Category Archives: credit

10.23.18
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Awesome marketing opportunity

But it is in disguise.  See, everything can be classified as marketing or in it’s subcategory branding.  This post, even this post from November 2011 updated in 2015  

I could use words to rewrite the same things today and it would be valid, and also useless.  So, let us use words differently and simply make a different point based on the same thing.

  • Your rate increases allow us to build our brand stronger while weakening yours
  • Your rate increases prove that you have no faith in your actuaries and your distribution methods.  Could even say a lack of faith in your capital investment strategy
  • Your rate increases show a complete lack of understanding of how word of mouth works.  It’s been publicized many times and, although I think it is tough to prove, negative news travels faster.  This is a societal flaw.
  • Net Promoter Score is a useless measurement created by professors and marketers.  Here is a simpler measure; If you have 1000 customers, are you receiving at least 500 referrals a year?  Simple, shouldn’t half your customers think enough of you to share you with friends?
  • Still firmly believe that one of if not the biggest and boldest marketing moves is to freeze rates for 12, better to do 24 months, and advertise the heck out of that.  You’ll simultaneously prove that price optimization is awesome when used correctly and add huge amounts to your top and bottom line.

Oh, and I have been operating this way, mostly successfully, for 8 years.  Sure, some of this is theory, but most are already in practice.

03.09.16
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The most powerful paragraph in insurance

AKA  My and the Insurance/Banking industry’s simultaneous biggest problem and opportunity

AKA What #insurtech should be trying to solve but outside of me and maybe some people I have not found yet, is not.

Really it is two paragraphs.  One that comes from a standard document that you’ll find in your policy forms. Yes, I know you likely do not read them.  Also, the version in your state may be different.  The other is a direct quote via an email.  I see or hear variations of the second one every week.  So here goes;

In connection with this insurance, we previously used a credit report or obtained or used a credit based insurance score based on information contained in that report.  We may obtain or use credit information again provided, however, that upon renewal such information may only be used to reduce premiums.  An insurance score uses information from your credit report to help predict how often you are likely to file claims and how expensive those claims will be.  Typical items from a credit report that could affect a score include, but are not limited to, the following; payment history, number of revolving accounts number of new accounts, the presence of collection accounts,bankruptcies, and foreclosures.  The information used ot develop the insurance sore comes from Transunion.  If you have any questions about the use of credit information in insurance underwriting, you can contact us at 1-800-***-**** or write us at p.o. box______________ or via fax at 877-***-****,  When you write us, please include your name and policy number.

Here are a series of questions I am pondering;

So when negotiating for this right, did companies really just build in a “backdoor” to cover them if it didn’t work?  Think about it; if this was so accurate why do they reserve the right to raise your rates after claims?
Is this really a “customer centric”approach?
Why don’t they actively use this awesome tool to retain you as a customer?
Depending on what blog or newsletters you read, depending on who you follow, depending on who you work with/for you’ll catch almost the  “excuse of the week” when it comes to fixing the personal insurance marketplace.  The saturation point of unexecuted thoughts and ideas has been reached a long time ago.  I prefer things much simpler; acquire customers, take care of them, keep them.  By keep them I mean BY ALMOST ANY MEANS NECESSARY.  I like to think I follow a good cross section of people/companies.  Yet they all see to alternate what the excuse is for not being able to help the customer.  So many are focused on new business and will spend whatever time and money necessary to get it but most overlook what they have already.  Silly and sad…..but creates an awesome opportunity.
2.  “Billy,
Why would the rate go up 50$ shouldn’t it decrease over time? No tickets, no accidents… Is there anyway to lower the rate? It just doesn’t sound kosher that the rate they want now would be more then the initial payment with XYZ, then the second payment decreased to around 680$ which I’m fine with… “
Quick Back story for you insurance people; came to me as uninsured, single, male.  I was thrilled with the rate he obtained. Then, for the next six months his rate went down, then after that period his rate went up.  In the meantime, as I do, I checked my markets to see if anything better was available.  His rate, although inexplicable raised, was still the best I could offer.  
 
His logic is completely sound.  This is, sadly, the once accepted but should no longer be acceptable, norm.  This method of doing business is exactly what is allowing newer companies to come in and try and “disrupt” and old system.  Crap like this is why your agent might be pounding you with a useless newsletter or article.  This kind of behavior is not considered acceptable in any of your other buying experiences, why do we as a society allow it to continue?  
 
The short answer is I don’t…but more often than not am outnumbered.  The odds are long, but the payoff is massive.  Based on my(my company’s) growth rate, people like the way I do business.  But currently we come up short with technology and people power and to not bore you with analogies, it’s just tough.
 
Take from this what you want.  I gain more answers and fine tune things almost daily.  Almost daily I am also inundated with silly reports and nonsense being pushed by marketers and companies onto my fellow agents.  Such is life…currently.  I/We keep moving forward.  Actually close to a pretty massive move/shift that will greatly accelerate things.
 

An aside that is sort of related; A long ways back it was a Monday afternoon and a coach was giving us JV’ers a pep talk.  During this we watched the other team line up and he pointed out a couple of very large people.  He was very quick to point out, if they are so big and bad why are they playing on JV?  Yup, simple, profound and very logical.

I think  of this after just about every article, white paper or study I read.  If the people writing or being quoted know so much about how insurance is bought and sold, maybe they should start their own insurance brokerage or go to work for a broker or company?  The reality is things might accelerate if they did.

ONE HUNDRED MILLION or more people will benefit from these changes, would you like to help me?

06.24.13
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The perfect crime, insurance edition

Just read this by Seth Godin; The Perfect Crime a very similar thing actually occurs in Insurance.  Thanks for the idea Seth.

I cannot factually speak on any of the lobbying or NAACP points.  Instead here is what I do know.

None of the insurance advertising you see actually shows you how to be a better consumer in the long term.  The companies only concern is on switching your insurance this year which, since the cost to acquire customers is high, is pretty stupid.  It takes several years to turn a profit on any individual, why would you only advertise for this year?  Because you are conditioning the masses.

Most of these “masses” also generally do not have a lot if any significant claims.  Yet millions are spent on advertising claim services.  An almost FACT, since this is from my experience, is most claims go fine.  Figure they would be grade a “B” or higher each time.  Let me know any service you have that is always an A+.  A couple of basic, proactive steps is all it takes to keep things going smooth.

Oh but you can “bundle and save”  or get a “discount double check”, etc, etc.  As I have said before, credit , plays a bigger role than just about anything else.  But of course we could not advertise the truth so let’s hide it with discounts whose collective impact is not nearly what credit + home ownership+education+marital status equals.

And the loop continues.  Instead of getting excited, like a mime saving $706 realize you missed  a shift in the market.  The goal each year should be to save between $0 and $300.  Reality is the higher your savings the longer you have been overpaying.  ***Yes, of course driving records clean up, people get married, etc.***

Either way, he could have written on a myriad of topics that marketers exploit.  Would love to see his take on insurance.

Thanks for reading, just some thoughts.

06.03.13
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The value of discounts

is not really what it seems when it comes to insurance.  Reality is they are a seemingly wonderful tool used to advertise to the masses of people that are required to have insurance.  Do they create a savings, yes they absolutely do.  Are they worth paying attention to?  Yes, if you  are entitled you should be asking about them and receiving the credit.

BUT, the reality is discounts are not nearly as critical as your credit score, home ownership status, marital status, education and driving history(sort of but not a factual priority list).  So why don’t the big companies advertise this?  Because it would really upset some people.  BUT it may also encourage some people to choose to improve their credit and driving history.  The other three don’t leave much room for adjusting but if you focus on improving your credit you will see more of a change then with any particular discounts.

It is what it is, not a pretty topic and although you may not agree it plays a role and there is more than enough evidence to support the use of credit.  Either way, since you and I will not change the system, let’s instead learn the rules and figure out how to use them to our advantage.

Just some thoughts, thanks for listening.

01.30.13
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A response to an awful article

Here is a link to a terribly written article; http://boingboing.net/2013/01/29/american-insurers-charge-reckl.html

Like most garbage there is a “catchy” headline and zero to no substance behind it.  This article tries to study insurance rates and say that “rich” people get better rates.  Now although I am not a scientist I know that when running an experiment you must keep as many factors equal as possible.  This “experiment” did not.  The facts;

Using two hypothetical characters the group compared premiums offered to two 30-year-old women. Both had driven for 10 years, lived on the same street in a middle-income Zip code and both wanted the minimum insurance required by whichever state the group was researching.****Using the minimum insurance required already screws up this experiment.  Having the lowest coverage required makes you look irresponsible*****

The imaginary woman who wasn’t married, rented a home, didn’t have coverage for 45 days but has never been in an accident or ticketed with a moving violation was compared to a married executive with a master’s degree who owns her home and has always had continuous insurance coverage. But she’d been in an accident (again, hypothetically) that was her fault and caused $800 in damage within the last three years.*****Having a lapse in coverage, regardless of circumstances, has a massive impact on a rate.  Also an $800 accident may have minimal impact since it is below a surchargeable amount.  Also, when in the last three years was it?  You are also comparing married to not married.  Well if someone is in a relationship the spouse/partner will need to be listed.

The results were somewhat surprising, although there were differences across the five insurers. Farmers, GEICO and Progressive always gave a higher quote to the safer driver than the woman who’d caused an accident. Across all 12 cities in the study, State Farm offered the lowest or second lowest premiums.  ****Useless paragraph sorry you wasted time reading it****

“State insurance regulators should require auto insurers to explain why they believe factors such as education and income are better predictors of losses than are at-fault accidents,” said J. Robert Hunter, CFA’s director of insurance and former Texas insurance ****STOP, how about consumers find out how to get better rates rather than worrying about factors they may not have much control over?****

FACT”S BELOW;

  1. There are more factors that go into a rate then I can count.
  2. Income NEVER comes up when doing a quote
  3. Married/relationship factors in as well
  4. An educated consumer can do better than a consumer with a degree
  5. “rich”(whatever that means) and “poor” people can both have the same credit score

 

 

10.29.10
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Discounts or advertising

Enough already with “…with discounts up to 40%” or “..15mintues can save you…”  or ” the more policies you have the more discounts…”

  • Is it really a discount if your base rate is too high, to begin with? 
  • Is it really a discount if you have to purchase a policy you don’t already have to get it? 
  • Would you only give your accountant, doctor, lawyer or even your mechanic only 15 minutes to review something that can affect you, your family, your livelihood and your wallet? 

FACT, every company I have encountered offers the usual four discounts your car qualifies for; anti-lock brakes, airbags, daytime running lamps and alarm systems when it comes to cars.  Maybe you get another discount for using your car a limited amount of mileage, national average is about 12,000 miles per year.  Maybe you get a multi-car discount if you own additional cars.  After this, it starts to get interesting which makes it almost impossible to accurately compare companies.  Be careful, ask lots of questions and review your policy each year.

5/12/2015  Updates

The lesson here is the statements above really have not changed.  Rating engines(the algorithm behind the companies) are more sophisticated than when the post was written.  What does that mean?  It means that the percentages and advertised discounts are less important than they were at the time of this post. There can be wild swings in your rate but this is more based on changes to your personal status and chaaracteristics than anything else.

The larger companies still have not learned how to advertise their “product” and have instead allowed it to become commoditized.  This is actually a good thing for you despite the confusion.

Beyond that, the facts are the same; determine the coverage levels you are comfortable with.  Shop accordingly.  Plan on remaining in the upper portion of the available market instead of trying to find the lowest.  You’ll save less money by overshopping than you will be doing a reasonable amount of shopping.