Niche Markets For Insurance Agents

Niche Markets For Insurance Agents

Many of today’s insurance agents have found that when it comes to marketing and selling products they believe in, it’s better to use a laser than a shotgun. Being an expert in the niche markets you are targeting enables you to separate yourself from other agents who use the shotgun approach and rarely have the expertise that your prospect may depend on.

According to a recent study released by the Independent Insurance Agents & Brokers of America, agencies that specialize in niche markets and focus on technological improvements, are performing better than the competition who do not. While focusing on market niches that you become an expert in, you’re able to focus marketing strategies and convert more prospects into long-term clients and benefit from the renewals year after year. Your niche markets can be based on an industry class (plumbers, barbers, accountants) or on a product selection (cyber liability, professional liability, workers’ comp).

Industry Class Niche Markets

Many insurance agents come to the industry from other industries where they may have spent years working for someone else. As an insurance agent, that knowledge you have about your prior industry can become a stepping stone to a highly successful agency based on the market niche. If you spent five years as a hair stylist before becoming interested in insurance, wouldn’t it make great sense to market to hair salons and other related businesses? You’re an expert in the industry and others will be more open to doing business with you.

When selecting which niche markets to approach, make sure it’s a niche that you have the products to serve and can be competitive with. Let’s use a busy hair salon as an example:

Products needed for the Business

  • Business Owners Policy
  • Cyber Liability
  • Professional Liability
  • Workers’ Compensation

Additionally, if the hair salon has independent contractors (most do) that work on a booth rental or a commission split, each stylist is going to need professional liability as well. You would also round out the account by providing life and health insurance for the contractors. This account would be worth four policies, and if they had five stylists, another five to ten policies!

Marketing to Each Niche

For example, using the hair salon niche, you could expand this market segment to Barbers, Tanning Salons, and Beauty Supply Stores. Your purpose would be to become an expert that the businesses would gravitate to because of the authority they perceive in your agency. By concentrating on your chosen niche market, your marketing efforts will be more focused and will typically result in a consistent return on investment.

Product Type Niche Markets

Targeting your marketing efforts based on product selection is another method that can establish your agency. Often times, your product selection is also the result of prior work experience or it could be something that you’ve become passionate about and have become an expert in.

In today’s business environment, there is a lot of discussion about cyber threats. Being an expert about cyber threats and offering a comprehensive program to transfer that risk, can make you the legitimate expert in your marketing area for cyber liability insurance. Since we know this threat is unlikely to go away anytime soon, the prospects you convert are likely to become long-term clients. Although you’ve become the market expert on cyber liability, it’s highly likely that you will sell multiple policies in the accounts you convert.

Using a product niche approach, you simply focus your marketing efforts on the problem your product solves (cyber threats) rather than the market niche your product serves (every business with an internet connection).

The niche market is a great place for an insurance agency to focus on. According to the 2013 Best Practices Study by the Independent Insurance Agents & Brokers of America, specializing in niche markets pays off. Agencies with net revenue $5 million or less, realized a solid growth rate of just under 10 percent. The more specialized you are, the more long term conversion you get and the more returns in investment you receive.