Independent agents are often "blind sided" by carriers who change their rates seemingly out of the blue. The reality is that insurance companies, much like people, tend to have the herd mentality (very few like to lead when rates are going down and even fewer like to lead when rates need to rise).
So how does an independent insurance agent get a handle on the rate trends that will inevitably impact their clients and subsequently the agent's income and workload?
While there is not a single magic answer to this question, a great place to start is by getting informed. How you may ask? Simple, listen to as many conference calls as possible each quarter. Every publicly traded insurance company holds regular conference calls which are open to analysts or any member of the public who wishes to participate.
As an example, I have been listening to conference calls for a number of years now. The "hard market" is coming sooner rather than later. How can I make this statement? Well, on virtually all of the second quarter conference calls this year I heard the words "positive rate action" over and over again. Positive rate action is just a polite way of saying rate increase! Prior to the second quarter of 2009 I had not heard the words "positive rate action" for at least three years. Now every carrier is throwing these words around and you can bet that a rate increase is coming to a policy near you.
When you start to hear a consistent theme amongst multiple carriers you must realize that in the near future that theme (whatever it happens to be) will reach your locality. So it behooves you as the agent to be aware of the trends that will impact you.
A great resource for conference calls is Yahoo! Finance. Check out this link for the conference call area: http://biz.yahoo.com/cc/
Key areas to listen for on the conference calls are:
- Loss cost trends within the various lines of business (personal, commercial, etc.)
- Catastrophe losses and trends
- Expense ratio management
- Investment portfolio changes and trends
- Management's commentary regarding their results
In summary, one of the best ways for independent agents to be informed of trends in the P&C industry is by listening to as many conference calls as possible. By doing so you will have a better understanding of future impacts to your clients and your agency.