JANUARY 2001
I
can remember almost 10 years ago when Suncoast General Insurance along with many
other general agencies, fell on hard times, similar to now. Garamendi was
entering the Commissioner's office and many companies left the state because
there was a general sense that California was no longer a good state for
insurance. When insurers feel that they can not adjust there rates in a timely
manner, whether it is up or down, they lose confidence quickly and will migrate
to friendlier environments (other states). Can you blame them? Is there a law
written somewhere that insurance companies are only allowed to make enough money
to squeak by? It feels that way in California these days. Reinsurance
companies have forced many carriers to accept larger portions of risk and less
commission to pay themselves and their agents and brokers and quite frankly, I
don't know how some of the general agencies are still able to pay their bills
with the crappy reinsurance treaties and agreements they have had to accept.
Confidence will eventually come back but the question is when. There have been
guesstimates that 2004 will bring back more favorable terms, buy why 2004? Could
it be sooner than later. Sure it can but we must have a much stronger stock
market for the companies and reinsurers to make money on that end of their
capitol investments, not to mention that the need to produce underwriting
profits and that will take premium adjustments. Will John G. help or hurt the
industry with all of this in mind? One would like to think that he learned his
lesson from his last experience as the commish and would serve the public more
efficiently by encouraging competition amongst the carriers. The more choices
that the public has to chose from, the better chances they have to find an
insurer that fits their needs and budget. And we all know that there is nothing
good about a state with a handful of large direct writers who constantly raise
their rates because "they are the only game in town."
Currently, Statefarm and Allstate have major problems and are looking to
non-renew and/or cancel many isolated relativities that they have lost a lot of
money on including but not limited to youthful operators, homes with wood shake
roofs, homes with water losses regardless if the current or previous owner
reported it, just to name a few. The D.O.I., under the watchful eye of Judge
Lowe, did a terrific job in allowing insurers to adjust their rates over the
last couple of years to higher levels, but let's not forget how far they came
down a few years prior. This business cycle reminds me of an old scientific
proof, "…for every action, there is an equal and opposite reaction."
And boy did that come true. Rates were much too low in during the late 90's as
carriers tried to buy market share. That works for deep pocket companies such as
Deerbrook, Mercury Insurance, Infinity and Unitrin but certainly not the Pacific
Pioneers of the world (and you know all of the names that we suffered through).
But, with all of the challenging times, I have know the agency owners who are
still in business and they are getting stronger and the way it is being done is
through the realization that waiting for a bull insurance market is foolish.
These agencies are not waiting. They are aggressively pursuing other forms of
income whether it is by cross-selling mortgage refinance, commercial insurance,
CPA services and many other opportunities. There was about a 10-12 year period
there that an agency could simply open with an ad in the yellow pages and make
money. NO LONGER.
The Yellow Page rip-off has been exposed and fewer and fewer agencies are throwing their money away. They use this capital to higher better agents to sell other products or to market their agencies in much more creative ways such as soliciting direct writers for some of their rejected business, canvassing title companies or advertising within real estate publications. Believe me, there are numerous other avenues that your hard earned money should be working but it all depends on the essence of your agency. Are you preferred, non-standard and what appointments do you have that will attract your target market? Do you service the Latin, Chinese, Russian or other ethnic group community. You want to know a quick way to get clients? Every time you sell a policy, staple a colored paper flyer to the top of their papers that says the following, "Thank you for your recent purchase of auto insurance. We want to be your "one-stop" insurance agency and can also help you with renters, homeowners and business insurance, just to name a few. Please contact me the next time you need insurance."
It works. It works. It works. Here is another tip. Every time you sell a policy,
staple a $25.00 referral few coupon and tell them that you will give them
unlimited referral fees as long as they mention your name at the time of
application and follow through with your promise. I have one client who has
brought me 11 new policies so far - his family owns a Chinese restaurant and few
of them speak one bit of English. Referrals are the best. And a final thought.
Before you complain so hard about a companies lack of product or service, don't
forget that it IS a market and that someday soon they will have more markets
that you will need. Do you think they will remember the agencies who were loyal
and understanding during the tough times? Damn straight. So don't bite the hand
that feeds you. It might just bite back.