By: Carey Wallace  

A hard market is a term used in the insurance industry to describe a period of time when insurance premiums are generally increasing, and underwriting standards are becoming more stringent. A hard market may be the result of a variety of factors, including increased claims and losses, rising costs for insurance companies, and increased regulation. In this environment, an independent insurance agency’s profitability may be impacted in several ways. That impact can be positive for some agencies and negative for others based on how well an agency responds to their customer’s needs.

During a hard market, insurance companies may experience increased commission and fee revenue provided that their customers can withstand the rate increases. This can also occur due to their customers incurring higher claims and losses, which can lead to higher premiums for policyholders. As a result of these increased premiums, independent insurance agencies may find it more difficult to sell policies to potential customers and retain their current customers as the higher premiums may be less affordable for some consumers. This can lead to lower sales and retention revenue for the agency. 

Additionally, during a hard market, insurance companies may also be more selective about the risks they are willing to cover, which can result in a decrease in the number of policies that are available to sell. This can also lead to lower sales and revenue for the agency. Independent insurance agencies may also face increased competition from other agencies as they try to win business in a challenging market. This can lead to lower profit margins for the agency. There are several things that independent insurance agencies can do to minimize the impact of a hard market on their agency: 

  1. Focus on providing excellent customer service: Providing outstanding customer service can help to retain existing clients and attract new ones, even in a challenging market. 
  2. Build and execute a strong retention strategy: Communicate clearly to your current customers about the market conditions and be proactive in your approach. This is a time when your advice and guidance are key to building a strong relationship with your customers. 
  3. Diversify the types of insurance products offered: Offering a variety of insurance products can help to mitigate the impact of a hard market in any one specific area. For example, if one type of insurance is experiencing higher premiums due to increased claims, the agency may be able to offset this impact by selling more policies in a different area where premiums are stable or even decreasing.
  4. Develop a strong digital presence: In today’s world, having a strong presence online is essential for businesses of all types, including insurance agencies. By improving your website, maintaining an active social media presence, and using digital marketing techniques, agencies can reach new customers and expand their reach. 
  5. Look for opportunities to save money: In a hard market, it may be necessary to look for ways to reduce expenses in order to maintain profitability. This could include negotiating lower rates with suppliers, finding more cost-effective ways to advertise, or streamlining operations to reduce inefficiencies. Investments in your agency’s efficiency are key, and those agencies that have made these investments will be well-positioned to perform well in a hard market situation. 
  6. Consider joining a network: By joining a network an agency can expand the range of products and services offered and increase the number of customers they can serve. 

By implementing these strategies, independent insurance agencies can minimize the potential negative impacts of a hard market and continue to operate successfully. Agencies that anticipate and prepare for the changing insurance environment are able to be better equipped to meet the needs of their customers. 

By simply having the infrastructure, procedures, and foresight to be proactive they will be able to outperform agencies that continue to operate the way they always have. The ability to be nimble and adjust as the market conditions change will be appreciated by their customers and will serve agencies well in a hard market. 

For more information about planning for your agency please visit or contact Carey Wallace at

About the Author:

Over the past 14 years, Carey Wallace has worked with hundreds of agencies helping them understand their agency’s value and turn that knowledge into an actionable plan for their agency’s future. Carey is a Certified Exit Planning Advisor, CEPA and provides a variety of consulting services through the company she founded, Agency Focus, LLC. 

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