How Much Do You Budget for Chargebacks?

[somarco]

Not sure what you have against the old guy, but he's as honest as it gets.

Who you calling old guy?

FWIW, and I don't write FE, mostly major med (and now Medigap), I can't remember when a client refused an offer from a carrier.

I have had more than one where I felt the offer was not a good one and I suggested they refuse it, but can't say I have had a client refuse the policy when I encouraged them to take it.

Of course I am not as old as Rouse, but I am gaining on him.

 

[tins]

Of course I am not as old as Rouse, but I am gaining on him.

Rick told me you could remember, in your youth, when Eli Whitney invented the cotton gin. Those must have been some boisterous times!

 

[MGA]

TINS
I have no problem with Rouse. I will even state that I am sorry if I came across in the wrong way but i don't want any new fe agent to believe that they will not have any NTOs. It's just real hard to believe that in 41 years he has had no NTOs and when it's stated that he was a debit agent and never had an NTO that sounds even more hard to believe.

 

[donamese]

Assuming it all fell off in the first 30 days, I made this. Commissions vs premium collected. I did not account for overhead or claims, just a simple chart of premium vs commissions. You can see the difference in premium vs commission paid out and that it takes time to level them. I am aware that portions of new business will be reclaimed to pay some debit balance, but that is dependent on New Business coming in...should it stop then this chart remains true.

And yes I put in a call to see if my actuary contact has anything that can show it without revealing private company data.

Same chart with no lapses

Yr 1
$99,750 Comm
$45,500 Prem

Yr 2
$131,075 Comm
$129,500 Prem

Yr 3
$135,975 Comm
$213,500 Prem

Pretty significant difference if you bump this to 10,000 policies.

 

[MGA]

donamese
So how many years do you think it takes a company to make a profit on fe business?

 

[Josh]

You're ignoring a lot of facts here.

Fact 1: Insurance companies make money by investing the premiums while they have them.

Fact 2: That whole chart is ignoring that the premise of your argument is flawed. If the folks aren't keeping the policy past 30 days, your chart doesn't even enter into the discussion.

Fact 3: I think this is the biggest fact your ignoring, your claim was that policies that fall off the books before 30 days (the ~$200k in premium in the example of the producer that did a little over $500k in production) were raising the the cost of FE insurance.

Again, you claimed that the guys writing business that fell off the books in the first 30 days were a driving force in the way premiums were going up. That's the fact I'm questioning and looking for you to support.

 

[somarco]

Rick told me you could remember, in your youth, when Eli Whitney invented the cotton gin. Those must have been some boisterous times!

Never met this Eli guy and have never swilled any cotton gin. Bombay gin, yes, but not cotton.

Doesn't sound like it would make a good martini.

 

[GulfCoastIns]

So, just so we're clear.... HOW MUCH should a new agent set aside in the beginning if he plans on writing primarily FE insurance?

 

[Josh]

So, just so we're clear.... HOW MUCH should a new agent set aside in the beginning if he plans on writing primarily FE insurance?

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

 

[rousemark]

I have no reason not to believe it. Rouse has been pretty honest the whole time I've been on here...never makes wild production claims. I'd think just about everybody besides you will take Rouse at his word. Not sure what you have against the old guy, but he's as honest as it gets.

Thanks....... .