Non-Standard Vrs. Standard Insurance

[Financialguy27]

I'm interested in everyone's thoughts regarding the income potential and value of a non-standard (high risk) auto insurance agency versus a standard (preferred) multi-line insurance agency.

Just a little on my background, my family owns what would be labeled a non-standard auto insurance agency. I am considering getting into the business full-time and eventually taking it over. I have worked in the business in the past but since graduating from college I have been engaging in financial planning, etc. to high-net worth individuals outside of the family business. I am licensed in all lines of insurance and financial services, for what it's worth.

My thought is to transition the business to a standard, multi-line insurance agency, which would increase the value of the book of business and possibly provide a great opportunity to add a financial services/financial planning division to the insurance agency in the future. However, I'm wondering if it might be even more profitable to simply expand the agency by opening/purchasing other non-standard insurance agencies throughout the state and maintaining a larger premium base.

I'm wondering if everyone thinks it's an obvious decision to move the agency towards a standard insurance clientele or if there is some justification for growing the non-standard business instead. Are the commissions on standard insurance that much higher where it would justify maintaining fewer clients? Any thoughts would be greatly appreciated.

 

[Mark]

Do what?

Non Standard is high risk and standard is the best,,is the far as I got.

I"m lost...

 

[GreenSky]

Do what?

Non Standard is high risk and standard is the best,,is the far as I got.

I"m lost...

You know the auto insurance you'll be buying at renewal time? It will be for high risk drivers.

Rick

 

[Financialguy27]

Sorry if I wasn't clear. I guess my first question is, how difficult is it for a non-standard auto insurance agency to transition into a standard insurance agency?

 

[desert boy]

no offense, but who in the hell only has sub=standard auto?

So your saying you turn away standard or preferred clients?

So what do you do when the clients "issues" that made them sub-standard fall off their record, sent them to another agent? Say a wreck or DUI falls off the record, that client will leave your agency!

Plus, Sub-Standard has a fairly large turnover ratio, your retention cant be very good.....

please send me your preferred clients!

 

[JCK818]

You should have both. You could have a great client with a house and few cars. One accident with BI, most of your STANDARD carriers wont take the risk anymore.

 

[Financialguy27]

Thanks for the replies. We are located in Massachusetts which recently had a major overhaul in the auto insurance rules. As such, we don't have a brokerage contract with any standard insurance companies. Instead, we have to throw all our business through an assigned risk pool. We'd obviously prefer to get out of this arrangement in order to give our standard risk client's a better alternative. However, we've had difficulty getting contracts with insurance companies. Has anyone in MA had more success attaining contracts? If so, how did you do it?

 

[desert boy]

Thanks for the replies. We are located in Massachusetts which recently had a major overhaul in the auto insurance rules. As such, we don't have a brokerage contract with any standard insurance companies. Instead, we have to throw all our business through an assigned risk pool. We'd obviously prefer to get out of this arrangement in order to give our standard risk client's a better alternative. However, we've had difficulty getting contracts with insurance companies. Has anyone in MA had more success attaining contracts? If so, how did you do it?

Call SIAA, they will give you direct access to all the major preferred carriers

 

[Financialguy27]

Call SIAA, they will give you direct access to all the major preferred carriers

I've spoken to others about that option, but it sounds like they basically control your business in the long run. I've heard other owners had issues selling their business because of their contracts with SIAA. Has anyone else had these issues with SIAA or a similar entity?

 

[desert boy]

I've spoken to others about that option, but it sounds like they basically control your business in the long run. I've heard other owners had issues selling their business because of their contracts with SIAA. Has anyone else had these issues with SIAA or a similar entity?

I am with SIAA and love it, you wont get the big companies without them, I am told some companies wont put any new agents on unless they are SIAA.
I have had NO control issues from SIAA only help.
Selling your business, SIAA wants first right of refusal simply because they want to make sure the person buying is "qualified" to SIAA. It is important to SIAA to maintain great relationships with the carriers.

I will tell you what, I get emails CONSTANTLY of commission bonuses from my siaa carriers that I wouldnt get without them