Currently, insurance brokers are experiencing a soft market, meaning competition between brokerages is fierce. This market actually provides an excellent opportunity for expansion into captive insurance services with the aid of an agency captive. Any brokerages that have previously considered expansion should re-evaluate their position, because the market is unlikely to become more favorable. Now is the time to expand because:
- Market Growth – Despite heavy insurance competition, captive insurance is growing rapidly as it gains publicity. More businesses than ever recognize the benefits of captive insurance, and they need brokers.
- Increased Revenue – Insurance companies that expand during soft markets increase their potential for short- and long-term revenue growth. Added services give brokerages the opportunity for new clients. As the market hardens again, these new clients become increasingly loyal.
- Ease of Expansion – During soft markets, agency captive carriers offer better rates, with fewer volume requirements than exist during hard markets. With fewer volume requirements, brokerages have the opportunity to expand with less pressure while they wait for their captive insurance solution demand to increase.
Take Advantage of the Soft Market
While most brokerages hunker down and wait for the market to harden, opportunist brokerages take the initiative to grow during soft markets by expansion into captive insurance services. Expansion does more than lead to an increase in the number of clients and overall revenue. It also allows brokerages to take advantage of the fact that agency captive carriers offer great opportunities during soft markets.