- Rising reinsurance costs are behind the growing trend of insurers ceasing the sale and renewal of personal property and casualty policies in states prone to natural disasters.
- Insurer exits also impact insurance agents specializing in personal and business property coverage as these markets narrow.
- Agents may find opportunities in small business insurance products that focus on business services rather than property and assets.
State Farm and Allstate shocked consumers this May when they announced they would no longer issue new home insurance policies in California, citing increased wildfire risk.
Though these decisions will potentially impact hundreds of thousands of homeowners in the Golden State, they also have repercussions for insurance agents. Those with books weighted heavily towards personal property and casualty policies may find it harder to retain clients amid soaring premiums and decreased choice.
“Agents may consider expanding their portfolios in response to these insurer exits,” says Andrew Lilley, Channel Sales Manager for small business brokering platform BizInsure for Agents. “Policies that provide coverage for a business’ activities, rather than protecting its property, could be a key growth driver for agents.”
A growing trend
The latest insurer exodus from California is part of a growing trend throughout the U.S. insurance market primarily driven by rising reinsurance costs for insurance companies.
California isn’t the only state plagued with wildfire worries. Colorado and Oregon are also facing skyrocketing premiums and potential insurer exits.
Florida has struggled to maintain a stable insurance market since 1992, when Hurricane Andrew caused a then-unprecedented $16 billion in damages. Louisiana has also taken steps to shore up its property insurance market after Hurricanes Katrina and Rita.
Auto insurance is also on the chopping block in some states. Farmers Insurance recently announced it would issue no new auto or umbrella policies in Florida and would not renew coverage for existing Sunshine State customers.
Opportunities for agents
The home and property insurance landscape may look bleak, but business insurance could be a promising market for agents looking to grow their books.
While business property policies are also part of State Farm’s California exit, agents can instead focus on covering a business’ activities.
“Agents considering a pivot to SMB insurance have two aces up their sleeves—General Liability and Professional Liability,” says Lilley.
Both policies are considered business insurance mainstays, covering third-party injuries and property damage (General Liability) and negligence claims (Professional Liability).
Lilley continues, “General Liability is a bit of a ‘catch all’ coverage—virtually any occupation or business may need it, particularly if they are leasing commercial space. And Professional Liability is essential for a diverse range of professional service providers, from content creators to healthcare professionals.”
Following employment trends
Agents may also focus on policies targeted to specific industries. Home health care is one area experiencing tremendous growth. Bureau of Labor Statistics data projects a 25% increase in available home health and personal care aide roles by 2031—far outpacing the 5% average for all occupations.
“Beazley’s Miscellaneous Medical Liability is a popular product on BizInsure for Agents,” says Lilley. “It’s an easy and affordable way to address the primary risks that home care clients face with a single policy.”
“Home and auto insurance might be shrinking markets, but there are always risks that need to be managed. Small business insurance could be an exciting new avenue for enterprising agents.”
As with any insurance, coverage will be subject to the terms, conditions and exclusions contained in the policy wording. The information contained on this web page is general only and should not be relied upon as advice. The number of quotes provided varies between products, occupations and other underwriting factors determined by the insurers.
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