Carrier Reps - I FIGURED IT OUT!!!

[Matt37]

^So why would a carrier even bother writing something that's only a 5% stake?

Because its profitable business that might not have a lot of competition and the reinsurance rates might be good.

In my example: Fuel Dealers were a tough to place class and Munich Re worked with us on a treaty that was good and we still made a nice amount but its a class there is no way you can take on 100% of risk.. we only took on 5% exposure in house to be safe.

None of these carriers are taking on 100% risk .. its all spread out with reinsurers.

When you write a condo with Travelers or something .. Travelers might be taking 50% of it .. that would be a lot.

 

[insurance1822]

So you're telling me that at most...carriers are only holding 50% of the risk? I didn't realize reinsurance accounted for that much...

...who makes more money...RE's or the retail carriers?

 

[Matt37]

So you're telling me that at most...carriers are only holding 50% of the risk? I didn't realize reinsurance accounted for that much...

...who makes more money...RE's or the retail carriers?

well it varies across the spectrum but yes most of the time .. these reinsurance giants absorb a lot of it.

Part of the reason why in FL homeowners is still so expensive even without a major storm as of recently is because those carriers are bulking up on massive reinsurance .. FL carriers in particular keep bare minimum risk in house.. but their premiums are so high because their reinsurance is insanely high.

essentially they are just taking your insurance premium and using it to pay their RE-insurance premium... and on and on it goes..

As far as who makes more money like anything that depends but you think underwriters for carriers are bad? deal with reinsurance underwriters and actuaries ... they are tremendously conservative...

 

[insurance1822]

My cousin is an actuary for a huge RE & many times I find myself wanting to punch him in the face. This is good information you share.

See this is 'carrier side' information that I find very interesting & valuable. I learned something today Matt37.

 

[GXR2]

Santa Claus ... Easter Bunny... Jesus ... Devil ... Railing Monsters .. "Donald Trump is ethical"

All parents lie to their kids by finding ways of justifying it. Many parents believe the lies because their parents lied or it's culturally ingrained from reading parchment pages of Semitic times.

You don't need to lie to your kids to get a point across. Nor do you need parables or stories.

In insur666 example with his kid on the railing ... To each their own but I would have said to my child...

Do you see this egg? Watch what happens when it falls over the edge. Now, let's go downstairs and look at it. You could die just like that smashed egg if you fall over the edge.. Which means you'll never see mommy, or daddy, or rover, or anyone ever again because you'll be dead and gone forever ... and mommy and daddy will be sad. You don't want that. Don't ever, ever, EVER!!! play on the railing. Understand?

Your kid WILL understand. They will remember dad's wisdom and teach their kids the hard truth.. And so on..

Back to the OP question ...

Oh, how apropos the winding road this conversation has taken.

Insur666 .. You're on the railing about to fall off. Get off the railing. Get it?

Now go clean up the egg.

Oh an P.S. Never EVER call the carrier reps. Call your underwriter if you have a question.

 

[shawnmwalker]

I am glad Ins4567 got a lesson on Reinsurance. This is a great segment of the industry to learn about when trying to understand the larger picture.

Consider one more thing. Reinsurance renewals. I believe they are 3 or 5 year contracts. All seems fine until a carrier gets a renewal and they are unprofitable. Re comes back and says we can keep doing this but the Reins is going to cost more.... Causing?..... Rates to go up....Good. glad you hung in there with me...

Also, this is why some times a carrier will be artificially low for a time.

And, the gent above hit it on the head- Carriers in FL are giving TONS of money to Reins programs and stil making a huge profits because the wind has not bown for some time.

 

[insurance1822]

Are there brokers between RE's & retail carriers? I wonder how that market does business. Of course I understand the basics of RE however this definitely does shine light. Won't make a difference trying to explain this to Joe the plumber when his auto insurance goes up, but...I like it.

 

[FL P&C Broker]

^yes. They are all hanging out on their yachts in Bermuda.

 

[marksinsurance]

well it varies across the spectrum but yes most of the time .. these reinsurance giants absorb a lot of it.

Part of the reason why in FL homeowners is still so expensive even without a major storm as of recently is because those carriers are bulking up on massive reinsurance .. FL carriers in particular keep bare minimum risk in house.. but their premiums are so high because their reinsurance is insanely high.

essentially they are just taking your insurance premium and using it to pay their RE-insurance premium... and on and on it goes..

As far as who makes more money like anything that depends but you think underwriters for carriers are bad? deal with reinsurance underwriters and actuaries ... they are tremendously conservative...

Thanks for sharing, Matt. Helpful indeed.

Reinsurance companies are a big player in the CA fire insurance market as well.

 

[FL P&C Broker]

Reinsurance rates have been trending down here recently. The problem now that has caused rates to go keep going up is a tremendous amount of roofing fraud from hail claims and AOB abuse.