Having a balanced book of business protects your business from issues you may face in the future . If personal lines struggle , commercial lines can give the necessary support or vice versa . A diversified clientele also improves your reputation and your opportunities for cross-selling . •
MARKETPLACE mergers and acquisitions among larger companies . Over time , InsurTechs could just keep accumulating personal lines , leaving fewer clients for independent agents to cater to .
PL GENERATES LOWER GROWTH
The other big reason to diversify between personal and commercial lines is your agency ’ s growth . Simply put , it can be downright challenging for an insurance agency to grow with just small personal lines . Each line simply doesn ’ t lead to enough profit . You need the higher premiums and income of commercial lines to balance out these personal lines .
CL CAN BE MORE STABLE
Don ’ t forget that the loss ratios of commercial lines also tend to be more stable over time . In the last decade , they have even performed better .
A DIVERSE BOOK OF BUSINESS HELPS WITH REFERRALS
In addition to future-proofing your insurance agency , having a balanced book of business helps with referrals . This is a natural consequence of a diverse client base . After all , a diverse client base typically leads to a larger extended network of potential prospects .
YOUR REPUTATION
A balanced book of business also just helps your overall reputation . If you have a diverse client base , people will see your agency as a business that can help nearly anyone . You will be viewed as a leader in the industry and the go-to option for anyone , regardless of what they need .
IT CAN BOOSTS CROSS-SELLING
Offering both personal and commercial lines will also improve your ability to cross-sell other products or services . After all , every business owner also needs personal insurance , for example .
ADD COMMERCIAL LINES WISELY
If your insurance agency currently has more personal lines than commercial lines , you will need to put in some thought and effort to balancing the ratio . Make sure to consider the profitability of lines in comparison to your level of investment . You don ’ t want to make a significant investment for minimal profit .
One approach is to focus on a particular type of commercial line . Maybe you want to focus on seasonal businesses . Or maybe you can also focus on tech companies or large manufacturers . All you need to do is decide which industry to focus on .
EVALUATE YOUR BOOK AND PLAN
Before balancing your book of business , you need to evaluate their current state . This is as simple as looking at the information in your insurance agency management system . Start by comparing personal versus commercial lines . Once those are balanced , consider balancing your book of business in other ways as well . For example , to diversify the demographics you serve , look at current target personas .
Having a balanced book of business protects your business from issues you may face in the future . If personal lines struggle , commercial lines can give the necessary support or vice versa . A diversified clientele also improves your reputation and your opportunities for cross-selling . •
Lisa Price is the Vice President of Jenesis software , a company that provides a web-based CRM , Website , & Social Media Marketing for Insurance Agencies . Learn more at jenesissoftware . com
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