Page 6 - COVID-Proof-Your-Agency

Chapter 1 – Introduction and Background | Blew, Caldwell, Masiello

Today, many businesses have gone out of business, virtually overnight. This includes

restaurants, hospitality, retail, wholesale and some manufacturing businesses. Even those

businesses who remain active are impacted in some way including transportation, airlines,

construction and even service businesses like doctor’s offices, consultants and others including

insurance agencies. The long-term prospects for many of these businesses is less than certain.

The insurance industry in the United States, fortunately, is in a very strong position

financially, with a large surplus and strong balance sheets. Our industry is well positioned to be

able to weather this economic calamity in good shape and be there to pay claims and serve

policyholders.

The insurance agency business is experiencing operational disruptions. But for now,

income is flowing normally. In fact, right now as the virus pandemic in the United States begins

to wreak serious destruction, insurance agencies are receiving annual profit-sharing payments

bolstering their cash position. The income disruptions in the insurance agency business will

come later this year and into 2021, as policies cancel, premium audits result in commission

reversals, and renewals with lower premiums result in lower commissions.

No one knows how long the disruption period will last, how long the recovery period will

take, and whether there will be additional waves of disruption in the coming months. Though we

don’t know when, we do know it will end.

The nation needs insurance and insurance agents now and they will as we go forward. So,

with our present and our future more secure than most industries we need to turn our attention to

taking advantage of opportunities to serve our clients and grow our businesses. Agents have

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