Who Focuses on NON Standard Business?

[insurance1822]

I've come to learn that some people focus on nonstandard business...and I can't understand why? I hate to sound like I'm some snob who "only" writes preferred business...but if by some random chance a bum calls for a "cheapest state minimum" policy I just politely say we don't have carriers that do that & refer them off.

Who the hell wants non standard bums? You can instantly pick them out. I'm not talking the multicar household who got dropped because of unfortunate driving records (that you can reevaluate in 2-3 years) I'm talking straight uneducated state minimum bum business?

I mean what's the retention on that non standard stuff? I can't imagine you're hitting profit sharing?

Am I missing something here?

 

[BlockO]

several things here:

The non-standard market isn't as bad as you're making it out to be.

-retention is higher than you think. it just so happens that SR22's and the threat of having their license suspended turns out to be a great motivator in keeping policies active.

-believe it or not, loss ratios tend to be lower with non-standard companies.

-most of these "bums" as you call them, can be convinced to select higher levels once you give them 2 minutes worth of education about serious accidents, and show them that the premium increase is usually less than $2/month to double or $5/month to quadruple liability coverage. most drivers simply aren't aware of that. granted, there are a few that are too bull-headed to get it, but not as many as you would think.

-it is much easier to acquire a new non-standard customer than it is to acquire a preferred customer. that's because preferred customers tend to be happy with the policy they have, and don't shop around nearly as much.

-finally, an agent has to follow the money. many agents are simply not in the position to target the preferred market because they don't have the carriers to do so.

 

[wingateexpress]

I've come to learn that some people focus on nonstandard business...and I can't understand why? I hate to sound like I'm some snob who "only" writes preferred business...but if by some random chance a bum calls for a "cheapest state minimum" policy I just politely say we don't have carriers that do that & refer them off.

Who the hell wants non standard bums? You can instantly pick them out. I'm not talking the multicar household who got dropped because of unfortunate driving records (that you can reevaluate in 2-3 years) I'm talking straight uneducated state minimum bum business?

I mean what's the retention on that non standard stuff? I can't imagine you're hitting profit sharing?

Am I missing something here?

It is obvious that your attitude towards this market is the issue, not the people of this market.

 

[insurance1822]

several things here:

The non-standard market isn't as bad as you're making it out to be.

-retention is higher than you think. it just so happens that SR22's and the threat of having their license suspended turns out to be a great motivator in keeping policies active.

-believe it or not, loss ratios tend to be lower with non-standard companies.

-most of these "bums" as you call them, can be convinced to select higher levels once you give them 2 minutes worth of education about serious accidents, and show them that the premium increase is usually less than $2/month to double or $5/month to quadruple liability coverage. most drivers simply aren't aware of that. granted, there are a few that are too bull-headed to get it, but not as many as you would think.

-it is much easier to acquire a new non-standard customer than it is to acquire a preferred customer. that's because preferred customers tend to be happy with the policy they have, and don't shop around nearly as much.

-finally, an agent has to follow the money. many agents are simply not in the position to target the preferred market because they don't have the carriers to do so.

What's the retention like on a legitimate block of nonstandard business? Again..the person who is capable of being educated about limits is somebody I wouldn't classify as non standard. Im talking the straight ignorant state minimum people with 3+ carriers in the last 8 months all of which cancelled for non pay.

 

[BlockO]

What's the retention like on a legitimate block of nonstandard business?" ........


you can't fairly compare non-standard retention vs. preferred retention because in-agency transfers are a big part of the non-standard business, and are not reflected in retention numbers. thus an agent's retention rate is actually higher that what's being reported by each individual carrier.





" Im talking the straight ignorant state minimum people with 3+ carriers in the last 8 months all of which cancelled for non pay.

......


that's only a very small piece of the non-standard market. people like that are more likely to not fool with buying insurance at all. and for the one's who do buy insurance and cancel often, an agent can easily manage those people by only writing one month policies. but really those people are few and far between. the number of people that I have like that can be counted on one hand.

 

[F150]

you guys miss one thing.....

agency fees on non standard, where allowed, THATS where an agency makes money

 

[BlockO]

you guys miss one thing.....

agency fees on non standard, where allowed, THATS where an agency makes money

that makes sense in some states, but in other states it isn't practical even if it is allowed.

for example, here in Ohio we have over 660 auto insurance companies (only Illinois and Texas have more). if I tried to charge fees, I would get smoked on rates by my competitors.

 

[Norwayguy]

that makes sense in some states, but in other states it isn't practical even if it is allowed.

for example, here in Ohio we have over 660 auto insurance companies (only Illinois and Texas have more). if I tried to charge fees, I would get smoked on rates by my competitors.

But your not competing with the 659 other insurance companies but the other agencies....Your right though if no one else charges a fee your at a competitive disadvantage.

 

[BlockO]

yeah, I just mentioned the 660 companies to show just how competitive this state is. it's a lot tougher than any of my non-res states. tack on additional fees and staying competitive is nearly impossible.

 

[Bertolinoins]

Non standard auto is not something you should dabble in. There is a lot of money to be made if you want to commit to it. It would be unwise for a normal preferred agent to get involved without charging fees or knowing how to streamline the process and deal with that segment of the market. You are better off making friends with a local non standard shop and referring those clients to them. In turn, some of those non standard shops run into some good business at times. I was referred into a concrete company 7 years ago by a non standard agent that has grown into a $250,000 account. The owner only spoke Spanish and felt comfortable working with this non standard agency so we ran everything through them the first few years but as they have grown they hired a controller that spoke English. They are great people, one of my favorite accounts to work with.