HOW MANY WILL WE LOSE?
submitted by Sonny DiMeo

     As you see the marginal auto programs slowly but surely exiting the state, you should ask yourself, "Do I have the right markets to make it through the next wave of hardening and market consolidation?" It's possible that you do, but you can never be too careful. A.M. Best publishes a P/C guide once a year with all the information that you need about insurance carriers including who owns them, their balance sheet, what lines of business they primarily write, their reserves and of course, their rating. Also, when you see a general agency offer a new program or you become aware of a new carrier entering the market, you should consult A.M. Best, Moody's, or Standard and Poors for all of this financial information. Stability is what your agency needs NOW more so than pricing because rates are undergoing a major overhaul to the upside. Look for appointments with companies / general agencies who have proven themselves in the market over many years. They have the contacts and they know how this business works in soft and hard times. Now, for a moment, reflect back on the carriers who have had the most problems. How long were they writing business in this state prior to having loss ratio problems? Who did they clone or copy for their rate structure?


     What was their criterion for appointing agents? What did AM Best have to say about the company? After answering all of these questions, you will quickly realize that it was probably too good to be true. I realize that we all have to sell policies to stay in business, but I also know that many companies are competitively priced and you could have placed that same client with a better company for a few extra bucks. I know. I have done all of this before and learned the hard way. I had to rewrite three different books of business due to my carelessness and I can tell you that it was not very profitable. Get familiar with selling company stability soon because by some estimates, the number of auto insurance company products that you see on the comparative raters could drop by as much as 25-40% next year.


     Please don't get freaked out about all of this because it is a great opportunity for companies and agencies to do better than they have since the market began to harden. Some of the companies and agencies that you have come to know well, will not be there to help you in 2001 unless they proved their ability to run a profitable program in 2000. Additionally, those agencies who sold the cheaper, less-desirable and problematic programs are going to find out that they DON'T have the tools to make it this coming year and will close there doors, merge or consolidate ... what ever the case, they will be less of threat to your business and that is the edge you need. Without mentioning names (because if I forget someone, I'm sure I will hear from them), be selective with who you are selling and look at ALL of the companies that come up on the decision screen and notice how closely they are priced. If the premium is within $100 or so, consider selling the company you feel has the best service and stability. I always ask ONE question of myself prior to taking an appointment.
"Would I insure my mother with this company?" Funny but true.

 

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