A new survey of property and casualty (P&C) brokers and agents has found that 97% of respondents feel that recent hard market conditions are impacting their books of business, while 95% say their clients risk being underinsured due to high inflation in 2022.
Amwins notes that insurers have become more price sensitive in recent months as the hardening market has combined with rising inflation, meaning many are turning to a wider range of carriers to minimize risk management.
Many factors continue to pose challenges to policyholders’ businesses, analsts report, but the top issues identified by respondents for 2022 included increased costs of materials/services, rising interest rates, and supply chain disruptions.
Of the more than 300 brokers and agents surveyed by Amwins, three-quarters said their clients have been impacted by shrinking capacity over the past few years, with 48% saying at least half their clients had been affected, and 89% saying at least a quarter.
As insureds faced reduced budgets, agents and brokers saw their books of business shrink, with nearly all saying that hard market conditions are impacting their current books of business.
At the same time, claims are growing with some 71% of respondents saying their clients’ average claim size has increased over the past 12 months, and 16% saying claim size significantly increased.
With severe weather showing no signs of abating in 2023, Amwins therefore warns that insurance brokers and agents should prepare for a continued rise in claim size over the next 12 months.
But in the face of these challenging conditions Amwins also reports that most respondents have seen clients taking steps to counter shrinking capacity, with increased risk management/ contingency practices and higher premiums the most common measures.
Almost all respondents also shared that their clients made moves to counterbalance increases in claim size, in particular seeking to address the issue by accelerating proactive risk mitigation strategies and seeking out third-party support for more accurate valuations.
“As markets tighten and policyholders are left with fewer attractive options in 2023, deriving greater value from their insurance partnerships will be a key strategy for companies to survive,” Amwins concluded. “In particular, with hard market conditions continuing this year, policyholders are looking for solutions that tap into a wider range of markets and carriers as they seek to balance value with price.”
“Insurance agents and brokers must rise to meet ongoing challenges both by leveraging broad risk management capabilities and tailoring solutions to their clients’ specific situations and resource levels,” it added. “Those who remain responsive to clients’ evolving needs and trends in shifting insurance markets will be well-positioned to thrive in 2023.”
