black knight
Expert
I concur with joshb, our agency follows similar protocol.
Need Help in My Auto Loss Ratio
- Thread starter brightonins359
- Start date
In personal auto there is not a thing you can do about loss ratio other than stopping writing new business and canceling all your existing business. That will have the effect of moving your loss ratio to a smooth zero.
The company sets the underwriting rules and they set the rates. You can't debit or credit accounts. You can't change MVR's, CLUE reports, or credit scores. The insurance company does not let you have any input on the rates nor do they allow exceptions to published rates (in my state this is dictated by the State).
You have no input on the risk selection decisions. The company determines which vehicles, drivers and violations are acceptable. If there is a judgement call to be made, the underwriter makes it, the agent doesn't even get much input into that.
Plus if an accident is serious enough, it is a lawyer that will determine how much your insured's liability limit will pay out. The lawyer may offer the whole ball of wax just because. Or a jury may award an incorrect amount. Those decisions all affect loss ratios and you haven't a say at all in that.
I won't even mention UM.
Tell me exactly where the agent has any control on a personal auto policy loss ratio?
The company sets the underwriting rules and they set the rates. You can't debit or credit accounts. You can't change MVR's, CLUE reports, or credit scores. The insurance company does not let you have any input on the rates nor do they allow exceptions to published rates (in my state this is dictated by the State).
You have no input on the risk selection decisions. The company determines which vehicles, drivers and violations are acceptable. If there is a judgement call to be made, the underwriter makes it, the agent doesn't even get much input into that.
Plus if an accident is serious enough, it is a lawyer that will determine how much your insured's liability limit will pay out. The lawyer may offer the whole ball of wax just because. Or a jury may award an incorrect amount. Those decisions all affect loss ratios and you haven't a say at all in that.
I won't even mention UM.
Tell me exactly where the agent has any control on a personal auto policy loss ratio?
- 415
You can be selective who you put with what company. As a IA I try to keep preferred clients with preferred companies. If I think someone is BS me about drivers in a household or something doesn't seem right I can choose not to issue the policy or I can put them with another carrier that loss ratio isn't a big factor for me. Also I can call a underwriter to recommend non renewals if I know something they don't DUI, DWI, if someone has moved out of state. Actually I have done this a few times. The agent has quite a bit to do with the loss ratio...but there are things that you can't control. Example one of my preferred carriers loss ratio was 37% last year...this year 101% had a couple of large losses!
Agents can't control that there are losses, but they can definitely impact the loss ratio over the long term.
Want your loss ratio to go up? Start working with used car dealers and writing their referral business. You'll have claims through the roof.
Want your loss ratio to go down? Write engineers, doctors, teachers, nurses, etc, that have a solid career, tend to have demonstrated personal responsibility and perhaps have a bit of savings.
I learned this the hard way, early on. While California doesn't use credit in ratings, I can definitely see the coorelation, even though it may not be an individual predictor. You look over enough policies and where the claims happen, you'll see trends.
Once you see those trends, figure out how not to write certain business.
Dan
Want your loss ratio to go up? Start working with used car dealers and writing their referral business. You'll have claims through the roof.
Want your loss ratio to go down? Write engineers, doctors, teachers, nurses, etc, that have a solid career, tend to have demonstrated personal responsibility and perhaps have a bit of savings.
I learned this the hard way, early on. While California doesn't use credit in ratings, I can definitely see the coorelation, even though it may not be an individual predictor. You look over enough policies and where the claims happen, you'll see trends.
Once you see those trends, figure out how not to write certain business.
Dan
How about learning to market in different areas of a metropolitan area? For example, if your office is in Phoenix, instead of just writing Phoenix spread out to Glendale, Chandler and Mesa. Be proportional; service 5 towns and try to keep no more than 20% of your book in any town. That will hold down on cat losses on the home and auto for your book. Cat losses like hail storms and tornados, for example, can devastate your loss ratio, but storms will typically run in a narrow band (hit or miss). That way your spreading out your risk on your P&C book. Contingency profit bonus' pay for alot of vacations!
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