Navigating a Hard Insurance Market

Hard Insurance Market

Since 2019, the insurance market has firmed, creating many challenges for the insurance industry. It’s been a difficult time for the insurance industry as a whole, and like other insurance companies, Farmers Alliance is making changes that affect both our policyholders and our agents. We’re doing our best to make sure our agents are informed about the changes we are making and why we have to make them, so that they can communicate that with their customers. Here is some general information we’re sharing with our agents to prepare them for those conversations.

What is causing the hard insurance market?

The insurance industry has been experiencing many unprecedented changes simultaneously over the past several years.

  • Weather events over the past five years have generated record losses for the insurance industry, and the premiums collected were not adequate
  • The reinsurance companies that have provided the backstop for large losses have seen the same results and are unwilling or unable to continue to provide coverage.
  • The inflation rates for repairing damaged property have grown exponentially over the past several years, adding to the cost of losses.
  • The financial markets, including interest rates and equities, have been very volatile, reducing the income needed for insurance companies to offset the increase in losses.

How long will the hard insurance market last?

The insurance market will likely continue to be in its current state for several years.

How is the hard insurance market affecting policyholders?

Insurance companies must shift more of the exposure to loss to policyholders by means of higher premiums and coverage reductions to remain solvent.

  • The frequency and severity of weather events over the past several years, combined with the growing cost of repairs due to inflation and volatility in the financial markets, have generated a record number of losses for the insurance industry.
  • These challenges are not limited to just a few insurance companies but are systemic throughout the industry.

What can FAMI agents do?

  • Sell the value of themselves, their companies, and the coverage provided. Let customers know they will continue to do the best job of providing them with a superior product from a great company.
  • Take the time to explain the value provided by the coverage they are buying.
  • Since all companies are dealing with these challenges, it may not be in the best long-term interest of insureds to chase a lower premium when facing renewal increases.
  • Encourage customers to renew their policies to help build a positive history with the insurance company, which can help them retain their coverage following a loss.

What can policyholders do?

  • Talk with your insurance agent about your coverage and your options

The employees at Farmers Alliance are committed to continuing to offer a superior product with a fair premium and unmatched customer service. We know some of the changes we’re making are difficult for our agents and insureds, but we are doing what is necessary to continue to provide them with a great business partner for many years to come.