Retaining Investor Clients in a Hard Property Market

retaining clients - reip

You have likely heard it before; it is easier to keep a client than it is to get a new one. Acquiring a new client can cost up to five times more than retaining an existing client. Unfortunately for insurance agents, we are experiencing an extremely hard property market, with rate increases across the board. But rest assured, there are a few ways you can manage your investor clients’ property insurance costs. Let’s first look at the reasoning behind these rate increases. 

COVID Impact

The aftermath of COVID is still being felt in the United States: rising interest rates, rising inflation, rising material costs, and almost every industry is experiencing labor shortages. These higher material costs and labor shortages are affecting claims payouts for carriers. This may lead to rate increases and even canceled policies or carrier insolvency. Additionally, longer repair periods leave investors missing out on potential rental income.

Climate Disasters


Contrary to popular belief, hurricanes and tornadoes are not occurring more frequently. They are, however, more severe. NASA reports that global warming has caused seas to rise, leading to a higher storm surge and resulting in more intense rainfall and an increase in coastal floods. 


Even though the total number of tornadoes per year has remained relatively stable, recent years have shown changes in their patterns. Tornado events are becoming more clustered, and evidence suggests that tornado patterns have shifted geographically. The number of tornadoes in the states that make up Tornado Alley continue to fall, although tornado events are on the rise in Mississippi, Alabama, Arkansas, Missouri, Illinois, Indiana, Tennessee, and Kentucky. 


Wildfires have been occurring in new territories as well. These fire events are largely taking place in areas of the country that, historically, have been lower for insurers, and therefore were afforded lower insurance costs. Property rates in western states are a fraction of what they are in the Midwest or Southeast. 

Unfortunately, just one extreme event can drastically affect a carrier or program’s profitability, causing them to halt business in these areas. 

Catastrophes Drive Up Property Rates

According to the National Centers for Environmental Information, there were 18 individual billion-dollar weather and climate disasters in 2022. What stands out is the diversity of disasters: a winter storm across the central and eastern U.S., a wildfire event impacting western states including Alaska, a drought and heat wave event, flood events in Missouri and Kentucky, tornado outbreaks, and hail events across many parts of the country. Of course, we can’t forget Hurricane Ian, the third costliest tropical cyclone that caused $113.1 billion in damage.  

The insurance trend we have seen in Florida over the last few years will continue as claims arise from the hurricane. Many carriers have suspended writing new business to assess their financial situations and ability to stay afloat. Unfortunately, this also means that substantial rate increases are imminent, as carriers attempt to keep pace with the costly number of losses. 

Climate catastrophes have driven up property rates for everyone, regardless of geographic location or individual loss history. Why are we seeing this trend? Reinsurance carriers are increasing their reinsurance rates for primary insurers. Unfortunately, primary insurers then pass that cost on to the end buyer, which is your clients. 

Looking Forward  

The aforementioned factors all contribute to what is shaping up to be a chaotic 2023 property market. Although situations will differ, initial numbers for 2023 renewals show a 30-35% increase in property insurance costs on clean risks. “Clean” meaning the portfolio has had no property losses and is not located in a region prone to catastrophes such as wildfire, hurricane, or convective storm areas.  

If your investor clients have had losses and/or their property is in a catastrophe-prone area, they could potentially see a 60-70% increase (or even more) this upcoming term. We are experiencing a hard property market, and in times like these, your clients will want to shop annually for insurance. They will get much more out of shopping for benefits, policy structure, and included coverages than they will for price. As you likely know, there is not that much fluctuation between property carriers. The most investors can save is pennies on the dollar. 

So, how can you retain investor clients in this hard property market?

Insurance agents that are selling on cost alone are struggling right now. Agents who can find benefits and comprehensive coverage for the same cost are of more value to their clients. 

You should always look for ways to keep your clients’ costs stable. If your clients are comfortable taking on a little bit of additional risk, you can look at increasing their property deductible, changing their policy form from Special to Basic, or switching to actual cash value coverage instead of replacement cost coverage.  

Remind your clients that if any of their properties have a lender, they will be required to stay within the insurance lending guidelines. You are the expert. You should be able to guide your clients in the right direction while providing the positive and negative implications of any changes to the property policy.  

Stay ahead of your clients’ renewals! Do not wait until the last minute to aggressively shop coverages and costs, as markets will be limited. We recommend you start shopping renewals 60 days out. You want to provide investors with the best terms, applicable benefits, and the broadest coverage form. In a hard market, doing these things will be to your advantage when it comes to retaining clients.  

For the next couple of years, the best piece of advice for agents is to stay out in front of it. Be in constant communication with your investor clients and make sure they are getting the most for their money in this hard property market.