It has been said that the insurance market, specifically the workers’ compensation market is or will soon be hardening. The biggest fear for most brokers is the same fear they have when the market softens or even remains stable, and that is that they will potentially lose clients.
The brokers that fear they will lose clients whenever the market takes an expected, or unexpected turn are those that are already exposed to competition due to a lack of either expertise or execution ability, or both; further explanation of which is beyond the scope of this post.
Regardless the state of the marketplace; be it considered hard or soft the brokers that find themselves in trouble are those that do not poise themselves for success. In a hard or hardening market, the number of carriers willing to entertain a specific risk typically shrinks, carrier availability or willingness to credit rates decreases, and the level of competition/desperation between brokers typically increases.
When the market shifts as it has slowly started to do over the last 12 months or so, the opportunity for brokers to increase their market share in their local markets increases. The increase is due to the simple fact that the market shift itself is an additional avenue of opportunity for a broker to pursue. The clients of the brokers who fear market changes and begin to act in a desperate fashion are also the same clients that are typically more open to entertaining a competing broker during harder markets.
One of the primary benefits for the client is that they perceive the opportunity to have carriers conduct a “bidding war” for their account; which typically is presented by most brokers as the most price competitive way to sell insurance. I beg to differ and am willing to go as far as to say that this type of blind bidding simply creates competition between brokers and in many cases creates negative impressions of an account for carriers.
Matthew Davis MBA, AAI