Following several challenging years of hard market characteristics since COVID, the beginnings of an overall soft market have emerged with signs of competition increasing, growing capacity, and lowering premiums. For agents, this means change. And responding proactively to the emerging soft market will shape both profitability and policyholder relationships for the future.
Soft Market Effects on Policyholders and Agents
While a soft market may have positive impacts on policyholders through lowered premiums and expanded options, for agents the reality is different and more complex. A soft market usually means an increase in work for agents as pricing and availability shift. Agents often must:
- Remarket accounts frequently since pricing and conditions change
- Compare more options from carriers
- Respond to increased quoting requests as consumers consider their options
- Justify value beyond price
For agents, the soft market often means more work for less revenue per account, but policyholders expect higher levels of service as they seek the best coverage options. For policyholders, the soft market can feel empowering after several years of limited options and high premiums. During soft cycles the media reports on better insurance rates and reduced costs, and this reshapes consumer expectations.
Policyholders may question renewal increases and push for annual re-quoting, regardless of risk quality and loss history. Some may expect expanded coverage without paying additional premium and many consumers will shop around for other options even when satisfied with their current coverage and agent. This can challenge agents and strain relationships as policyholders may value short-term savings over long-term relationships. This means consultative selling and ethical advice are even more important.
Soft markets also stress internal agency operations. Internal teams can be stressed by the additional quoting activity, renewal reviews, and increased client communications expected during the softening market. Operational efficiency is a strategic differentiator during these times. Agencies relying on manual processes and fragmented workflows will struggle to keep up with demand compared with those that have modernized their processes through digital workflows and platforms. Soft markets tend to expose these operational weaknesses quickly.
Opportunities Hidden Within the Soft Market
Even with the challenges of a soft market, there are meaningful opportunities for agents to thrive, including by:
- Revisiting coverage and deepen policyholder relationships through proactive education
- Strengthening advisory and subject matter expert positioning
- Optimizing cross-selling, upselling, and risk management opportunities
- Refining legacy issues that surfaced during the hard market but could not be resolved then
- Reviewing agency workflows to reduce friction and find opportunities for automation and standardization
- Reinforcing documentation and advisory best practices to lower E&O risk
- Training agency staff to handle increased policyholder questions and enhanced expectations with confidence
- Setting realistic expectations early with policyholders about soft market dynamics
By managing the soft market cycle proactively, with operational strength and ethical consistency, agents can thrive and empower policyholders with sound advice.
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External Links:
- https://ar.casact.org/an-insurance-soft-market-landing/
- https://www.businessinsurance.com/nearly-all-commercial-lines-in-a-soft-market-willis/
- https://www.ibm.com/think/topics/operational-efficiency
