I am an Ohio agent who represents West Bend using their NSI products. I keep seeing numerous comments about how they are under reserving and massively under pricing their products. How vulnerable are they as a company and are they that much worse than their peers in the market place. Also is Michigan Insurance Company for sale and who are the suitors. Finally how is their claim service in other markets.
Hey WI Agent- this is off topic but can you tell me if NSI was downgraded when Best took West Bend down to A this week ? I didn’t see it listed in the list of underwriting companies that they controlled and just wondered.
surprise, surprise. this has been coming for a while. with decling premiums in most all commerical lines and releasing reserves it will be a triple wammy when the IBNR begins to creep up and into the current year loss reserves.
Remember when A+ and A++ used to mean something? West Bend just got knocked down to A. United Fire is on the rocks. Selective has NEGATIVE implications and their stock has been in the stink for over a year. General Casualty was knocked down to A- years ago, but then recovered to an A when QBE bought them. Society is an A- and they could care less. But then the agents don’t care either. I won’t even get into the irresponsibility of Liberty Mutual, FCCI, etc.
And most of these carriers just keep chasing cheap accounts, cheaper and cheaper. And the agents could care less.
Who is going to finally start sticking to some underwriting principle?
One company not mentioned was Nationwide Mutual (and Allied). While I was there, I found a lot of evidence of rampant reserve suppression. Rather than just on a case by case basis, there was testimony suggesting that entire pages of claims (50 to 100) would have the reserves arbitrarily reduced at year end so executives could get bonuses. One state/book (Michigan PIP) saw a $250mm prior year development posted in late 2005 after such practices were discovered. You can only get away with this stuff so long. I also find their 2009 year end financials reported to be suspect, at best, in my opinion. Should be interesting to see what happens at the end of 2010 when the new NAIC MAR (Model Audit Rules) go into effect with Sarbanes-Oxley type requirements (at least in theory).
West Bend is a good little company. Their problem is that they try to play big like Acuity or General Casualty, and they get themselves in trouble. They did it back in the 90’s and even had to put a moratorium on new biz because of their surplus problems. It looks like they’re heading that way again because of a lot of factors. Personal Lines is too cheap, market is too soft, their book is too heavy in contracting, and they’ve spent way too much money on initiatives that take them away from their core. I’ve been told that NSI is the only division that makes them money, and they’re losing money everywhere else. I believe they’ve posted 100+ combined ratios for 4 or 5 years straight? And this was never a company that lived in the 97 or 98 combined range. They’ve always hovered at 100 and above. Wisconsin is a tough state with Acuity, Generous Casualty, Secura, Society, Sentry, and on and on and on. I’ve even heard that West Bend might be looking to merge with one of those other mutuals because they need to find ways to grow other than buying business on the street. Because that just isn’t working.
West Bend is like any other small company especially heavy into Personal Lines and Illinois contracting. They are hurting! So look for them to continue to get out of Illinois construction and start to raise rates in personal lines. They hate to do it because they try to be a strong agency carrier, but they are buried too deep. They tried to outrun all of their contracting problems for too long by buying noncontracting business. They figured that buying noncontstruction business would help them outrun construction. Too many carriers have tried that and failed and West Bend is learning that you cant outrun that long tail. They’re getting smarter now that Tony is gone, and they’re bringing in a lot of high priced talent to help them fix it.
I thought that Nationwide fixed all of the problems with Allied? They took a year or so off, and bowed out of the market. But they’re back and very aggressive again. My marketing rep told us that the gloves are off, and they are under orders to write as much business as possible?
With all of the problems that West Bend and other small mutuals in Wisconsin are having, General Casualty and Acuity have to be laughing all the way to the bank.
In Illinois they are telling us that they want to be the next flavor of the month. They’re desperate to get back their lost premium and a high profile state like Illinois is exactly where they want to buy business. I’ve tried them on a couple, and they blow Indiana out of the water. And right now it is Indiana vs. the rest of the market. Nobody else is even close. So if you can beat Indiana, then you ARE the carrier of choice.
Is that insured’s get used to paying the lower rates, and it leaves a really bad taste in their mouth when their insurer starts to raise the rates. A few of my companies in personal lines have been very slowing increasing their rates, and my clients get pissed. “I havent had any claims or tickets?!? Why are my rates increasing?!?” and as an agent, I explain it to them, yet they don’t want to hear it, all they see and care about is that they are paying more for their insurance.
I know quite a few people that have been with the same insurer for years, but their insurer increased the rate, and then insured leaves, after being with the same insured for years. It wasn’t a lot, and other then the price, the insured was happy with their insurer. The economy is really tight right now and people are shopping. And unfortuatly, because the econ is the way it is, people are looking toward less then legal means to make a quick buck, and thus, insurance fraud I beleive is on the rise.
Harley, you need to stop putting all of your business with the cheapest carrier on the street. Indiana agents are learning that lesson, as they bought accounts the past few years and now have to deliver renewals with 15% and 20% increases. Or worse, nonrenewals for no apparent reason other than Indiana bought too many accounts too cheap, with no underwriting.
I am an Ohio agent who represents West Bend using their NSI products. I keep seeing numerous comments about how they are under reserving and massively under pricing their products. How vulnerable are they as a company and are they that much worse than their peers in the market place. Also is Michigan Insurance Company for sale and who are the suitors. Finally how is their claim service in other markets.
Hey WI Agent- this is off topic but can you tell me if NSI was downgraded when Best took West Bend down to A this week ? I didn’t see it listed in the list of underwriting companies that they controlled and just wondered.
Thanks!
surprise, surprise. this has been coming for a while. with decling premiums in most all commerical lines and releasing reserves it will be a triple wammy when the IBNR begins to creep up and into the current year loss reserves.
Ahhhhhh, here is what I’m talking about. Take heed West Bend. AM BEST and S&P are watching. Your games in Personal Lines are about to end.
Remember when A+ and A++ used to mean something? West Bend just got knocked down to A. United Fire is on the rocks. Selective has NEGATIVE implications and their stock has been in the stink for over a year. General Casualty was knocked down to A- years ago, but then recovered to an A when QBE bought them. Society is an A- and they could care less. But then the agents don’t care either. I won’t even get into the irresponsibility of Liberty Mutual, FCCI, etc.
And most of these carriers just keep chasing cheap accounts, cheaper and cheaper. And the agents could care less.
Who is going to finally start sticking to some underwriting principle?
One company not mentioned was Nationwide Mutual (and Allied). While I was there, I found a lot of evidence of rampant reserve suppression. Rather than just on a case by case basis, there was testimony suggesting that entire pages of claims (50 to 100) would have the reserves arbitrarily reduced at year end so executives could get bonuses. One state/book (Michigan PIP) saw a $250mm prior year development posted in late 2005 after such practices were discovered. You can only get away with this stuff so long. I also find their 2009 year end financials reported to be suspect, at best, in my opinion. Should be interesting to see what happens at the end of 2010 when the new NAIC MAR (Model Audit Rules) go into effect with Sarbanes-Oxley type requirements (at least in theory).
Uh, Gosh? You might want to focus on the rating agency “crisis of credibility” for a while.
West Bend is a good little company. Their problem is that they try to play big like Acuity or General Casualty, and they get themselves in trouble. They did it back in the 90’s and even had to put a moratorium on new biz because of their surplus problems. It looks like they’re heading that way again because of a lot of factors. Personal Lines is too cheap, market is too soft, their book is too heavy in contracting, and they’ve spent way too much money on initiatives that take them away from their core. I’ve been told that NSI is the only division that makes them money, and they’re losing money everywhere else. I believe they’ve posted 100+ combined ratios for 4 or 5 years straight? And this was never a company that lived in the 97 or 98 combined range. They’ve always hovered at 100 and above. Wisconsin is a tough state with Acuity, Generous Casualty, Secura, Society, Sentry, and on and on and on. I’ve even heard that West Bend might be looking to merge with one of those other mutuals because they need to find ways to grow other than buying business on the street. Because that just isn’t working.
West Bend is like any other small company especially heavy into Personal Lines and Illinois contracting. They are hurting! So look for them to continue to get out of Illinois construction and start to raise rates in personal lines. They hate to do it because they try to be a strong agency carrier, but they are buried too deep. They tried to outrun all of their contracting problems for too long by buying noncontracting business. They figured that buying noncontstruction business would help them outrun construction. Too many carriers have tried that and failed and West Bend is learning that you cant outrun that long tail. They’re getting smarter now that Tony is gone, and they’re bringing in a lot of high priced talent to help them fix it.
I thought that Nationwide fixed all of the problems with Allied? They took a year or so off, and bowed out of the market. But they’re back and very aggressive again. My marketing rep told us that the gloves are off, and they are under orders to write as much business as possible?
With all of the problems that West Bend and other small mutuals in Wisconsin are having, General Casualty and Acuity have to be laughing all the way to the bank.
Our Allied rep keeps telling us the rates are going up. How competitive is that?
In Illinois they are telling us that they want to be the next flavor of the month. They’re desperate to get back their lost premium and a high profile state like Illinois is exactly where they want to buy business. I’ve tried them on a couple, and they blow Indiana out of the water. And right now it is Indiana vs. the rest of the market. Nobody else is even close. So if you can beat Indiana, then you ARE the carrier of choice.
Is that insured’s get used to paying the lower rates, and it leaves a really bad taste in their mouth when their insurer starts to raise the rates. A few of my companies in personal lines have been very slowing increasing their rates, and my clients get pissed. “I havent had any claims or tickets?!? Why are my rates increasing?!?” and as an agent, I explain it to them, yet they don’t want to hear it, all they see and care about is that they are paying more for their insurance.
I know quite a few people that have been with the same insurer for years, but their insurer increased the rate, and then insured leaves, after being with the same insured for years. It wasn’t a lot, and other then the price, the insured was happy with their insurer. The economy is really tight right now and people are shopping. And unfortuatly, because the econ is the way it is, people are looking toward less then legal means to make a quick buck, and thus, insurance fraud I beleive is on the rise.
Harley, you need to stop putting all of your business with the cheapest carrier on the street. Indiana agents are learning that lesson, as they bought accounts the past few years and now have to deliver renewals with 15% and 20% increases. Or worse, nonrenewals for no apparent reason other than Indiana bought too many accounts too cheap, with no underwriting.
Heard that West Bend is looking to take rate increases of 10 to 15% in Personal Lines? Has anyone else heard this?
I guess that isn’t so bad when Grange is taking 30% and Selective is taking 25%.