“Unlike the banks and Wall Street icons brought down by the financial crisis, and unlike some once mighty industrial giants that have had to turn to Washington for financial aid, property/casualty insurers have thus far been able to continue servicing policyholders without skipping a beat and without burdening taxpayers. In fact, property/casualty insurers pay taxes, provide jobs, and contribute to local economies by buying the state and municipal bonds that finance so many critical projects.” LIKE MAKING MONEY WHAT WHAT ABOUT AIG. WHAT- A – JOKE servicing policyholders without skipping a beat.DO YOU MEAN NOT PAYING policyholders. HAVE YOU NOT READ THE PAPER OR LISTEN TO THE NEWS.Washington IS IN THE HANDS OF YOU GUYS.
Good well written article.
How many of your carriers are taking big increases and sending out memos about how terrible things in the P&C business were for 2007 & 2008? So are things as bad as the companie’s say or more like the article?
Those underwriting losses will continue to worsen as long as there are carriers out there w/ no regard for underwriting discipline and who continue undercutting the market. Its no wonder written premium was down in the Q4/full year. When you’ve got certain “unnamed carriers” out there slashing renewal pricing by 40% to retain business and another 10 carriers in line right behind them doing the same thing, it’s no wonder profits fell off a cliff.
They’re not totally to blame either. For every sub par, cut rate carrier out there that’s doing this, there are brokers stupid/lazy enough to peddle it for a price. WAKE UP AND DO YOUR JOBS AND STOP SELLING BASED ON PRICE!
I’ve said it 1000x, until the industry as a collective unit starts to press rate increases instead of just cutting the price to save an account, we will never get out of this soft market.
I know i’ll likely be crucified for saying what a lot underwriters think but nobody likes to say. I for one am tired of hearing brokers complain about losing accounts/commission when they wont’ pick up a phone to call their clients and actually explain coverage differences instead of just pointing them to the cheapest price.
Sorry for taking this reply a bit off topic but I felt the need to get that off my chest b/c this market is getting out of control now and it seems everyone would rather join the mob than work to turn it around.
“Until the industry comes together and raises rates” Uh, wow, that’s really capitalism. I think it’s every company for themselves, let them kill themselves.
well, i know that GEICO was somewhat profitable. but as far as AIG, the insurance side was but not the financial side. remember the p/c is not financial but insurance for property and casualty. insurance and bank, although sometimes appeared to be linked but in reality they are 2 different industries.
Just because the industry in total is “profitable” doesn’t mean things are going well. Do the math — the $2.4 billion profit for the entire industry wouldn’t translate into a reasonable rate of return for even a single company the size of State Farm or Travelers. So, maybe these numbers show the industry is not in the intensive care unit like the banks, but quite a few insurers are sitting in the emergency room waiting area waiting for treatment. And, if the economic downturn and the soft market continue, some weaker patients will bleed to death. So, the big producer E&O events are coming — where you place your customers is HUGE. Triage now, avoid the problem later.
Thanks MM. Sorry I had to be the one to say it but its true. Most of the brokers out there couldn’t sell themselves short, let alone point out coverage differences. I honestly think they’re looking out for their own best interests in most cases..ie who pays them the most commission.
A hint for brokers who lack proficiency in math:
17% of $2500 is less than 10% of $5000. Remember that next time you place an account w/a cheapo carrier.
Perhaps i should start posting under the name Batman?
I do know that in IL, the regionals have been profitable, like Auto Owners, Erie, Secura, Hastings, etc. It’s the nationals that are a problem and with Travelers going direct, they can kiss my derriere.
Scapegoat has obviously never sold insurance a day in his/her life. Much of the market is price-driven and very often an agent has the unenviable choice between losing an account or cutting the price. The majority of sales out there are not coverage sales. Divorcing ourselves from the reality of how things operate in the real world is silly.
Zorba: Can not vouch for Scapegoat. But I have sold before and have direct contact with those who do sell.
When I was working with a new contact/prospect I would “qualify” them. I would determine what was driving their decision. Of course price is always an issue…but there are usually other considerations.
I tried a few tatics to get my point of value vrs price across. I might ask what kind of car they drove. If they were an exec they might say Mercedes, Audi, BMW etc. I would then ask “why don’t you have a cheaper car? A Hyundai or Kia would get you to work just as well as your Benz right”. Typically they would reveal other issues that drove the purchase: Prestiege, safety, fuel economy..and using those I was able to get pricing to be just another issue and not the sole issue.
To transfer the value discussion to the policy…I would focus on options in the form and way to reduce pricing by transfering items from BPP to Bldg. That overhead crane or that backup genset…is that BPP or Bldg? We all know that the major difference that drives the rate on propery is theft. Can that genset that is the size of a car and housed in a seperate structure really subject to theft in whole? Same for the crane.
Focus on serving a client and not on selling to a customer. There is a huge difference between a client and a customer.
MM, thank you for sharing your thoughts and your advice is spot-on. Without mitigating your latest post in anyway, you are also preaching to the choir. Consultative selling is always my default posistion and I am constantly qualifying potential clients. There are “coverage clients” out there but they are the exception, not the rule.
I don’t know what you’re talking about. West Bend is in the tank (2 years well over 100 combined); and Secura is headed there. Unitrin, based in Chicago(??) just got dumped to A-. State Auto is drying up as well, and Cincy isn’t far behind.
Farmers made more than 2.4 billion on its own. Therefore, there may be trouble in Insuranceville for a few of the others if the total amount of P&C profit is less than 1 company declared.
“Unlike the banks and Wall Street icons brought down by the financial crisis, and unlike some once mighty industrial giants that have had to turn to Washington for financial aid, property/casualty insurers have thus far been able to continue servicing policyholders without skipping a beat and without burdening taxpayers. In fact, property/casualty insurers pay taxes, provide jobs, and contribute to local economies by buying the state and municipal bonds that finance so many critical projects.” LIKE MAKING MONEY WHAT WHAT ABOUT AIG. WHAT- A – JOKE servicing policyholders without skipping a beat.DO YOU MEAN NOT PAYING policyholders. HAVE YOU NOT READ THE PAPER OR LISTEN TO THE NEWS.Washington IS IN THE HANDS OF YOU GUYS.
Good well written article.
How many of your carriers are taking big increases and sending out memos about how terrible things in the P&C business were for 2007 & 2008? So are things as bad as the companie’s say or more like the article?
Those underwriting losses will continue to worsen as long as there are carriers out there w/ no regard for underwriting discipline and who continue undercutting the market. Its no wonder written premium was down in the Q4/full year. When you’ve got certain “unnamed carriers” out there slashing renewal pricing by 40% to retain business and another 10 carriers in line right behind them doing the same thing, it’s no wonder profits fell off a cliff.
They’re not totally to blame either. For every sub par, cut rate carrier out there that’s doing this, there are brokers stupid/lazy enough to peddle it for a price. WAKE UP AND DO YOUR JOBS AND STOP SELLING BASED ON PRICE!
I’ve said it 1000x, until the industry as a collective unit starts to press rate increases instead of just cutting the price to save an account, we will never get out of this soft market.
I know i’ll likely be crucified for saying what a lot underwriters think but nobody likes to say. I for one am tired of hearing brokers complain about losing accounts/commission when they wont’ pick up a phone to call their clients and actually explain coverage differences instead of just pointing them to the cheapest price.
Sorry for taking this reply a bit off topic but I felt the need to get that off my chest b/c this market is getting out of control now and it seems everyone would rather join the mob than work to turn it around.
Scapegoat: Halleujah Brother/Sister!
Truer words were never spoken.
“Until the industry comes together and raises rates” Uh, wow, that’s really capitalism. I think it’s every company for themselves, let them kill themselves.
well, i know that GEICO was somewhat profitable. but as far as AIG, the insurance side was but not the financial side. remember the p/c is not financial but insurance for property and casualty. insurance and bank, although sometimes appeared to be linked but in reality they are 2 different industries.
Yeah But:
Just because the industry in total is “profitable” doesn’t mean things are going well. Do the math — the $2.4 billion profit for the entire industry wouldn’t translate into a reasonable rate of return for even a single company the size of State Farm or Travelers. So, maybe these numbers show the industry is not in the intensive care unit like the banks, but quite a few insurers are sitting in the emergency room waiting area waiting for treatment. And, if the economic downturn and the soft market continue, some weaker patients will bleed to death. So, the big producer E&O events are coming — where you place your customers is HUGE. Triage now, avoid the problem later.
Thanks MM. Sorry I had to be the one to say it but its true. Most of the brokers out there couldn’t sell themselves short, let alone point out coverage differences. I honestly think they’re looking out for their own best interests in most cases..ie who pays them the most commission.
A hint for brokers who lack proficiency in math:
17% of $2500 is less than 10% of $5000. Remember that next time you place an account w/a cheapo carrier.
Perhaps i should start posting under the name Batman?
I do know that in IL, the regionals have been profitable, like Auto Owners, Erie, Secura, Hastings, etc. It’s the nationals that are a problem and with Travelers going direct, they can kiss my derriere.
Scapegoat has obviously never sold insurance a day in his/her life. Much of the market is price-driven and very often an agent has the unenviable choice between losing an account or cutting the price. The majority of sales out there are not coverage sales. Divorcing ourselves from the reality of how things operate in the real world is silly.
Zorba: Can not vouch for Scapegoat. But I have sold before and have direct contact with those who do sell.
When I was working with a new contact/prospect I would “qualify” them. I would determine what was driving their decision. Of course price is always an issue…but there are usually other considerations.
I tried a few tatics to get my point of value vrs price across. I might ask what kind of car they drove. If they were an exec they might say Mercedes, Audi, BMW etc. I would then ask “why don’t you have a cheaper car? A Hyundai or Kia would get you to work just as well as your Benz right”. Typically they would reveal other issues that drove the purchase: Prestiege, safety, fuel economy..and using those I was able to get pricing to be just another issue and not the sole issue.
To transfer the value discussion to the policy…I would focus on options in the form and way to reduce pricing by transfering items from BPP to Bldg. That overhead crane or that backup genset…is that BPP or Bldg? We all know that the major difference that drives the rate on propery is theft. Can that genset that is the size of a car and housed in a seperate structure really subject to theft in whole? Same for the crane.
Focus on serving a client and not on selling to a customer. There is a huge difference between a client and a customer.
MM, thank you for sharing your thoughts and your advice is spot-on. Without mitigating your latest post in anyway, you are also preaching to the choir. Consultative selling is always my default posistion and I am constantly qualifying potential clients. There are “coverage clients” out there but they are the exception, not the rule.
I don’t know what you’re talking about. West Bend is in the tank (2 years well over 100 combined); and Secura is headed there. Unitrin, based in Chicago(??) just got dumped to A-. State Auto is drying up as well, and Cincy isn’t far behind.
Travelers will own ILLINOIS by 2010.
Farmers made more than 2.4 billion on its own. Therefore, there may be trouble in Insuranceville for a few of the others if the total amount of P&C profit is less than 1 company declared.