Your Introduction to the Insurance Industry: The Current State of Insurance Affairs

Welcome to insurance!

Are you just getting started on a career in insurance? Congratulations! Careers in this industry can be majorly rewarding. But trying to level up your knowledge can make you feel like the dog that caught the car: What do you even do?

If you’re looking for a way to get smart quick, we’re here to help. After writing hundreds of posts on insurance, we’ve learned a thing or two. Consider this our roadmap to help you learn more about the inside of the industry. If you’ve read about the regulatory background of the industry, how the industry distributes products, what lines of authority are and why they matter, we’re turning now to the current state of the industry.

The current state of the market: Challenges

Broadly, the modern insurance market faces many challenges. 

Like all industries, the mass retirement of baby boomers has left many gaps in insurance. Carriers, agencies, and MGAs alike have struggled to retain and replace seasoned leaders with decades of industry experience and knowledge. 

Often dubbed the “talent gap,” there aren’t as many people entering the insurance workforce as are leaving in the retirement exodus. This is true of insurance producers, leaving fewer people to move business from carriers to consumers, but it’s just as true of people working in the less-public administrative roles in insurance. From compliance to regulation to even tech and marketing, finding people who understand the complexities and nuances of the industry to fill roles is increasingly difficult:

https://agentsync.io/blog/ease-of-doing-business/the-great-resignation-what-does-this-mean-for-the-insurance-industry

With fewer people to do the work, the insurance industry then tasks fewer people to bear bigger loads, which is, of course, impossible without solutions that allow them to work smarter and not just harder.

How AgentSync helps: By leveraging APIs and automations that integrate through multiple other systems, AgentSync Manage and ProducerSync API can help businesses operate with smaller margins. When producers are able to spend less time manually maintaining their license and appointment data and reporting it back and forth between carriers and agencies, they can spend more time with their clients, letting them maintain bigger books of business per producer. Likewise, automations help internal producer and compliance management teams complete tasks instantly that would previously have required hours of manual data management. 

Inflation affects insurance. So does social inflation – the phenomenon of juries awarding ever-increasing amounts to plaintiffs in court cases, sometimes causing a single large court case to have the effect of raising the risk for the carrier, in turn increasing premiums for everyone:

https://agentsync.io/blog/insurance-101/what-is-social-inflation

As it costs more and more for insurance carriers to pay claims, these inflationary factors can outpace insurers’ ability to raise premiums. This can make insurance less affordable, both for the carriers that provide insurance and for the consumers who need it. 

If insurers can’t afford to pay claims, they’re more likely to collapse into insolvency and put responsibility for paying claims onto state guaranty associations, which cover a limited baseline for policyholders whose insurers can’t afford to pay:

https://agentsync.io/blog/insurance-101/state-insurance-guaranty-associations

Alternately, when insurers drop out of the market and there’s no remaining affordable coverage, states often provide the needed insurance with state-backed insurers of last resort. This can put a lot of risk on taxpayers:

https://agentsync.io/blog/insurance-101/states-insurers-of-last-resort-for-property-insurance

If consumers can’t afford insurance, they’re either left exposed, or they face an incentive to defraud insurers and leave everyone more vulnerable to risk, increasing premiums for everyone who does have insurance, and around and around we go! 

These struggles are further exacerbated by particular factors that impact businesses under the various lines of authority differently.

Challenges and opportunities for life and health insurers

Right now, the life/health sector is coming down from a COVID–high, where everyone suddenly remembered mortality comes with an expiration date and bought life insurance. Yet, annuities and permanent life insurance contract sales remain elevated as consumers avoid ceding their retirement funds to a stock market that struggles to make up its mind as to whether it’s headed up or down. Carriers in this space are still looking for conservative growth as they also replace an aging producer population:

https://agentsync.io/blog/insurance-101/how-fewer-insurance-producers-can-address-a-growing-life-insurance-market

Challenges for P&C

Property and casualty (P&C) businesses are suffering. Increasingly catastrophic events, regulators who don’t want to allow carriers to raise premiums, reinsurers dropping out of the market or jacking up prices… P&C carriers are doubled down on the bottom line and operational efficiency as their risks increase and their losses mount:

https://go.agentsync.io/hubfs/Content%20Downloads/(E-Book)%20The%20Future%20of%20P&C%20.pdf

Many P&C carriers also have specialty services that they end up selling outside of the “admitted” market, meaning their products are approved in their home state, but aren’t registered and reported in other states. These products are sold through “surplus lines brokers” who often have P&C licenses and then an additional line of business or certification that allows them to sell surplus lines:

https://agentsync.io/blog/insurance-101/what-is-excess-and-surplus-lines-insurance

P&C businesses face rising risks because once-in-a-century catastrophic disasters happen about every 10 years:

https://agentsync.io/blog/industry-news/five-times-mother-nature-shocked-the-insurance-industry

These disasters are also increasing in cost, and require carriers to deploy more claims adjusters faster than ever, but adjuster regulation is more difficult than producer regulation. Many states don’t require adjusters to have licenses, but others have many requirements that make it difficult to work across state lines:

https://agentsync.io/blog/compliance/the-7-step-challenge-of-life-and-health-adjuster-licensing-and-4-ways-to-make-compliance-easier

How AgentSync helps: For one thing, AgentSync can reduce operational costs at carriers, agencies and MGAs. It can help these entities reappropriate headcount to revenue-generating jobs instead of tedious data-entry and spreadsheet management. Manage, Autopilot, and APIs also help manage compliance for various kinds of claims adjusters, which is a hot mess that makes producer licensing look like a breeze:

https://agentsync.io/blog/compliance/5-ways-carriers-can-take-the-pain-out-of-insurance-adjuster-compliance

What lies ahead for insurance carriers, agencies, and MGAs

There are many ways for businesses to meet the challenges they face now and in the future. With fewer available knowledgable, experienced workers and more work to do than ever, carriers, agencies, and MGAs must manage more with less.

Of course, as a company building modern insurance infrastructure, we see the future as tech-enabled, but still producer-focused.

Producers will continue to be the face of insurance to consumers who are making life-long choices about products that matter a great deal to their financial well-being. Maintaining tech that can meet producers’ expectations and elevate their experiences will be a differentiator for many insurance businesses, particularly agencies and MGAs:

https://agentsync.io/blog/distribution-channels/top-5-insurance-agent-preferences

Carriers care quite a bit about managing insurance distribution channels. They also care a lot about attracting and retaining employees, and helping their operational teams manage distribution with high-quality data:

https://agentsync.io/blog/producer-management/attract-and-retain-top-producers-by-creating-an-exceptional-employee-experience

And, lest anyone forget, insurance will always boil down to what it does for the end consumer. As much as tech and its promises offer more speed and personalization than ever before, human relationships will remain the foundation of trust in this industry for consumers:

https://agentsync.io/blog/technology/with-the-rise-of-ai-in-insurance-the-human-element-is-more-important-than-ever

How AgentSync helps: By reducing friction in onboarding, producer management, and ongoing compliance, AgentSync’s ProducerSync API, Manage, and Autopilot solutions can all help internal and external stakeholders alike for improved experiences all around.

The future of insurance

Talent gaps and an aging workforce, doing more with less, catering to digital-first appetites; all of these and more lay ahead for the whole industry. There’s plenty of room for improvement, and loads of ways AgentSync can help carriers, agencies, and MGAs turn their current siloed spaghetti processes into an integrated tech stack that makes everyone’s lives easier. To find out how we can help your team operate more effectively, watch a demo today.