The UK’s insurance market goes through soft and hard market cycles. After being in a soft market since the early 2000s, Insurers and Insurance Brokers alike are in the full throes of a hard market once again, with many Account Executives bearing the brunt.
Characterised by increasing demand, reduced capacity, high premiums and rigorous underwriting criteria, a hard market is the polar opposite of a soft one. Whilst insurers are still competing for business in a soft market, there’s more coverage available and premiums are lower.
A hard market can be caused by a wide range of things, from economic downturn, to EU and regulatory intervention, low interest rates, failing investment returns and more.
The majority of account executives and brokers who joined the market since the early 2000s will not have experienced a market where cover is reduced and premium costs have increased significantly for their clients, anywhere from 100% to 500%. Understanding how to navigate the current climate is vital, which is why we’ve pulled together a few tips on how to thrive and take advantage of this hard market.
Be open with your clients and customers
If you want to maintain your black book of business and maintain customer relationships, you need to be open with your clients and insurers about the current situation. Don’t wait until policy renewal dates before speaking to your clients about the expected price increase. Pick up the phone or arrange a video call and explain what’s going on in the market, so that they’ll understand how it will impact their premiums and coverage.
You should also talk to your insurers to understand how the hard market is impacting them, and what their underwriters are looking for. Determine what information they need to understand your client, their risks, and how to manage them. This way, you’ll know exactly what to include in your market presentations.
Building and maintaining client relationships is vital, especially when discussing what a client will see as bad news, so it is important to be open and honest about the current situation.
Invest time in training, mentoring and upskilling
Building lifelong skills and development is a crucial part of every AE’s career progression. However, our 2020 UK Account Executive Insights Report had shown that 54% of AEs did not receive any sales training or support in the last year, and 73% of AEs stated that their employers didn’t provide a structured career plan.
As mentioned earlier, a lot of Account Executives and Brokers have never experienced a hard market, as we’ve been in a soft market for over 15+ years.
You can navigate this difficult time by investing time in training and mentoring. One way to do this is by talking with your employers to see whether they offer any online learning or mentoring programmes. You could also join LinkedIn groups and ask if there are any seasoned AEs and Brokers who will mentor you and help you learn how to work in this type of market.
Help your clients manage their risks as if they're uninsured
Insurance plays an important part in a company’s risk management strategy, but it shouldn’t be the only part. In a soft market, it was common for insurance to be the only protection that clients had in place to manage risk, especially when there was confidence that the renewal process would be straight forward.
In a hard market however, companies who don’t have a pragmatic approach to risk management are much harder to insure. A company’s insurance policy should be there to cover the unpredictable, and all other risks should be as controlled as possible.
The best way to do this is by getting your clients to look at their risks under a microscope, so that they can see what sits within their control. They can also think about how to put better risk management in place. Don’t be afraid to highlight that bigger insurance premiums showcase the gains to be had from better risk management.
Focus on the narrative
Before the pandemic, Account Executives and Brokers could build relationships face-to-face, making it easier to win the confidence of insurers and underwriters, But now, virtual communications such as email and portal software make it harder to build these relationships. All underwriters have are the documents you send them, so you need to make sure they tell a rich, clear and detailed story.
For example, when your underwriter asks you for the client’s claims history, you should highlight any significant ones and go into detail about them. Tell the underwriter what happened, why did it happen and what’s been put in place to make sure it won’t happen again. When you clearly tell the story of the event, the underwriter will have a better understanding about how the client operates. You’ll give the underwriter the confidence that you can make the right improvements to mitigate risks.
Be aggressive when it comes to marketing yourself
When insurance premiums go up, customers will inevitably shop around. Marketing is a great way to tap into these new clients. Thanks to digital marketing platforms there are ways to get yourself out there and network.
For example, LinkedIn Sales Navigator is a great sales management tool that enables you to tap into LinkedIn's extensive network more effectively and identify leads.
If you want to thrive in a hard market, you need to be proactive and put things in place to excel. You can choose to work with insurance companies that will give you the means and methods to enhance your career. After all, your future is in your hands - if you’re thinking about taking the next step in your career, then get in touch with IDEX.