Whenever the stock market and economy are doing well, the insurance sector benefits. Higher employment levels and increases in real estate transactions (both residential and commercial) favorably impact agents across the country, but there are still some challenges to the industry as a whole.
The Market Continues to Run Soft
Traditional insurance companies are facing pressure from consumers and group captive insurance units to offer more affordable premiums without sacrificing any coverage. Though there is an increased need for insurance, the competition and expectations of service have also grown. Agents and brokers are being forced into creative measures to satisfy a digitally-driven and budget-conscious public. Many companies are trying to reduce their operating costs, but agents are looking for better commission deals or workplace perks.
The GPD is Slowing Down
Though everything seems rosy with the economy, the GDP is actually growing more slowly than forecasted and needed. Current growth rates within the U.S. are on par with the global GDP of around 4%, but as the numbers fluctuate in light of a crisis, agents have to be smart about their costs while focusing on customer retention. With steep competition, an agent has to be just as committed to securing new clients as they are with innovative measures to retain their current base.
The Regulations are Crippling
Recent years have seen a stronger focus on rules and regulations for U.S. agents, with those who work overseas having a harder time with more strict parameters. Both the Department of Labor Fiduciary Rule and the European Union’s counterpart have updated the insurance directives and are coming down hard on those who do not comply. Agents must be extremely cautious and proactive in areas of cybersecurity, safeguarding client data at all costs. The added measures are costly, which is an unfortunate need in already trying times.
Insurance agents have the potential to expand their business as the market continues to remain steady. However, a proactive strategy and cost-evaluation of operations can help save money if the market faces a downturn.
