It seems like almost every day I read another headline about improved insurer profits, increased insurance and reinsurance capacity and record broker profits.
Published in the July 2003 issue of Automobile Dealer
It seems like almost every day I read another headline about improved insurer profits, increased insurance and reinsurance capacity and record broker profits. What does this mean for the dealer? Well, if this keeps up, it will result in more competition and lower premiums. Now don’t misunderstand me, I am not saying you should expect a big drop in your premiums, next time around but I am saying it looks like better days may be just around the corner.
Today we still have a smaller insurance marketplace. A handful of insurers have either stopped writing dealers or have gone out of business entirely. Dealers in most parts of the country still have, albeit a smaller number, a number of insurers to choose from. We are beginning to hear rumors and rumblings of more insurers entering the dealership marketplace but as of this writing we have not seen any step up to the plate. We have seen a few alternative markets, like captive insurers, crop up and try to write garage insurance. However, we have yet to see one who’s coverage, premiums and investment made good economic sense.
Over the past couple of months, the landscape for dealers bidding their coverage has changed a bit. First and foremost we have seen average rate increases become much smaller and in a few cases dealers are even paying less than last year. Second, insurers are much more likely to negotiate, but only if they think you have other better options. This means that you must seek other bids so your insurer feels the competition.
As the insurance market continues to improve, you will not hear a lot about it until the improvement is really old news. Don’t expect your agent or broker to run in next week and tell you he can cut your premiums, even if he can. When markets begin to soften, insurers are quiet so they don’t have to cut premiums any and more than is necessary to keep your business. Don’t be surprised if your agent, next time around, comes in and tells you that your premium increase will be minimal or non-existent, therefore there is no need to bid your coverage. This is just a ploy to keep you from finding out where the insurance market really is. If you passively sat on the sideline waiting for the “bad news” you have just played into their hand. Therefore, to take advantage of this improving climate you must bid your coverage so you can see all your options. Competition is a beautiful thing.
The rules for successful bidding are still pretty much the same. Start your bid process about 90 days out. Be sure you have reviewed your loss runs and everything on them is correct. Give explanations of large or frequent losses and what you have done to remedy the situation. Get as many bidders as possible, even if it is just two or three, and be prepared to analyze the coverages as well as the costs.
If you follow this advice, you will be in a position to benefit from an improving insurance market long before it hits the news. Every dollar saved is a dollar of profit!
Yes, I do think it’s a light.. Not a train
