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Predictions of a softer insurance pricing market are on the horizon. Perhaps not in early 2025, but there’s no question the market is stabilizing from the high prices the sector has seen in recent years. Relying on higher revenue from higher prices in the property/casualty market is not a sustainable way to keep pace with agency growth. Now is the time to make plans for future agency growth. This report highlights a few recommendations on how agencies can grow in the changing market.

Employee Benefits

Cross-selling employee benefits for commercial business is not new but most insurance agencies continue to struggle with crossing department lines when it comes to agency growth opportunities, according to Randy Schwantz, author of three previous books on selling insurance, and CEO/president of The Wedge Group, a business performance and sales consulting firm.

Even the largest agency organizations find low percentages of cross-selling happening between the P/C side of the house and the employee benefits side of the house, he said.

Agencies focused primarily on P/C business will cross-sell other P/C products. For example, an agent with a small commercial lines client might ask for an opportunity to quote that insured’s personal lines coverages. But not all agencies will cross-sell employee benefits products if they do not sell them directly.

“For example, I was working with one of the huge private equity firms — a $3 billion company — and they said that their accounts were only between 3% and 6% cross-sold across their platform. That means they probably had the P&C business but only up to 6% were cross-sold with employee benefits,” he said.

Schwantz says there’s a “boat load” of money to be made when an agency makes it commonplace to cross-sell their commercial lines P/C insureds with employee benefits.

But why don’t more P/C agents seek out cross-selling opportunities with the life/health and benefits side of the business? Schwantz says it has a lot to do with the competitive nature found in a typical profile of an agent. Agents are protective of their business. “The fact that we work for the same company doesn’t mean I’m going to let you in on my accounts,” he said.

“It’s a trust issue, a competence issue, but when you look at opportunities the money is there,” he said. “You can see the gold pot at the end of the rainbow.”

Schwantz says even the agencies that do cross-sell benefits products have room to grow. “A lot of agencies that are really proud would say that they’re probably 30% cross-sold, but that’s still a huge gap.”

Stay Focused on Prospecting

There’s no better time to grow the agency than in today’s market because everyone wants to shop, says David Carothers, principal of Florida Risk Partners, who also founded the Killing Commercial Insurance Sales Training program. He counsels his own agency producers and others on how to grow their book of business. Growth is more than waiting for new business to walk in the door; it’s critical for agents to stay mindful of prospecting even during these busy times, he says.

“The problem is, with all of the inbound coming in right now, producers aren’t staying focused on what they know they’re good at and what they’ve been successful with in the past, and they’re allowing these other opportunities that seem like low hanging fruit to come in and distract them,” Carothers says. The problem with that is that those people seeking new business are only reaching out for price.

“The reality is, if you start running the numbers, the close rates are much higher. The retention on that business is going to be much lower because these are people that are reaching out because pricing changed and there’s no loyalty there.”

He challenges producers to come up with an ideal prospect profile. “And we want them to have three to five ideal prospects that they’re going after every single day,” he said.

Carothers doesn’t believe in producers limiting their prospecting to one niche market, either. “I’m not a big believer in getting so niched down that you’re only going after one class of business, because then you’re not diversifying your book and you’re not spreading your risk,” he said.

But getting “really good” at three to five niches and finding ideal prospects in those niches can be a great way to grow.

“You’ve got to stay focused in your prospecting and stay true to what built your business to this point,” he added.

But don’t confuse activity with productivity, Carothers said. New business activity doesn’t always mean growth, he added. Agents should be measuring the hours they are investing to quote some of the incoming activity and compare it against their return on investment, he suggests.

“One of the things we talk about all the time is knowing your hourly rate,” Carothers said. “You should not touch anything on your desk that’s not going to pay you your hourly rate. So, if you start working on things outside of your hourly rate, you’re going to diminish your own income and the income of the agency at the same time,” he said. “You’re going to end up wasting your time on a bunch of bad business.”

Pay Attention to Gaps

One area that could help agencies grow — and protect agencies from potential errors and omissions claims — is paying close attention to coverage changes during this time of rapid movement, says Chris Burand, president of Burand & Associates. For more than 30 years, Burand has offered consulting services for the P/C insurance industry.

“Absolutely make sure you are checking the renewals to make sure coverage hasn’t been removed, or diluted,” he said. “You will increase sales if you do that, and you will reduce your E&O exposures.”

Burand says while carriers have re-structured their underwriting criteria for certain lines of coverage, they have also re-structured some policy forms with more restrictive coverage terms. It’s important to pay attention as some changes can be difficult to identify, he says.

“I’m seeing pretty sneaky wording creep into policies that materially reduces coverage,” he said. “A lot of it has to do with ‘silent exclusions,'” he said. “They’re silent because there should be wording in the form that says, ‘This is the coverage and here’s the exclusions.’ But now instead of, ‘Here’s the coverage and here are the exclusions,’ it says, ‘Here’s the coverage for X,’ but it’s worded in such a way that the exclusions are automatic and don’t have to be listed,” he said.

For example, a recent policy he reviewed asked for the insured to go online to answer some additional questions. “What it doesn’t say is that if you don’t go answer those additional questions, your coverage will be reduced,” he said.

As rates and pricing begin to moderate there will continue to be movement of accounts because of these changes. Carriers will continue to adjust their underwriting criteria, and some may leave certain markets entirely, Burand says.

“Agents may even see some interesting mergers for small mutuals,” he adds. “You still have some carriers that have to shrink; they just have run out of operational surplus, and so business is going to have to find new homes.” Agencies have an opportunity to capture more business as result of these ongoing changes, he said.

“It’s going to be another couple of years of changes,” he said. Accounts are going to be moving at a faster pace than normal and they’re going to go somewhere.

“So why not you,” he said. “It’s a matter of thinking it through and being ready and making sure that you’re the first agency that clients call.”

Capturing this movement could be a lucrative strategy for agencies. “And so, as an agency, are you set up to take advantage of that?” he said.

Cross-Selling, Again

Cross-selling is key to growing in 2025 and that’s not always a primary focus for agencies even for P/C lines of business, Carothers said.

“If I wanted to grow right now, I would be looking at every single account that I have on the personal line side and make sure I’ve offered them flood and umbrella,” he said. “And on the commercial side, I would make sure I’ve offered flood, umbrella, employment practices and cyber.”

Not only are agencies not offering these coverages, they are not offering the right limits of coverages and are setting themselves up for a disaster when it comes to an E&O scenario, he said.

They are also not maximizing revenue. “Agents aren’t maximizing revenue because we’re not fulfilling our duty to offer as agents,” Carothers said. “We have a duty to offer that coverage or get that client to reject it.”

The independent insurance agency and brokerage channel achieved an organic growth rate of 10.3% in 2023, according to a Reagan Consulting survey. But Carothers hears that many agencies have grown by as much as 25% organically over the past year or two due to rate increases. “Is next year going to bear the same thing? And if it doesn’t, what are we going to do to offset that?” he said. “We need to continue to make prospecting and cross-selling a priority even though everybody’s fat and happy right now, because as the market will start to soften; we need to ready.”

Topics Trends Employee Benefits