“Start Balancing…Volumes”

We’ve all heard the adage: “Don’t put all your eggs in one basket.” But many of us have broken this golden rule. We get comfortable with one company because it is easy to do business with or because it has been great with claims for our clients in the past, and we build our book with that company, inadvertently at the expense of all the others. Suddenly, you can find your agency is top heavy—a big percentage of your volume rests with one carrier.

Then one day, your friendly carrier, your friend, your compatriot, decides to increase rates by 10 percent … and then on top of that, another 15 percent. At this point, your clients start screaming bloody murder:

“Find me a competitive quote.” (Actually, you are lucky if your clients call you at all for that competitive quote. Many of them will just move without even telling you.)

Either way, your underwriting staff and CSRs are unexpectedly burdened with unhappy clients and tons of work trying to move the business. They have to do their day-to-day business, and now on top of that, they are busy trying to retain all of your clients.

As you move your clients to competitive carriers, you can expect a call from your marketing rep or even from those higher up the food chain at the first carrier wondering why your volume went down. When you explain that you had to retain your clients in the face of rising rates, the company’s response is to ask you what you are going to do to keep the volume up. This cautionary tale is not an exaggeration. I know several fellow agents who are faced with this very scenario right now. A word to the wise: Start balancing your companies’ volumes. Your carrier friends can change their tune on a dime.

Of course, those of us who have been around for a while recognize this scenario as the harbinger of a hardening market. PIA members have the benefit of the association’s Market Transition Tool Kit to help them deal with this cycle—it includes market news; expert discussions about market cycles; consumer materials to help agents have valuable and proactive discussions about their rates; and access to education that will help any agency’s staff sell more in these market conditions. For a veteran like me, it’s hard to believe that many agents and/or their employees have never experienced a hard market. While for some reasons we will welcome it (Think: more measured underwriting and reasonable rates), many of us will remember the work and greater necessity for customer education that can come with it. I’ve read several trade publication articles in the Market Transition Tool Kit that say a hard market is inching toward us. MarketScout reported an overall increase in the property/casualty industry rates of about 4 percent in the first half of the year, but those of us in coastal areas know this sector is firming up at a particularly fast pace.

Even politicians recognize this. Right before announcing grants to areas that were ravaged by Irene and Lee last year, Governor Cuomo issued a press release in July urging homeowners to check their policies and make sure they have adequate storm coverage. No doubt, he’s taking a proactive stance before the anniversary of the Labor-Day hurricanes in an attempt to avoid a crisis when tropical storms like those from last year hit.

Of course, this is an unabashed segue into the need for legislative action to standardize windstorm triggers. It’s beyond me how lawmakers in the Senate could have left their posts this summer without passing the bill that would have helped their constituents before the hurricane season hit. Nobody can say they haven’t been warned. I’m not just talking about my regular appeals that run in this column: Late this spring, PIANY members participated in a letter-to-the-editor campaign that resulted in newspapers across the state urging lawmakers to standardize windstorm triggers. I know of several people, including myself, Peter Resnick, Jeffrey Greenfield, Rich Savino and of course, PIA staff who have testified before the Department of Financial Services about the need for standardization. The public disaster that policymakers and insurers alike will face when homeowners are hit with a storm that illuminates the massive discrepancies in policy to policy shouldn’t be a surprise to anyone at this point. Yet, somehow, the State Senate continues to fail to take action to remedy the problem. When the storms do hit, those same senators will damn the industry and have hearings and meetings … after all there is an election coming up in November.

I mentioned earlier the veterans of our industry, and I wanted to make note of one our industry recently lost. Recently, I heard that a good friend and professional, Phil Platzer, passed away. Phil was a consultant for insureds and he was probably was one of the nicest people I ever had the opportunity to meet. He had a constant smile and always had good things to say about people. This world will surely miss him. It’s a shame there aren’t more people like Phil in this world.