HOW A HARD MARKET CAN IMPACT YOUR AGENCY ’ S PROFITABILITY written by Carey Wallace , AgencyFocus
A hard market is a term used in the insurance industry to describe a period of time when insurance premiums are generally increasing , and underwriting standards are becoming more stringent . A hard market may be the result of a variety of factors , including increased claims and losses , rising costs for insurance companies , and increased regulation . In this environment , an independent insurance agency ’ s profitability may be impacted in several ways . That impact can be positive for some agencies and negative for others based on how well an agency responds to their customer ’ s needs .
During a hard market , insurance companies may experience increased commission and fee revenue provided that their customers can withstand the rate increases . This can also occur due to their customers incurring higher claims and losses , which can lead to higher premiums for policyholders . As a result of these increased premiums , independent insurance agencies may find it more difficult to sell policies to potential customers and retain their current customers as the higher premiums may be less affordable for some consumers . This can lead to lower sales and retention revenue for the agency .
Additionally , during a hard market , insurance companies may also be more selective about the
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