It seems so frustrating. You get your renewal and your rate has gone up! How can this be? You didnt have any claims. You were the perfect customer. Heck, I mean, you never even called your agent for anything within the last 6 months. Why in the world do they have to do this? Why does this happen, it always seems like you cant get a policy and just leave it alone. The stupid insurance company always has to upset your nice peaceful scene with a new policy and new rates ever 6 to 12 months. Is there anyway to avoid this? What should I do if this happens?
Firstly, as an agent, I have to agree with you. It is most bothersome for these insurance companies to always change things all the time. I too wish they would just give you a policy and keep your price the same as long as your remained the "perfect" customer. Ah, it would be utopia...I could just sit back, twiddle my thumbs, and wonder how to waste my workday.
The insurance companies however have their own problems to deal with as they try to slog their way through each quarter and keep their earnings up and their stockholders from rioting.
Funny as it seems, most insurance companies take almost every dollar you pay them and use it to pay claims and operational expenses. However, they dont just take money in and send it directly out. They pool all customer dollars and invest them in order to try and gain as much interest as possible before they have to let go of the money.
So why should you care? How does this affect you anyway? Its like a recurring itchy rash that reappears once or twice a year, you really just want it to go away!
It affects you because these 3 factors directly impact the rate you pay! 1. claims, 2. investments, 3. operational expenses.
We all know if there are serious catastrophic storms that the insurance companies will be working like mad to pay the claims. We also know that this will probably affect us in a negative way sometime within the near future.
However, most people dont understand that the insurance companies rely heavily upon their investments to keep the cash flowing in a positive direction.
In these uncertain times insurance companies (and everyone else) are losing quite a bit in the 'ol stock market. And, if you combine that with a year of bad weather (hurricanes, tornadoes, hail, high winds, etc) you can bet the insurance companies will be trying to recoup their losses sometime within the very near future.
Additionally, some insurance companies are insufficiently managed, and therefore their operational costs are out of control.
These things all add up to BAD NEWS for you!
In my next post I will give you the GOOD NEWS about HOW TO FIGHT BACK, and WHAT YOU CAN DO to control your expenses and still make sure you are getting sufficient coverage with a reputable company.