SO riddle me this Mr insurance man.

Nicely Stated.

 

It's the best business model ever:

1. Supply a service that you go out of your way never to deliver.
2. Pay your politicians to make sure your customers are forced to buy a large amount of your service.
3. Charge a fortune, then ratchet up your rates every term.
4. Have to pay too many claims? See #2, increase rates again.
5. Profit!!!

 

When Insurance is purchased, you are buying into a pool of people (i.e.:RISK). You are spreading the risk that you represent amongst a group. If you or anyone in that group experience claims, the group pays for the claim through the insurance carrier (i.e.: Premiums). If you buy insurance through a carrier, any carrier, and that carrier's policyholders have a bunch of claims, then you can expect your premiums-as well as everyone else's to increase. Insurance companies have to remain solvent (able to pay the claims of its policyholders), and are required to have large amounts of cash in reserves (mandated by Government agencies that oversee them). People can whine about their insurance premiums increasing (and yes, it sucks) however, they really need look no further than the group of people that are covered in that group (or pool) that they bought into for the real reason that their premiums increased. (Licensed Insurance Agent AND Consumer, jxu417)

 

Some smaller companies with minimal claims are heading toward self insurance through "insurance captives".

They pool their money in order to save on premiums and cut out the insurance man.

Here's an article that tells companies "why they shouldn't join a captive". An isurance company saying why their way is the best way. Hmmmmm.

http://public.nbfc.com/NR/rdonlyres...-D7600AD163E5/0/3013_LetsTalkCaptives_v7E.pdf

 

Before buying a truck I did Commercial Property and Casualty Insurance sales serving among other things the Trucking Insurance market. It was an independent agency and I would obtain quotes from several carriers fro clients. I still maintain a small book of business there and it is an agreement me and the owner came to when I decided to buy a truck. I will try and answer a few of your questions. While I am not a BIG wig as you put it I may be able to offer some insight.

Captives - they have pro's and con's like everything else. A pro would be that they typically have lower overhead than admitted companies
( Northland, AIG, Canal, etc....) so they are able to offer lower premiums. A con would be that the policies are typically bare bones and have some exclusions that do not exist with admitted companies. An example would be captives rarely offer combined deductibles as many admitted companies do. A combined deductible applies when you are at fault in an accident and have a physical damage claim and a cargo claim - with a captive you would have to pay the first $1,000 deductible for the cargo claim and the first $1,000 of the physical damage claim bringing you to an expense of $2,000. A combined deductible with an admitted carrier would be just that - a combined deductible in that situation meaning you would only be coming up with $1,000. While the captive policy may have cost you $500 less, with a captive you are now on the hook for that extra $1,000 meaning you lost $500 at the end of the year.

Insurance companies have no choice but to put you into a pool of risk and determine rates accordingly - the statistics show a greater chance of an accident with a driver with less than two years of experience. The fact that they strongly resist adding a driver with less than two years means that they saw a high number of claims with inexperienced operators. For those with teenage children they clearly know that once a child turns 16 and is added to your insurance your premium increases to offset the increased financial risk the insurance company took.

Would it surprise you to know that most insurance companies do not make an underwriting profit, they make an investment profit. The difference is this - Insurance Company A takes in $1,000,000 in premiums and they spend $1,100,000 in paying claims so they are at underwriting loss of $100,000. In the meantime of doing that they took the $1,000,000 in premiums and invested it in the stock market, commercial real estate, and various other investments. The goal is to have that $1,000,000 turn into $1,200,000 in the investment world therefore they turn a net profit of $100,000. Progressive is the one company that comes to mind that operates with the goal of making an underwriting profit. In order to do that they take on a lil' more risk by allowing newer drivers however they add a radius restriction to try and lower the risk. The main driver of underwriting profit for Progressive is through charging a higher premium than another company would. As an independent agent Progressive was typically your fourth or fifth stop on the list of companies to seek competitive quotes from as in my experience they typically were never provided a competitive premium.

Please keep in mind the above scenario applies to most circumstances regarding insuring a small fleet of tractors. Once you get a little bigger the insurance company values your business and will occasionally make an exception such as a less experienced driver needing to be added to your driver list. Rarely can you have a claim that the insurance company pays out $20,000 and then turnaround and ask for an exception b/c you think young Johnny is going to be a good driver even though he got his license 3 months ago and get it approved. Exceptions in business occur all the time - if your biggest direct shipper needs a favor and needs something hauled across town for a lower rate than you expected you do it anyways to keep your biggest customer happy. Same ideals apply in insurance or selling widgets or whatever.

As the stock market and commercial real estate markets started providing less of a return for the insurance companies money they had to figure out way to offset that decline. One of the ways was to ask customers for rate increases. I switched companies for my truck once company A wanted $1,200 more than Company B with almost identical policies. I did an audit of my current policy and it's features and an audit of the proposed policy and decided Company B with $1,200 in less was a better value. I do these audits all the time for trucking insurance customers so they can see what they are paying for.

I hope this provided a little bit of insight into the way an insurance company operates and if I can answer any more questions to the best of my ability I will do so.

 

So, out of ALL the people who have insurance with the same company as you, YOU and YOU ALONE are THE ONLY INDEPENDENT MAN who does "not belong in a pool or group??" LOL. Get over it, its the way it is, you cannot change it, unless you have enough money to self-insure yourself. You want to gripe and complain about insurance, fine! I am just trying to tell people that their anger, frustration, and complaints are somewhat misguided. If you can't realize that, then you have fallen into the class-warfare crap coming from DC because you have never been instructed otherwise (aka: Ignorant). I am an insurance consumer just like everyone else, and I don't necessarily like premium increases, however, I do understand that the insurance companies need to make a profit (BTW-when did the word PROFIT become a DIRTY WORD???? Geez!) in order to remain in business, but more importantly, they need to remain in business so that THEY CAN HONOR THEIR PROMISES TO ME IF I WERE UNFORTUNATE ENOUGH TO NEED THEM! How cool would it be if they slashed their premium prices, started losing all kinds of money, just so people would like them more, stop calling them names and hating on them all the time--And then, you need them, and they can't take care of your loss. But BOY OH BOY! You sure do feel better because they aren't making a PROFIT!!! Some of you people sound like communists, sorry....... And, here's a hint for you regarding your cunning attempt to cast doubt about their industry as crooks (aka:"Question") "but what do they bring in??hmmm??" -Well, you can get an insurance company's annual report AND LOOK IT UP. They DON'T HIDE IT FROM YOU!!!

 

cableclown,what is the basis for your thread? Are you trying to insure a younger inexperienced driver or are you an older experienced driver who has been out for a while and trying to get back in?
If it's the inexperienced driver,then I fail to see why you don't understand that he is much more likely to be involved in some kind of accident in the first couple of years than a driver who has been around the block a couple of times already.
You say you have been a trucker for fifty years,right? Then if you started at twenty years old you would now be seventy. Not at all hard to understand why an insurance company would be a bit hesitant. Not saying that an older person is not a safe driver,just that things like reflexes start to slow down,vision probably not as good and the possibility of medical issues come into play.
I would like to understand what it is that has you so worked up about the insurance thing. I'm not a communist btw. I am paying big insurance on a younger inexperienced driver and so far so good. He's done a great job for a over year now with no incidents but I am aware that it could change in an instant. So is the insurance company that took a risk by insuring him.