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Dear All:

Our office are thinking to have the Cal. Low Cost Auto Ins. in our office; However I have heard that there are many restriction on it. We do have carrier that can accept that kind of market already. Should I get this? Any thoughs and comments would be appreciate.

Why in heavens name would you want to be expending agency resources for a low cost, high touch, low commission product? For the potential that these risks will someday gravitate into an asset accumulation demographic that will be so impressed with your dedication and service that they will blindly stay with you for higher personal lines premium?

I've never signed up, but have heard from agencies that have placed this business and it's a very low performing segment. First, you've got a bunch of qualifying paperwork to accumulate and submit, then you've got very low premiums and finally a very high missed payment rate leading to lapse and rewrites.

If you've got markets that will handle the clean, no prior, minimal coverage risks, place it there and let the California Assigned Risk program take those who are out of the market for high activity. I can't give you a good reason to be dealing with the demographic that wants rock bottom cheap rates on minimal coverage and high levels of service, convinced that you're keeping 50% of the premium as your commission.

In addition to what D's said, the plan offers low limit, 10/20/3. I agree that it does not make business sense for many agents from multiple standpoints. I believe the assigned risk and the low cost program have the same certification. And if you're a CAARP certified producer, you're obligated to assist applicants who wants to buy the low cost policy.

I agree with "d's". Don't waste your time. I was CAARP certified until I recently submitted cancellation. You end up doing whole bunch of paperwork for very little commission. I think about half gets cancelled for non-payment of premium. I kept doing it thinking it as "community service", but due to the recession, I was getting too many inquiries. It was taking too much time away from "good commission" generating clients.

There are many insurance companies in California that offers competitive auto insurance quotes, and they do come with different discounts to cater to various tight budgets.

Feel free to check this out:
http://going4budgetinsurance.blogspot.c ... r-car.html
http://www.autoinsurancequotes.net/

I agree with all of the above. There is no way to profitably service this market segment except with broker fees which you are not allowed to charge on the CaLo. If they allowed even a $50 broker fee on this program, sales would quadruple. I still wouldn't sell it, but I suspect many agencies would.

Rochambeau wrote:I agree with all of the above. There is no way to profitably service this market segment except with broker fees which you are not allowed to charge on the CaLo. If they allowed even a $50 broker fee on this program, sales would quadruple. I still wouldn't sell it, but I suspect many agencies would.

The broker fee would have to be $200 minimum.

This is SO an example of politicians having no clue on how businesses operate and what it takes to design a product that makes sense. Yet they keep dipping their slimy fingers in our Froot Loops.

Roy,

It looks like we are all in agreement here. I agree - too many headaches. A ton of paperwork and most of the time, the clients that are inquiring, do not even qualify and those that do qualify let their policies lapse....If you already have something comperable with less work involved, I would just leave this alone. You would be doing yourself and your agnecy a favor. And as stated by Rochambeau, a $200. Broker Fee would definately be in order here (if it were possible) just to compensate you for all the time and energy you will put into servicing this type of client, not to mention the amount of commission you could lose. Time = Money....sorry to be so blunt.