Enough is enough from three perspectives

So below you will find a short report that I receive daily.  This shows policies that renewed, the average premium change and the percent increase;

Renewal Details by LOB

LOB Number of Renewals Average Premium Change Average Percent Change
AUTOP 2 $121.38 10.21%
HOME 5 $61.80 7.45%
DFIRE 2 $47.00 7.32%
PUMBR 2 $0.00 0.00%

Now, showing you companies and names is something we shouldn’t and cannot do.  So let us focus on a few things;

1. Yes,   9 of the 11 policies so a rate increase.  None of them had claims or any other changes these are simply increases companies choose to take.

2. PUMBR stands for Umbrella policy.  Rare to see a rate increase with these.

3. Name ANY product in your life that you would allow the cost to go up when the quality of the product has not gone up?

So three perspectives and some notes

CONSUMER; Yes, this happens almost every year with most insurance policies.  Not with every company and not with every policy but with most.  Now think of the products you buy.  If the rate stays the same or goes down a little does that prompt you to switch?  Seriously, all things being equal if a company keeps the rate even are you leaving them?  What if on occasion they give you an unprompted discount?

INSURANCE COMPANY; Have you looked at how much you spend on advertising?  Have you looked at the acquisition cost of your new business?  Have you looked at the closing ratio of new quotes?  Have you thought for a moment and said: “you know, it costs us more to get new customers than to keep current ones…”  Or ” you know, we have been profitable on this person for two years, maybe earning $x from them for five years is better than earning $x +$y for two years or worse yet only $x for one year…”

What about your underwriters?  Think about them for a moment, they determined what people fit best into your system.  This is a big piece of their job  Problem here is that most preferred companies like the same people with only slight variations.  So in other words, your best customers have more options than you think.

Now factor in your actuaries; would having a customer longer give your more data?  Yes.  Should having more data help with your underwriting?  Well if it doesn’t you have bigger issues.

THE INSURANCE AGENT; Now we need to break it down two to three ways;

Captive Agent; So you only have one company.  You really, really, want to see your companies keep rates level.  If not you are pretty well screwed.  Really, there is no getting off that hamster wheel with just one company.  Keep buying all the leads you can and hope for the best.

BROKER; You are in the best position of them all.  Imagine you have 3-7 preferred companies, if you do it right you should be it a 98-99.5% retention rate.  Not to mention you should be closing on 70% if not 80% of your quotes.  Unlike the captive agent, rates go up you just move them.  Heck, even if they stay level you can likely pay attention to some live data points and strategically move households.  Remember a few things that we said already and some we didn’t

  • any way we shake it out, it costs more to get new customers than to keep current ones