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Top three drivers of P&C insurance sales growth and how they affect the marketplace

December 16, 2014

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While it is difficult to definitively prescribe the key to sales growth, we are able to discover drivers for growth when looking at brokerages in the current market place.

Where does sales growth come from?

Commission growth generally comes from three sources:

  1. Increase in premiums for the same coverage
  2. Providing more coverage and/or policies to your existing customers
  3. Finding new customers.

P&C sales blog2

 

Opportunities in the marketplace

At this time, there is no evidence that there will be a general increase in premiums any time soon. The most successful brokers are doing the heavy lifting of investing time and effort to develop a customer relationship to enable them to identify then close sales opportunities to provide better coverage or increase the number of policies.

We all know that adding new clients is the most difficult. We continue to see three trends in the industry:

  1. Consolidation continues to be the easiest and surest way to increase commission volume; however, there is a great deal of competition if you’re looking to buy a book of business.
  2. Recruiting producers with an existing book of business have become more prevalent. Although always be cautious about agreeing to produce compensation that is too rich.
  3. Specialization in specific industries or lines of business can yield significant commission.

On top of that, we have also noticed that contingent commission allocation percentages are becoming greater for those brokers that can deliver profitable volume at the expense of smaller brokers. Our final observation is that we believe technology will play a greater role in the distribution of insurance. Currently, there are some good online sales results, but my prediction is there will be lots more to come. And as always, there are those brokerages where people simply work hard to increase sales.





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