Preferred Carriers VS Non-Standard Carrier

[dahonored1]

Are there any significant differences? I tried explaining to a client that their current company (although much less in premium) is a non-standard company, and that the company I am offering him is slightly more expensive, but is considered a preferred carrier. When it comes down to it, price is the major selling point to him, and he doesn't care whether its non-standard or standard. Am I missing anything??

 

[djs]

You have to be missing something. A standard carrier should have lower premiums then a non-standard. If its not, then you need to figure out why not.

It does happen though if they are acceptable to the standard carrier, but not their ideal market, i.e., maybe 1 accident or low credit scores or ???? whatever, but close and acceptable. Non-standard carrier might have a better appetite for some of these drivers and have lower premium.

If thats the case, why push them into a standard carrier to pay more? Okay, claims might be a better experience, but if its a liability only policy, this won't matter much either. The standard carrier might offer better policy limits, but if he is shopping price, this may not be a real issue anyway.

My guess is, you need to find a different standard carrier for this risk, or let him stay where he is for now.

Dan

 

[indienoise]

I see nonstandard carriers beat standard carrier premiums a fair bit. Normally when this happens, there are a LOT of holes (or at least cons) in the nonstandard policy: named driver, lack of grace period, requires immediate payment when endorsement creates additional premium, no substitute vehicle coverage, etc. If the client can't appreciate the differences, he probably fits the nonstandard profile anyway.
Safeco is a perfect example of this scenario. They'll take risks that many other standard carriers would decline, but they kinda make their statement with their premium. In my area, they are typically in line with progressive's premium when the prospect doesn't hit their preferred tier.

 

[dahonored1]

I see nonstandard carriers beat standard carrier premiums a fair bit. Normally when this happens, there are a LOT of holes (or at least cons) in the nonstandard policy: named driver, lack of grace period, requires immediate payment when endorsement creates additional premium, no substitute vehicle coverage, etc. If the client can't appreciate the differences, he probably fits the nonstandard profile anyway. Safeco is a perfect example of this scenario. They'll take risks that many other standard carriers would decline, but they kinda make their statement with their premium. In my area, they are typically in line with progressive's premium when the prospect doesn't hit their preferred tier.

I am starting to write some Nat Gen in my part of New York, but the wholesaler is offering 5/5. Is that fair without a direct appointment? Should I look elsewhere?

 

[indienoise]

I am starting to write some Nat Gen in my part of New York, but the wholesaler is offering 5/5. Is that fair without a direct appointment? Should I look elsewhere?

What does Nat gen pay in NY? I've trypically heard 15%. One third is a horrific split. Even if they only pay 10%, earning only half is pretty bad.

 

[dahonored1]

What does Nat gen pay in NY? I've trypically heard 15%. One third is a horrific split. Even if they only pay 10%, earning only half is pretty bad.

I like to think that they pay 10% but the thing is theyre not appointing direct for new agents...so I have to go through wholesalers. Apparently they pay 5%

 

[VolAgent]

I like to think that they pay 10% but the thing is theyre not appointing direct for new agents...so I have to go through wholesalers. Apparently they pay 5%

Surely you can find something that is going to be more profitable to market?

 

[chaseman]

The next time this client shops their insurance through some standard carriers, they will be offered a higher premium than they would have been if they had a standard carrier as prior insurance instead of a non-standard. In some cases, standard carriers consider non-standard prior coverage to be rated as "no prior coverage" & will decline offering a policy at all, or rate it at a higher tier. Prior standard coverage is looked at more favorably than prior non-standard coverage by several standard carriers. I hope this helps.

 

[Derrick]

Surely you can find something that is going to be more profitable to market?

Depends what his goals as an agent/agency are.

If they specialize in non-standard, to some degree, then yeah, try to find a carrier that will pay you more. Or in this case, a better split between you and the wholesaler. As anyone knows, non-standard always requires a bit more work and is staffed accordingly.

If not, at least you can keep them "within the agency" but ultimately pass on the work that goes into non-standard to the wholesaler. The non-standard types always have problems, payments, endorsements, roadside, etc. By pushing that off to someone else within 30 seconds, "We don't handle the payment processing for Nat Gen, here's your policy #, and here's the number you're going to need to call." It turned a 20 minute conversation about how they can't pay their bills but still bitch about it, into a minute convo about how we don't handle the payment processing, no access to the information, nothing we can do about it.

 

[tpowell138]

Find a different way to spin it... First off I would bet the E&S policy is under a co-insurance clause 80% or 90% with ACV not RC.
With those two differences you should be able to explain why the extra money is worth spending.

As far as straight up pricing... non admitted carriers are not regulated as hard as standard carriers. They write their own policy forms and for the most part their own rates. Typically if a standard company will quote a risk it is most always cheaper, especially after policy fees. You could have a rare situation.