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Posts Tagged ‘insurance carriers’

A client who had been insured by a well known carrier recently asked if there wasn’t “any other carrier out there” that could also offer broad coverage for his large home “that didn’t charge an arm and a leg”. I explained that his carrier’s rates reflected their overall loss experience, and reminded him of a claim that he had many years ago and how happy he was with the outcome. Pressing his point, he asked if there were any carriers that had “better loss experience” so that they were able to price their coverage at a lower cost.  Enter a new carrier I’ve written about frequently here – Pure High Net Worth.

This excerpt is form a recent professional journal assessing the marketplace for high valued home insurance summarizes the opportunity: “However, there is some competition out there for these big players. For instance, a relatively new company from Florida called Privilege Underwriters Reciprocal Exchange (PURE) is making a big splash on the East Coast right now.  PURE offers similar features to Chartis and Chubb, and is very open to coastal properties where others are more restrictive in coastal areas.”

When my client reviewed the terms of Pure’s offer, he asked how the costs could be appreciably lower given the very similar coverage. I explained that because Pure was just beginning to add new risks, they had not yet experienced many losses, adding that Pure’s risk selection process relies heavily on credit scoring, which they believe will help attract policyholders who better manage their finances and their homes. The client shared that he regards this as a de-facto “sale” on home insurance, and told me I should explain it in such terms to others.

Well —– although insurance carriers do not have “sales”, it is fair to observe that new carriers entering the marketplace without the burden of prior losses and who also carefully select the risks they insure are able to price their policies at rates that can give the impression they are on “sale”.  For those who find the idea of a “sale on insurance” appealing, please contact me to examine an offer from Pure.  Meanwhile, as an independent risk advisor, my advice on “who the best carrier is” remains unchanged:  it is whichever carrier best meets that particular client’s specific protection needs.

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 In an attempt to speak with a local attorney about the importance of un / underinsured motorists coverage, I clumsily asked how he felt about the topic. My awkward phrasing provided the perfect fodder for this attorney to display his oh-so-sharp wit, and he mockingly replied to my question “Why, I’m 100% against uninsured motorists!”  

Once he was done laughing at his own joke (it took awhile), I explained that what I intended to ask was whether he ever felt it worth his while to recommend to his clients the importance of structuring their automobile insurance to better protect themselves from the costs of injuries caused by a driver with either no insurance, or very low limits of liability coverage.  As I recall, he wasn’t so against uninsured drivers that he felt it important enough to makes his clients aware of the need to protect themselves and their families. According to this news report, neither is Geico.

A large part of Geico’s ability to help consumers “save 15% in 15 minutes” stems from the fact they feature a “select your own coverage” business model. One of the outcomes of DIY insurance: according to this report (check the link above), Geico is not complying with state laws designed to help consumers make informed coverage decisions. Why not?  They are not complying because it is more profitable for Geico to allow consumers to select less protection from un and underinsured motorists

Call me @ 631-329-7246 if you want to understand WHY Geico and several LARGE insurance carriers encourage consumers to “save money” by skimping on important un/underinsured motorists coverage, and to learn what you can do to actually protect your family and your clients from the many drivers who have little or no liability coverage.

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I cringe each time I see major insurance carriers advertising their coverage using “save ___% in __ minutes” or “name your own price” deceptive sales pitches. Most sophisticated consumers understand that in order to significantly lower insurance costs, certain sacrifices in protection (known or unknown) lurk somewhere in the fine print.

Meanwhile —- there IS a way to purchase high limit personal excess liability (often referred to as “umbrella” coverage) at costs between 30 and 50% below the prevailing market costs. Often, coverage enhancements can be included that even expand the protection normally available with such policies. More coverage at a lower cost —– but how?

As always, there is a “catch”: more protection for less money can be arranged only when carriers are presented with a large enough group of applicants who comprise an eligible “Group”. “Group Personal Excess Liability” (GPEL) is a concept that has been around for decades, and is regarded as a valuable voluntary benefit at many large corporations.

The leading underwriters for this product are Chubb, CNA, Chartis, Fireman’s Fund and Ace. The differences in eligibility, costs, and coverage features offered by each carrier are subtle, yet important. Generally, the program is most successful in a workplace with a group of 10 or more participants seeking liability limits of $5 million or more. For larger groups, the coverage enhancements, ease of enrollment and cost discounts can become very meaningful. I’d be happy to have a conversation to help you examine whether this program can benefit you and others you know, or clients you advise.

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It’s no coincidence — insurance carriers who have always invested heavily on advertising to attract new insurance buyers are spending even more to do so this year, and are attracting more buyers with what can best be described as a very compelling “save money now” message.  

Because the many differences between insurance policies are so difficult to evaluate, many consumers are too often enticed to prioritize lower premiums over the harder to discern quality of protection that is provided.  Informed consumers should seek assistance to closely examine HOW cost reductions are being achieved.  A reminder: although buying insurance coverage is not a lot different than other purchases, the axiom “you get what you pay for” usually only becomes apparent after a loss.  While the “save money now” pitch has short term appeal, the real question is at what cost down the road? 

My suggestion: rather than moving coverage to carriers whose central theme is “save money now”,  first explore the many opportunities to make high quality insurance coverage more cost efficient.  Professional risk advisors have a variety of strategies to help their clients structure quality insurance coverage that is also cost efficient.  One of the most overlooked strategies we offer our clients is described in this link to a one page summary

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I am often pressed to explain the rising cost of insurance — not an easy task. As with the rising cost of anything, a complete explanation involves revieiwng many factors (boring). There is one leading factor driving the rising cost of insuring homes that the WSJ recently decided to cover.

 

I am surprised that many I speak with do not realize insurance carriers also buy insurance on the risks they insure. The process of buying “reinsurance” allows insurance companies to spread their exposure to large, catastrophic losses that can strain their ability to pay many claims and remain in business.  

 

I share this because the factor with the greatest influence on the rising cost of home insurance (especially those in coastal areas) is the rising cost of the reinsurance that insurers are paying. Of course, those rising costs are passed along to all of us in the form of rising premiums. This page one Wall Street Journal article offers a thorough and interesting explanation behind the factors driving of the rising cost we are all required to pay to insure our homes.

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“Save Money Now” (and the many variations) has to be the first ever marketing pitch. Most consumers know to ask themselves “how is it that the savings are being achieved?”  Ask yourself: do you think an insurance carrier offering to lower your insurance costs has not first determined how they can reduce the protection provided by their low cost coverage?  If it looks to good to be true……

There are smart ways to reduce the long term cost of insurance coverage without also sacrificing valuable protection. Remarkably, these strategies are often under-utilized, as many consumers are instead lured by the never ending “bargain” advertsing hype. Check this one page primer for an overview on how to make quality insurance more cost efficient.

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Recent news reports tell a story that insurance carriers know all too well: residential construction projects involve a number of risks that can create significant damage to your home.  Determining who can be responsible after a loss can be very challenging. While it is  important to have the right insurance coverage, it is just as critical to know the steps that can be taken to avoid or reduce the chances of the most common causes of loss.   

This insightful report explains the risks, as well as the precautions that can be taken to reduce the risk of loss during home renovation and construction projects.

 

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