Insurance Agent Forum

[dder04]

Hello everyone, I am an independent agent in el paso, tx and i am filling out applications to get appointments, but i need help. They ask for the loss ratios and I have no idea what it is. I have asked for the report from insurance companies but I can't seem to get it. Can someone help me?

[1manshow]

You're just getting started? Or are you an employee? All carriers keep track of the loss ratio on your book...unless maybe if you don't have a big enough book.

[AnMarieB]

If you are a new agent and haven't written any business yet, you won't have a loss ratio. If the companies you are requesting appointments from know you are new to the industry, they will know you don't have any loss ratios to provide.

Otherwise, if you have been writing business for any length of time, the companies you currently represent should be able to provide you with your loss ratio, just contact the marketing rep for each company.

Your loss ratio is an indication of the profit you are (or aren't) making for the carriers you represent. Your loss ratio is typically calculated as the amount of claims your clients have had divided by the earned premium you have placed with that carrier. Some carriers will include reserves (money not paid but expected to be paid) in that amount as well. I've even seen some companies inflate a loss ratio because of their contract with their reinsurer - but that is a subject for another day.

Loss ratios are important because as you are already seeing, they can prevent you from getting preferred appointments. Also, you will find many times companies offer contigency bonuses and/or higher commissions based on loss ratios.

Typically when you are new to the business, your loss ratio will run a bit high because you have little premium on the books and with just a few claims, your loss ratio percentage can rise substantially.

There are also debates over the years between insurance companies and agents as to how much control an agent really and truly has over their loss ratio, i.e. if the company comes out with ridiculously low rates - how is that the agent's fault? But again, that is a discussion for another day.

So in short, if you have been writing insurance already, call your marketing representatives from your companies. They can get you the loss ratios you need to provide to the companies you are requesting appointments from. If you haven't written any business yet and are new to the industry, the companies you are applying to will know you don't have loss ratios (aka loss runs) to provide to them.

Hope this info helps. Good luck to you and welcome to the industry!

AnMarieB