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First, homeowners policies are too broad. In most cases, an “insurance” solution works best when we offer products that protect consumers from potentially catastrophic, but infrequent, losses. That’s what insurance is good at. Below, I’ll give you a suggestion for how to tackle this in conjunction with the next “solution.”
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Second, deductibles are too small. How many homeowners can’t afford more than $250 for a deductible, particularly when you consider that the average homeowner only files a claim every 8-9 years? Let’s face it, deductibles are GROSSLY inadequate to prevent small claims that drive up costs and result in nonrenewal or availability problems for consumers. It’s called risk retention, look into it. More on this below.
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Third, loss control is virtually nonexistent in personal lines. Alternative risk management techniques, particularly loss control (loss prevention and loss reduction), are not encouraged by the insurance industry, nor practiced by consumers by and large. There are some simple things that we can all do to improve loss experience, reduce rates and make exposures more insurable. A sample tool is referenced below.
Who’s to blame for the current homeowners insurance “crisis” (since we Americans feel compelled to point the finger at
EXPERTISE YOU CAN LEVERAGE. , IT S THAT SIMPLE.
someone)? It’s easy to place blame on folks like attorneys and mold remediators (and they deserve their fair share), but that’s just the excuse du jour. If you’ll take a moment to consider the premises above, the answer is easy: WE are largely to blame. Companies have expanded HO coverages (“We cover on an ‘all-risks’ basis.”), sometimes at the instigation of agents wanting more competitive products, to the point where coupled with low deductibles they serve almost as maintenance contracts. And we do little to promote, facilitate or reward homeowner responsibility for loss prevention. Before we go on, perhaps we should consider a fourth problem to the three cited above. It’s generally accepted that a relatively small number of people account for a disproportionately high amount of crimes. In other words, there are a lot of repeat offenders. The same is true of insurance claimants. According to the Insurance Information Institute, 11.5 percent of homeowners file a claim in a given year. In other words, on average, a homeowner files a claim every 8-9 years. It seems, though, that some homeowners file a claim every 8-9 months. For example, one of the largest direct-writing homeowners insurers in the country sent a letter to policyholders who had submitted more than three claims in the past three years. According to the letter, only 1.5 percent of current policyholders had submitted three or more claims in the past three years. However, this group accounted for more than 20 percent of all claims payments!
A simple machine like the lever redirects and multiplies the force applied to it – making a job easier. Builders Mutual has been taking that same approach to construction insurance since 1984. Agent tools like BOB 2.0 allow you to issue and service policies online with ease. When you’re quoting construction-related accounts, the insurance choice is simple.
Login today at buildersmutual.com.
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South Carolina Agent & Broker • Spring 2012