Insurers hire very highly paid actuaries who serve like Vegas odds makers telling the insurer what price to charge in order to make a profit on all lines they offer. State regulators may not authorize 100% of those rates, and insurers may also lower them to protect markwt share and gain business. OK, everyone knew all of that. Then you also know that they are charging extra for that replacement cost on those storm damaged roofs. So, why would any
agent be concerned about paying a legit claim to your customer?
If you’re old enough to remember ACV, then you’re also old enough to understand the great disatisfaction it causes at the time of settlement when you find client forgets all about telling you they
wanted the cheaper alternative coverage. Even if they saved enough
to pay the difference, they’ll likely not be happy. And when they
compare notes with their neighbors who bought rc, they’ll be even
less happy. Rather than taking responsibility, they’ll want to
blame someone else. Maybe that will be you?
The storm chasing roofers would not be so eager if all companies actually adjusted claims. The poor loss experience, (losses up 7.4% per year since 1997 according to PropertyCasualty 360) will drive rates up or result in higher deductibles or lead to what is really the answer, in my opinion, ACV for roofs. RCC is a big loss waiting for the next storm.
When I started in 1970, the norm was still monoline policies for everything! Packages were new in both commercial and personal lines. The marketing trend that started then has never stopped:
IF everybody knows you need it, they don’t want to sell it to you!
If nobody thinks you’ll make a claim on it, they’ll give you two for free.
We’re not here to collect premiums, we’re here to pay claims. The
profit comes from balance. Insurers do much to upset that balance,
government does the rest.
For the past 15 + years that insurers were hauling in hugh profits
from investments, did they offer you a higher commission? Did they
offer your clients lower rates?
This report is the antithesis of what Consumers Groups say about satisfaction with insurors. They think any rate is too high no matter how many catastrophies are paid. Companies also are having issues with Loss Experience and we are seeing the unending rate taking in the past three years. If we weren’t bundling for companion credits, the rates would be astronomical for many.
If you’re seeing big rate increases, you never know why.
Most insurer want to play follow the leader, not be the leader.
Travelers is an exception. I don’t have much with them, and can’t
generalize. I expect what they are doing depends much on the zip code, line, and competitive environment. ie: what they feel they can get away with. Cutting agent commission is such an easy target
most insurers just can’t resist.
And they wonder why we have a hard time selling more? Where are those advertising dollar suppose to come from?
Travelers got out in front with the rate taking and expected the other carriers to follow suit. Oops! When that didn’t happen, they were hung out to dry and lost a good deal of business. We had to move a substantial amount to hang onto customers. We have never cared for their piecemeal way of paying commisions on renewals. None of our other carriers have done that. Now, they are reducing commissions on monoline HO if we can’t bundle. I asked their marketing rep if they had any agents growing with Travelers in her territory. She had to admit that she didn’t. We are supposed to hang in there and the watchword was that they were positioning themselves to grow in 2013 which is another way of saying they expect the rest of the market to catch up with them on rates. Other carriers are taking some rate, but they will probably not catch up with Travelers anytime soon.
Everyone is taking rate. The combination of 3 factors, Cat losses, unavailability of reinsurance, and weak investment performance has driven reserves down. As a result, the only way to regain reserves to an acceptable level is premium. The market is hardening and the key policy on an account level to retain your clients is life. Fire and Auto are easy to change but life is not. If you lock them in on a life policy your retention skyrockets.
A report came out earlier in the week that companies are reaping a nice profit in 2012 vs losses in 2011. Some of those rate increases are kicking in now and losses have gone down. We don’t expect the companies that have taken rate or plan to will change their strategy. Hard and soft markets have been around my whole career. We roll with the punches. The thing that is different about this one is the economy is in the tank and it is really hard to take rate when customers are hurting. We are constantly re-marketing searching for solutions. Our salvation is that the big captives are taking more rate than our carriers so we are picking up their business.
Wonderful Travlers announced to us that if we have monoline homes on the books, they are cutting commissions on the monoline business. We try to bundle, but their Auto rates suck or there is something wrong with MVR’s or young drivers and often we can’t bundle with them. We will have to find a new home for many of these since we don’t want the reduced commission.
Bundling is a two edged sword. You sell two, or you may lose two.
Insurers tend to be reactive, not creative. Unless they lose
business to this strategy, it’s a winner for them.
My stategy is to take care of my clients, so I don’t lose them.
This is just the up and down world of insurance. If you’ve been doing this long enough and have been through both the hard and soft markets, this is standard procedure. Rates go up, coverage (mostly on roofs) can change, and then companies start to surcharge for weather related claims.
we can thank the storm chaser roofers that helped folks win the hail damage roof lottery ! If I won I’d be happy with a new roof for $1k too!
Insurers hire very highly paid actuaries who serve like Vegas odds makers telling the insurer what price to charge in order to make a profit on all lines they offer. State regulators may not authorize 100% of those rates, and insurers may also lower them to protect markwt share and gain business. OK, everyone knew all of that. Then you also know that they are charging extra for that replacement cost on those storm damaged roofs. So, why would any
agent be concerned about paying a legit claim to your customer?
If you’re old enough to remember ACV, then you’re also old enough to understand the great disatisfaction it causes at the time of settlement when you find client forgets all about telling you they
wanted the cheaper alternative coverage. Even if they saved enough
to pay the difference, they’ll likely not be happy. And when they
compare notes with their neighbors who bought rc, they’ll be even
less happy. Rather than taking responsibility, they’ll want to
blame someone else. Maybe that will be you?
JD Powers must not have talked to any Floridians.
The storm chasing roofers would not be so eager if all companies actually adjusted claims. The poor loss experience, (losses up 7.4% per year since 1997 according to PropertyCasualty 360) will drive rates up or result in higher deductibles or lead to what is really the answer, in my opinion, ACV for roofs. RCC is a big loss waiting for the next storm.
When I started in 1970, the norm was still monoline policies for everything! Packages were new in both commercial and personal lines. The marketing trend that started then has never stopped:
IF everybody knows you need it, they don’t want to sell it to you!
If nobody thinks you’ll make a claim on it, they’ll give you two for free.
We’re not here to collect premiums, we’re here to pay claims. The
profit comes from balance. Insurers do much to upset that balance,
government does the rest.
For the past 15 + years that insurers were hauling in hugh profits
from investments, did they offer you a higher commission? Did they
offer your clients lower rates?
This report is the antithesis of what Consumers Groups say about satisfaction with insurors. They think any rate is too high no matter how many catastrophies are paid. Companies also are having issues with Loss Experience and we are seeing the unending rate taking in the past three years. If we weren’t bundling for companion credits, the rates would be astronomical for many.
If you’re seeing big rate increases, you never know why.
Most insurer want to play follow the leader, not be the leader.
Travelers is an exception. I don’t have much with them, and can’t
generalize. I expect what they are doing depends much on the zip code, line, and competitive environment. ie: what they feel they can get away with. Cutting agent commission is such an easy target
most insurers just can’t resist.
And they wonder why we have a hard time selling more? Where are those advertising dollar suppose to come from?
Travelers got out in front with the rate taking and expected the other carriers to follow suit. Oops! When that didn’t happen, they were hung out to dry and lost a good deal of business. We had to move a substantial amount to hang onto customers. We have never cared for their piecemeal way of paying commisions on renewals. None of our other carriers have done that. Now, they are reducing commissions on monoline HO if we can’t bundle. I asked their marketing rep if they had any agents growing with Travelers in her territory. She had to admit that she didn’t. We are supposed to hang in there and the watchword was that they were positioning themselves to grow in 2013 which is another way of saying they expect the rest of the market to catch up with them on rates. Other carriers are taking some rate, but they will probably not catch up with Travelers anytime soon.
Everyone is taking rate. The combination of 3 factors, Cat losses, unavailability of reinsurance, and weak investment performance has driven reserves down. As a result, the only way to regain reserves to an acceptable level is premium. The market is hardening and the key policy on an account level to retain your clients is life. Fire and Auto are easy to change but life is not. If you lock them in on a life policy your retention skyrockets.
Just got my L & H and hope your thoughts are true!!! Ready to see results!!
A report came out earlier in the week that companies are reaping a nice profit in 2012 vs losses in 2011. Some of those rate increases are kicking in now and losses have gone down. We don’t expect the companies that have taken rate or plan to will change their strategy. Hard and soft markets have been around my whole career. We roll with the punches. The thing that is different about this one is the economy is in the tank and it is really hard to take rate when customers are hurting. We are constantly re-marketing searching for solutions. Our salvation is that the big captives are taking more rate than our carriers so we are picking up their business.
We aaalllll bundle.
Wonderful Travlers announced to us that if we have monoline homes on the books, they are cutting commissions on the monoline business. We try to bundle, but their Auto rates suck or there is something wrong with MVR’s or young drivers and often we can’t bundle with them. We will have to find a new home for many of these since we don’t want the reduced commission.
Bundling is a two edged sword. You sell two, or you may lose two.
Insurers tend to be reactive, not creative. Unless they lose
business to this strategy, it’s a winner for them.
My stategy is to take care of my clients, so I don’t lose them.
This is just the up and down world of insurance. If you’ve been doing this long enough and have been through both the hard and soft markets, this is standard procedure. Rates go up, coverage (mostly on roofs) can change, and then companies start to surcharge for weather related claims.