The Preeminent Producer Podcast
Discover how to become a Preeminent Producer in the commercial insurance industry with The Preeminent Producer Podcast! Join the Preeminent Coaches as they dive deep into the world of commercial insurance and discuss the strategies and tactics needed to stand out from the competition and grow a successful book of business. From marketing tips, prospecting, commercial insurance producer sales training and so much more. You’ll get the knowledge and insights needed to build a lasting and fulfilling career in the commercial insurance world. You will learn how to get unstuck and earn a game changing increase in income.Tune in now for the latest episode of The Preeminent Producer Podcast!
The Preeminent Producer Podcast
Navigating and Leveraging a Hardening Insurance Market
What if you could transform the challenges brought about by a hardening insurance market into a golden opportunity for your business? Get ready to explore how inflation impacts the insurance industry and how to turn these changes into unique opportunities.
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Are you a commercial insurance producer struggling to stand out from the competition? Do you find it challenging to grow your book of business and create a fulfilling career?
Then welcome to The Preeminent Producer Podcast! Each week, we'll be tackling important topics, sharing proven strategies and insights from successful producers that are in the trenches and have traveled the journey to becoming a Preeminent Producer.
You'll discover what it really takes to become Preeminent & build your book of business, in a way that isn’t being taught anywhere else. Our hosts are experts in the field and have built thriving businesses by becoming the most trusted adviser to their clients. Welcome to your journey to becoming a Preeminent Producer.
Let’s dive in!
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The market is changing. Are you feeling, are you seeing the effects of that? What's going on? My friends, welcome to this episode of the Pre-eminent Producer Podcast. In today's episode, our coaches are going to dive into the topic and go over some very important things that you need to know and consider when entering into a changing market. So grab a pen and paper and let's dive in.
Speaker 2:Are you a commercial insurance producer struggling to stand out from the competition? Do you find it challenging to grow your book of business and create a fulfilling career? If so, then welcome to the Pre-eminent Producer Podcast. Each week, we'll be tackling important topics, sharing proven strategies and insights from successful producers that are in the trenches and have traveled the journey to becoming a pre-eminent producer. You'll discover what it really takes to become pre-eminent and build your book of business in a way that isn't being taught anywhere else. Our hosts are experts in the field and have built thriving businesses by becoming the most trusted advisor to their clients. Welcome to your journey to becoming a pre-eminent producer. Let's dive in.
Speaker 3:And I think we've been talking here before we started this podcast about the changing marketplace that we're all, as insurance brokers, living in and for many of you who may not have been in this business for more than three or four years, you've really been in a fairly steady market. In other words, you can find coverage. It's been very available. Limits of coverage, both for property and umbrellas, have been pretty easy to get. You might've felt a little bit of a hardening, but that's changing and it's changing rather rapidly, and this is going to sound like doom and gloom. It's not. This is actually a podcast of opportunity for you to understand and to be able to educate your clients in a changing marketplace Because, like you, they haven't been through one of these in the last several years either. And when you come to someone and say we have a 10% premium increase going on, that may be the first time they've heard something like that in a long time. I know I'm facing that with my clients in some pretty severe ways. So I think one of the things for you to understand and be able to tell the clients who we don't necessarily need to go into a lot of this is and you need to do this concisely why the market is changing. It's not just them, it's everyone. Tell them about.
Speaker 3:Reinsurance premiums have gone up. Attachment points, where reinsurance kicks in, is going up and insurance companies are dramatically increasing replacement cost values. And you know that makes sense because everything you and I buy is going to cost more, is costing more than it was a year or two ago. So we have to keep those replacement cost numbers up. We don't want to make a reinsurance, a co-insurance rather, penalty on any of these things.
Speaker 3:And I think the last thing that I would say make sure, when you get a quote from an insurance company, if there is a 20% premium increase, make sure you break that down for your client into how much of that is rate increase and how much of that is value increase, in other words, increase in property values. What I try to do to someone to say there are two factors here, one of which doesn't help you at all. The other one does help you and the rate increase, of course, isn't one of your more pleasant things and it doesn't help you at all. That's 10% of your 20% premium increase, but 10% of this increase is due to increasing your property values. Your building, your content, your business, personal property, all of those kind of things. That is beneficial for you because that keeps you out of the co-insurance problem. I love it when insurance companies tell us how much to insure a property for, because it puts the odors on them to set that replacement cost.
Speaker 4:So that's kind of my little pitch here Sure.
Speaker 4:Yeah, okay, let's face it, we are in and we have been in overall economically, not just the insurance sector, but we've been in an inflationary environment and our insurers generally understand that. But so we need to explain to them that the insurance industry is not impervious to inflation. You know there's costs that are increasing on the carrier side. So to me, the biggest picture and I guess this is maybe just another way of saying what you just said, rick it's we've got to communicate to the clients. We can't just come out in a vacuum, or in a vacuum they just can't be faced with oh, here's a 20% cost increase, you know. So communication, communicating early, not at the last minute, is really appreciated and it just smooths the way.
Speaker 4:I'm in Southern California, so West Coast. We're definitely facing a changing marketplace here and it may be different in other regions of the country I'm not that I'm unfamiliar with, but we're definitely facing that on all lines of commercial insurance. Heck, in personal insurance some of you guys might be aware I don't deal in it myself, but some of my staff does there's hardly any homeowners markets left in California, you may have heard they just keep pulling out. It's amazing, even though it's such a huge potential marketplace here. So it's a changing market.
Speaker 4:My last comment would be and this may be self-evident, but changing markets do create opportunity and if you're a new producer, in many ways it's the ideal time to be starting in a hardening market. Actually, the first agency I started was in a super hard market many years ago in California, and some of my buddies said you're crazy to be starting at this point. But no, I mean because we recognize the opportunity clients. You know. A common thing that we talk about here, about from in this coaching program from some of the members, is how do I get in front of clients? Well, my experience is it's quite a bit easier to get in front of people when their costs are going up, you know. So they're willing to talk. So I think it creates opportunities as well.
Speaker 5:I think you're absolutely spot on, matt. It does create opportunities and the successful and preeminent producers are the ones that are going to see that opportunity and seize it. And I am repeating a little bit what has already been said, but educating, communicating with your clients as early as possible, making sure that you understand, you have an understanding of what's happening in the marketplace, and you can find that information on the internet. You can find that in having discussions with your underwriters when you get the renewal quotes. Okay, explain this to me what's happening. But you can see out there and I'm on the East Coast, I'm in Maryland, so currently, right now, I'm in Florida, but nonetheless on the East Coast. You know and I won't talk about Florida because that's a whole nother program, but it is absolutely the same where we're seeing property values, reconstruction, cost increase, and so you have there's a lot of information out there that you can have to support, an explanation to your client as to what's happening and how.
Speaker 5:Yes, unfortunately it may be a premium increase, but it is beneficial. You need to show your client the benefit of what's happening in the marketplace and the only way you can do that is you, the producer, being educated on what's happening and whether or not it's increased cost of construction. You know social inflation increasing. You know the value of lawsuits that may affect liability sides of insurance, professional general, whatever it is. Automobiles we do some transportation business and my gosh social inflation on being in an accident with a trucker I mean you know they started a million bucks. So again, you have to educate yourself and be able to explain that concisely and in terms that your client understands. If you do that you're providing a real value and your client. It may be an uncomfortable meeting but they're going to appreciate it in the long run. The worst thing you can do and I think Rick said this is go out and just say, yep, your insurance went up 10, 20%, deal with it.
Speaker 3:Yeah, you know, I think there's a feeling here about I have to market every one of my renewals because we're in this changing market. The answer is no. You don't Now if you're an incumbent, in other words, it's your account. Matt said some really important things here, which is you need to be taught, you need to have orderly meetings or routine meetings with your clients. If something has just renewed or renewed, let's say, six months ago, the market has changed again. You need to be letting them know in advance of this. You need to be preaching the value of staying with the same insurance company for as long as possible. It should, if they have a good loss ratio, help mitigate some of the increases in premiums that they're going to feel.
Speaker 5:But if you yeah and I also Go ahead, go ahead. I'm sorry to jump in here, but I just want to say one thing about remarketing, because we hear that a lot. I got to remarket this account and it takes a lot of time, a lot of effort on everyone in the agency and on the carrier side. And, quite frankly, I think you got to remember underwriters are people too, and if they don't, if they quote an account so many times and they don't get it, they're just going to throw up their hands. So most likely you already have them with the best carrier. I mean, you've already done that homework.
Speaker 5:If it's a year ago, two, three years ago, it's probably still with the same carrier. So I absolutely agree with you Work with that underwriter, Work with that carrier, have a discussion back to that underwriter to say wait a minute, they've been with you. Is there anything we can do here? And maybe there's not, but the knee-jerk response of oh now I got to block all the markets, I think is an exercise in futility many times, oh it is, and it's very expensive for the agency to do that and maybe unnecessary.
Speaker 3:We've done podcasts on how to renewal policy, in other words, quarterly meetings pre-negotiate the renewal with the insurance carrier, go out and meet with your client and there's an interesting podcast on that. We don't have the time to go into that today, but that helps you renew the account early and not market the account and save you time, which is money.
Speaker 5:Yeah, I mean, how would you like it, how would you like it to those listening, if, all of a sudden, you came home one day and your mortgage doubled? Or your car payment tripled or what have you without an explanation? You're going to seek an explanation first and if they can explain to you what I'm not saying, you necessarily may go with it. But that's kind of what our clients are facing, is what they don't understand, they don't like.
Speaker 4:Yeah, absolutely the inefficiencies of marketing every account like that. I had a producer once that just insisted on doing that and it was so costly for the agency it was just hard to get them to correct that. And the other thing is that people don't think about sometimes. Let's say that you're feeling this pressure because of the changing market, I've got to remarket all these accounts and I'm going to send everything out to 10 carriers. Let's say, well, even if your hit ratio is 100%, you write every account that you quote. All things being equal, what's your hit ratio with any given carrier? One out of 10?, exactly. And underwriters aren't going to like that. And you know, in Christian you said I think you said I tried to jot it down real quick that underwriters are people too. I think that's what you said.
Speaker 3:I did that. I got stuck in my head too and I said when did that happen?
Speaker 4:Yeah, yeah Well, underwriters might have ceased being people when I left the underwriting field, but that's how I got into this industry. I started a few years with a couple of big carriers and I know when I was I was one of the AIG carriers in Southern California we shut down the Orange County office which I was working in and they moved me up to the Los Angeles office, much bigger territory. They said, matt, I was commercial package underwriter. They said, matt, you not only have all the Orange County agencies now, but we're going to give you letters L through S of Los Angeles County. I was just buried. As you can imagine, the volume of submissions that hit my desk every day was incredible and I was really forced to do something that you hinted at there, I think Christian, and that is so true. Underwriters are often forced to. You got to, like any of us. You got to focus your time on the agencies and the individual producers, often within a certain agency that you have a good hit ratio with.
Speaker 5:Yeah it's a false sense of security that I think producers use, like, okay, well, I'll remarketed, I'll blanket the market, I'll get 20 carriers to look at this, and then I can show my client look, I looked at 20 different carriers. Well, it's a false sense because, again, most likely you already have them with the best carrier, except that. But I think in this. So that is something in a changing, in a hardening market that producers revert to. It's the easy knee-jerk. I'll revert to that instead to really survive and actually take advantage of the opportunity and grow your client base and grow as a producer into a preeminent producer.
Speaker 5:I think it comes back to in this type of marketplace, the best thing you can do is understand what's happening, okay, educate yourself on what's happening and then be able to communicate that clearly to your prospect. If you need to practice that with someone in your office, do that. Say, hey, look, we have the situation. This client's gonna be very upset. Can I just take a minute and share with you how I expect to explain this to the client? And that may be helpful, but in a changing marketplace that's the best thing you can do. That I have seen and it really does create a lot of value to the client and they will probably speak to someone else because a lot of business owners in this, in the hardening marketplace, they're ticked off and they may say to someone hey, my God, my insurance just went up 20%. What happened to yours? I mean they have these conversations. Well, yeah, mine went up, but man, I understand this is what. Who the hell's your agent?
Speaker 3:Yeah, just saying let's pivot this back to the producer, the new producer, or it's not a renewal. Now you're out marketing yourself and all of a sudden you are marketing now in a changing marketplace and, as we said earlier, this is an opportunity for you because not all agents are doing what Christian and Matt are saying, in other words, getting out there explaining it to people. So this is your opportunity to go out and do that. Now don't work for free. In other words, we're not gonna go out solve everybody's problems, but you are going to engage people and you're gonna maybe ask a few simple wedge questions. Don't ask too many, because it becomes very salesy.
Speaker 3:You know when your current broker came out probably 90 days for renewal and went over the change of the marketplace and the dramatic changes in premiums and deductibles, well, what was some of that conversation like? Well, didn't happen, didn't happen. Oh well, I don't know. Maybe it's not important, but when my clients are finding that very important, we're helping them prepare for the upcoming changing market. So there are a lot of things that you can do if you don't have that account.
Speaker 3:Christian talks about this all the time. Research the heck out of your prospect, pre-qualify them, know them better than their current broker does. Brokers who have been in the business for a long time tend to get lazy and they tend to rest on a long-term relationship which in many cases, in many marketplaces, has worked. But it's a changing marketplace now and you need to be able to continue to drive that home to your prospect. That hey, listen, just gives you guys were golfing buddies doesn't mean that this is the best match for you right now. It's a changing marketplace, changing environment and your business is too important to you, too critical, to really skimp on knowing what's going on in the marketplace right now and what the new and important coverages are and most likely Rick, most likely Rick.
Speaker 5:that incumbent agent is too afraid to have that conversation.
Speaker 3:Absolutely. That's the pros with that client.
Speaker 5:So as a prospect man jump in there.
Speaker 3:Yeah, if I tell my client too early, I'm going to scare him and he or she is going to start marketing whatever. And then back to if it is your client. The other critical sin don't come in the day before the policy goes Right. Yeah, yes, that is the worst thing you can do. It gives the industry a bad name. It makes you look like an idiot.
Speaker 5:Yeah, Well, I want to talk. Yeah, I'm sorry, man, I just want to talk about that because that has happened to me in a situation that sticks in my mind, that I'd mismanaged and I learned a very valuable lesson, and that was that things got away from us, and it was the day before and I didn't have any other options but to present what we had, which was a pretty substantial increase. So I had to really dig deep and figure out OK, why did this happen? So forth and so on.
Speaker 5:But my point here is that many times, carriers, you may be at the mercy of the underwriter or the insurance company to get you that quote early and they can't do it. But the worst thing you can do is not communicate that to your client. Get ahead of it and say, look, this is going to come down to the wire and unfortunately this is why but you're explaining it to that You're not afraid. You can't be afraid, as a preamble producer, to call your client and sometimes give them bad news or at least let them know that it might not be on the time schedule that they're used to.
Speaker 3:Yeah.
Speaker 4:Yeah, absolutely right. It's a very common lament that we've all heard. Hey, my guy comes into the last minute every year, sort of thing, and it's a negative surprise. Yeah, that's really bad.
Speaker 4:And I learned early on a story that I've shared before, so I won't go into all the details now. But, bottom line, I had a large account. I was a fairly young producer at the time. I could see that they were going to be facing a significant I don't remember what it was now it's called a 30% rate increase in their workers comp, and it was just mathematically impossible to avoid.
Speaker 4:And I thought I remember thinking to myself well, do I wait till the week or so before so he doesn't have time to go out and shop with another broker, or do I explain? There were reasons why this was unavoidable, or do I explain it to him now? And I decided to go with that latter approach and you know what led to more room there, although he wasn't happy with the news. I remember this guy, the CFO, telling me Matt, what I really appreciate is that you didn't sit on this. You gave me time to kind of assimilate it and I understand why the rate increased, and so he did not end up shopping me, so that's kind of a lesson I've taken with me.
Speaker 3:Yeah, just just Christian. We had one that was going to go down to the wire as well and we knew it because it was a problematic building. It was a little older, it was a big building and we told the client that and I said you know what I'm going to do. I'm going to call you every Friday. It renews in six weeks. I'm going to call you every Friday with an update to let you know where we are.
Speaker 3:And we're afraid this is going to look ugly. It's going to have bigger deductibles, it's going to have reduced coverages and I just want you to be prepared for that. And we were able to get it placed. Unfortunately, it went down to literally the last day, but we were calling him a lot and he appreciated it and he liked the premium, which probably tripled and the deductible went from $5,000 to $25,000. And the building was. It was a $6 million building. It's not that huge, but it was a big hit to this guy. But it really did help very much in the transition of marketplaces and coverages because we kept him informed every step of the way.
Speaker 3:And even if we didn't have an update, we still called him and said hey, james, it's the same as it was last week. We're plotting a lot. Go ahead.
Speaker 5:Yeah no, you got to treat. You have to treat your clients the way you would want to be treated and not fall under that trap of being so defensive that you lock up, you don't communicate, you can't live in fear as a premium producer. If you're going to lose account, you're going to lose the account, but at least treat them the way you would want to be treated, educate them, get to them early, keep them in the loop. In the long run, you're going to have way more wins with that type of an attitude than the other way around.
Speaker 4:Absolutely. And the corollary to that golden rule of insurance. The corollary to that is also it's well, rick, you kind of touched on a treat, I think it was you, rick, treat people the way you would want to be treated.
Speaker 3:I think Christian said it, but it was so good I'm going to give you both credit, OK thank you, I think it's the golden rule, so no one. If it was really smart, I probably didn't say it, but I appreciate you saying that I did.
Speaker 4:And the other kind of part of that I've always felt. I'm sure you guys do too. I don't think the three of us ever talked about this, though. If you look out, if you truly in every instance look out for your client's best interest first, that will serve your own best interest in the long term. It just does Amen.
Speaker 3:Yeah, you want to be able to sleep at night, you do the right things.
Speaker 3:Yeah, we are salespeople that sometimes live in gray areas, but we know areas we never fudge on. We have a professional responsibility. This is not a job, this is a career and we have a professional responsibility, just like your doctor has, just like your lawyer, just like your CPA has to these very important clients, because we say this a lot in these podcasts that probably every one of your commercial clients of size is going to pay more for their insurance than they do to their attorney, than they do to their CPA, probably combined and unless something horrible happens. But they pay us an awful lot of money and there's an expectation there that we earn our keep, which also give you a warning, because I get asked this every now and then, especially on large accounts how much money are you making on this? Yeah, and you better be prepared to answer that question and it's not an unfair question, it is a very good question and you better anticipate it and have a really good explanation for it.
Speaker 5:Yeah, I think this changing market for those listening is that you've heard a lot today about educating, getting ahead of it, being honest, treating people the way you would want to be treated. All of this builds trust, and when clients trust you, you are very valuable to them. So the hard market is an opportunity to also establish and cement the trust that your clients have in you as a professional.
Speaker 1:All right, guys. I hope you enjoyed that episode and got a lot out of it. Remember, implement, implement, implement. And if you would like more information on how you can learn and actually get coaching from our preeminent coaches, visit us at thepreeminentproducercom. Take a look at the different programs that we offer, where you can get personal coaching and access to their success path of becoming a preeminent producer, closing more accounts and growing your book of business Again, thepreeminentproducercom.
Speaker 2:Until next time, guys, we'll see you in the next episode of the Preeminent Producer Podcast. Thanks so much for joining us on this episode of the Preeminent Producer Podcast. If you're enjoying the show, please feel free to subscribe, rate and leave a review wherever you listen to your podcasts. That helps others find the show and we greatly appreciate it. Once again, thanks for joining us and we'll catch you in the next episode of the Preeminent Producer Podcast.