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Why You Need a Target Niche for Your Insurance Agency

Insurance Agency Growth
Jan 25, 2022
7
minute read
Nectar Team
Why You Need a Target Niche for Your Insurance Agency

What is your target market? In the insurance industry, you need to have a niche. According to the Insurance Information Institute (III), net premiums in the U.S. insurance industry were over $1.2 trillion in 2020. That's a lot of business.

So as an insurance agent, whether new or with years of experience, how do you get a piece of that pie? The easy answer is for you to try to sell a little bit of everything. In the insurance industry, that makes you a generalist. A better approach is you work to find your niche. 

Insurance Agents Face Massive Competition

It's no secret that there are many insurance agents in the market. In 2020 alone, there were over 850,000 insurance agencies and brokers, with many more individual agents working for them. What this means is massive competition for business as an insurance agent. So, what is your way in? How can you differentiate yourself from the other agents and brokers in the area? It may surprise you to learn that it could help to focus on a smaller target market than trying to “win” every type of business.

What Does It Mean to Have a Niche in Insurance?

When we say you want to have a niche target market when selling insurance, what exactly does that mean? The goal is to hone in on a specific subset of the business. Take the auto insurance business for example. A niche within the auto insurance business could be selling coverage to individuals who purchase collectible antique vehicles. There are special policies insurance providers offer for these vehicles and specializing in that niche can help you serve that market.

Especially if you're just starting as an agent, it's all about identifying three to four niche areas and then exploring them. You want to see what interests you and your insurance agency as a whole. Many insurance agents have more interest in one niche area over another. When this is the case, that is likely the sign of where you should specialize. When you can feel comfortable and confident in what you're selling — and show passion for it — it will be easier to close the deal.

What Can a Niche Do for Your Agency?

A niche can work wonders for your insurance agency. It gives you a differentiating factor. Insurance agents and agencies as a whole are all trying to sell insurance products, but what they sell and how they strategically package coverage options together to mitigate risk is where they differentiate themselves.

When you develop a niche for your insurance agency, you can build agents that connect with target customers. These are the same target customers that have the muscle car they have no clue on how to insure, a piece of jewelry worth millions, or an inground pool in the backyard they’d like special coverage for. When you have expertise in covering certain types of exposures, your agency can set itself apart from the pack. 

What Are Some Examples of Niches I Can Target?

There are countless possible niches in the insurance industry. We all know the basic coverages folks buy when it comes to insurance — auto, home, and liability. There are thousands of insurance agents who fall into the generalist bucket and spit out premium quotes. However, simply playing this space may not be the most not fruitful path for your insurance agency. Here are a few niches you can consider.

Medicare plans for seniors with special needs 

Seniors have a variety of insurance needs, so serving special needs for seniors can be a powerful niche. Insurance that covers this need includes Medical Special Needs Plans (SNPs). This type of plan is specific for individuals who have applicable medical conditions or meet other requirements.

Medicare Special Needs Plans are for those seniors with chronic conditions, living in a senior care center, or those with dual eligibility, meaning they qualify for Medicare and Medicaid. When you specialize in this niche, you can help seniors understand that this coverage exists and help determine eligibility. In 2020, more than 3 million individuals had enrollment in an SNP.

Boat insurance

Boats are extremely popular and continue to become more valuable as folks increase personal property they own in favor of going on family vacations. The pandemic has spurred many Americans toward different lifestyle choices. It may be more likely someone will buy a boat to enjoy due to their increase in time at home vs. doing a one-week vacation each year. 

But how do you buy insurance for a boat? If you have a large yacht, what additional considerations need to include in the coverage? All this equates to a great niche worth tapping into. The global boat insurance market stood at $930 million in 2020 and is expected to top $1.2 billion by 2027.

Active-duty military insurance

There are more than 1.4 million people in active military roles in the United States.  All of these individuals have different insurance needs. One interesting niche is to target this market and help those who are stationed stateside or overseas.  

Ever think about how an active military member treats their auto insurance? Do they have specific life insurance needs? All of these are factors, inclusive of overseas insurance coverages, that can help give active military members and their families the protection they need. Specializing in insurance coverage for active military can help you assist those who dedicate their lives to protecting their fellow citizens.

Antique car insurance

Do you have clients that own antique cars? It can be unique to insure these vehicles. Owners of antique cars are traditionally not actively driving the vehicle regularly. Generally, to qualify for antique or classic car insurance, the vehicle must not be primary, needs to be driven less than 5,000 miles per year, and has to be over 15 years of age. Antique cars are highly popular among individuals across the United States, and sound knowledge of how to cover them can prove fruitful for agencies and their agents.

How To Find and Build Your Niche

The best way to find and build your niche is to understand what you want to target. To have a niche, you need to be an expert in that space. If you decide to focus on providing insurance for superyachts, for instance, how do you go about doing that? What are the various coverages available? What are some risk exposures that individuals need to think about?  When deciding on your niche, ask yourself some practical questions:

  • What are specific types of niche insurance coverages that interest me? You cannot sell a niche insurance product if you don't have a genuine interest in being an expert in the subject.
  • Is there a market in my area to successfully sell the niche coverages? If there is no market, your odds of success will be low.
  • What licensing requirements are necessary to begin selling the coverage? You need proper licensing before you can sell a specific type of coverage.
  • How do I find customer leads to begin selling the niche product? We'll look at this in greater depth below.

By asking yourself practical questions, you better set yourself up for success in the short and long term.  After deciding that selling niche insurance is right for you, the process of developing your niche and bringing it to market becomes cyclical:

  1. You begin by choosing your specific niche market. You focus your knowledge growth and your marketing on that niche.
  1. As the niche develops and you begin to connect with leads, you gain a positive reputation in the industry for selling that particular coverage. 
  1. In theory, as your reputation grows, referrals will begin to pour in leading to more clients in that niche market.
  1. You then begin to expand further, into new niches, expanding your client base further via that network web in place. At the same time, you continue to build your knowledge base in the original niche.

Focus On Your Niche, But Don't Discard Other Lines

It's always worthwhile to continue to sell other lines of insurance. Focus on your niche, but if you have real-time leads from Nectar or other sources seeking auto, home, and liability insurance, you never want to turn them away. Think of the insurance industry as a big pie. The niche you specialize in is just a sliver of that pie.  When opportunities arise to take a bigger piece, you should dedicate resources to seizing those opportunities.  

Use your niche as a gateway to grow your insurance profile. Build your brand as an expert in a particular niche and differentiate yourself in a crowded market. As you grow, remember to lean on the more traditional insurance lines so you can continue expanding your client base.

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This article reflects the features of Nectar as of the date of publication. Features are subject to change at any time. This article is meant for informational purposes only, it is not a guarantee that using Nectar will help you achieve specific business or financial results and is not intended to serve as the sole recommendation for any business financial decisions.

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