FE Companies Rate Increase.

[RichMcK]

I've noticed many FE companies adjusting their rates, is there any connection with the Affordable Care Act (Obama Care)?

With the presumed fear of increased mortality rate: doctor shortages, loss of care with longer waiting periods, death panels, etcetera.

Are companies shoring up their pricing to cover their future costs? Health Insurance companies are.

 

[Todd King]

Not that anyone here would know for sure, but I doubt very seriously this is the reason for increases.

 

[donamese]

I would presume it is mostly due to mortality rates they are actually receiving.

 

[GreenSky]

It's most likely because their investment income is way down so they must increase premiums to make up for this.

Rick

 

[GMDM100k]

Could be because an increase in marketing costs. I know its more expensive to advertise now. Airtime, mail costs, ads. For recruitment and leads. All went up in cost for me this last year.

 

[Newby]

It's most likely because their investment income is way down so they must increase premiums to make up for this.

Rick

This is definitely the correct answer. Most of them will tell you this when they have rate increases.

It's a huge problem for them.

 

[0b1kanobee]

It's most likely because their investment income is way down so they must increase premiums to make up for this.

Rick

That's could be one of the reasons. Sometimes they also increase rates to slow down business. Sometimes they will take options off the table to slow down business.

Insurance companies are like buffet bars. Sometimes you can go up to the bar 7 or 8 times before you are full and sometimes just 1 time and you are full. Just depends on how hungry they are for business.

Some annuities use the same principal. They adjust cap rates down or up, decrease and increase agent comp, take away certain products, decrease/increase minimum gaurantees, ect. ect.

A lot of businesses do this besides insurance. For example, if you owned a flooring company for instance and you had more work than you could handle and are appreciative but yet don't want to grow too fast, where's the first place you look? answer = rates.

Raising price or rates usually has an easing effect and increase in revenue without additional headaches.

 

[RichMcK]

I'm not upto date on Ob1's buffet bar example. I was under the impression rate adjustments had to be approved by the insurance commission of each state, rather than being hungry for business or less hungry. I thought rates had to be justified, as in Rick's example.

Using Rick's example on investments, interest rates have been down for years (why now?). I didn't think the cost of doing business (advertising etc.) would be included in rate increases as another poster suggested.

That's could be one of the reasons. Sometimes they also increase rates to slow down business. Sometimes they will take options off the table to slow down business.

Insurance companies are like buffet bars. Sometimes you can go up to the bar 7 or 8 times before you are full and sometimes just 1 time and you are full. Just depends on how hungry they are for business.

Some annuities use the same principal. They adjust cap rates down or up, decrease and increase agent comp, take away certain products, decrease/increase minimum gaurantees, ect. ect.

A lot of businesses do this besides insurance. For example, if you owned a flooring company for instance and you had more work than you could handle and are appreciative but yet don't want to grow too fast, where's the first place you look? answer = rates.

Raising price or rates usually has an easing effect and increase in revenue without additional headaches.

 

[0b1kanobee]

I thought rates had to be justified, as in Rick's example.

I wouldn't necessarily call his example justified. Just because one company may have invested better than another doesn't give them a free pass so to speak.

They could lower rates and tighten underwriting. Still have to get approval.

 

[Josh]

I wouldn't necessarily call his example justified. Just because one company may have invested better than another doesn't give them a free pass so to speak.

That notwithstanding, the market has been hurting for a while now. It's not like one insurer is hurting in that respect, it's likely (nearly) everyone. The market can't be in this much pain for this long without it hurting insurers that generally make their money off of investments vs unclaimed premiums.