How Insurance Diversification Can Be the Key to Weathering a Hard Market
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By Paul Hohlbein, Co-President
Over the course of this year, many home and auto insurers announced they have made or are considering making changes to certain lines of personal insurance. An increase in the severity and frequency of weather-related losses, excessive litigation, and high inflation on repair and replacement material costs are all key contributors to the hardening of today’s personal lines insurance market.
Unfortunately, these changes have resulted in more personal lines carriers pumping the brakes on writing new business for certain lines of coverage – prompting them to non-renew many existing accounts. Some carriers have even gone as far as pulling out of some states altogether.
If you’re an insurance professional who has focused primarily on personal lines, navigating this ever-evolving marketplace can be a challenge – which is why it may be an ideal time to think about diversifying your business by putting more commercial business accounts on the books.
If you’re an insurance professional who has focused primarily on personal lines, navigating this ever-evolving marketplace can be a challenge...
Exploring new and promising insurance diversification opportunities (beyond your core business)
It’s easy to fall into a selling comfort zone, but most insurance experts agree that relying exclusively on one core segment of the market can be hazardous to a business’s financial health. Metaphorically putting all your eggs in one basket can be a risky business practice for an obvious reason – when that one market segment struggles, a business can take a significant financial hit that can be difficult to bounce back from.
In today’s hard market, the process of insurance diversification has become an increasingly vital success strategy for brokers and agents. A more diversified book of business that includes both personal and commercial lines products is a great way to expand your pool of potential buyers and create a more sustainable business model. Insurance diversification can also help you weather the ups and downs of the market by providing more opportunities to target and solicit new business for continued growth.
Insurance diversification not only safeguards against market volatility but also opens doors to fresh opportunities for sustainable growth.
Getting started with insurance diversification – one sector at a time
Diversifying your business can be done incrementally. For example, you can begin by focusing on one core sector, such as small-business owners. Later on, you may want to expand into larger commercial risks or even specialize in a particular industry such as restaurants or transportation, or consider emerging sectors, such as cannabis. Just imagine all the possibilities that await you when you diversify!
In the midst of a challenging market, insurance professionals are facing a crucial decision: adapt or suffer the consequences. As personal lines insurers hit the brakes on writing new policies and, in some cases, withdraw from states altogether, the need for diversification in the insurance business has never been more apparent. Steering away from the comfort of a single market segment and exploring new avenues, particularly in commercial lines, is emerging as the key to resilience.
Insurance diversification not only safeguards against market volatility but also opens doors to fresh opportunities for sustainable growth. Embracing this strategy can be the lifeline that ensures success in a challenging landscape – proving that in the insurance world, spreading the risk is the surest way to weather the storm.
Paul Hohlbein is the co-president of Builders & Tradesmen’s Insurance Services, Inc., an Amynta Group Company. To learn more, please email Paul at phohlbein@btisinc.com.
Builders & Tradesmen’s Insurance Services Inc.
BTIS is committed to providing robust, individualized products and the highest level of service. Our easy-to-use commercial insurance platform, educational tools, and helpful underwriters make it simple for producers to diversify their books of business by expanding their product portfolios.
Part of the Amynta Group, BTIS is a nationwide insurance intermediary with a small-business attitude. We believe in building solid relationships through communication and a genuine concern for the success of our retail broker clients and the policyholders they serve.
For additional information, visit www.btisinc.com or call (877) 649-6682
