Non Standard Auto Loss Ratios

[insurance1822]

Do non standard audo carriers care about loss ratios? I protect my preferred loss ratios big time & if I come across an account with poor credit, MVR or losses I won't place with my preferred carriers...I'll go to GMAC or progressive even if I have a preferred market. Older people...inner city...young drivers all go to them..

Now I don't write much nonstandard business but I still have about $250,000 with GMAC. That being said, my loss ratio with them is horrific...like 130% 2 years ago... 80% last year and this year's already off to a similar start. Now granted I have a small Book with them & I'm part of a group..but will they ever take issue?

I've never heard a word from the carrier rep & there's been like 5 since I got appointed. I still write mostly 50/100 - 100/300 and a majority are homeowners so I don't know what the deal is. It's definetly not a frequency issue, more so enough medium sized PD claims that add up.

 

[BlockO]

in general, a non-standard company's loss ratio is better than a preferred company. this is due to having higher premiums along with lower coverages.

specifically about GMAC, their decision making always seemed to be a little impulsive and bi-polar to where you never knew what to expect. I also agree with the comment you made about their reps... I don't think I had ever seen the same rep twice.

as for your agency's loss ratio, I don't think it matters as much as the overall loss ratio in your area. I learned a couple years ago that when GMAC starts losing in a certain area, they get out of Dodge quickly (no pun intended).

here in southern Ohio, they were losing money and abruptly changed their underwriting standards almost overnight. for example, they stopped taking new business for drivers without prior insurance and drivers with bad credit, and the premiums for drivers that needed state filings went through the roof! (it's very rare for a non-standard to do any of those things).

a few months later, they sent myself and other local agents divorce papers, and cancelled all of the policies at renewal.....

then a year later, after they became known as National General, I get a call from a rep saying they were getting back into the area. he was calling former GMAC agents that they kicked to the curb to re-appoint them.

since they've been National General, things have been much better. so far so good.

 

[insurance1822]

in general, a non-standard company's loss ratio is better than a preferred company. this is due to having higher premiums along with lower coverages.

specifically about GMAC, their decision making always seemed to be a little impulsive and bi-polar to where you never knew what to expect. I also agree with the comment you made about their reps... I don't think I had ever seen the same rep twice.

as for your agency's loss ratio, I don't think it matters as much as the overall loss ratio in your area. I learned a couple years ago that when GMAC starts losing in a certain area, they get out of Dodge quickly (no pun intended).

here in southern Ohio, they were losing money and abruptly changed their underwriting standards almost overnight. for example, they stopped taking new business for drivers without prior insurance and drivers with bad credit, and the premiums for drivers that needed state filings went through the roof! (it's very rare for a non-standard to do any of those things).

a few months later, they sent myself and other local agents divorce papers, and cancelled all of the policies at renewal.....

then a year later, after they became known as National General, I get a call from a rep saying they were getting back into the area. he was calling former GMAC agents that they kicked to the curb to re-appoint them.

since they've been National General, things have been much better. so far so good.

Wow so they non-renewed your whole book? What kind of loss ratios were they experiencing in your area (and you specifically?) What % of that book were you able to retain?

 

[BlockO]

yes but it was a very small book. maybe 15K, 20K at the most. I hadn't been with them very long and half of that time their rates weren't competitive.

I was able to re-write most of them with other carriers but I did lose a few. and those few added up quickly in lost premium because GMAC was very competitive at one time for high risk drivers who needed comp and collision.

my loss ratio wasn't bad at all because again, I hadn't written too many policies and was lucky. I don't know about the area's overall loss ratio.

 

[shawnmwalker]

Hum, how to approach this one.

NS carriers typically look at regional areas and determine rate needed. How big or small the region is always interesting to see. Don't get me wrong they can use a number of factors to adjust rates.

If a carrier wants to bust someone's chops on LR:

1. You either need a significant amount of WP to validate what they are seeing
2. Have evidence the agency is doing bad field UW or exploiting lop holes causing Premium Leakage. (Example: Comparing your book to the state on Married discount, POP, Home insured Elsewhere)
3. Severity vs Frequency problem

250k is a large National General book. But not large enough to validate your loss ratio. What carriers often do in this case is roll the numbers up to your group to see how the group is preforming compared to the state.

Your code compared to group code compared to State results.


The other comments about Rep turn over and stability in states seems to have validity. They have been to CO five times now.

National General has acquired talent and carriers that might suggest a turnaround. We'll see!

 

[insurance1822]

2015 Trailing 24 Month Loss Ratio 97%

2014 Tailing 24 Month Loss Ratio 99%