I’m thinking that I should start telling my commission-based brokerage clients that I need to charge a fee to recoup my lost commissions.
My workload will be heavier if I have to do due diligence and market their renewals aggressively to the A rated hungry carriers. My work product doesn’t drop by 20% when I get them a 20% reduction in their premiums.
This market is just out of control..period. These lousy flavor of the month carriers keep popping up left and right. I had one undercut a Paco non renewal the other day. Expiring $8500, new carrier wrote it for $2500. WTF? A non-renewal by a carrier that didn’t last because they were so cheap…so they undercut the hell out of an already dirt cheap price.
I’m curious what carriers you all are seeing as “just out of control” in this market.
I think the worst i’ve been seeing by far is Essex. They are the insurance equivalent of a car salesman selling a Benz for the cost of a Kia. Whats that? You got a quote for cheaper? No problem, we’ll just cut the price even more. Loss ratios? What are those?
Great News for those of us in the industry who look out for the best interests of the insurance buyer.
Surely price is not the bottom line with quality/rating of carrier and quality of coverage contributing in equal measure to the pricing of a commercial p/c account.
I have worked on the agency side, wholesale side and the company side. Currently on the company side, and you are right…pricing is out of control. Joker mentioned Essex, but the real culprits (in my humble opinion) are the admitted carriers. I started out in the midwest at an admitted carrier, and we were pretty meat and potatoes as far as what we would write (in the hard market). Now, admitted carriers are getting involved in all sorts of accounts where they not only don’t have the expertise, but they have no idea how to rate them.
When I started, my company would not write roofing contractors. However, there were a few that had been booked (as favors, I’m sure). Anyway, we had rates filed for them, but they were completely inadequate as the only roofing risk that I’m sure were booked, were very nice accounts. I had an agent call me one day, and said, “hey, I looked at your roofing rates and they are spectacular. I have a pretty large book of them and wanted to try a rollover.” It’s the same thing with many classes.
FYI…I think the worst offender I’ve seen is Travelers.
Regionals like Hastings, West Bend, Selective, and Secura can’t keep hanging with the big dogs like Indiana – Lib Mutual. Look for their ship to sink first, trying to overcome years of combined ratios over 100. They just can’t do this endlessly. State Auto has already bowed out, and these others will be next.
Secura doesn’t undercut the price. They just misclassify everything, use wrong GL classifications, and rate Heavy Autos as Light Service. It’s incredible that they can continue to pass Insurance Commissioner conduct reviews.
You are right. the pressure on all of these regionals is going to create huge M&A activity in the next 2 to 3 years. Look for mutuals to merge, and look for a large number of acquisitions. Traveler’s and QBE might even be in the market to gobble up some of these regionals. Lib Mutual too once they get their IPO straightened out.
Well, apparently the President of SECURA reads the Insurance Journal. Perhaps he should be conducting file reviews if he believes that they are not misclassifying auto and GL to undercut the competition.
Have seen it many, many times. They are notorius for it.
(and I guess I’m giving them credit that they are knowingly misclassifying. Or maybe their underwriters are just that stupid)
Funny you mention the fees. I’ve been seeing more and more of the fees being tacked on to these polices b/c the commission is nil when the premiums are so low.
The games these MGA’s are playing with rates is absurd. On average, i would have to go surplus lines with a 50% credit to compete with essex. Firemans’ fund isn’t far behind. I see them pay huge losses on tiny $1800 accounts, then raise the renewal premium by a hundred bucks and the insureds complain b/c they feel they deserve a reduction.
Just about every submission I see, includes some note saying “This one has tons of claims and we feel their price is way too high at $50k. You should come in around $25k and we’ll also need more commission if we’re going to place it with you.
A great discussion here, love the comments. Misclassification stuff is so crazy – I saw an account who removes gasoline storage tanks be classified as a plumber by my lower priced competitor!
We assure you at SECURA we make every attempt to properly classify and rate all of our insurance products. We would be happy to discuss any specific situations or concerns with you directly. Please call 1-800-558-3405, ext. 4430.
At SECURA Insurance, our stability speaks for itself. We’ve been in business for over 110 years and we’re rated A (Excellent) by AM Best with a stable outlook. We’re in it for the long haul.
I’m thinking that I should start telling my commission-based brokerage clients that I need to charge a fee to recoup my lost commissions.
My workload will be heavier if I have to do due diligence and market their renewals aggressively to the A rated hungry carriers. My work product doesn’t drop by 20% when I get them a 20% reduction in their premiums.
Any other broker or agent want to follow my lead?
So unless we sell an additional 10% growth, we won’t maintain our commissions and nobody gets a raise.
Work harder, but it’s like running in place. Sooner or later you get restful and the belt rolls you right off the machine.
This market is just out of control..period. These lousy flavor of the month carriers keep popping up left and right. I had one undercut a Paco non renewal the other day. Expiring $8500, new carrier wrote it for $2500. WTF? A non-renewal by a carrier that didn’t last because they were so cheap…so they undercut the hell out of an already dirt cheap price.
I’m curious what carriers you all are seeing as “just out of control” in this market.
I think the worst i’ve been seeing by far is Essex. They are the insurance equivalent of a car salesman selling a Benz for the cost of a Kia. Whats that? You got a quote for cheaper? No problem, we’ll just cut the price even more. Loss ratios? What are those?
Great News for those of us in the industry who look out for the best interests of the insurance buyer.
Surely price is not the bottom line with quality/rating of carrier and quality of coverage contributing in equal measure to the pricing of a commercial p/c account.
I have worked on the agency side, wholesale side and the company side. Currently on the company side, and you are right…pricing is out of control. Joker mentioned Essex, but the real culprits (in my humble opinion) are the admitted carriers. I started out in the midwest at an admitted carrier, and we were pretty meat and potatoes as far as what we would write (in the hard market). Now, admitted carriers are getting involved in all sorts of accounts where they not only don’t have the expertise, but they have no idea how to rate them.
When I started, my company would not write roofing contractors. However, there were a few that had been booked (as favors, I’m sure). Anyway, we had rates filed for them, but they were completely inadequate as the only roofing risk that I’m sure were booked, were very nice accounts. I had an agent call me one day, and said, “hey, I looked at your roofing rates and they are spectacular. I have a pretty large book of them and wanted to try a rollover.” It’s the same thing with many classes.
FYI…I think the worst offender I’ve seen is Travelers.
Regionals like Hastings, West Bend, Selective, and Secura can’t keep hanging with the big dogs like Indiana – Lib Mutual. Look for their ship to sink first, trying to overcome years of combined ratios over 100. They just can’t do this endlessly. State Auto has already bowed out, and these others will be next.
Secura doesn’t undercut the price. They just misclassify everything, use wrong GL classifications, and rate Heavy Autos as Light Service. It’s incredible that they can continue to pass Insurance Commissioner conduct reviews.
You are right. the pressure on all of these regionals is going to create huge M&A activity in the next 2 to 3 years. Look for mutuals to merge, and look for a large number of acquisitions. Traveler’s and QBE might even be in the market to gobble up some of these regionals. Lib Mutual too once they get their IPO straightened out.
Well, apparently the President of SECURA reads the Insurance Journal. Perhaps he should be conducting file reviews if he believes that they are not misclassifying auto and GL to undercut the competition.
Have seen it many, many times. They are notorius for it.
(and I guess I’m giving them credit that they are knowingly misclassifying. Or maybe their underwriters are just that stupid)
Who is vulnerable? Who do you see getting bought or merged? I’ve heard that Sentry is looking to buy too?
Funny you mention the fees. I’ve been seeing more and more of the fees being tacked on to these polices b/c the commission is nil when the premiums are so low.
The games these MGA’s are playing with rates is absurd. On average, i would have to go surplus lines with a 50% credit to compete with essex. Firemans’ fund isn’t far behind. I see them pay huge losses on tiny $1800 accounts, then raise the renewal premium by a hundred bucks and the insureds complain b/c they feel they deserve a reduction.
Just about every submission I see, includes some note saying “This one has tons of claims and we feel their price is way too high at $50k. You should come in around $25k and we’ll also need more commission if we’re going to place it with you.
Yeah right!
A great discussion here, love the comments. Misclassification stuff is so crazy – I saw an account who removes gasoline storage tanks be classified as a plumber by my lower priced competitor!
We assure you at SECURA we make every attempt to properly classify and rate all of our insurance products. We would be happy to discuss any specific situations or concerns with you directly. Please call 1-800-558-3405, ext. 4430.
At SECURA Insurance, our stability speaks for itself. We’ve been in business for over 110 years and we’re rated A (Excellent) by AM Best with a stable outlook. We’re in it for the long haul.