Forester's Rate Increase???

[wave828]

A little birdie told me that Forester's is taking a rate increase on their final expense business...can anybody confirm or corroborate?

After years of paying out about 20 more points that other companies with lower premium rates than most, I would think that this has been long overdue...

 

[Rearden]

That's been the rumor for a while...

I want your Foresters contract, please.

 

[Newby]

Does Foresters really pay out more or is it just 1st year heavy?

If you look at 10-year commission payouts I think Assurity, American Memorial, Settlers, and until recently Monumental paid more than Foresters. They just pay less 1st year but much better renewals.

Monumental just reduced theirs quite a bit but bumped 1st year 5-points so a lot of agents would think they got a raise. They really got a huge cut. Seemed to be the trend of the industry. Oxford and Forethought have gone that direction also. I think it's real bad for the agents.

I'll tend to sell more RNA, Settlers, 5-Star, Assurity, and other companies that pay 10-year level renewals if everything else is equal. You make more money plus your business is less of a roller coaster.

 

[jdeasy]

A little birdie told me that Forester's is taking a rate increase on their final expense business...can anybody confirm or corroborate?

After years of paying out about 20 more points that other companies with lower premium rates than most, I would think that this has been long overdue...

I don't believe that to be true. It's been being said for over a year now and no increase. They are changing underwriting and the applications to make it tougher to get. They do not have state approvals yet for all the changes.

As for contract levels, you must have some bad contracts with other companies if Foresters is your high one.

 

[donamese]

Does Foresters really pay out more or is it just 1st year heavy?

If you look at 10-year commission payouts I think Assurity, American Memorial, Settlers, and until recently Monumental paid more than Foresters. They just pay less 1st year but much better renewals.

Monumental just reduced theirs quite a bit but bumped 1st year 5-points so a lot of agents would think they got a raise. They really got a huge cut. Seemed to be the trend of the industry. Oxford and Forethought have gone that direction also. I think it's real bad for the agents.

I'll tend to sell more RNA, Settlers, 5-Star, Assurity, and other companies that pay 10-year level renewals if everything else is equal. You make more money plus your business is less of a roller coaster.

It depends on the restructure of the commissions and average tenure of the policy. I sell primarily Oxford Life and took a hard look at the new commissions when they changed them. I initially thought like Newby in that it was horrible due to the drop in renewals. I have a lapse rate of 23% inception to date (roughly 5 years). Using my business, the new commissions pay out more through 9 years then drop lower in year 10.

In a 9 year period there is a good chance for a client to die, get poached by another producer or run into financial issues and cancel the insurance. If any of those happen, I made more because of the front loading.

From a companies standpoint I don't understand it as it would seem to encourage agents to roll production rather than preach persistency but that is their issue to deal with!

 

[Newby]

It depends on the restructure of the commissions and average tenure of the policy. I sell primarily Oxford Life and took a hard look at the new commissions when they changed them. I initially thought like Newby in that it was horrible due to the drop in renewals. I have a lapse rate of 23% inception to date (roughly 5 years). Using my business, the new commissions pay out more through 9 years then drop lower in year 10.

In a 9 year period there is a good chance for a client to die, get poached by another producer or run into financial issues and cancel the insurance. If any of those happen, I made more because of the front loading.

From a companies standpoint I don't understand it as it would seem to encourage agents to roll production rather than preach persistency but that is their issue to deal with!

I can see your point. But some of the companies really go down after year five.

Overall I think agents need to always look at what the commissions are over 10-years with all their companies. If we focus on 8 or 9 years that's fine too. But if everyone only looks at year one, there is no need for the companies to pay ANY renewals at all.

 

[RonRoberts]

I can see your point. But some of the companies really go down after year five.

Overall I think agents need to always look at what the commissions are over 10-years with all their companies. If we focus on 8 or 9 years that's fine too. But if everyone only looks at year one, there is no need for the companies to pay ANY renewals at all.

What do you consider desirable year 2-10 renewals?

 

[Newby]

What do you consider desirable year 2-10 renewals?

7-8 is good.

9-12 is excellent

10-year level.

 

[WinoBlues]

7-8 is good.

9-12 is excellent

10-year level.

What average 1st year would you say is correct for each of these?

 

[360]

I agree, makes sense to look at 10 year point. RNA for example is 105 and 9 for years 2-10 or 110 and 9.25 for 2-10.