Homeowners underwriting: Direct Writers vs others

[meytai]

Hello community,

For all of those in the know regarding this one please respond:

I have looked at some of the declarations pages for some of my client's, particularly for older homes, pre-1970s built homes, the premiums on these are very comparable to the newer homes. In comparison to the companies i usually write, Fidelity National, McGraw, Commerce West the premiums on the State Farm policies is significantly less. My question is do the State Farms & other direct writers NOT properly underwrite and asses the risk? I have heard something along the lines of them looking the other way on risks. I have been witness to it as well, but that was only once. I am wondering if those clients are underinsured with those companies.

And while we're at it.. are teh companies i listed good homeowners markets?

Thank you in advance for your responses,

Meytay

[d's insurance store]

You're trying to impose logic on an illogical system. Many times, direct writers will accept personal lines property business at rates and programs that make no sense to an independent agency owner concerned with quality and properly underwriting a risk.

In my area, I've found CSAA, State Farm & Farmers taking PC9 homes into their preferred programs. I've lost surplus lines homeowner business with houses on pier/post-stilts, way up in the urban hills surrounded by brush to these types of carriers. I've lost quotes for homes in outlying areas where there are no hydrants, well water only and 5+ miles from volunteer fire stations to these direct writers who will write in preferred programs. Do they NOT inspect??! I guess not.

The only satisfaction is that when (and not if) the wildfires come, these companies will take GIANT hits to their loss ratios and my contingencies will keep rolling in.

Don't try and fight it. Accept it as competition and move on. You're not going to change the soft market and these carrier's appitite for growth at all costs. Someday they WILL suffer the fire losses, reinspect their books and start tossing people off back into the non admitted market. Then your phone will ring.

[meytai]

Hey D,

Thank you for shedding light. I'm not trying to change it, but i definitely want to understand it. I've been working at the same agency for 5 years now and everything i know i've taught and learned myself. I am glad to find this forum to find these things out, because my reps aren't on the frontlines and don't see as much as we do.

Thank you for the reply,

Meytai

[Porter]

To Meytai,

The captive agents only have one company so they will load up all their risks with their one company the good with the bad so to speak. They don't have the ability to place the right risk to each carries appetite like an independent. You should find that the captive agent's premiums should be above average. You should be able to beat the captives on pure price most of the time. With that said the markets you listed are not that great. I am appointed with all the companies you listed and others and I only use the markets you listed as a last resort if my other carries will not take the risk. You should look at getting better markets such as Allied, Kemper, Safeco, and Travelers.

Porter

[meytai]

Hey Porter,

Thanks for your responses. I really appreciate the advice. I have access to those markets, however, I cannot get those directly, i have to do them through a GA. Would you advise i build up a big book of homeowners with a company i am not directly writing with?

And by the way, what makes those companies better?

Meytai

[Porter]

Meytai,

If I were in your shoes I would build up some business with a GA. However, get direct appointments as soon as possible and move the GA book over.

The reason those companies are better is they are all package companies with very competitive rates that offer great coverage. McGraw is an A- company that does not offer preferred auto. Their home insurance coverage is not that great either but, they are good with homes with wood roofs and claims. Commerce West just got into the home insurance business and does not offer contents replacement on their mono-line home insurance. Fidelity National is not that bad. They have come a long way in a short amount of time. I just don't find them competitive that often.

Porter