Navigating the Hard Market: Communicating the Futility of Remarketing

The challenging market conditions, characterized by reduced risk appetite and strict underwriting practices, make it increasingly difficult for carriers to take on clients with poor credit scores and/or a history of claims. In such circumstances, carriers are unlikely to make exceptions and are more likely to decline coverage for these individuals.

One area where this trend is noticeable is in comparative raters, such as EZ Lynx. Agents are experiencing across-the-board declines for clients who have poor credit scores or a history of claims. Even attempts to bypass the comparative rater and approach carriers directly often result in wasted time and effort for agents and account managers.

Under such circumstances, the best course of action for clients with poor credit scores or a history of claims is to stay with their current carrier if possible. Since underwriting is stringent across the board, switching carriers is unlikely to yield better results.

How to approach this topic with clients and prospects

When communicating with current clients or prospects who have poor credit scores or a history of claims, independent insurance agents can employ several tips to explain why staying with their current carrier, despite a rate increase, is likely their best option. Here are some effective strategies:

• Understand their concerns: Begin the conversation by empathetically understanding the client's concerns. Acknowledge that rate increases are never welcome news but emphasize that the agent's goal is to ensure the client receives the best possible coverage and protection.
• Explain market conditions: Educate the client on the current hard insurance market conditions, including the reduced appetite of carriers for clients with poor credit scores or claims history. Describe the increased scrutiny of underwriting and the challenges agents face in finding alternative coverage options. This helps set realistic expectations and provides context for the client's situation.
• Highlight carrier familiarity: Highlight the benefits of a longstanding relationship with the carrier and their understanding of the client's unique circumstances. The carrier already has knowledge of the client's credit score and claims history, which can work in their favor during the underwriting process. Explain that switching carriers may require starting from scratch, potentially leading to higher premiums or even declination.
• Discuss alternative risk management strategies: If appropriate, discuss alternative strategies to mitigate the impact of a rate increase. This could include suggesting ways for the client to improve their credit score over time or implementing risk management practices to minimize future claims. Assure the client that their efforts toward improving their risk profile can have a positive impact on their future premiums.
• Provide transparent and clear communication: Clearly communicate any rate increases, policy changes, or other relevant information in a transparent manner. Explain the reasons behind the rate increase, such as market conditions or the client's risk profile, to ensure the client understands the factors at play. Answer any questions they may have and address any concerns openly and honestly.
• Revisit the topic periodically: If the client is initially resistant to the idea of staying with their current carrier, offer to revisit the topic periodically. Assure them that if market conditions change or if they can improve their risk profile, the agent will proactively explore opportunities on their behalf.

Effectively conveying to clients or prospects that attempting to remarket their insurance is unlikely to yield fruitful results can be a challenging task. However, insurance agents must prioritize their most valuable resource: time. Persisting with policies that are bound to be declined or subjected to substantial rate increases will not alter the inevitable outcome. By recognizing the limitations of remarketing, agents can focus their efforts on more productive strategies.