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Tag Archive for 'policy'

State Farm Fine-Tunes Risk Assessment, Decreases Rates

A.M. Best recently reported that carriers are looking at more than just rate increases to help them maintain profitability in a volatile property insurance market. Other risk-management initiatives that are being looked at include mandatory wind/hail deductibles, percentage hurricane deductibles and roof limitations based on the age and condition of the roof. Geo-coding and better understanding a specific home’s (versus an area’s) risk is also becoming a new trend in risk management practices.

Looking at “micro-zones” versus more broad measures is one way that State Farm in CA is able to manage the carrier’s risk while also offering more discounts to their client’s premiums. Beginning April 15th, State Farm, the largest homeowner insurer in CA, is dropping rates by an average 12.6% for more than a million customers. When looking at State Farm’s customer base in CA, that means 85% of the homeowners they insure will see an approximate $100 savings in their premiums. Renters will also see some savings upon renewal.

Instead of looking at just the zip code, State Farm’s new rate-setting system breaks down risk factors such as geology and fire danger, based on the exact geographic location of the home. This will position State Farm as having the ability to offer competitive pricing based on a fine-tuned set of risk assessments.

Homeowner claim payments rose 173% since 1997

A recent study from the Insurance Research Council (IRC) found that from the time period of 1997-2011, the cost of an average claim payment per insured countrywide rose 173%.

The increase is reported to be rising so rapidly because of increases in claim frequency and heightened claim severity.

This study analyzed both CAT related and non-CAT related claims, with the results of both claims being similar in some aspects.

Non-CAT related claims averaged around $8K and for CAT related claims, the average was $7.5K.

With the rising cost and frequency of claims, restoration contractors will definitely be vying for the business, but how will they edge out the other competition?

You can email us at info@theBDAway.com for a free special report on “13 Ways Restorers Kill Sales” so you have an edge on not doing what your competition will most likely be doing in their selling! Please include your name, company and where you’re located!



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