"Living off of existing clients will hurt an agency," says Dirk Glass, President of Advanced Insurance Partners, Inc., an insurance agency and risk management consulting company. "We have to always seek new business. Premiums are based on revenue, number of procedures, property values, employee count and payroll. It is safe to say over the past 12 months almost everyone experienced downward trends in exposures so audited premiums have dropped. Add in years of rate reductions in a 'soft market' and every agency has less commission if no new clients were added."





Daniel McDonough, Vice President of New Science Insurance, a division of Britton-Gallagher & Associates, Inc., estimates that written property and casualty industry premiums were down across the country for two straight years, which hasn't occurred since 1932 -1933. Clients' businesses may be suffering, but it may be the best time to get insured, before rates begin to climb again.

"The small business manufacturers, say those who manage their own private label X-ray machines, are currently enjoying a competitive marketplace. It is really competitive out there right now," says Mann.

Insurance carriers feel the pinch of credit and equity markets

Due to the dwindling return on investment for insurance carriers, previously deep pockets are becoming increasingly shallow. The market is also being consolidated and brokers have fewer carriers to quote from. In just the past few years, Travelers took over St. Paul and Liberty Mutual bought Safeco, Indiana Insurance and Ohio Casualty, says Glass.

"These pressures have resulted in a poor capital position for many carriers and may force those carriers to raise rates," says McDonough.

In fact, Glass says there is a buzz going through the industry about a rate increase by carriers by 4th quarter 2009. The bottoming out of AIG only makes matters worse.

"The loss of AIG is disturbing. AIG was the leading writer of most types of insurance and a real 'go to' market. Take products liability - AIG underwriters could be very creative on coverage and premiums where few could compete. AIG's marketing model was to be most things to most companies with easy access for all agents. This is no longer the case. AIG lost 17 percent of their premium last year since agents have been slowly moving business away."

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