Though the pandemic adversely affected many industries and businesses, nationwide lockdowns were a boon for the swimming pool market. During the one-year period between October and October , the industry saw a whopping 533% increase in pool installs as the total number of swimming pools in the United States (U.S.) surged 20%. While the pandemic-driven growth of swimming pools has slowed, the addition of millions of pools has created plenty of new opportunities for pool cleaners and wholesale brokers.
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The increase in the number of residential pools drove the incidental pool market up, with increased demand for repairs, maintenance, supplies, and service. The growth of the pool industry means more work for pool contractors, many of whom are looking for tailored pool coverage. As a wholesale broker, these businesses offer an opportunity to strengthen your client portfolio. Here are five reasons why you should consider adding pool contractor insurance for the benefit of your portfolio.
According to a McKinsey survey, two-thirds of middle-market brokers anticipate a shift toward specialization within the next five years. As insurance broking and the industry as a whole continue trending toward specialization, wholesale brokers are increasingly focused on excess and surplus insurance. Large-scale events such as the coronavirus pandemic, natural disasters, and civil unrest have fueled demand for specialty insurance products after businesses experienced firsthand the impact coverage gaps could have on their balance sheets. Specializing can provide countless benefits for both brokers and businesses, leading to a more productive working relationship, a greater sense of security, increased trust, and improved communications.
Brokers who offer specialized coverage can help build their brand, improving client retention and attracting new customers through referrals. According to The Independent Insurance Agents of Dallas, the average customer retention rate in the industry is 84%. That&#;s not bad, but it leaves much to be desired, particularly when you acknowledge that the top five companies retain 93%-95% of their customers. The roughly 10% difference between average retention rates and excellent retention rates might not seem significant until you consider the estimated $900 average acquisition cost for a new insurance customer.
The best way to retain clients is to keep them happy, and you can only do that when you provide the specialized coverage they need, and the industry expertise they want in an insurance partner. Aside from price concerns, companies may look to switch brokers if they think there are coverage gaps, if the service is poor, or if they feel their broker is a poor match for them or their business.
As a commercial broker, you know how difficult it can be to distinguish yourself from your competition. You might know what sets you apart, but how can you convince prospective business owners that you&#;re the right person for the job? Working with a specialty insurance company gives you a distinct competitive advantage, both in your ability to offer specialized programs and in having a partner who understands the nuances of your clients&#; businesses. Wholesale brokers are only as good as the insurance policies they can offer, and while your clients might enjoy working with you, the strength of your competitive advantage rests primarily in the coverages you can offer.
Over the past few decades, several global events have demonstrated the importance of portfolio diversification for wholesale brokers. The Great Recession revealed the costly risks of failing to diversify, and more recently, the coronavirus pandemic proved how quickly the economy can shift and how rapidly an industry can falter. While many industries struggled to stay afloat, pool contractors saw unprecedented demand for pool and hot tub installation, supplies, cleaning, repairs, and other services.
Swimming pool contractors enjoy recurring revenues and multiple streams of income, both of which contribute to a more stable business and an increased need for comprehensive specialty insurance. Though most people only associate pool contractors with installation and maintenance, the pool industry extends far beyond the initial construction of a pool. Pool contractors may help design and install backyard oases, which, in addition to pools and spas, can include landscaping, lighting, irrigation, and outdoor structures. Pools also require regular maintenance, creating an additional business opportunity for repairs, plastering, and retail sales and distribution channels. The ongoing costs of maintaining a pool or hot tub can help drive revenues for pool contractors, helping them grow, and in turn, helping your broking business grow.
Pool contractors take on many risks, some of which have serious health, safety, and financial implications. Like all businesses, pool contractors need general liability coverage, workers&#; compensation, and protection from theft. But pool contractors also face more serious risks. Their work with heavy equipment and potentially harmful chemicals can cause injuries and illnesses in both employees and customers, making it impossible for a standard policy to address the coverage needs of a pool contractor.
Since swimming pools, spas, and hot tubs can be regulated by both federal and state governments, pool contractors must understand and abide by any federal, state, or local pool safety laws. These laws can include specific guidance not only on the pool itself but also on electrical components and drain systems. Pools and spas require permits and are subject to federal regulations, such as the Virginia Graeme Baker Act, and local building codes, including requirements to enclose or cover pools and hot tubs.
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Pool installation and pool maintenance companies must also consider the risks of the equipment they work with, like heavy machinery and pool cleaning chemicals. Pool installation companies excavate and pour concrete, both of which involve heavy equipment and are inherently risky. Pool maintenance companies deal with potentially hazardous chemicals such as chlorine, bromine, cyanuric acid, and pH balancers. Improper storage or use of these chemicals can result in injuries to both employees and customers, creating a liability for the owners of pool installation, maintenance, and servicing businesses.
Finally, pool contractors may be liable for property damage, either due to accidents, design flaws, or negligence. The average pool holds 18,000-20,000 gallons of water, which, if not properly contained, could cause tens of thousands of dollars worth of damage. This, combined with the challenges of constructing a pool in a confined space within a few feet of homes and other structures, can increase the risk of property damage claims.
As the wholesale broking market leans into specialization, you can grow your book, diversify your portfolio, and capitalize on the growth of the pool industry while helping pool contractors protect their businesses. PoolPro specializes in covering contractors that install, service, and repair pools (both below ground and above ground), spas, and hot tubs, offering the expertise and expansive coverage contractors need to grow and secure their businesses.
Visit the PoolPro webpage today to learn more, submit your accounts, or speak with a program manager.
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