Atlantic Mutual Reducing Deductibles to Reward Claim-Free Homeowners and Drivers

July 22, 2004

  • July 22, 2004 at 4:08 am
    Public Review says:
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    22 July 2004

    The insurance industry has forgotten that individuals purchase insurance as a transfer of Risk. Insured’s known they could suffer a loss of property or have liability assessed against them. What they don’t expect is being hammered with increased premiums/deductibles or cancellation, when they suffer one or two losses over a 10-15 year period.

    The industry develops rates based on a statically bases, which includes loss severity/frequency in order to determine the pool [law of large numbers] needed to cover known losses and still make an underwriting profit. This system worked well for many years, until the Bean Counters came along and screwed up the process of UNDERWRITING and attempted to see each individual Risk as a Win Win or Loss Loss scenario. This short slighted approach as also brought us Big Cycle Swings, with scraping the bottom of the rate barrel to overflowing the entire ship.

    It takes a steady hand to sail in the Insurance Industry and it’s too bad we don’t have any real INSURANCE PEOPLE RUNNING THE SHOW.

    LG

  • July 23, 2004 at 9:58 am
    Marvin Blum says:
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    In LG’s pontification and preaching to the choir, there are a minimum of 8 spelling/grammatical errors. Can anyone find more?

    It appears that good English usage has gone the way of the pre-Bean Counters.

  • July 23, 2004 at 10:47 am
    Larry says:
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    LG’s comments, and Marvin Blum’s noting of LG’s poor grammar and spelling notwithstanding, I still can’t understand why anyone would care much about having their deductibles reduced for good experience. The deductibles Atlantic is supposed to be reducing are quite high to begin with, so these insureds are likely the types who can afford smaller losses. They also not the type to be putting in claims for smaller losses.

    I would imgaine what would appeal to insureds and prospects more would be reductions in premiums for good experience. However, as I understand it, many states won’t allow that since the reverse of it (not having a reduction in premium as a result of having been paid for a claim) becomes a de facto rate increase.

    If I were a company official trying to find some incentive for insureds to keep losses at a minimum and perhaps not report smaller claims, I’d be at a loss for what to do, given the state of many state’s laws.

  • July 23, 2004 at 11:57 am
    Winston says:
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    Mr. Marvin Blum must realize that this forum is to be used for meaningful thoughts.
    We are not submitting our comments to fulfill any undergraduate or graduate studies. I for one do not have time to proof read my thoughts herein–it is not that serious.
    I would suggest that Mr. Blum contact a psychologist to work out his personal issues. He must have a low self-worth.

  • July 23, 2004 at 5:26 am
    Agent Browsing says:
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    If you sell high value personal lines – you have to like this. By high – I mean a home at least 500k in value. Most in our area are much higher than that. While many high value companies like to say they want 5-10 million dollar homes, their bread and butter is still 500k to 2,000,000.

    This is a good way to help move insureds from 500 to 1,000 deductibles, or 1,000 to 2,500 deductibles. Frequently (still) we will see an insured with a 250 deductible, underinsured for way too long. Bought a HO policy through a captive 18 years ago and have not read it since. When you review/recommend a new program, including updated dwelling values it becomes clear that a 500 or better yet, 1000 deductible is in order. There is for some people a psychological crutch about a deductible.

    Scenario 1: If someone saves about $150 per year in premium for move from 500 to 1000 it would normally take 4 years to be break even on a loss versus the savings.

    A deductible reserve cuts that time down. It works even better on a 1000 to 2500 where there may not be as great of a premium difference.

    Scenario 2: This may allow a potential client to afford to move up to a better program (all risk, higher special limits, etc) offered with a 1000 or 2500 deductible versus buying a lesser policy form with a 500.

    Scenario 3: Let’s take the 150 we saved on the deductible and do something wise with it. The client should buy a higher umbrella limit with some cost reduction on the homes and autos. Now the reserve really helps over time.

    Selling high value programs does not mean that the client cares little about the premium or features. Many do care, and features like these help high value personal carriers like Atlantic, Chubb, Firemans and AIG separate themselves.

    This is a smart move for Atlantic and maybe the agent in client retention.
    I like it, and say nice job Atlantic!…. I hope the others follow.

  • July 24, 2004 at 10:24 am
    Mr Conservative says:
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    I wouldn’t want a company subject to many financial rating downgrades to insure my house. Giving me a break on my deductable is not going to convince me to stay with a financial distressed carrier. Afterall, being a conservative company requires a proven track record with ratings that show good leadership. Anyone interest in $115 million in surplus notes?

  • July 24, 2004 at 12:06 pm
    TO LARRY says:
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    Larry would you like to trade eyes, so I can see better?

  • July 24, 2004 at 1:35 am
    from Larry says:
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    Huh?

  • July 24, 2004 at 4:08 am
    From Larry says:
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    Before you call attention to others spelling and grammar, check your own.
    “imgaine” insureds or insured’s.

    Anyway the importance should be placed on the idea’s and constructive thought.

    ML
    PS I might have misspelled something.

  • July 25, 2004 at 7:29 am
    TO Marvin Blum says:
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    Marvin Blum

    Maybe you should pay more attention to Idea’s and less to some errors written in Haste.

    Haste makes for spelling errors and some poor grammar, but it never strangles good ideas. Criticism can suffocate the creative spirit when given at inappropriate times. Not because criticism is bad, but used inappropriately it is not constructive and distracts from the more important Issues and Ideas.

    But are the idea’s to be washed away by your petty cristism?

    Less then Perfect

  • July 25, 2004 at 7:45 am
    TO Larry says:
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    TO LARRY

    You are right on and I apologize. Someone got it right I certainly don’t have time to proof ever word in making comments to stories. I certainly will be more careful knowing Mr. Blum looks to for spelling and grammar vs. ideas.

    Constructive critism is a valuable tool, but there is a time and place
    for everything. Mr. Blum chose not to see the ideas presented.

    Again my apologizes

    LG

  • July 25, 2004 at 8:08 am
    Larry again says:
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    To ML/LG –

    Apology accepted, and thanks for being a big enough person to admit you made a mistake. A lot of people would not have. You have my respect.

    Larry

  • July 25, 2004 at 12:46 pm
    Larry says:
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    Dearest ML –

    Please re-read my original comments. If you look closely enough, you will see that it was not *me* who was critizing the first commenter’s spelling and/or grammar, but rather Marvin Blum. I was noting his criticism, but was asking that we look at the issue instead of the errors.

    Perhaps *you* should try to see better. My intention was to talk about ths issue of deductible reductions as a function of loss-free experience and whether or not that would be much of an incentive to policy holders.

  • July 26, 2004 at 4:21 am
    Not-That-Easy says:
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    The high val personal lines market needs multiple carriers. The last thing we need is a casualty. Atlantic agents are still pretty supportive, and generally these are also pretty good people. I used to be one in another agency.

    The business the agents have written is, as I understand it, very good. Around here it used to be a real unique advantage to be one of their personal lines agents so the agencies I know treated their appointments very well.

    Atlantic is now a company with a lopsided balance sheet with far more money in the bank than written premium. A result of the sale of commercial lines. They also run a profitable personal lines company, and clients still love their claims people, more than can be said for some larger stock companies.

    There are many issues that face carriers these days in the ratings game, so just having money in the bank is apparently not good enough when you have sold off your other lines of business and the future is not crystal clear.

    Being a mutual is not always easy, and although I do not represent Atlantic, I wish them the best.

    If they turn around the recent Best ratings it will have an awful lot to do with the support of their agents. So in the end it is a catch 22.



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