kootch88 wrote:Mine went up too, and I am an insurance agent! Lots of factors go into rates, but I can tell you from my small sample, which is not a scientific overview of experience, that we have lost money the last three years. Here is why. When the economy goes bad, claims go up. My losses in auto have me running 75% losses vs premium, and that does not account for commission, claims handling costs, infrastructure etc. Normal loss ratios are below 50% if we want to make a profit. I can tell you factually that the claims that of the claims being reported to me, more and more of them are pocket claims, another words, people are pocketing the money and not having the repairs done, which is why in our area of Maine repair shops are struggling as well. When things are bad fraud goes way up, not to say all claims are fraud, just that it goes way up. More claims are filed where in normal times many people choose not to put claims in so they won't loose claims free discounts. This is not an anomaly, it has always been this way history shows us.
Homeowner's cooperage is no different, although one good ice storm can skew the numbers easily in a state like Maine. In my book of business one or two total loss claims can nail my loss ratio for the year. Think about it, one $200,000 loss, and that does not count contents, is the total premium for 400 policyholders where I am, that does not count any of the roof leaks, thefts or other smaller claims. It is common for people to look at their own experience alone instead of the big picture, which is what insurance is, the spreading of the risk. If you feel insurance is a rip off, which many do, then buy a fidelity bond and cover yourself. Most people are not willing to take that risk, I wonder why if they are so sure they will not have a loss.
I think many would just assume buy a bond and cover them selves rather than pay for some % of idiot drivers, or idiot homeowners, or people making fraudulent claims, or at least share a fund with some family and friends. I personally only buy insurance the law or my mortgage requires me to, and only pay for work on my home or vehicles which I am incapable of doing myself regardless of what the economy is doing and would probably continue to do so with a 500% raise in take home pay. Sounds like to me the system is fundamentally broken, but allowed to continue on as broken because it is not a true free market, I am required to pay for these insurances. Maybe the math whizzes in the industry should alter their algorithms to make more discrete pricing structures for customers, somehow I don't feel like asking a person with no kids if they have a trampoline in their backyard is a very valuable input to my likely hood of needing to file a claim.
You can attempt to justify all the increases as much a you want, but the fact is prices rising faster than the rate of inflation or peoples salary increases is unsustainable.