Through proactive communication, diversification and investment in their agencies, independent agents are successfully navigating the hard market and laying the groundwork for future growth, according to the “2024 Agent-Customer Connection Study," the latest research by Liberty Mutual and Safeco's Agent for the Future.

The report explores how the hard insurance market is impacting both agents and customers, with 83% of agents saying this is the hardest market they can remember seeing. Also, 89% of customers said their insurance rates increased in the last year and 21% said it increased “significantly."

Yet, customers don't fully understand what's causing rate increases, the report said. Only about 20% of insurance customers say they understand the market forces behind rising insurance rates. Insurance clients want their agents to help them understand, as 62% said it's important for their agent to educate them on the changing market dynamics.

However, while 70% of independent agents say they are proactively communicating with their clients about market conditions, only 20% of customers said they first heard about a rate increase from their agent. More than half (58%) said they first learned about the increase when they noticed their bill amount changed.

There is an opportunity for agents to communicate their value as trusted advisors through improving proactive communication. Agents could improve customer satisfaction and retention by adapting their communication strategies, particularly when it comes to customers who have experienced significant rate increases, the report says.

“Insurance is a relationship business," said Luke Bills, president of independent agent distribution at Liberty Mutual and Safeco Insurance. “In a hard market, those relationships have become even more important. We already know that customers rely on their independent agents for advice and expertise on their insurance coverage. But this research goes further to show that today's customers are turning to their agent for even more. They want their agent to educate them on changing market conditions, help them better understand policy changes and provide advice on risk mitigation."

According to the research, forward-thinking agents have stepped up to today's challenges, adapting to meet clients' needs and finding growth opportunities. Agencies that experienced an annual revenue increase of more than 10% reported three strategies: diversifying and shifting toward markets less impacted by the hard market; investing in new retention programs to keep existing clients happy; and positioning themselves for future growth by continuing to invest in new client acquisition programs, as well as hiring additional staff.

Amid the hard market, 65% of agents say their retention rates are the same or better than they were a year ago, and 69% say they are acquiring new clients at the same rate or better than the previous year.

“Hard insurance markets are challenging, but they don't last forever," Bills said. “It's with a sense of optimism that I can say—and this research validates—that independent agents are well-positioned to weather this market and come out stronger, more resilient and customer-centric." 

Olivia Overman is IA content editor.