Five Things Impacting The Industry Shaping You Today - ITB InsuRant with Rick Fox

There are major factors in play when it comes to what's really impacting the insurance market in the second half of 2023.

On this week's edition of Insurance The Brightway (ITB), Rick Fox shares the most important variables that you need to keep top of mind in an "InsuRant" that could make all the difference at your agency!

Listen to this week's ITB podcast beginning this Thursday at noon at www.brightwaydifference.com/podcasts or wherever you listen to your favorite podcasts today!

ITB is a weekly podcast brought to you by Brightway Insurance, the insurance franchising leader coast-to-coast.

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Transcript

Rick:
Welcome back to another episode of the ITB Insurance the Brightway podcast. I'm the host Rick Fox. And today, yes, it is time. Another insurer rant. And, uh, those of you that have been listening in know that I usually am ranting about things that are top of mind for me. So I sort of co-related a list of things. In fact, five things that are. currently impacting the industry that I want to just touch on that you should be very aware of and things that could potentially help you navigate through some of these choppy waters. Okay. So five things that are currently impacting the industry. Number one is the climate that we live in right now. So think about the temperatures that we're seeing. There are more and more intense and extreme events. that are causing damage and cascading hazards and intense like droughts and storms and heat that are having such an impact, not only, I mean, think about wildfires, floods, mudslides, hurricanes, where we live here in Florida. The climate is having an impact on our industry in a very, very distinct way right now. It's impacting losses, which is then carrying over to impacting rates. It's impacting carrier's ability to think about how they react to loss ratios and rate increases and things like that. So if you really look at our climate and how it's been, I mean, I was in Europe about a month ago now and it was 108 degrees at 1030 in the morning. I don't remember that. The last time I went to Europe, maybe I shouldn't go in July. I don't know. But the idea that the extreme hots and extreme colds are having impact on our industry, on again, the carriers and on losses, that's something for us to think about. Nothing we can do about it. We can't go outside and say, stop raining, stop flooding, stop fires. I wish we could do that one, especially. Our hearts go out for all the people in Maui that just happened recently. And it's just, it's just another one of those wildfires that has just been unbelievable. So, our hearts are with you, everybody in Maui, if you know people out there, lots of ways to get involved, Red Cross and things like that, if you want to be a part of the solution, but that's just another example of the climate climate. There was something started, not enough water around, drought wise. and it just spread. That's just one example. We sit here in Florida in the middle of hurricane season and we're hoping the wind doesn't blow. And it's been blowing a lot, you know? So it's all of these things. So not again, this is just something that's having an impact. So when we sit back and go, why are the rates going up? Or why do these carriers not wanna write in these geographics? Climate is at very close to the top of that list of one of the main reasons that's happening. So it is having. a very serious impact on our business and on the way we do business. So I wanted to, again, calling out, I'm not going to tell you guys anything you don't know. It's just five things from my seat that I see out there that are changing the game, so to speak. So that's number one, the climate. Number two, this one will come as no surprise to anybody, the economy. So that means when the economy shifts, that means interest rates go up. Home sales go down, which impacts our business. Insurance rates go up, which causes a lot more volatility. And availability and capacity at the carrier level is at an all time craziness. It is wild right now. I mean, and even with the carriers out there that are trying to navigate through this, and they are struggling because every carrier is looking to get rates. in every state and those requests are sitting on the desk at the office of the insurance commissioner for way too long because there's so many of them. That's all driven by the economy. So you look at the climate, climate impact, economy at the same time as we've gone through this inflationary time where interest rates are on the rise and have continued to rise. And then rates, that affects rates. So impactfully... that it causes us to look at our business in a different way. It causes us to spend, when you used to think, okay, I've got an X size book of homeowners business of which 80 plus percent will just go on about their business and renew their policy. Well, now you're looking at 10, 20, 30, 40, 100% rate increases and having to go back and resell to existing customers. That is... Let's be very clear here and hear me say this, that is the right thing to do. You should be going back and reselling because it's still easier to keep and retain a customer than to go find a new one. But how you build your business is by having a lot of that take care of itself because those rates aren't so volatile. So you spend your time on new business. But the economy has had a huge impact. I have never been in this industry when it's been as volatile and where the carriers have been as reactionary as they have been to rate, to losses, to like I said, interest rates impacting investments, all of those things. Not surprised to anybody that economy is on this list. Again, remember our industry is very cyclical. We are in the hard market and we'll come out of it like we always do. But right now, the economy's having a major, major impact on what's going on in our industry. So that's number two. Number three, and this one is one that I am on the bandwagon, I'm at the front of the list with the bullhorn yelling and cheering and hoping, is insurance clients want self-service technology. It is why we've seen, and I'm not going to give you the numbers because I don't have them sitting in front of me, but why we've seen a growth in the direct market and a shrinkage in the captive market is because of the ability that that by nature, a direct is a self-service technology. So those of us in the independent channel, even those in the captive market that don't have portals and self-service capabilities, or even assisted service capabilities, are falling behind. Let me give you some stats. Three quarters of the people surveyed view brands more positively if they provide self-service options. So three out of four of your customers prefer self-service. They might not all use it, but they look at your brand in a more positive light. They look at your company in a more positive light if in fact you carry or give, create the scenario where if they want, they can self-serve. And in 2023 and beyond, that's table stakes, folks. Again, I'm not telling you something you don't know, but that number is staggering. The other thing that just a tick under three quarters of customers want the ability to solve product and service issues on their own. That's almost three out of four, same thing. So is self-service a big deal right now? Yeah, you better believe it is. Is it having an impact on the way you are viewed by your customers and prospects? You better believe it is. Even in my organization, we are taking We are in the middle of some baby steps, some larger steps, but lots of energy toward giving our customers, our agents' customers, the ability to self-serve. Think about the busy work that's done with ID cards or payments or all of those things. And people do that in their normal day, and they don't need to talk to you. They don't need to email you. They just need to go somewhere like they do with... all their other things and take care of the task and move on to the rest of their day. So once again, is self-service technology impacting our industry right now? 100%. Not three out of four, four out of four. It is an impact. So look at it that way. All right, that's my third. I go to my fourth thing here. And this one's a little more behind the scenes and... That's no pun intended, but it's embedded insurance is everywhere now. Embedded insurance is literally the thing that almost everybody's trying to do. They're trying to make it easier. And I read a blog the other day and I want to read these stats to you out of this blog that I read. $70 billion in embedded insurance premiums are anticipated by the year 2030. 49% of consumers, half of your customers, would buy embedded insurance for convenience. Again, convenience, I mentioned self-service, you're seeing a trend here. And one-third or 34% of consumers would buy embedded insurance to save money. So, The good news is that number's only 34%, which means two thirds of the people aren't shopping on only price, but one third of them are. One third of your customers would buy insurance through embedded insurance just to save money and cut you out and cut the professional, educated, licensed consulting vibe that you're giving as an insurance agent. So again, as I keep mentioning these things, I'm saying them not as you didn't know there was embedded insurance, but you better stand up and be ready to fight the fight against some of these things out there that are going to impact your business today and moving forward. So embedded insurance is a real thing. As a business, what are you doing to create an embedded insurance environment for you, where you could embed yourself into something else? Think about that. If that's what people are doing and they're willing to look at that as an option, what are, are you an option? Could you get yourself in a position to be embedded somewhere in something else? Ease of use, uh, with, like, with, with a real estate firm, with a online loan provider, like I'm just using, there's a million examples. So not only do you need to be aware that embedded is out there and it's happening, but the other side to this. is that are there opportunities for you to participate? So think about that from two lights. And then finally, number five on my list, and I'm gonna just touch on this one briefly because this is a tease. I'm teasing you for the next rant. My next rant will actually be about specifically chat GPT and how to use that in a very quick way, quick wins to get your agency to a different place. But chat GPT. And the use cases of that are very impactful in insurance. They're not widespread yet because some are afraid or don't know how to get started. Again, teaser, check into my next rant and I'll tell you some quick wins that you can use chat GBT to up your game and your agency. But it's real, it's out there. It's in every part of our lives. Make sure your kids aren't using it to write their papers because that is what is happening. Chat GBT is real and it's on this list because it's not going anywhere and it'll just become more and more prevalent in what we do. So these are not the five things you have to worry about. This is a list of five things that are currently impacting our industry. So again, run through my list. This is not going to be a long rant, but it gives you the opportunity to think about these things and how they are impacting. So when we get it... When you get another rate increase in the morning, you get a new, a customer that's renewing at 42% higher on the homeowners, climate has a major impact on that. Losses because of climate have a major impact on that. So, okay, let me read them through. Number one, climate. Number two, the economy. Number three, insurance clients yearning for self-service technology. Number four, Embedded insurance is everywhere and number five, chat GBT. So think about what else is impacting your business. The reason I do these rants sometimes is because it's what I'm thinking about in my business. And it's not just, again, I use another rate increase and it's either number one or number two that's causing that number one, the weather, the climate, number two, the economy. At least then I have a better understanding and you've heard me rant about this before, but understand why everything that's happening in our industry is happening. So you look at this list of five things, and you could go line by line. Number one, climate. Okay, nothing you can do, but be aware and know it's going to have an impact. Number two, economy. Woo, major impact. Are you reacting to that, like some of our carriers are, or are you ready and understanding that we are in a cycle And the cycle is going to be tough based on the economy for a really long time. Number three, self-service. Are you currently either completely capable, are your customers completely capable? Is their customer experience include a self-service option? Or are you thinking about it and planning for it? Because if you aren't, you will get passed up. Three out of four consumers believe. You're a better business if you offer them a self-service capability. Get on the train, folks. That one's not going away. Think about, again, you've heard me say this a million times, but what they do in the rest of their lives, they online bank, they buy groceries and have them delivered. They buy anything they want, click, click buy at Amazon. Everything has them very limited. to having to talk to somebody and insurance, it's 10 a.m. on a Saturday and they want an ID card and they have to call you and your message says, call back Monday after 9 a.m. Good, bad or indifferent? Bad. Number four, embedded insurance. Again, making you more aware of that, it's more real than maybe some of you think and if we're headed towards 70 billion in written premium, in embedded insurance by 2030, guess what? We're gonna blink and it's gonna be 2030. So knowing it's out there and using what you do best to combat that and make sure you've built the relationships, but simultaneously taking advantage of that opportunity if there is ways for you to participate in embedded insurance and be a solution within another offering. And then finally five, ChatGBT, I'm not going to dig in. Like I said, I'm going to leave that one out there for you to think about, and then tune in two weeks. Because when you tune in, I'll do a whole thing on how you can start ChatGBT 101. Okay, so again, you guys know most of the time when I rant, I'm ranting about what's top of mind for me. And all of these things have been on my mind. So I kind of bundled them up, I said earlier, co-related them into a rant, and just sort of gave you my view. These aren't the only five things. These aren't even the top five things potentially that are impacting your business. But they're pretty important. You better understand them. You better be able to talk to them, and you better be moving in the direction. of using or calibrating with the things that I mentioned. Hopefully that helps. Hopefully that kind of gives you some foundation for things you can be looking at to every single day come into the office and do better. Get better, make more, save more customers, better environment for your employees or if you are an employee, coming into work and feeling good about what you do every single day because you're right on top. of the things that are impacting our business right now. Hopefully this is at least some piece of that for you. Again, I am just putting this out there. If one out of five of those makes tomorrow morning a little better conversation with the people you work with or a different thought on something like self-service or whatever the one is, that works for me. Maybe all five. But as always, I am eternally grateful for all of you that have continued to build the community online with what we do by subscribing wherever you get your podcasts. by connecting with me on LinkedIn, sending that I'm getting such awesome feedback through DMs. They're my direct messages on LinkedIn and great suggestions for rant topics. Great, great suggestions for guests. Get on the train, join the community, make sure you're, again, if you, wherever you subscribe, give us a review. We'd love to get it. Hopefully this helps. Again, I'll just race through them one more time. Climate, economy. self-service, embedded insurance, and finally, chat GPT. Do you feel like you can have a conversation on all of those? Hopefully this helped. Thanks again for tuning in. This has been another one of our insurer rants and we will see you next time.