There is no business in the country that hasn't been touched in some way by the current rampant inflation. This inflation unquestionably has also impacted independent insurance agencies. The specific impact differs from one insurance market to another—including, but not limited to, auto and residential coverage. Still, the result is the same: A massive cost increase for your business and your customers. 

At the National Insurance Group, we understand these issues. That's why we want to ensure that you understand what inflation means to your independent insurance agency and how you can cope with it.

Insurance availability and costs

Before inflation, we endured a global pandemic. COVID-19 shined a light on the role insurance plays in absorbing risks by supplying financial relief for policyholders. These economic hits have helped field the increase in insurance demand. New markets enter different lines of business and represent additional capital causing premiums to rise. This is the core problem with inflation. A sudden increase that does not exclude independent insurance agencies and other professionals in the insurance industry.

Inflation has only reinforced the uptick in premium costs. We have transitioned into a hard market of high premiums and low-capacity insurance. With the hard market likely to continue well into 2023, insurers must find ways to adjust their underwriting and pricing to account for these factors.

Always put your client first

Remember, you may be feeling the pinch of inflation, but so are your clients. Clients are looking to cut costs wherever they can. They are trying to stretch their dollar on everyday expenses, from gas to groceries and, yes, even on their insurance. Doing so would indeed leave them exposed, should an unfortunate event occur, but saving money is a repeating theme during inflation.

Your job is to remind clients of the purpose of insurance. Help them weigh out both the pros and cons. Remind them how having an insurance policy in place protects them financially and offers peace of mind. Express to them how it's the ultimate safety net by giving a worst-case scenario. Suggest bundling insurance products to help lower premium costs. Work with them to find a policy that better suits their current financial situation and still provides adequate coverage. Put their needs first.

At a minimum, promise to review their account and see what options are. Maybe there are changes you can make to their payments, deductibles, or coverage that can leave you both satisfied.

Inflation and claims costs

The recent and seemingly endless supply chain issues have led to rising costs for virtually everything. This, in turn, impacts claims costs as once abundant materials become harder and harder to obtain. Among the worst shortfalls is the semiconductor chip shortage impacting nearly all aspects of our economy. Manufactured from silicon, these microchips serve as the “brain” of today’s electronics.

This shortage is making electronic goods, cars, and computers more expensive to repair or replace. Add to that the construction, supply disruptions, and labor shortages, and you also get lengthy claim wait times. Insurance premiums must increase to counter the rising claims costs. Inform your clients.

Providing transparency in a time of economic distress is a sure way to support customer retention rates. Of course, you aren't helpless in dealing with these issues. You can improve your claim turnaround by leveraging collaborative relationships with other independent insurance agencies, allowing you to better serve clients.

Our national independent agency alliance works to help you to identify additional vendors or suppliers when you need them most. It’s an inflation lifesaver.

Adapting to a hard market

The shift from a soft market to a hard market during inflation is not the easiest of tasks, but adapting to the evolving insurance landscape is a necessity. Every independent insurance agency must find new ways of conducting business, including budgeting practices and marketing strategies.

Independent insurance agencies should consider:

1. Reviewing underinsured products to help clients account for gaps in coverage.

Inflation has impacted various industries ranging from housing to automobiles. The increased costs of building materials and transportation, coupled with labor shortages, has resulted in high claims cost. This means that your client’s assets might not be fully protected. Connect with your clients, inform them of the potential danger, and offer them an affordable solution.

2. Connecting with independent agencies to create an inflation-proof network.

I, of course, but our national independent agency alliance will help you identify additional vendors or suppliers when you need them most. It’s an inflation lifesaver. work together when they can. When we leverage our connections we canI provide our clients with better service and invest our resources efficiently. This means less expensive professional development, access to different product lines, and expanding your underwriting.

Inflation means that every independent insurance agency must work smarter and harder. When we take on these troubled economic times together, we can ride out the uncertainty of a hard market.

Contact us today and discover why we’re all BETTER TOGETHER.