Upon various counts of research, it is safe to say that the commercial lines insurance market is in a bit of a turmoil in 2024 deeming more favorable for certain lines of coverage over others. There are a variety of market trends to look out for as we head into the future, some good and some bad, and in this blog we will dive in to a few of those trends that your independent agency should be aware of and prepared for in 2024.
IMPACT OF WEATHER
With 2023 setting the highest record for weather related disasters and resulting damage costs, independent insurance agencies can expect nothing less than a continuous increase in rates and coverage limitations. While there is no way to stop this increase, there are ways to respond to these changes. One way to respond is by creating and managing a list of contractors, as well as emergency service companies, that you know to be responsive and trustworthy to refer your clients to in case of occurring damages. Possessing lists of this sort not only allows your independent agency to remain ready for cases of emergency, but eases stress on clients, establishing trust and increasing client retention.
IMPACT OF INFLATION
Ongoing increases in the Consumer Price Index and overall inflation is a leading concern for the commercial insurance industry as property and casualty expenses continue to rise heading into 2024. Not only is inflation impacting the costs of auto repair due to the increasing labor and material expenses, with the limiting distribution in auto materials further increasing the cost of repair. With rising medical expenses due to developed technology and the enactment of government programs, liability insurance prices are also seeing a continuous increase in cost. With premium pricing increasing by the day, it is crucial that your independent agency is remaining ahead of the game when it comes to informing your clients about changes in their insurance plans.
AI IN INSURANCE
With the continuous development and implementation of AI in various areas of the insurance industry, it is important to remain consistently up to date on said developments as they can both potentially hurt or help your independent agency in the future. While there are numerous positives found in the integration of AI, such as improving overall control measures, maintaining claims practices, and providing round the clock aid to clients through chat bots, there are also underlying factors that may deem to be problematic down the road, such as potential errors in the information or advice we give which may lead to lawsuits and or related claims against your independent agency. With developing technology being more prevalent than ever in the workforce, it is important to use it to your agency’s advantage, but also remain educated on what technology you are implementing into your daily routines.
SUPPLY CHAIN DISRUPTIONS
Although the pandemic is now almost 4 years in our rear view, the buildout and continuation of supply chain disruptions is still ever present as demand is still surpassing inventory for various sectors of business, resulting in companies struggling with price increases, limited sourcing, and overall business execution. With these continuous supply chain disruptions, the impact on the insurance side of these businesses, predominantly focused on loss recovery insurance, leading to major conflicts, some of which resulting in prolonged closure of businesses until materials and resources needed become readily available. One way your agency can prepare for potential future supply chain disruptions is staying informed on latest supply chain updates, be in constant communication with customers regarding any information that may affect their business, and strengthen your knowledge of supplier relationships.
Future of commercial lines insurance in 2024 brings both challenges and opportunities. Weather-related disasters, inflation, AI integration, and ongoing supply chain disruptions are shaping the landscape. Independent agencies need to be prepared by staying ahead of inflation trends, cautiously adopting AI, and advising our clients to fortify against supply chain issues. Success lies in adaptability, resilience, and strategic planning to navigate the evolving commercial insurance landscape in 2024.