Depending on which experts and futurists you believe, were either hurtling toward a recession or witnessing a post-pandemic market correction. Some are even saying the recession is already here. The insurance industry is all about mitigating risk, and preparing for an economic downturn is no different. Smart, independent agencies and MGAs should plan their strategies now for navigating the potentially rough waters ahead. Whether the recession is protracted or a short dip, agents and brokers can make many pre-emptive operational changes over the next few months to keep them well-positioned and even strengthen their bottom lines.
Agents of change
The good news is that many independent agents, brokers, and MGAs have already gone through numerous operational changes over the last two years due to the pandemic. The insurance industry proved that it could be resilient and accelerate digital transformation when its a matter of life and death for the business. Agencies shifted quickly to support remote workers and make the front-office experience digital to serve their customers better. In some ways, the pandemic accelerated the mass-scale transition needed to prepare the insurance industry for future uncertainty. Disruptive events can come at any time and in many forms.
Now, in the face of a potential economic downturn, its time for agents to continue to optimize their operations, end to end, across the entire organization. Preparing for a possible recession should be an extension of the work you’ve already been doing to future-proof your business.
Here are five ways for independent agents and MGAs to prepare for a possible recession:
- Lean into your company’s data. Independent agents and brokers are sitting on a gold mine of historical data about your company and customers. If its in your system, you should be able to analyze it. For better or worse, spotting trends using your data will help inform your response plans in the face of an economic downturn. Ideally, your data will tell the story of your agencys strengths and weaknesses. Examine every angle of your business to see where opportunities are, where youre wasting effort, and what your next move should be.
- Discover ways to streamline your operations. Anytime a business enters a recession, its time to take a hard look at cutting costs and being more efficient. Do you have a clear picture of how much time employees spend on repetitive tasks? Does your back office team struggle with processing claims due to human error? What is the value of reducing time and frustration for your workers and customers? Automation answers these questions and more. The right automation solution can deliver the streamlined, fast, and error-free experience your customers expect while freeing up your agents to do more complex work. At this point, any agency that chooses to solve problems by adding more people instead of technology to do the work will face hard times if we hit a recession.
- Focus on retention. In the event of a recession, your agency will need to do everything in your power to keep your best employees. Over the last two years, agents and brokers have been working remotely long enough to prove that they’re more productive than they were when they commuted to an office. To retain current workers and recruit a new generation of agents and brokers, agencies and MGAs need a resilient work model that is flexible and accommodating to employees, no matter where they choose to work. This requires a significant shift in thinking. The location of your agents matters less when the trade-offs are boosted productivity, reduced operational costs, and higher customer satisfaction.
- Diversify your risk product portfolio. Business flexibility and diversity is key to surviving a recession. Expanding your lineup of insurance products may the right move. But first, it goes back to your agency’s performance data. What do you do very well, right now? What would it take for you to offer more products in that area? Is is it possible to pivot your business based on customer needs?
- Empower your people. Employees who thrive in the insurance industry often share certain character traits and work habits. They crave responsibility, pay close attention to detail, have a passion to make an impact on peoples lives, and have great communication skills. These are the traits that keep your customers loyal and coming back for more. During a recession, its important to not only retain your best agents, but to give them the opportunity to shine and do what they do best. How do you do that? By providing them access to the relevant data and resources they need to make sound decisions that positively impact their customers and the agency’s bottom line.
Acting with a time-tested, data-driven strategy can empower independent agents and MGAs with the insights they need to devise, refine and implement a winning survival strategy. While each agency needs to create a unique approach, the goal is to build long-term resilience that helps you get through economic challenges and become stronger.