Winning in a Hard Market: How Agents Can Adapt to Challenging Times

Change is accelerating all around us, possibly at a faster pace than in any period in history. Climate change, rising interest rates, and effects from the covid pandemic are propelling companies to transform their business models and offerings. The insurance sector is no exception. In reality, these factors might serve as the catalyst that triggers a reinvention of how the industry operates and the role it plays in the broader societal context.

For the third consecutive year, the non-life insurance industry continues to enhance its top-line growth by implementing above-average rate hikes across virtually all segments of business. Despite these efforts, increasing loss costs are proving to be a substantial obstacle, rendering bottom-line profitability a challenging pursuit for carriers and the industry as a whole.

Insurance companies need to remain resilient in the coming months and year to succeed in a hardening market. In this blog, we’ll delve into the ongoing changes to the industry and explore how companies can and are adapting.

Increasing Catastrophic Events

The increasing occurrence and seriousness of global risks, from climate change to cybercrime, are heightening the scrutiny on the insurance sector’s ability to serve as society’s financial safety nets. Insurers are looking for ways to prevent losses from happening in the first place; but when losses seem unpreventable and severely risky financially, insurers might opt to exit out of markets entirely.

The rise in natural disasters, from hurricanes to wildfires, has put immense pressure on insurance companies. Payouts for these events have escalated, straining their financial reserves. These events have caused carriers to reassess their exposure and price strategies.

Earlier this year, State Farm and Allstate, the top-ranked and fourth-ranked property and casualty insurance companies in the nation, announced their decision to cease issuing new home insurance policies in California. Other major insurance companies have also withdrawn from providing coverage in Florida. Hurricane- and flood-prone states are accustomed to getting these news. However, it does not make it any much easier for policyholders and insurers alike.

Regulatory Changes 

If it is becoming more expensive to cover payouts, why don’t insurance companies just increase their prices? Insurance companies in certain states are facing increasingly stringent regulations and standards, like constraints on premium hikes and prohibiting policy cancellations. 

Insurance companies are trying to find a delicate balance between ensuring financial stability and providing affordable coverage to policyholders. Some companies are investing in advanced risk assessment and pricing models, leveraging technology to more accurately underwrite policies. Additionally, many are expanding their product offerings or entering new markets to mitigate the impact of stringent regulations. Collaboration with regulatory authorities and industry associations is also common, as insurers aim to influence policy development and advocate for adjustments that maintain a fair market while allowing for sustainable profitability.

In California, the departure of major insurers might increase the urgency to loosen consumer-minded regulations that have maintained low insurance rates in the state for an extended period. While regulations have been acknowledged for delivering substantial savings to consumers, the insurance industry contends that it imposes limitations on precise risk assessment and pricing.

Escalating Costs

For those that are still able to increase prices, they seem to struggle to raise them fast enough to cover record growth in expenses. According to Deloitte, the price of single-family residential home construction materials soared 33.9% since the start of the pandemic while contractor services are up 27%. “The cost to insure new home customers in California is far higher than the price they would pay for policies due to wildfires,” Allstate said to ABC News.

Many insurance companies are opting for reinsurance as their own form of protection against risky scenarios. However, recent years have witnessed a rapid surge in reinsurance costs due to escalating expenses from global disasters. When these prices become prohibitively high, and insurers can no longer effectively transfer excessive risk, they find themselves “holding the risk.” These financial pressures can either force insurers out of business or compel them to exit specific regions, as exemplified in the cases of California, Louisiana, and Florida.

One area in which the industry could face a disruption is the opportunities in embedded insurance. There has been a substantial growth in insurance premiums integrated into various third-party transactions, circumventing traditional intermediaries like insurance agents and potentially sidelining legacy carriers. These carriers should proactively explore partnership opportunities before they face the risk of not having an embedded partner. Alternatively, they need to devise strategies for competing against those who do join forces with product or service providers.

The Prominence of Excess and Surplus (E&S) Lines

The U.S. excess and surplus (E&S) insurance market is anticipated to achieve a second consecutive year of direct underwriting profits in 2023. With traditional carriers exiting high-risk markets, E&S lines have become a crucial component of the insurance landscape. 

Recent growth can be attributed to admitted markets offloading business that falls beyond their risk tolerance to the E&S market, like in homeowners’ business in states like Florida and California. E&S insurance offers greater flexibility in tailoring policies to specific needs. 

Excess and surplus lines also operate under a distinct regulatory framework, providing more flexibility to insurers and consumers. It enables carriers to take on higher-risk clients without adhering to the same regulations that apply to standard insurance.

The Time Has Come to Adopt Agency Billing

In an attempt to control risk, carriers are relying more heavily on MGAs and wholesalers to take on previously placed policies. In many cases, these MGAs may require agents to manage billing, thereby transferring any payment-related risks. Agencies lacking the infrastructure for agency billing may face greater operational challenges, both in terms of handling payments and reconciling accounts effectively.

“It is imperative for agents and brokers to adapt and find effective solutions to manage client payments, automate payment reconciliation, and integrate premium financing into their workflows,” says Dan Maloney, Head of Enterprise Sales at ePayPolicy. “Agents that position themselves to help clients navigate these challenges will come out the winners.”

Many insurers don’t want to deal with taking payments and reconciling them. They also don’t want to pay the fees. Because of this, it’s important to find a payment processor that is (1) highly automated and (2) able to pass the fees to the policyholders. 

ePayPolicy set out to automate the agency bill process to support both insurance companies and their customers. We made collecting payments convenient by enabling insureds to pay digitally by credit card or ACH. ePay also allows the insurance company to pass the fees either partially or entirely to the insured.

In reality, consumers face credit card and ACH fees in everyday life. “If insurers ever want to do something that might be a bit unpopular for consumers but beneficial for the business, now is the time to do it,” says Maloney. Agencies that can efficiently handle agency billing will be better positioned to navigate changes and provide a seamless payment experience for their policyholders.

Finding The Perfect Payment Processor For Your Agency

“It’s not us, it’s you.” Several insurance agents that use large payment processors (operate in multiple verticals) have reported being kicked off their payment processor, with no other explanation than “our product is not a good fit for your industry.” Well, their loss is potentially your gain. We can’t tell you exactly why these companies are rejecting business from the insurance industry. But we have some educated guesses. Even better, we have a solution! First and foremost, the insurance industry is highly regulated and involves a lot of tracking funds for compliance purposes. Some payment processors are designed for straight sales transactions. They simply can’t handle the additional levels of accounting and code compliance the insurance industry demands, in other words, they don’t speak insurance. “Not a good fit” is their way of admitting they’re not set up for a complex, regulation-driven industry like insurance. Here are some likely reasons why they might be rejecting business from insurance agencies:

Insurance Code Mandates and Trust Account Management

Most vendors who use a large multi-vertical payment processor have a simple business model: receive payment in exchange for goods or services provided. It’s straightforward. No fancy accounting required. Think coffee shops, digital storefronts, hotdog guy at the block party. But not the insurance industry. As you know, premium payments in some states are subject to insurance code regulations. When you receive premiums you are operating in a “fiduciary” capacity. You are not the “owner” of the premiums paid but are acting as a fiduciary of those funds.  As such, you must keep premiums in separate trust accounts that are segregated from the agency’s business operating funds. This is to protect premium funds from agency creditors. And you can’t take them out of the trust account without proper documentation of the commission earned and an audit trail, either. Truth be told, general payment processors are not set up for this level of sophistication. Volume, yes. Sophisticated accounting, no. Trust account (TA) management is a huge responsibility with potentially heavy consequences. You need a payment processor that understands the “ins and outs” — which, for insurance agents, involves more than simply depositing money from the client into your agency account, or even passing it directly through to the carrier! Terms like net funding and premium funds should sound familiar. 

State Compliance and Regulations 

Each state has its own set of regulations for selling insurance. The requirements in Ohio may be different from those in New York, California or Florida. That’s one reason why the trusted choice / BIG I associations are so valuable. They keep you on track to maintain compliance with any and all state-specific mandates. Needless to say, the big global payment processing companies are not operating at this micro (state regulations) level.  But you are. And so are we at ePayPolicy. We maintain close relationships with the Big I / Trusted Choice state insurance associations nationwide and are in the process of getting all 50 states endorsements. Their stamp of approval is their way of saying, “This vendor gets it. We trust them. You should, too.”

An insurance Industry-Specific Solution

I’ve kind of hinted at the solution in the “issues/problems with general payment processors” sections above. Yes.  I am talking about ePayPolicy — the insurance payment processing platform built specifically for independent insurance agents. We are not a general-purpose payment processor. We are a payment processor that was built by insurance professionals for insurance. We work exclusively with and for the insurance industry. By focusing on your business needs, as well as the highly regulated nature of insurance, we have created an ecosystem that streamlines your operations while ensuring compliance across the board. Check out ePayPolicy. We make collecting credit card and ACH payments as easy as possible and to get started takes only 5 minutes. 

IIARI Endorses ePayPolicy for Digital Payment Processing

AUSTIN, Texas, October 10, 2019 – ePayPolicy has been named as the approved payment processing provider by the Independent Insurance Agents of Rhode Island (IIARI). The company joins a select group of vendors endorsed by IIARI to provide agency services to its members. 

IIARI Executive Vice President Mark Male commented: “A central part of our mission is to enhance our members’ competitive position. Consumers today want the convenience of paying for purchases electronically. We researched payment processors and chose ePayPolicy because their platform is insurance-specific. They really understand the special needs of our industry.”

ePayPolicy Co-Founder Todd Sorrel concurred, stating: “We are more than just InsurTech geeks. We are insurance entrepreneurs helping insurance entrepreneurs give their clients better service. We live in an increasingly digital world. Our goal is to help IIARI’s members embrace all the client-nurturing and business growth opportunities afforded by digital technology.”

Endorsement by IIARI will expose ePayPolicy to the 140 agencies that write 82 percent of Rhode Island’s commercial policies and 39 percent of all personal insurance policies. IIARI members who implement ePayPolicy will discover a true business partner to help them speed up receivables, streamline their operations, and offer clients modern payment convenience.

IIARI is the 30th  state association of independent insurance agents to endorse ePayPolicy. 
Concluded Sorrell: “We rely on trusted associations like IIARI to open the door to independent agents who can benefit from electronic payments. We look forward to serving their members as we continue to spread the InsurTech gospel nationwide.”

The Independent Insurance Agents of Rhode Island (IIARI) is a trade association established July 25, 1900. IIARI membership includes most every independent agency in Rhode Island who employ nearly 1,400 individuals.

IIARI is an affiliate of the Independent Insurance Agents and Brokers of America, Inc. (IIABA), the largest property and casualty insurance producers organization in the world. IIARI membership automatically includes membership in IIABA and participation in the Trusted Choice consumer brand.

IIARI’s mission is to enhance the competitive position and satisfy the business, professional, education and political needs of member agents.

Learn more at:

About ePayPolicy
ePayPolicy is the simplest way to collect digital insurance payments. Austin, Texas-based ePayPolicy is the nation’s foremost provider of payment processing developed exclusively for independent agencies, brokers/MGAs, and premium finance agencies.  The company’s innovative electronic payment processing portal enables clients to accept credit card or ACH without messy merchant accounts or hidden fees.  ePayPolicy sets up quickly, integrates seamlessly with leading management systems, and is endorsed by independent insurance associations nationwide. 

To find out more visit
The company’s annual InsurTech Agency Award recognizes independent insurance agencies/brokerages for leveraging technology to enhance their sales, marketing, and customer service. Details and call for entry are at


Missouri Association of Insurance Agents endorses ePayPolicy

AUSTIN, Texas, October 8, 2019 – The Missouri Association of Insurance Agents (MAIA) has named ePayPolicy as its preferred provider for electronic payment processing. The endorsement means MAIA members will have access to an industry-exclusive platform to  accept credit card and ACH payments online, with transaction fees passed on to the payer. This endorsement brings the number of state insurance associations recommending ePayPolicy as the preferred payment processor to over 28!

ePayPolicy co-founder Todd Sorrel commented: “We developed ePayPolicy with the needs of independent agents/brokers in mind. It’s validating that MAIA shares our goal of bringing InsurTech solutions to Missouri’s independent agents. MAIA members looking to offer online payment convenience to their clients, speed up receivables and bind policies faster have a true partner in ePayPolicy.”

Said Matt Barton, MAIA CEO: “We may be the oldest insurance association in the state, but MAIA is dedicated to offering the most modern tools and resources to help our members thrive in today’s market.  We set out to find a payment processing vendor that understands the unique needs of independent agents. ePayPolicy meets and exceeds our criteria. We recommend ePayPolicy because it’s easy to use and has no merchant account, long-term contracts or hidden fees. It is secure and compliant. And we know our members’ clients want this convenience.”

Concluded Sorrell: “We’re ready, willing and eager to prove our worth to agents in the Show-Me State. Based on the feedback we’re getting from other states, we’re confident MAIA members will see a real difference in their efficiency, their client engagement and their bottom lines.”

About Missouri Association of Insurance Agents
Missouri Association of Insurance Agents is the oldest and largest association of insurance agents in the state of Missouri. The association was established in 1899 in St. Louis. “Independent” insurance agents and brokers offer their clients the products of more than one insurance company.

MAIA educates, informs, promotes and advocates for independent agents and their clients, encourages networking, high standards, and works to perpetuate the independent agency system. 

For more information visit

About ePayPolicy
ePayPolicy is the simplest way to collect digital insurance payments. Austin, Texas-based ePayPolicy is the nation’s foremost provider of payment processing developed exclusively for independent agencies, brokers/MGAs and premium finance agencies.  The company’s  innovative electronic payment processing portal enables clients to accept credit card or ACH without messy merchant accounts or hidden fees.  ePayPolicy sets up quickly, integrates seamlessly with leading management systems, and is endorsed by independent insurance associations nationwide. 

To find out more visit

The company’s annual InsurTech Agency Award recognizes independent insurance agencies/brokerages for leveraging technology to enhance their sales, marketing, and customer service. Details and call for entry are at