Good morning everyone! Today I’m going to talk a little bit about what I believe or where I believe insurance is going in the next 12 to 24 months. I think we’re going to see some really really big shifts and it’s super important to gear up and be ready for what’s coming because it’s going to be an interesting next 12 to 24 months. What I’m going to talk about here is the financial situation of a lot of these insurance carriers as everybody is seeing right now, the insurance companies are tightening up the underwriting and it’s probably one of the hardest markets I’ve ever seen. I’ve only been in the business for about eight-nine years but I’m hearing other insurance agents that are 30 years in saying that this is going to be the hardest time in Insurance ever. Getting direct appointments is very very difficult, and even getting auto quotes released (at least in California) it’s like it’s unbelievable right now.
Essentially, The Department of Insurance is the only one that is able to accept and approve rate increases. Insurance companies don’t have the freedom to go out and just be like “hey we’re jacking rates up this is the new rate for auto insurance for everybody,” the rate filings need to be approved and then the insurance carrier can bump those up. Usually rate increases here in California for auto and home insurance are usually between six and seven percent which is pretty standard. The big issue here is that The Department of Insurance at least in California put a moratorium which means they stopped allowing rate increases during the pandemic. So now we’re seeing everybody has insurance rates of basically two years ago. So everybody’s riding this gravy train right now of super cheap insurance from almost two years ago because they you know stopped all rate increases and now all these insurance companies are not receiving the amount of Premium that they need because inflation is going crazy. The cost of all goods are going up, like even replacing a vehicle if you get in an accident. It’s more expensive than it was two years ago but the insurance carriers are only receiving the premium of what it was two years ago. That’s exactly what’s happening with the insurance companies right now. They are trying to make underwriting restrictions and they are completely pulling out of certain States they’re stopping certain policies and because they’re basically have prices that are outdated on their insurance, so they’re really really hurting right now and claims they’re some carriers are actually taking Financial L’s like they’re taking losses right now like they’re bleeding money instead of profiting.
The carriers are making it very difficult to actually even get a policy, they will only take very very profitable business or preferred business and that means clean no losses, no tickets, no accidents, and no claims, on their loss history for commercial, auto, home, all those different things.
Also, insurance carriers are also giving out less direct appointments to agents, so if you’re a new agent trying to get a direct appointment right now, this is probably the hardest time ever to get appointments because they don’t want new agents that are inexperienced that might make mistakes and bring in low quality business.
When the Department of Insurance starts to approve rate filings again, they’re not just going to raise it six or seven percent, they’re pushing to raise it like 20 percent so everybody’s gonna see a steep rate increase on their insurance in the next 12 to 24 months- so gear up. Be ready for the inbound calls from customers saying hey you know the rates what happened to my rates why are they so high why are they going up I want to shop around! These are great opportunities to sit there, review stuff with your customer, and deepen your rapport.
So that’s all I got. Be prepared and feel free to leave your thoughts on the direction you think the industry will head in in 2023. See you at the top, peace!