This time two years ago, I wouldn't have blamed you for feeling uncertain about the state of the insurance industry. Plummeting gas prices, soaring premiums, and a steady stream of poorly priced and poorly underwritten policies were scaring agents away—even captive agents were looking at gloomy horizons.
But there’s good news—the storm seems to be passing, and rainbows (and perhaps your pot of gold) are on the horizon.
A Look Back At Property & Casualty Insurance Industry Trends: 2000-2017
1. Leads were falling as much as gas prices were.
As gas prices dropped to their lowest in nearly two decades, the direct result was an increase in miles driven per household. Auto insurance carriers were hemorrhaging cash regardless of their company size or location. If you read the Fitch Ratings 2016 report, you'll know that auto insurance underwriters suffered the weakest performance in 15 years.
2. Public transport use was dropping and accidents were rising.
In this time frame, Americans largely abandoned public transport to turn to another alternative: their vehicles. Between 2014 and 2016, all but seven of the country's largest urban areas lost public transport riders—a figure that translated nationally to a 4.5% drop. That meant less-experienced drivers were taking on daily vehicle commutes. Not surprisingly, both accidents and premiums skyrocketed.
3. Mobile device usage increased.
A generation of Americans became (almost) physically attached to their smartphones—and as those same people started driving themselves instead of taking public transportation, accidents increased. Refreshing social media was something these commuters were used to doing in the safety of a bus or train. Their phones weren't the only hardware that had gotten more advanced.
4. Bumped-up bumpers reflected in insurance claims.
20 years ago, a bumper was a bumper. If it got knocked around, you could simply get it replaced. Today, bumpers (and every other part of the cars) are inching their way toward being as sophisticated as phones. Expensive cameras, sensors, and detectors have driven replacement costs up for vehicle parts.
The result of each of these things? Insurance companies found themselves with an incorrectly-priced product. Cash flow from incoming premiums just wasn't equitable to the amount being paid out in claims.
Carriers and agents were suffering equally.
Carriers lost interest in acquiring new customers. A new customer just meant new ways to lose money. Desperate measures and poorly strategized business plans were driving up higher loss ratios as much as adverse claim severities were. The only way to regain control was to hike up rates—not the best route for company growth.
The Future: 2018-2020
The past decades of property and casualty insurance trends were grim. But if you stayed, you made the right decision.
2018 & Beyond
As with all many things, time is a healing factor. Since then, pricing and underwriting improvements have helped the industry to recover, according to Kim Auden, managing director of Fitch Ratings.
Now, because higher claims costs are no longer being outpaced by rate increases, the industry has righted itself, and the future looks promising for agents. More-balanced premiums are pushing prospects to find agents like you, and market-appropriate prices are translating to higher profits for agents and carriers alike. With better priced and better underwritten policies, the industry is raking in profits, and the time to grab them is now.
So what action should you take in order to capitalize on the future?
In my experience with the insurance industry, I’ve learned that it is a very cyclical thing. Good times come, good times go—as do the more difficult times. But right now, and in the foreseeable future, we are entering a good time for the industry—which means it’s a good time to be an agent.
So, make hay while the sun shines—that is, get to work building your book of business. Cross sell and make the most out of your referral program. Build your business with existing customers, and grow it even further by getting new customers.
The best way to do that? By partnering with EverQuote to get 100% originally sourced leads. These never-recycled leads mean you have the best reach out to people who actually intend to buy insurance, and who fit your insurance model. We tap the internet to find you customers that will bring in real business, real growth and an ROI you can be proud of.