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April 8, 2021

10 Ways to Prepare for the Hard Market

Summary:

In soft markets, differentiation can be challenging. But hard markets present an opportunity for the best insurance professionals to stand apart.

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When we think about how to prepare for a hard market, we immediately think of our end customers – the policyholders paying the premiums. While it’s true that we need to prepare them, the first step in doing so involves comprehensive training of our teams. It’s easy to forget that many of our employees have never lived through a hard market. They don’t know just how painful it’s going to be … for them and their customers.

Getting employees prepared and their messaging fully on point is like training for a battle. It requires conditioning, endurance and a tough dose of reality. Here are my top 10 tips:

  1. Name the Training. When you put a name on something, you place a stake in the ground. People know it matters, and it’s going to involve a process. This isn’t a one-and-done. It counts. Call it whatever you want – Hard Market Bootcamp, Rate & Capacity Awareness or 2021 Reality Check – just give it a title and make it official.
  2. Plan a Kickoff. Get everyone in your company on a call and introduce the topic. Show rate trends for your lines of business and have agents give firsthand accounts of situations they’re encountering. If you have veteran team members who were selling in the last hard market, have them tell the team what they remember about the last cycle. Share your historical retention rates and set a retention rate goal for the hard market. Use an infographic like this to paint the picture for your team.
  3. Convey the Urgency. When customers are hit with rate increases, they shop, which means a massive amount of shopping is happening right now. How your team navigates the hard market will influence your success for the next decade. You can be the agency that uses it to capture new customers, or you can be the agency that loses customers and scrambles to stay even. Team members’ raises, bonuses and advancement opportunities will be affected by what they do right now. Do they know what’s at stake?
  4. Bring the Numbers to Life. Use rate trends to illustrate the average financial impact on your customers. If a commercial auto client paid X to insure their fleet in 2019 and they have weathered two years of rate increases, how much premium will they pay at their 2021 renewal? How much will that affect their bottom line? 
  5. Make Scarcity Real. It’s hard to envision something you’ve never experienced. We’ve all grown to expect an on-demand environment, where you buy anything, any time. Team members won’t comprehend that, in some cases, customers will simply not be able to buy the coverage they want and need. Capacity will not exist. Use the very timely and relatable metaphor of COVID to make it real. Just 18 months ago, we could not conceive of a time when you could not go to a restaurant or attend school in person. Lack of insurance capacity is like that. Access will be cut off in some cases.
  6. Help Team Members Step Into Customers’ Shoes. It may seem obvious, but empathy is on the decline. Some people on your team won’t intuitively think about the hard market from your customers’ perspectives. Help them imagine it.
  7. Give Them the Words. Don’t assume your employees know what to say. Strategically consider the best way to frame your hard market conversations and write down scripts for common scenarios that arise. Make sure everyone on your team is sticking to the script and communicating the same message. Have your account teams practice and role play.
  8. Allow Time for Best Practice Sharing. Establish time each week for account teams to share what they encountered, talk about how they overcame challenges and support one another. This is a battle for coverage, and your team must be mentally focused and supported.
  9. Challenge Your Team to Set Up Preemptive Communication Processes. The absolute worst thing we can do is surprise our customers. Our job is to help them navigate risk, and a big spike in expenses is a major risk. We need to let them know what to expect and let them know that we’re shopping the market and advocating on their behalf. If they know we’re on their side, they will be less likely to shop. Talk about the hardening market in your blog and in your customer newsletter. Start sending emails and letters six months in advance of renewal, letting clients know what’s happening in the market and what you’re doing about it. Call them 90 days in advance. Spending the extra time up front could raise your renewal rate a few percentage points.
  10. Revise Your Game Plan Every Month. Hold a monthly training meeting for your entire team to compare notes, share best practices and review procedures. In every meeting, ask your front-line workers to share their experiences. Give key people notice that they will be asked to speak, so they come prepared. After a couple of months, people will know the drill and it will happen automatically, but you might need to engineer the experience the first couple of times. This should be collaborative and engaging – not a call where you talk and they listen. Track your monthly retention rates and compare them with the same month last year on each call, so your team has metrics to gauge their success.

See also: The Cost of Uncivil Discourse

As an industry, we always say that insurance is not a commodity, but in soft markets differentiation can be challenging. On the other hand, hard markets present an opportunity for the best insurance professionals to stand apart. This is our chance to demonstrate our value, make a difference and earn customers for life. Let’s do this!

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About the Author

Jeff Arnold is the author of two best-selling books, “The Art of the Insurance Deal” and “How to Beat Your Insurance Company.” His articles on agency management best practices have been published in numerous insurance industry publications.

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