Chargebacks - Non Standard Auto Business

Discussion in 'P&C Insurance Forum' started by Neil813, Jun 23, 2017.

  1. Neil813
    Offline

    Neil813 Member

    Posts:
    6
    Likes Received:
    0
    Hello all, I own an Independent P&C Agency in Florida. 95% of our business is non-standard auto due to our location. I love the business, and I know it can be profitable, one look in our area and there are agencies all over the place that have been there for a long time, so they must be making money. My question is; we have SO MANY chargebacks due to non-payment. What sort of system do you have in place for these clients? I don't understand how so many people can drive around without car insurance, it boggles my mind but that just seems to be the market we are in. It seems we have to almost be a collection agency to remind people to pay their bill. Any thoughts/experience on this would be super helpful. Thank you!
     
  2. indienoise
    Offline

    indienoise Well-Known Member

    Posts:
    903
    Likes Received:
    0
    State:
    South Carolina
    Request commissions as earned. It's the only way to have any stability/predictability with this market segment. Most NSA carriers prefer this method, and others will comply with the request if made.
     
  3. BlockO
    Offline

    BlockO Well-Known Member

    Posts:
    1,011
    Likes Received:
    0
    State:
    Ohio
    I would discourage that practice because it sets a precedent.... the customer starts to think that they're ok until they hear from you, and you become a babysitter.

    I've done non-standard auto for 7 years.... you can't eliminate chargebacks completely, but I've found that this strategy cuts it way down:

    -don't call them for the reason I mentioned above... let them get cancelled for non-payment.

    -as long as they pay during the reinstatement period, I let it go.

    -but if they pay so late that I have to re-write the policy, that's a problem! I'll let them get away with one re-write (maybe two if they've been with me for a while), but no more than that!

    -after one or two re-writes, I only quote them with 30 day policies. if they want longer than that, they need to pay in full for 2,3 or 6 months.

    -after a while, the customer will either get it, and pay more punctually, or they'll go away and become another agent's problem. either way, chargeback problem solved.
     
  4. insurance1822
    Offline

    insurance1822 Well-Known Member

    Posts:
    1,624
    Likes Received:
    1
    State:
    Alabama
    non standard business are all worthless bums.
     
  5. 1manshow
    Offline

    1manshow Well-Known Member

    Posts:
    1,578
    Likes Received:
    2
    State:
    Pennsylvania
    Little harsher than I would've phrased it...but yeah...run
     
  6. saieddie
    Offline

    saieddie Well-Known Member

    Posts:
    423
    Likes Received:
    0
    State:
    Virginia
    Just charge them an application fee every time you write a policy. You don't have to return the fees and it pays you for your or your csr's time.
     
  7. RickGerlock
    Offline

    RickGerlock Member

    Posts:
    18
    Likes Received:
    0
    Wish I could charge app fee in our state. Totally agree with the comments made saying do not call them to remind them of payments etc. That absolutely will make it so you have to do it month after month after month. The best thing we ever did years ago was turn down the non standard stuff. It always looks good on paper but the charge backs each month always made 2k checks closer to 500.00. It was a never ending game of reinstatements, cancels, rewrites and mind numbing conversations.
     
  8. BlockO
    Offline

    BlockO Well-Known Member

    Posts:
    1,011
    Likes Received:
    0
    State:
    Ohio
    If you had that many chargebacks, then there was a major flaw in procedure as far as not weeding the bad customers out. I will give customers a free pass, maybe two if they've been with me for a while.... but after that, I only write them 30 day policies... any longer than that, I would require payment in full..... that either straightened people out, or they became someone else's problem.
     
  9. RickGerlock
    Offline

    RickGerlock Member

    Posts:
    18
    Likes Received:
    0
    I am speaking of the customers that generally were placed in Mendota, Dairyland, Kemper and the like. Not all our clients. So in other words placing them there was the way to weed them out if you will.
     
Loading...

Share This Page