Every industry experiences market cycles, and the insurance sector is no exception. However, the insurance world has its own unique term for these downturns—the hard market. A hard market means higher premiums and fewer customers staying with their insurers. It also brings lower commission rates and financial pressures, making it tough for insurance agencies to run smoothly.
Yet, amidst these challenges, there are agencies that not only survive but thrive in these tough conditions. How do they do it? What sets them apart? Before exploring the strategies that help some agencies succeed, we need to grasp the factors that create a hard market.

Understanding the Hard Market
A hard market doesn’t occur randomly—it is typically driven by multiple factors, including:
- Rising disaster rates – Natural disasters, pandemics, and economic downturns bring uncertainty. Insurers raise prices to cover these higher risks.
- Rising claim costs – When repair, medical, and settlement costs go up, insurers must raise premiums to stay profitable.
- Market withdrawal – Some insurers leave specific markets or cut back on coverage. This change makes the market more competitive.
- Higher reinsurance costs – Insurers use reinsurance to handle risk. When these rates rise, they often pass the extra costs to consumers.
- Regulatory changes can create new laws and compliance rules. These often increase administrative work and tighten profit margins.
The current hard market is unique because all these factors are happening at once. This makes recovery slow and tough. Most insurance lines are seeing rising premiums. Property insurance stands out, with 24 straight quarters of price increases, according to Marsh in Q3 2023.
How Certain Agencies Are Thriving Despite the Hard Market
Most agencies face problems with retention and revenue loss. However, a few are thriving. They grow their net-new premium each year, keep over 95% of their clients, and boost their commission per policy. Their success boils down to four key strategies:
- Customer Experience
- Cross-Selling
- Data Integrity
- Carrier Optimization
1. Customer Experience: Building Stronger Relationships
Customers often choose independent insurance agencies instead of carriers. They like the personalized service these agencies offer. This is especially important in a hard market, where customers are paying more for coverage and want to feel valued and supported.
Top agencies focus on building strong relationships. They don’t just react when problems come up. They:
- Reach out before renewal time to discuss potential price increases and offer solutions.
- Help customers shop around for better rates when needed, demonstrating they are on their side.
- Teach customers about policy benefits. Explain why some coverages are important, even with rising costs.
- Use digital tools and automation to keep personalized communication at scale. This way, even large books of business get steady engagement.
When customers feel taken care of, they are far more likely to remain loyal—even if their premiums go up.
2. Cross-Selling: Increasing Retention & Revenue
Cross-selling (or policy bundling) is a simple yet powerful way to increase retention and revenue. Research has shown that bundled policies have a retention rate of over 91%, compared to just 67% for mono-line policies.
Why? Switching becomes less convenient when customers have multiple policies with the same agency. Additionally, they receive more value from their agent, strengthening the relationship.
Successful agencies leverage data-driven insights to identify cross-selling opportunities. They use tools like InsuredMine, Snowflake, SQL, or in-house analytics to:
- Analyze customer policies and highlight gaps in coverage.
- Create highly personalized, automated cross-selling campaigns.
- Contact customers with personalized recommendations to boost policy upgrades.
Agencies can boost revenue by using smart cross-selling strategies. This helps them keep customers for a longer time.
3. Data Integrity: The Backbone of Smart Decision-Making
In today’s digital landscape, agencies have access to vast amounts of data. However, the real challenge isn’t collecting data—it’s ensuring that it’s accurate, organized, and actionable.
Many agencies struggle with poor data integrity, leading to misinformed decisions and inefficiencies. The best agencies focus on smooth data integration across all platforms, such as:
- CRM (Customer Relationship Management) Systems
- AMS (Agency Management Systems)
- Raters & Quoting Tools
- Analytics Platforms
Clean, high-quality data helps agencies make confident, data-driven decisions. It also lets them improve sales and retention strategies. Plus, they can cut out time-consuming manual tasks.
4. Carrier Optimization: Aligning with the Right Partners
In a hard market, insurers adjust their pricing models and commission structures—sometimes to the detriment of agents. Smart agencies regularly review their carrier partnerships. This helps them work with partners that support their long-term growth.
Key strategies include:
- Moving business from carriers with bad commission changes to those with better incentives.
- Leveraging strong data insights to strategically allocate policies across different carriers, maximizing revenue.
- Build strong, lasting relationships with carriers. Focus on those who value and support agents. This way, you create a partnership that benefits everyone.
Agencies can boost profits by optimizing their carrier mix. This helps them stay strong for long-term success.
The Road Ahead: Turning Challenges into Opportunities
A hard market can be tough, but it also offers great chances for agencies that adapt and innovate. Stay proactive. Use digital tools, data insights, and strong relationships. This helps provide great service and keeps operations efficient.
Winning agencies don’t just react to the hard market—they redefine how they operate to thrive in it.
Final Thoughts
For agencies looking to stay ahead, the formula for success is clear:
- Prioritize customer relationships and proactive communication.
- Use data-driven cross-selling strategies to maximize retention and revenue.
- Maintain clean, accurate data to make informed business decisions.
- Align with the right carriers to optimize profitability.
Must read:
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Frequently Asked Questions (FAQ)
What is a hard market in the insurance industry?
A hard market is a time in the insurance industry. It has higher premiums, fewer renewals, lower commissions, and stricter underwriting. This often happens because of more claims, changes in regulations, and rising reinsurance costs.
How does a hard market affect insurance agencies?
Insurance agencies face issues like low customer retention, falling profits, and attracting new clients. Some agencies thrive by using smart strategies. They improve customer experience, leverage data, and optimize carrier relationships.
What strategies can agencies use to succeed in a hard market?
Successful agencies focus on four key areas:
Customer Experience – Strengthening client relationships to build loyalty
Cross-Selling – Offering bundled policies to increase retention and revenue
Data Integrity – Using accurate, well-integrated data to make informed decisions
Carrier Optimization – Diversifying portfolios to maximize profitability
How important is customer experience in retaining clients?
Customer experience is one of the most critical factors in client retention. Agencies that personalize interactions and offer proactive renewal strategies often keep clients longer. They also help clients find the best policies. This leads to higher retention rates, even in tough markets.
Why is cross-selling so effective in a hard market?
Cross-selling, or bundling policies, significantly enhances customer retention and overall revenue. Customers with multiple policies are more likely to stick with their insurer than those with just one policy.
Tarun Soni
I'm a passionate blogger with a love for storytelling. I write about cars, lifestyle, and trending topics in a relatable style. My goal is to inform, inspire, and entertain my readers. Driven by curiosity, fueled by creativity—one blog at a time.