to carry on in that
respect, and if you need help, reach out. We started National Insurance Group to not just better our
industry and better serve our clients, but to also encourage YOUR success and growth.
2022 is a new year, a new opportunity to reach new professional heights. Be on the lookout for National
Insurance Group’s evolving initiatives, list of offerings, and expanding network of partners.
We are truly BETTER TOGETHER.
Looking forward with all the best,
Charlie Downey
President & CEO, National Insurance Group
ph: 508-970-3380 | charlie@nationalinsgrp.com