Category Archives: buying insurance

02.14.19
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On Insurance Rates

what now

After seeing an insured go to the national carrier they are with and lower themselves from our minimum to the state minimum. 


Completely understand this younger person who needs to drive to work, pay other bills, etc.  On the other hand, 8 of our 10 options would not offer a rate so he is left with 2 of our choices and maybe 2-5 others elsewhere.  Now, we have a woefully underinsured driver on the road because this is what he can afford. So, his carrier is doing what they can to take on some of the riskier populations.  But riskier is relative to the criteria they are basing rates on.  Charging for driving infractions versus for paid claims.  But, those other 8 companies of ours, not to mention a few dozen more will then shoulder the cost of the property damage from any claims he is involved in, not to mention the potential for large medical bills.  As I learned this fall, it is very likely, in the event of a claim that exceeds the property damage, the carrier that pays it can then sue, garnish wages, etc.  None of these are positive.  None of these are healthy for the finances of the overall population.  None of these are good activities for expense ratios. But, if a contract is not enforced, if consequences for bad choices are ignored, where are we left?
We’re left where we are now.  With companies who may or may not know who they want to insure.  Then, they apply data to that uncertainty and it seems to be when in doubt, apply a higher rate.  But it gets better, see when they cannot afford that higher rate and then cancel that policy, the new company can choose to negatively impact the rate for this person. This now locks them into a typically higher rate for another six or so months, maybe longer.  Not good for anyone.
Now, in theory, they could have provided him with coverage and collected premium, maybe secured with a telematics device?  What if we took a longer play and said, you know, this person fits all our criteria and seems to have had a rough stretch 2 years ago.  But, no claims were paid out and there were no accidents reported.  Looks like he/she is in college and engaged now(we know because we are using data confidently and to the benefit of the customer, not the carrier) maybe this is a person we should work with?  

No solutions, just concepts that can be used better.

10.17.18
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Time for an annual review

Cleaning out some drafts I apparently never published, the paragraphs below(italics) were from February 2015.  Updates and comments in regular type.

Reviewing your insurance could be the most critical piece of personal finance.  Until the process can be automated it is on you and me to do it.  In this case, since it is just my insurance it is all on me.  I first wrote about this over five years ago.  If you searched the word “review”‘ on this site you would get several different takes.  Mostly coming from a variety of things that happened.  Here is a fresher look since my policies just renewed.  Yes, it actually happened just shy of three weeks ago and yes the paperwork has been on my desk since late December.

Why?  Well, the first thing you and I do is look at rates.  The home rate was about even and the auto rate went down.  Immediately I lost all urgency.  I also know that between my wife and I there are a handful of tickets and accidents that, like it or not, are still currently relevant to the rate.  You have to look at your rates.  PERIOD.  No, this does not mean to only shop on price, it just means you have to look at your price.  This is normal human behavior. And, like it or not, you have been conditioned by the industry to this.  BUT,  behind the scenes underwriting is tougher now than at any point during my 15+ years doing this.  We have begun to advise not canceling a lot of new property policies until we know any unplanned inspections have been completed.  Oh, and remember,  auto and home insurance + the U.S. consumer = commodities colliding.

Moving along to some detail;

AUTO:

  • cover the basics; name, address, drivers, etc. So disappointing that so much of this can be automated and pre-filled yet common apps fill it in an insurance quoting sites do not. This is basic stuff and the compounding time is huge.
  • Check the discounts, everything there that you thought would be? Tricky, tricky thing.  Discounts are not what they once were.  You are being “rated” more ways than you or I can count. Remember, asking is often the surest way to getting but, sadly, even if you get it, you may be disappointed.
  • Has your use of the vehicle(s) changed?  Fewer miles typically means lower rates. Telematics will replace this….but not until companies understand how to apply telematics.  Either way, mileage questions border on irrelevant.
  • Remember, a multi-policy discount can be substantial.  likely need to move both plans if shopping.  This may be the biggest flaw in the entire price shopping landscape.  Not quite fraud but certainly some ethical implications.  Multi-policy discounts are potential ENORMOUS. Not disclosing this to a homeowner who is doing an auto quote is a mistake.

HOME;

  • An escrow account is wonderfully convenient and very dangerous to your wallet.  Leaving just about any piece of your financial world unchecked is a bad idea
  • The compound effect is real and can have a profound impact on home insurance.  Sure, your coverage went up by a small percent this year but when it is 3-5 years later those percentage increases are magnified.  Pro-tip, many homeowners get a discount for something called “inflation guard” or similar.  Essentially, if you let us increase your coverage automatically we’ll “thank you” with a discount.  This often goes unnoticed but is important.
  • Where is your company flexible?  Some are with other structures.  Some with personal property.  Most aren’t with the main dwelling coverage.  Untapped but large opportunity for improvement here.  Not a full-on customization of a policy but certainly room here.
  • Fact is you are getting all sorts of coverage that look good on paper but really do not do much.  it is what it is.  Often said to older customers when comparing policies “Remember, there was likely nothing wrong with your home insurance from 20 years ago.  All these extras look nice but aren’t much….”  Google the insurance silos and this is another example of them not talking.  Lemonade did some funny writing on this as well.  This piece of coverage is overdue for an (r)evolution.

 

Your own diligence is huge.  Always has been likely always will be

Finding clever tools to help evaluate the replacement cost of your dwelling and your personal property is huge. This is a whole other topic and is a mess right now.  Lots of room here as well.  Don’t believe me?  Go look in your area at the price to BUY a brand new home.  Then realize that every property insurance company has a different version/idea of what that will cost to rebuild.  Many, or most of, will be laughed at by the builder.

 

 

10.16.18
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Just keep in touch

In the last week, a customer left, no news there, but I have donated to a fundraiser they did and do sort of know them. Yesterday, another customer came in with a gift for me and one of our team.  Actually very tasty olive oil.  The first one checks more “boxes” that most companies look for and spent at least twice as much with us.  The second spends half the amount of money and doesn’t “fit” common profiles of what a company wants.  Below was written May 2014 and has only been updated thanks to Grammarly.

Really, everything a company or a salesperson does seems to be geared towards a sale.  So many places online pitch social media success or “how to drive business  with social…”  Why must everything be about growing your business?  How about strengthening the business?  How about increasing profits?  How about simply using your strengths?  Use social to do all the things that your massive competitors cannot do?  How about realizing that before you spend money to advertise on social or run a contest or promote a post that there are a dozen or so free things that you can do that many of your larger counterparts cannot do.

So I come at this from the side of a developing insurance brokerage.  We tend to work with a pretty select clientele.  There is no advertising done.  So some thoughts;

  1. Before you spend any money, take some time and effort to get to know the people you already have in place.  Seriously, before you head out and get more customers or spend money solidify what you have in place.  Have you LinkedIn with everyone?  Have you shared a Facebook Page with them?  Looked for them on Twitter?
  2. How about recommendations?  Both LinkedIn and Facebook provide excellent opportunities for all these people you already know to say(type) nice things about you.  Just ask.  Start with the ones you think you know best.  While you are at it go and recommend the places you know and the people you have worked with.
  3. How about charity?  In my world, I doubt Geico will ever donate to a local charity and seriously why would your business simply donate to any charity or take out an advertisement in some sort of program just for the heck of it.  Support those that support you.
  4. We know large companies are very good at spamming.  In fairness, small companies can be as well.  Try and ignore the urge.  Seriously, double down on your efforts to keep up with existing customers.
  5. Do the things they do not or cannot; share the posts your friends and customers put up.
  6. Can your large counterparts refer their own customers to each other? Yes, Do they? NO, You can do this.  Connect the web of people you have around you and try and strengthen the weak ties.
  7. Instead of talking about rates be a resource.  Help make logical decisions,  Make an effort to bring them business instead of just taking their money
  8. Cracks me up when I see some sort of “canned” blog article appear on various sites.  I am also thoroughly amused by useless articles on Yahoo Finance and other sites.  Its like they have ten or so articles and simply make an effort to put out useless tips once a week.

Just embrace the fact that you are small and enjoy the heck out of it.  Why wouldn’t you?

10.13.18
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Anonymous and the Call Center

Really liked updating this post from October 2013, still is 100% accurate even if I could change a few things, I didn’t.  Being a resource can be interpreted a few ways; you are actually the resource, the one getting things done.  Or, you are the resource because you shared one.  So some moments from the week;

Overheard a call coming into one of the offices, sort of recognized the name.  Turns out it was a customer who started with us two years ago.  I was the resource then, helped insure a new home, made significant improvements to auto insurance coverage.  Then, we sort of helped find some coverage when an “uncovered” claim occurred.  But, then our friend Price Optimization stepped in.  But, I was also a “resource” or at least a contributor to a fundraiser a few years later.  But, alas, our growth is hindering some processes and the anonymous, doesn’t live in your town, doesn’t know your family call center person “won.” this one.  Annoyed and this will get its own post.

Having a tough time with an endorsement and an underwriter.  Nothing new, sadly.  Fortunately, a non-anonymous marketing rep stepped in to help sort things out.  A person who I see a couple of times a year.  Outstanding, cheers to the non-anonymous!!

It even happened again, a goofy claims thing, so I reached out to a person who I have met and has helped me before.  Thankfully, some help arrived.

I’m on the receiving end of a lot of calls and emails.  None of which come from any sort of advertising.  ALL of them come from people who, thankfully, have vetted me and are willing to pass my name and number along.  But, I, and maybe you, have seen anonymous reviews still have a place in society.

Another one from a 10 year plus customer who was questioning her current company.  Yes, there was something odd about their billing.  But, it really is an anomaly.  As I told her, you can look up any of the ten main companies we work with and find all sorts of negative information on ALL OF THEM.  But, much of this information is in fact ANONYMOUS.

This isn’t to say it is false, it is just to say, why are you so accepting of the opinion of strangers?

I applaud those of us IN THE ARENA, and yes it is an appropriate reference even if embellished.  Although I saw at least one product that leads with anonymous reviews, I still applaud their underlying thesis. I just disagree with anonymity and think it is not just stupid, but really f’n stupid to accept anonymous opinions.

This comes on the heels of reading a post from a really strong company who was left off some stupid list.  F them.  I know it takes a minute, but go read Ryan Holiday’s trust me I’m Lying or Robert Cialdini’s Influence.  If read together, watch out for what your eyes and brain will open up to.  I say screw them.  BUT, back to the link to the October 2013 post and you’ll see it is up to us, your people around you even if loosely affiliated, to step in and provide some insight.  Your circle, your people, your crew, your network, your family, your world THAT is who you should hear but only after you hear yourself, your gut, your instinct, first. 

10.11.18
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Dynamic underwriting exists…and somehow it is bad for customers

I’ve had my own run of claims as well as some others going on lately.  Fortunately, an occurrence that could have been claimed, sort of,  and a basic “How to handle a claim post”

Both are still accurate and both are somewhere between far from the truth and not enough.  I’ve long thought insurance functions as much like a credit card or bank loan than what people expect from insurance.  But, maybe I’m also abusing or misusing the word dynamic a bit.

Is your insurance re-underwritten year to year?  Sort of but in my experience, not completely.  See it is quickly reviewed and assessed for negative things like claims.  Sure, you may not see a surcharge for that accident but look closer.  See, you have a tier assigned to you and if that changes you’ll also likely see your rate go up.  Hence, dynamic underwriting….but not really.

But I was married this year or completed college this year or bought a house this year.  Don’t those things help?  Sure, sort of.  But, not completely in the live environment.  See, adding a second car and a spouse will find you multi-car savings but doesn’t typically adjust for your spouse or partners credit score or college degree that you don’t have.

An agent needs to know this and also needs to know the how and when to adjust.  But, as with all things, there is a cost associated with this.  The company does not bear the burden of keeping a customer.  In fact, many of their actions make you wonder if they actually want to keep the customer.

So, is it dynamic underwriting or situational dynamic or something else?  So it is much more situational dynamic.  In other words, we’ll be dynamic when it is convenient for us.  Yup.  That is why when David asks about filing a claim I have to have a drawn-out explanation that ends with, I really have no idea if it is a good idea or not. You really just have some sort of “loan” that sometimes functions like insurance, other times functions as a credit card with 6 months interest-free and no payments that you better read the fine print on.

Until an insurance company wants customers from top to bottom in the organization, this is unlikely to change.

09.30.18
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Review and repeat, It’s a cycle disguised as a tag line

Today’s idea comes from a silly, boring post in 2011  Although it was a short, almost lay, post, the message is correct and overlooked.  I’m guilty as charged.

But how do you find ” an average savings of $432….”  when reviewing auto insurance.  Well, the game is more or less rigged.  Some of it can mimic “self-sabotage” but it is really corporate laziness/indifference?  Here are some facts/scenarios to consider;

  • Insurance rates change. Period.  Sometimes a company can do it once a year…if the regulators cooperate.  Certainly every 18 months.
  • “New Programs” remember this new program is for NEW customers…but don’t worry you are a Loyal customer….You’ll continue to have the one-sided loyalty illustrated by not having access to the new coverage and rates
  • YOU change, but your company is not obligated, sometimes not allowed, to use this in a positive way.  But don’t worry, they’ll use it in a negative way.
  • Oh, and that “accident forgiveness credit” you actually PAY FOR, ask about your rating tier.  That may not be covered by the credit you are wasting money on

So, if you are merely “shopping” for insurance because ” I feel like my rates are too high, blah, blah, blah”  consider;

  • Are you really saving that much money if you do not know what the BEST current rate is from your current company? Actually, no.
  • The best way to save money is actually NOT to shop.  Make it a planned review no LESS than every two years
  • You DO NOT want to save more than $200ish on your auto, home, umbrella package!!!  Why?  Because if you save more than this you likely missed a cycle.

Advertising that leads with price and phony savings is bad for humanity and to a lesser extent the entire insurance industry. But, the fault lies in companies who are not willing to review their books of business and strive to keep people who fit their current underwriting criteria.  BUT, if the current marketing criteria are too different year to year or every three years, a company will likely never be as profitable as it can be.

So maybe it is the companies who need to do the reviewing?

09.25.18
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4 updates in 1

Circa October 2010, none of these really need/deserve a full reboot and it looks like I made slight updates in May 2015

Post 1     Post 2   Post 3   Post 4

First, let us take a moment to thank Grammarly.  Like you, I’m busy and miss things.  Old posts had lots of silly, mostly lazy, mistakes.

Your updated disclaimer; I value time more than I did in October 2010 and, as my available time seems to diminish and priorities shift, even more than in May of 2015.  What does this mean?  Well, I am not sure that I held back then and the only stuff I hold back now is proprietary stuff.  Even that is shared with certain audiences.

So you have your “here we go” and a “disclaimer” but what about the “Why I write?”  Still for clarity.  Still to empty the brain that is even more full today than it was.  The ideas are better, The actions are more.  The industry is changing, slower than I thought but still in the right direction.  And, I intend to be at the center of change.

So the scary one for me, and here comes the enlightened self-interest post and the “good selfish” one as well, is post 4.  Yes, that one is still sadly true.  How is it possible that others are not catching up to what I have been doing and advocating for 8+ years?  What gets a bit worse is watching people, now all over social, use silly absolute type statements that cannot be true.

Seriously!!!  What the F is “right coverage”  or “properly insured” 

NONE OF US CAN SOLVE EVERYTHING AND ALL OF US ARE AT THE MERCY OF THE CORPORATIONS WE PAY FOR INSURANCE.  PERIOD.

Consider starting high and with rare exception walking a little backward.

You better have some non-negotiable coverage in there as well.

Remember, NONE OF US can predict the future let alone a customers. Might as well buy a lotto ticket….but when it comes to insurance, fill as many logical holes as you can and accept that the companies do not care.

DO NOT spend someone else’s money for them.  Seriously, do you honestly think you know what is best for everyone you work with?  Are you seriusly still using some sort of antiquated ideas based on “assets”?

Do better.  Always.  Save your filters for Instagram

09.24.18
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Customers. Period

But really, I call them Friends and Acquaintances;

“There are no strangers here, only friends you haven’t met yet”  William Butler Yeats

A bit deep on Friends from 2015 coincides with a training session with some pieces that are a bit off

I’ve never quite fully understood the philosophy of  “A, B and C customers….”  In the sense that I completely understand what is being said; focus your time on energy to produce a better outcome.  Great.  But, on the other hand, when you see in insurance today can partially be attributed to widespread use of this kind of attitude.

Depending on where you learn about it, it essentially says you need to classify your fellow humans by how much money they invest with you or how many policies they have with you, etc.  We humans label each other enough.  Was thinking this(and may expand on it elsewhere) when looking at my car.  The car has a logo.  Shouldn’t that be enough?  Nope, instead, in my case, it also had four separate markings to further clarify the company name, model name, and two features.  A previous owner even put another label on it.  Yes, the brain has a lot to work on each day, I get it.  But do we really need to continue to label things so intensely?

Consider an alternative, stems from a piece of how we work;

  • Neutral or better; essentially, you do not need to love everyone, just like them.  It is ok to be indifferent, as long as they are nice.
  • All of their money is green.  Period.  Shouldn’t that be enough?
  • Not everyone will fit all the boxes you propose for them.  Do they really need to fit all them? NO! Especially if we are neutral or better and their money is green.
  • Look at your whole ecosystem; the fact is we would really like to have an average of 3 policies per household/customer.  Averaging this is possible but it is not reasonable to have three policies in every household.  Period.
  • The actions of some customers actually let you help others.  Is this subsidizing?  Maybe.  But if you look at your customer base as a whole entity, this is healthy.
  • Everyone in the company needs to be willing and able to help everyone that calls.  It doesn’t mean they can or will.  Of course, we have people who specialize in commercial.  We have those that can sort of help with commercial.  We have customers that just prefer one person to another.  All of this is ok. Why?  Because we have things we do that make this ok.

This can go a lot of ways.  I’ve seen this explained in some fairly despicable terms.  I get it.  You have a finite, unmeasurable amount of time on this sphere.  Me to.  But, on the other hand, if you have the ability to help people why aren’t you spending time on that instead of classifying who to help and who not to help?

09.19.18
by

Paying for loyal rates?

Yup. A couple of times a month we run into something similar.  Long time, likely profitable, customer not exactly being appreciated https://theinsurancebill.com/?p=199

Truth is, I’ll likely be in a similar spot about 10 months from now.  But how can that happen?  You had two NOT AT FAULT accidents.  Exactly  But, because of a lot of things, including a call center order taker and some weak regulations, one driver did not have enough coverage.  That means I need to use my coverage *sigh*.

Lots of bigger questions, but the one that pops into my mind is the “accident forgiveness” conflict.  My children, and maybe yours, have accidents all the time.  Forgiving accidents is just part of what you do for children. Our employees make mistakes all the time.  We fix them and move on, we don’t change their salary because of them.  But yet, in insurance, it seems to be acceptable to pay a company to forgive an accident.  Huh?

Don’t most consumers forgive actuaries, executives and underwriters on a daily basis for abusing price optimization, miscalculation and poor performance?  They even willingly but maybe unwittingly continue to pay premiums.

Times are a changing, time for a change.

 

09.11.18
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Not Extinct but Still Endangered

Happy to see that this from 2012 is still relevant https://theinsurancebill.com/?p=188 

On the other hand, it is disappointing to know that although the industry has advanced, it really hasn’t.  The excuses are still the same.  The lack of interest in the customer is still there.

But what has changed?  In theory, there are more tools today to help you “review” your auto and home insurance.  In reality, they may connect to more companies but the tools are not much better.  Carriers are spending more to find people instead of spending more to keep people.

Underwriting is quite a bit more sophisticated but has a long way to go.  But, the scrutiny post application is much higher.  I do not see this decreasing but what I hope to see are companies using more partnerships to make risks well rounded.  What does this mean?  Most carriers tend to underwrite the person or the risk(home/autos/situation) but do not do a good job at combining the two sets of metrics.  But, in lieu of figuring this out, they should be able to provide solutions for common concerns.

A potential resurgence of an endangered species is always possible.  But, it tends to be led by a group of people that want to see it happen.  In this case it should be the brokers and the companies they represent.  I’m just not sure that enough of them want it to happen.