Insurance Agent Forum

[Gulliver]

Yes it is true that the rates are not the same between agent rates and direct rates. There is a different pricing structure for each method of delivery to the customer.

As far as who charges broker fees goes, most agents that are allowed to charge broker fees (state specific) will charge fees on business like the non-standard customers, IE. no prior, DUI, too many accidents. The broker fee is the way many of the agencies are able to stay in business.

[ksigmtsu]

Penn National Also compares to them pretty favorably, in some cases they're cheaper. Try to get appointment from them, I'm not a P&C agent, I do Health/Life, just got my car ins through them because they were the cheapest option including progressive.

[moonlightandmargaritas]

Originally Posted by Quote

That really sucks that they offer direct consumers a better price. It should be the same or a little lower for the independent agent.

How does this happen?

Is it allowed in some states? Aren't the rates regulated, and have to be filed?

[ksigmtsu]

I did run it just to check, Penn National is actually 10 dollars per 6 months cheaper than progressive at exact same coverage. I know that isn't huge but it's definitely competitive.

[VolAgent]

I think you just managed to prove yet again Moonlight's point that auto insurance is a commodity. Unless your premium is rather small, $10 per six months is nothing.

[ksigmtsu]

Sorry I actually misread it, its actually almost 400 a year. I thought it was listing the 6 month rate and it was the annual. The yearly on progressive is 400 bucks higher than Penn.

[djs]

Except when you get into an accident, then who would you rather have? Of course, $400 a year is a pain point, many will go with the less expensive option.

Progressive online (Progressive Direct) is a different company than Progressive through agents. This allows them to have different rates. Since a large part of the infrastructure is the same, I'm not sure how they get by with this, but they do.

Some interesting statistics for those who care:
All comparisons are May 2008 to May 2009
Agency auto is a larger book than Direct (online) auto.
Agency auto shrank year over year
Direct auto grew year over year.
Total auto (policies) grew 3%
Commercial auto shrank (but then, whose hasn't)

Combined ratio grew (wrong direction for those who don't know what combined ratio is), but it's around 95%, so not bad.

The expense ratio for the agency force is almost exactly the same as it is for direct. My guess is a lot of ads are split based on revenue, though they drive policies to direct.

Loss ratios are lower for agency sales.
Combined ratio (year to date) is lower for agency sales (90.8) compared to direct sales (91.6) (again, this is a year to date number, not just May to May as mentioned above.)

Basically, given that progressive has done almost everything that they can to move business online, they haven't been as successful at that as they are with agency sales.
Time will tell if this changes.

Dan

[ksigmtsu]

Originally Posted by djs

Except when you get into an accident, then who would you rather have? Of course, $400 a year is a pain point, many will go with the less expensive option.

I'm not sure I agree that Progressive's reputation and marketing makes them worth the extra money. Haven't had any problems with Penn. Just because they're cheaper it dosen't automatically mean they're worse, have you had some specific problem with that company?

[bobson]

Originally Posted by ksigmtsu

I'm not sure I agree that Progressive's reputation and marketing makes them worth the extra money. Haven't had any problems with Penn. Just because they're cheaper it dosen't automatically mean they're worse, have you had some specific problem with that company?

I think you misunderstood djs. Would you rather call an 800 number and get someone in New Dehli to process your claim or would you rather go to your local agent (independent or captive) to file the claim?

[djs]

I know nothing about Penn. Progressive has a decent (not outstanding) claims process.

When I know nothing about a company, I assume they use third party adjusters who are paid to keep claims down. Claims usually get delayed, etc, etc. This isn't always the case, but I've seen it happen enough times.

I have no problem with centralized claims handling. In fact, it tends to work well. It's available 24 hours a day usually and can take care of problems where the agent may be delayed.

My issue is more when a carrier doesn't have their own claim adjusters / centers to deal with the problem. When they outsource this, I've seen more problems then when it is done in house.

Dan

[ksigmtsu]

Originally Posted by bobson

I think you misunderstood djs. Would you rather call an 800 number and get someone in New Dehli to process your claim or would you rather go to your local agent (independent or captive) to file the claim?

That's the thing, Penn National is done by my local carrier here. They're only in like 5 or 6 states but they are from a local independent agent, and 400 bucks a year cheaper than progressive. And yes, im an agent myself, I prefer using an agent, hell I would rather use an agent if it cost me more money.

[1manshow]

With a lot of loyal Progressive agents I've talked to, most of them had only one "preferred" carrier so progressive gets everthing else. Progressive's technology seems to be the envy of the industry, maybe that's what is keeping them in the race, it certainly isn't the loyalty factor with agents. Then again, what do they "owe" the agency force?

[djs]

Originally Posted by 1manshow

Then again, what do they "owe" the agency force?

Well, if you look at their financials, they owe the agents quite a bit. The overwhelming majority of their business is with the agents, not direct.

Dan

[1manshow]

Imagine that !

[bobson]

Originally Posted by djs

I know nothing about Penn. Progressive has a decent (not outstanding) claims process.

When I know nothing about a company, I assume they use third party adjusters who are paid to keep claims down. Claims usually get delayed, etc, etc. This isn't always the case, but I've seen it happen enough times.

I have no problem with centralized claims handling. In fact, it tends to work well. It's available 24 hours a day usually and can take care of problems where the agent may be delayed.

My issue is more when a carrier doesn't have their own claim adjusters / centers to deal with the problem. When they outsource this, I've seen more problems then when it is done in house.

Dan

Clearly you don't live in a rural town in a rural state. All we have is independents!

[djs]

You're right, I don't.
I do understand it in that case.

Dan

[xcccyk]

Progressive is one of my carriers for KY and OH. Every carrier has it quirks! Commission is low at Progressive, but we usually beat the "direct" rates all the time w/ Progressive.
The local rep is easy to work with and provides straight answers. Claims service is quick and fair.
We currently reserve Progressive for DUI's, no prior, horrible credit, monoline clients...
Progressive is offering home insurance through a small group of agents in our area. I told them I was not interested in selling someone else's home product w/ the Progressive label...especially since they don't offer UMBRELLAS yet! Bad combo for an E&O claim.
All in all, you have to have Progressive in any Indy agency...their clients can "graduate" to a preferred carrier after 6 months of prior insurance.
Just my two cents...

[jrbuch3]

Our agency writes for Progressive in Maryland, and as far as I know, we have never lost out to someone who got a direct quote before calling us. In fact, there are discounts that the Independent Agents can offer that cannot be done through direct.

We have lost out to some of the direct online quotes though. It seems as though they don't always ask all of the necessary questions online to get an accurate quote.

[shaedzs]

In California, I find Progressive to be very good for drivers with DUI's, but less competitive for higher liability limits. Their niche seems to work well with the household that has simple insurance needs. Needless to say, we are not really competing for the same clients.