An unprecedented confluence of rising inflation, carrier capital challenges, increasingly severe weather events, and pervasive legal system abuse has led to one of the most challenging markets for insurers and insureds alike.

In a recent webinar, The Agent-Customer Connection: Gaps and Opportunities in the Hard Market, hosted by the Agent for the Future Advisors — a panel of insurance industry thought leaders discussed findings from a new research study about agent-customer communications during the hard market.

The panelists — Luke Bills, Sarah Cooke and Nancy Germond — offered insights on the current state of the market and how agents can strengthen their customer relationships by sharing their expertise and providing counsel during this difficult time.

Here are highlights from the conversation.

Everyone agrees — this is the hardest of markets

Watch the full webinar for more insights.

Agents and customers agree on the current state of the market with 83% of agents saying this is the hardest market they’ve ever experienced, and nearly 90% of consumers reporting rate increases in the past year, according to research by Liberty Mutual.

Nancy Germond, executive director of risk management and education at the Independent Insurance Agents and Brokers of America (Big “I”) said it’s the hardest market she’s seen in her 40-year insurance career.

“We were talking to an agency principal recently and she said nothing you can tell me is going to shock me because I’ve already had two people in my office crying this morning,” said Germond. “You know it’s tough, and it’s tough on our employees, too.”

Give customers your expertise and counsel

While agents and customers share similar views on the impact of the market, when asked about agent-customer communications they part ways.

70% of independent agents surveyed for the research study said they proactively discuss market conditions with their clients. However, only 1 in 5 customers who purchased insurance through an independent agent heard about rate increases first from their agent.

Additionally, 1 in 3 customers expressed dissatisfaction with their agent’s explanation regarding market forces on insurance rates. How can agents bridge this gap and help their customers understand and adapt to the current market?

Sarah Cooke, director of personal lines at WalkerHughes Insurance, said it’s important for agents to be empathetic and listen to their customers. Let them know they’re not alone and explain what’s happening in the market in terms they can understand.

“Communicating often and early with a customer prior to their renewal is key in keeping that surprise factor down when they get their bill,” said Cooke. “One of the things we have focused on heavily in our agency is educating our agents and our clients about the factors that are driving the hard market.”

WalkerHughes developed a short video about the hard market, which is shared with customers before renewal conversations to address common questions and concerns. They also advise agents on how to offset rate increases, including reviewing customer policies for deductible options and discounts.

Nancy Germond said many agencies are small and may not have the time or resources to market to customers. She suggests agents go “old school” — getting on the phone and sending direct mail — to communicate and share their knowledge with customers.

“Now is the time for us to show our expertise and what we can bring,” said Germond. “Review your customer’s renewal checklist every year and reach out in advance to check in and explain where the market is going.”

Keep customers by delivering value

An encouraging finding from the research study shows that most independent agents are holding strong during the hard market, with 65% saying their retention rates are the same or better than a year ago, and 69% saying they are acquiring new clients at about the same rate or better than a year ago.

Luke Bills, president of independent agent distribution for Liberty Mutual Insurance, believes that customers need agents now more than ever.

“As insurance becomes more expensive and a bigger piece of a household’s discretionary income – or for a business a higher percentage of expense – customers need advice, they need choice and they need expertise — that’s the value of an independent agent and what the independent agency channel brings,” said Bills. “This is a challenging time for agents but also a great opportunity to deliver what this channel does for our customers.”

While market factors continue to squeeze the industry and consumers, Bills shared some cautious optimism.

“The one thing about every hard market is that they do end at some point,” he said. “We’re starting to see a few green sprouts. It depends on what state you’re in, but across the country we’re starting to see rate catch up to loss costs, which needs to be in balance for our business to work.”