How Hard Markets Can Help Brokers Earn Trust & Loyalty

As a broker, you help your clients secure coverage in good times and in bad. Sometimes your work is more challenging – and right now is one of those times. On a brighter note, there’s never been a better opportunity to showcase the value you bring. In a hard market, your expertise, creativity and market connections can make a real difference, helping you build client trust and loyalty that will last for years to come. Below are some crucial step to help you stand out.

#1: Help Clients Understand the Causes Behind the Hard Market

According to the Association of British Insurers (ABI), bad weather, higher rebuilding costs, and inflation have forced insurers to raise their premiums. In the fourth quarter of 2023, six named storms and a tornado hit the UK. Insurers paid out £352 million in home insurance claims following Storms Babet, Ciaran, and Debi.

Education is the first step in helping policyholders navigate a hard insurance market. Once your clients understand what’s happening in the market, they can work with you to control their risks and shop for coverage. Rate hikes are even worse for clients who are not prepared.

#2: Educate Clients About the Go-to-Market Process

When the insurance market favours policyholders, renewals tend to go smoothly and purchasing coverage is quick. In a hard insurance market, however, purchasing insurance requires more time and effort. Policyholders may find out that their insurers are raising their rates or reducing their coverage, resulting in a policy that no longer meets their needs.

This is an opportunity to shine, but you only do so if you allow enough time. Engage your clients well ahead of their policy x-dates and explain the process that lies ahead. Let them know how many markets you’ll be contacting on their behalf, and what to expect from stricter underwriting standards. Work with them to develop a strong application. Keep them informed every step of the way – even if you don’t have good news yet. In the absence of information, clients may assume you’ve forgotten about them.

#3: Help Clients Proactively Address Potential Exposures

In a soft insurance market, accountholders with attractive risk profiles have an easy time securing low rates, whereas accountholders with higher risks tend to pay higher rates and may have a harder time securing coverage. In a hard market, even accountholders with attractive risk profiles may have a hard time securing robust coverage and their rates will likely be higher. For accountholders with higher risks, finding affordable coverage in the traditional insurance market may be almost impossible.

Brokers can help their clients by educating them on how to proactively address potential exposures and keep claims low. This isn’t something that should only happen once a year at renewals – by then, it may be too late to do anything. Instead, brokers should provide information throughout the year to explain why risk management is important and what clients can do.

#4: Think Beyond Traditional Insurance

In a hard property insurance market, some of your business clients may be unable to find traditional insurance that’s adequate for their needs. Carriers may refuse coverage outright or premiums may be too high and coverage too restrictive.

If you don’t offer these clients any other options, you risk losing them. By working with a wholesale broker, you can extend your expertise and your toolbox of options.

For example, parametric insurance is an option that’s helping a lot of companies. Parametric insurance pays claims based on the magnitude of triggering events – unlike traditional insurance, which pays claims based on actual losses. Parametric insurance often covers natural disaster perils, but you can find coverage for nearly any type of event it is possible to independently verify and which your clients do not have adequate coverage for through traditional insurance. For example, a client who is unable to find coverage for hail damage may like to secure a parametric policy that covers hail.

Parametric insurance offers many advantages, including a high level of flexibility and fast claims payouts. One downside is the underwriting process may be lengthy. This is yet another reason to reach out to your clients early and start exploring insurance options as soon as possible.

Do you need help finding coverage for your clients? Costero Brokers offers creative solutions to help you stand out in today’s hard market. Learn more.