Hope Within A Hard Market?

Insights from Channel Harvest’s 17th Annual Survey

One of the toughest markets they have experienced is how many of the respondents of this year’s Channel Harvest Survey characterized the current state of the insurance industry. Now in its 17th iteration, this year’s survey respondents noted rising premiums, shrinking coverage options, and an increasingly challenging environment for policy renewal and customer retention as just a few of the challenges today’s independent insurance agents face.

The survey, conducted among over 1,600 independent agents and brokers, encompasses responses from agency owners, producers, and customer service representatives, asks agents what they need in a carrier relationship and why they prefer to work with certain companies. Respondents also rank specific carriers on a variety of performance metrics. This year four key insights emerged:

The Impact of a Hard Market

One of the standout findings from the survey is the pronounced effect of the hard market on agencies, especially within personal lines. Agents have flagged this period as one of the most challenging they have encountered, with increased customer turnover due to new restrictions imposed by carriers, non-renewals, and competitive pricing from other insurers. This environment not only strains the relationship between agents and their clients but also puts pressure on agencies to adapt their strategies to maintain customer loyalty and business sustainability.

Revenue Growth vs. Policy Growth

Interestingly, while three-quarters of the surveyed agents reported an uptick in revenue, only half saw an increase in the number of policies in force. This discrepancy suggests that while higher premiums may boost revenue, they do not necessarily correlate with a growth in business volume—a trend that can spell trouble for the long-term health of these agencies. More alarming is that 20% of respondents, or one in five agencies, experienced a net loss in their policy count, underscoring the severity of the market conditions and the urgent need for strategies that foster both customer acquisition and retention.

Digital Adoption in the Insurance Sector

The survey also highlights a significant trend towards digital transformation, albeit at a moderate pace. Half of the agencies have enabled customers to communicate via text, a move that aligns with broader consumer expectations for more accessible and immediate forms of communication. However, the adoption of more advanced technologies such as self-service portals, apps, and real-time quoting or binding tools remains limited. This slow digital adoption represents a missed opportunity for agencies to enhance their service efficiency and appeal to a digitally-savvy customer base.

The Diminishing Role of In-Person Visits

The traditional model of in-person interactions between carrier representatives and agents is also undergoing a shift. While nearly half of the survey respondents still value these visits, there is an increasing sentiment that they are not as crucial as they once were. This shift could be attributed to the greater reliance on digital communication tools and the efficiency they bring, or perhaps a changing perspective on what constitutes value in the carrier-agent relationship.