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 Posted: Tue Nov 03, 2009 5:10 pm Post subject: bargaining insurance rates |
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Insurers are NOT allowed to "play" off of one another. The rates are the rates, and an agent or insurance company cannot play negotiation games.
You just got lucky finding a better quote as you shopped around. There's no way that a person could do something like this:
Applicant: "Hi, I have a quote for $125 a month for my car insurance. If you can do $100 a month, I'll give you my business!"
Agent: "Sure, I can do that...I'll write you up at $100 a month! Come on in and sign the paperwork!"
Either the carrier can beat the price or they can't. There's no bargaining or negotiation involved. Insurance contracts are contracts of "adhesion." This means that it's offered to the applicant on a "take it or leave it" basis and the terms, conditions and coverage are not subject to any kind of negotiation. If the client takes the policy as issued, he's "stuck" with it and must adhere to all of the conditions and terms found within the policy.
Rates are pre-approved in almost every state and insurers cannot deviate from the published, approved rates that are on file with each state.
Sorry...ain't gonna happen!
InsTeacher 
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InsTeacher
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| Posted: Wed Nov 04, 2009 12:07 pm Post subject: |
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Hi Teacher, I've come across a thread wherein someone has explained how he's achieved rates from different carriers and mailed/faxed it between them. Do you really believe such a thing could have happened? Crossbreed
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Crossbreed
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| Posted: Wed Nov 04, 2009 7:07 pm Post subject: |
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| Quote: | | Hi Teacher, I've come across a thread wherein someone has explained how he's achieved rates from different carriers and mailed/faxed it between them. Do you really believe such a thing could have happened? |
No. Rates are rates, and the only way you can change the rate within an auto policy to get a better rate would be
1. Less coverage
2. Eliminate physical damage coverage
3. Activity dropping off a motor vehicle record
4. Age and marital changes
You cannot "play one company off of another" in this game. There are certain, however uncommon, exceptions in commercial liability coverage, but that's about it.
Bottom line? Different insurers have different rates. If you were to contact 10 different carriers requesting premium costs and we assume that we look at same coverage comparisons, you would get 10 different rates. Has nothing to do with bargaining or negotiating, it's simply that some insurers are less expensive than others.
InsTeacher
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InsTeacher
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| Posted: Thu Nov 05, 2009 11:13 am Post subject: |
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| Quote: | | Has nothing to do with bargaining or negotiating, it's simply that some insurers are less expensive than others. |
I guess it's simply due to the fact that some of these carriers have more brand values in the market than their competitors. Or is it that the risk which I pose varies with the carriers?
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Crossbreed
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| Posted: Sat Nov 07, 2009 12:42 am Post subject: |
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| Quote: | | I guess it's simply due to the fact that some of these carriers have more brand values in the market than their competitors. Or is it that the risk which I pose varies with the carriers? |
Brand value, in the pure sense, has nothing to do with it. Brand value when used in a marketing connotation denotes things like name recognition, market share and other things that, in part, determine the amount you can charge for a product and it's perceived value.
Car insurance is car insurance. If you purchase 50/100/50 auto coverage from your carrier, it's exactly the same thing as if you purchased it from another carrier. Now there may be slight differences in policy language, but it's all basically the same thing.
Variations in premium rates are due to a number of different internal insurer issues, such as:
1. Loss ratio
2. Underwriting philosophy
3. Risk spread
4. Investment income
5. Reinsurance attributes
6. Other income from subsidiaries, etc.
There are a host of other things that come into play as well. This is just a simple explanation and I hope it helps clarify.
InsTeacher
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InsTeacher
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| Posted: Sat Nov 07, 2009 12:35 pm Post subject: |
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| Quote: | No. Rates are rates, and the only way you can change the rate within an auto policy to get a better rate would be
1. Less coverage
2. Eliminate physical damage coverage
3. Activity dropping off a motor vehicle record
4. Age and marital changes |
I'd add, raising coll/comp deductibles to that list..
I've heard/read of people playing one agent/carrier against another too..never done it, (been with the same company/agent for more than 25yrs, and don't intend to even shop till they retire if then)...and I understand that you are saying this can't be done...but do you think it possible in cases where it 'appears' to happen, that maybe an agent is reducing the premium by say 5% by knocking that much of their commission back to get the business? Is that allowed? (as you know I know zip about the sales part of this business  ) just curious.
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| Posted: Mon Nov 09, 2009 2:23 am Post subject: |
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Applying any part of the commission in an attempt to reduce the premium to the insured would likely be considered rebating in just about every state. Personal lines rates are personal lines rates.
Certain commercial policies allow the agent to play with the rates assuming the underwriter is willing to play along.
InsTeacher
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InsTeacher
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| Posted: Mon Nov 09, 2009 6:31 am Post subject: |
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| Quote: | | Certain commercial policies allow the agent to play with the rates assuming the underwriter is willing to play along. |
I'd like to know if it happens with all types of insurance. Also tell me if there's any communication between the agent and the underwriter regarding this.
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