Insurance agents believe an economic downturn is on the way, with nearly three-quarters of respondents to a recent survey by American Modern Insurance Group indicating they think the U.S. is likely to go into a recession in the next 12 months.
If a recession happens, the agents said they are most concerned about consumer price sensitivity (82 percent) and that consumers might be willing to go without insurance (65 percent). Many agents also worry that insurers might experience a rise in fraudulent claims (49 percent).
The specialty insurer, a Munich Re company, on Thursday released its 2023 Agent Perspectives Report on key issues shaping the personal lines property/casualty marketplace based on results of a recent survey of independent insurance agents across the United States.
“This study uncovers valuable insights from experienced independent insurance agents who are on the frontlines of our industry,” said Andreas Kleiner, president and CEO, American Modern. “Their perspectives highlight important factors shaping the personal lines property/casualty marketplace, including technology, data security, generational change and the economy.”
Key findings of the report:
- 70 percent of agents expect demand for renters insurance to rise over the next five years while 55 percent anticipate increased demand for manufactured home insurance.
- More than half of respondents expect coverage demand for boats/watercraft (58 percent) and collector vehicles (57 percent) to hold steady over the next five years.
- 80 percent of respondents see generational differences in the insurance purchasing behavior of their clients. Younger clients are perceived to have a much higher interest in new technologies and to be more concerned about climate change. They are also believed to have a somewhat higher risk tolerance. Older clients, on the other hand, are perceived to have much higher financial literacy and to be more willing to plan ahead. They also seem to have a greater commitment to home ownership and a greater interest in owning vehicles and other insurable assets.
- Asked about the impact of technology on agency business, respondents ranked data security/privacy as the most important issue (84 percent), followed by the Internet of Things, which includes “smart home” devices, appliances and sensors (61 percent). Half of the agents said the business impact of direct-to-consumer platforms was important, while about one-third (35 percent) consider artificial intelligence to be highly important.
- Roughly 3 in 4 agents expect AI to be disruptive to the industry over the next five years.
- The respondents cited talent recruitment as the No. 1 employment challenge insurance agencies will face, with 51 percent saying it was a major challenge and another 20 percent rating it a minor challenge. Rising compensation demands are seen as a major challenge by 40 percent of agents, followed by employee motivation/engagement and retaining top performance, both at 30 percent.
- Despite headlines about a desire for remote work, employee resistance to working in person is not perceived as a problem, with only 20 percent citing it as a major challenge while 43 percent said it was not a challenge at all.
About the study
The findings are drawn from American Modern’s Agent Perspectives Report. A total of 240 independent insurance agents in the United States were surveyed over a 10-day period in August 2023.