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| *Loan,banking and credit>>>auto insurance |
Insurance industry folks only, does your company make money off auto insurance, or is it a loss leader? |
Insurance industry folks only, does your company make money off auto insurance, or is it a loss leader? We make money off of it, but maybe not how you think. We do "front line underwriting" at our office - we have multiple companies. The "good accounts" tend to get placed with companies where we have contingency overrides - what that means, is at the end of the year, if our loss ratios are low enough, we get "bonus" money. Not a ton, but still. Then the "risky" stuff goes to Progressive, Windsor, Leader Infinity, the high risk companies. Well, sometimes Progressive gets "good stuff" when their rates are most competitive. But if you walk in the door, with hints of high risk behaviors (driving records, if you're a kid, if you don't have prior coverage, if you're cancelled for nonpay, or if you ask me if I'll lend you the down payment, LOL), then you're going to go RIGHT to one of the high risk companies. For a $100,000 book of business, with a 30% loss ratio or less, maybe the contingency will be $15,000. So it's not a TON or anything. And on homeowners, it IS a loss leader. Once you factor in the "service issue", how much it costs to service the accounts, the actual profit on personal lines is pretty slim. Source(s): agent, 21+ years I used to work for one, and they sold it off to another company because it wasn't very profitable. We make money off auto and ANY company that follows underwriting guidelines should over the long haul. The majority of multi-line companies I've worked for have been profitable on auto, at least over a five year period. http://ohio-insurance-forum.blogspot.com... |
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