Why Should an Agent Choose Commercial Insurance Over Personal Insurance in 2020?

Property and Casualty insurance in the US market is big. The net income of the sector soared to $60 billion in 2019, with an increase of 66% from last year. 

The numbers look very promising for everyone. But an important question arises for agents who want to deal with property and casualty insurance. 

Should I choose personal insurance or commercial insurance line? 

In this blog, we will help you decide which is the better choice for you in 2020. 

Personal Insurance Vs. Commercial Insurance 

The poster child for agents has been personal insurance for some time. And why shouldn’t itPersonal lines collected $329.8 billion of new premiums in 2018. 

That’s a massive market for agents to explore. 

However, it’s the commercial insurance where the real potential is hiding.   

For independent agents to compete, they can’t solely focus on selling personal insurance anymore.  

According to the IIABA, independent agents wrote 83% of commercial lines premiums compared to one-third of personal lines. 

The premiums and commissions in this line are higher than that of personal lines. 

Sure, personal insurance does have many fishes! But the bigger ones are in the commercial lines. 

Why choose commercial insurance? 

High commission payout

Let’s face it: businesses in the US are paying more for insurance.

Personal insurance is an already congested market for agents. To clarify, there isn’t much diversity in this line as well.

On the other hand, commercial insurance provides a bunch of different niches within one niche.

These niches are profitable as well. For instance, commercial trucking insurance can easily collect $8,000 to $12,000 in premiums per year.

In the initial year, agents make 10% to 15% commission and 8% to 12% in renewals.

Doesn’t that interest you at all?

 Potential market

Interestingly, the wave of entrepreneurship has seen growth in a lot of small businesses.

From construction to home-based business, there are over 7 million small businesses in the US.

Be in the business to keep others in business.

In addition to that, the sharing economy is rising. There are unusual businesses in every corner.

For instance, from Uber and Lyft insurance to Airbnb insurance, unique products are always coming up in the industry.

Wouldn’t you want to be a part of a path-breaking business?

Additionally, the commercial market is getting signs of hardening. The prices of auto, D&O, and umbrella insurance are increasing in double digits.

Certainly that means commission rates might get high in this seller’s market cycle.

Sounds good, doesn’t it?

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How easy is it to make the switch?

Personal lines have been a volume game for the industry.  

In contrast, commercial insurance requires more expertise.  

For agents who want to expand their book to commercial, the same methods to target personal clients might not give the desired results. 

Above all, business owners need advisors — knowledgeable experts who can work with their business portfolio. 

This includes specific details like products, customers, working conditions, and employees. 

Dealing with personal lines is straightforward, right?  

Firstly, you maintain a good relationship with your clients, connect them with a reputed carrier, and get them a reasonable price. 

If you’re good at it, you might end up with heaps of referrals too. 

On the other hand, commercial lines are a lot more complicated than that. 

 Cold calling and prospecting will take longer than a few days. 

You need to know about the business in detail. You must understand the risks and exposures on a deeper level.  

Similarly, building referrals might not come as easily too. 

Does it feel like you’re up for it? 

Don’t worry!  

Once you get a hold of your niche in the market, the rest will come easy. There are tons of niches for you to choose as well! 

Commercial lines are still a field dominated by independent agents.  

Understand the business and your interests. Always keep up with the industry’s trends and technology. It’s most important to keep in mind that communication is vital.  

Do you think you will make the switch from personal to commercial insurance in 2020? Comment below and let us know! 

Learn how you can flourish as an agent after one call!

Schedule a call right now and learn how you can ease your work, sell more, and increase your profits!