Rate increases are bad for everyone

Unfortunately people have come to accept rate increases with their auto and home insurance policies.  Kind of sad.  They have heard all sorts of silly excuses;

” Rates are going up across the state…”

“It’s inflation…”

” The big storms across the country are the cause..”


Rates go up because companies can raise rates PERIOD.  That is all, for the most part they do just go up.  Now this kind of rate increase is the main culprit.  FACT is if your driving record has changed since when you took out the policy your rate should go up.  But now it also goes up if you have a home insurance claim as well.  Thing is most home insurance claims are avoidable and most times you see an increase.  Sort of like with auto insurance, like it or not ANY accident that shows up on your record will likely have an impact.

But what is the next level?  Well now that we see what happens to the consumer lets watch it get worse.  So Company A increases rates so someone they insured calls their agent.  Now is this company is the only option the agent has to work with both Company A and the agent will now likely lose this customer.  Congrats, you tried to get more money now both the company and the agent lose money.

Now lets say the person is with an independent broker.  Well now Company A, who is in a bit of a partnership with the agent/agency, may not have the best available rate.  But since it costs more to get a new client than keep an old one the agency “shops” for a better rate and finds one.  Even if the commission rates(insurance is not a not-for-profit) are the same from the old company to the new one the agent still loses.  See the time you have to invest is what is at issue.  Without the rate increase you have a seemingly happy customer and a briefer annual review.  With the rate increase we have a disappointed customer and more time spent making things better.

When the things we do for profitability are not gaining profits it might be time to change things.

Markets change, I get it.  Times and people change, I get it.  Arbitrarily raising rates “just because we can” is hindering the long term results and profitability of an entire industry.

Just some thoughts.  Could go longer.