Standard Vs Non-standard Auto

[Guest]

besides the fact that you can bridge to home and other toys, why would an agent want to write standard auto? i understand they stay in the books longer but with the ability to charge higher broker fees (California) and possibly re-write/re-charge after a lapse on non-standard clients as well as lower premiums on standard clients i don't see the advantage of writing standard business. the reason i ask is i am a new broker and have been writing non-standard auto quite profitably and am wondering if it is worth it to try to get standard carrier appointments. please enlighten, thanks.

 

[BTFuzz]

Higher profitability, better retention, less service, more policies, better overall clientele, etc...plus, I think contingencies are better most times.

I am quite the opposite of you on this one. May have a lot to do with individual personality too. Non standard clients, as a whole, drive me nuts.

I'm sure there is plenty of money to be had in that market but personally, it's not my bag.

 

[AZ Insurance Guy]

Ditto, I'd go crazy with a book full of nonstandard! a rewritten app means a chargeback first. All I get from nonstandard is headaches and rework... Don't get me wrong, some agency's write it and do very well so it's not impossible, just not something I chase after. I like when policies renew, not when they are rewritten every month.

 

[djs]

I do both, but they are different businesses.
Nonstandard to me is like selling a life policy. Decent money upfront, residuals are kinda bad. Standard is the opposite, you probably make no money upfront, but the longterm residuals are valuable.

You should never have a chargeback for non-standard. Use carriers that pay as earned. It becomes a decent steady income.

Dan

 

[robb01]

Ditto, I'd go crazy with a book full of nonstandard! a rewritten app means a chargeback first. All I get from nonstandard is headaches and rework... Don't get me wrong, some agency's write it and do very well so it's not impossible, just not something I chase after. I like when policies renew, not when they are rewritten every month.

Are you charging a broker fee for non-standard? Sometimes we can make even more on that than the commission on the policy, so chargebacks are a non issue.

 

[AZ Insurance Guy]

Are you charging a broker fee for non-standard? Sometimes we can make even more on that than the commission on the policy, so chargebacks are a non issue.

We've tossed the idea around, but as of now we are broker fee free.

 

[Guest]

AZ can only charge a broker fee for E&S commercial policies.....

 

[joshb]

Loss ratios are typically going to be higher with non-standard.

 

[AZInsurance1]

Are you doing anybody a favor selling nonstandard...oh wait...your pocket book! I am afraid to drive knowing how many people buy nonstandard.

 

[djs]

Loss ratios are typically going to be higher with non-standard.

This is a general perception, but doesn't seem to be reality. My non-standard loss ratios are lower than my preferred book. I know, crazy huh??? Turns out, a lot of agents loss ratios are pretty decent. Higher loss ratios would actually lead to higher premiums, putting the loss ratios back in line.

Part of the reason is nonstandard has higher premiums, the value of the covered car is usually much lower and the liability limits are low enough usually that even if maxed out on an accident, it won't have an impact on your loss ratios in the same way.

On the other hand, 16 year old who totaled his dads car and 2 others (all pretty decent cars) had a pretty heavy impact on my loss ratio in my preferred book in a month. Add this to the average fender benders it was noticed.

Dan