How Much Do You Budget for Chargebacks?

[Josh]

It's ok Josh...you disagree, that is fine. You can't prove 40% lapse/NTO is profitable and I can't prove otherwise because neither of us have actuarial software. I at least put numbers on paper which is more than you have. As Rousemark had mentioned, companies terminate for poor persistency and it is a factor for qualifying on many incentive trips, so I am sure you are correct and I am wrong.

Don't play that game.

You said that folks with high amounts of written business that doesn't stick past 30 days are why FE premiums go up. I asked for your source and you tried changing the conversation to be about many different things rather than admit you don't have a source. I used very conservative numbers and couldn't make it add more than $1/month to the premium.

I did put numbers to paper (or at least to screen), despite your claim to the contrary. Your numbers prove nothing when they aren't even based on the issue in question.

 

[rousemark]

As hard as it might be to believe, if rouse said he hasn't had one, he hasn't had one. It's really that simple. He may be a crudgetity old fart but he is an honest crudgetity old fart.

I resemble that remark!

 

[senior-advisor-indiana]

If they're writing good business, nothing. Just sell it right and sell enough and it'll be a non-issue.

When you say non issue, are you referring to NTO's? This thread is very confusing. Can you back up this claim?
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I can see how NTO's could drive the price way up. You also have to figure in the agents that don't pay back the charge backs...

 

[tins]

I can see how NTO's could drive the price way up. You also have to figure in the agents that don't pay back the charge backs...

Most agents pay it back pretty quickly. Unless it's some crazy $1900 chargeback...or something like that.

 

[jamesflou]

Turned into and interesting argument or debate. Seems that on FE lapse of 40% 1st year that the agent will be basically paying the commission advance back and really bear the brunt of the charge backs. I asked my old college roommate who is a Senior Actuary and he said that underwriting on FE is not as expensive as term and thus the 500 thousand with 40% lapse example is not much of a factor in pricing. Depending on the chargeback schedule anything after 6 months to 18 months are the mostly costly to the company because agent keeps more of the commission.

 

[senior-advisor-indiana]

Most agents pay it back pretty quickly. Unless it's some crazy $1900 chargeback...or something like that.

Well it would have been paid back today except some agent sabotaged my appointments today.

 

[RonSmith1984]

This took a fast turn into a childish pissing match.

 

[Rearden]

Welcome to the Insurance Agent Forum.

This took a fast turn into a childish pissing match.