How Do You Explain Premium Increase by 25% to Your Clients?

[Guest]

You know, you must be doing something wrong.

I only have 1 carrier who required us to use a certain dollar figure per square foot, even if the replacement estimater is lower, they require us to use their minimum number, and they will go in and change it if you dont. Maybe this carrier has a requirement like this?

 

[VolAgent]

You know, you must be doing something wrong.

I only have 1 carrier who required us to use a certain dollar figure per square foot, even if the replacement estimater is lower, they require us to use their minimum number, and they will go in and change it if you dont. Maybe this carrier has a requirement like this?

That is my thought. If a carrier does it to every single piece of business, you messed up somehow. Either you didn't understand their rules or something.

 

[AZ Insurance Guy]

200 sq ft to 235 sq ft is kind of like missing a whole second floor.

 

[djs]

Time to get some new contractors if it cost $235/sqft to rebuild an average house!!!!!!

Okay, the conversation will go like this....
I've got good news and bad news....
Bad news is the carrier I placed you with has decided to raise your premium.
The good news is you get to screw them over by cancelling your policy and placing your business elsewhere......

Next step is to make sure you are calculating reconstruction costs correctly. I highly recommend cost estimator software rather than $$$/sqft, mostly because it gives you something to fall back on if there is a dispute, either high or low.

Dan

 

[natalie1954]

Be proactive and reshop the rate. Look out for their best interest.

 

[NCAgent]

I like what people are saying here about moving the client over if necessary. I just had this issue where my carrier contacted me because I only did 80% to value on a 250k house and they tried to raise it. It happens.

However, at least with my carriers here, if something like that changes, we hear about it through e-mail, underwriting, and our carrier reps a few times first. Either you need to find out why they aren't telling you or need to see why you aren't getting the memo.

Raising things by 35/sq ft also sounds like the company got screwed in premiums vs claims or faced issues with people being underinsured and/or guaranteed replacement cost coverages, so if that happened it might be a good talking point for the client. The carrier found that 200/sq ft wasn't enough due to past claims and just made it effective that you had to change it. Carriers usually do this when they got burnt or are trying not to get burnt in the future. If there were a lot of claims going on, then the client will understand. Any horrendous storms in your area or other disasters, or a large frequency of claims?

But I'm in a similar boat, here in NC they just did a rate increase on pretty much everyone, across the board. A lot of companies are now stopping monoline homes as well. So now I have to tell people that things I quoted them in Nov aren't the same rates anymore, or that my HO is 40/year higher than what they have now but that the policy the currently wield expires in March so it will have a nice rate increase...

Companies go hot and cold. I'm glad I'm independent for that reason.

 

[iiinycboi]

let me clarify something, the quoting system will auto change the dwelling coverage depending on the sq ft. (if it is too low, it will not even let me lower beyond the minimum needed) it will say for reference on the bottom min 200/sqft coverage. So i usually dont even input the dwelling coverage, i look up house records and input (for example) 2546 sqft brick house 2 family 1945 owner occupied and it will auto put $509200 for coverage. I can only go up from this number since this is the min. coverage needed to RC the house. I usually round it off to nice numbers and put in 510,000 coverage.

Then the premium it pops out depends on the number of families, structure, occupancy, year built, and other coverages needed.

So for example above, it comes out to 510,000 dwelling 500,000 liability and it will say 725/annual. Now 2 months later, i get an email saying oh we determined that the insured needs 235/sqft not the 200/sqft that we said before. So now that person needs 598310 for the house. Therefore we will be charging him 200+ for the extra 88310 dwelling coverage.

All the premium quoted was approved by the system then by the underwriter before it was bound.

I will be proactive though, i have to wait till the holidays are over and i will be re-quoting other policies that he can switch to.

 

[Bertolinoins]

Find a different carrier, if you needto touch a HO policy more than once you are losing money on it for the first year. Having to do this consistently is a time drain that is keeping you from closing more profitable business. Use a different carrier if you can or learn their guidelines inside and out.

 

[Guest]

Well, I would have the company rep in my office first thing next working day, threaten to cancel your contract with them and they will show.

Second, what are other carrier replacement coming back as, run some and show them to the rep.

Find out why their system is wrong. Make the Rep call the clients, I have done that before.

Something is completely fishy about this, you havent told us what carrier this is, I would like to know incase I have them.

$200 a foot seems pretty high, at least in MY area, the minimum is $125 a square foot.
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and another thing, I wouldnt write a single piece of business with them for a long time.

 

[Josh]

Not meaning to sound harsh, it sounds to me like you have a quoting issue. When I was doing P&C I'd always try to go over the way the replacement cost was generated and point out that with their current policy it may not actually be enough, so apples to apples our rates would be better, but that they might end up needing to buy more insurance coverage because the replacement cost might be more than it was before.

Do you have a mentor helping you or not so much?