What workers really think of their employers' health and retirement plans.
Ft. Lauderdale, FL (PRWEB) February 09, 2012
During the past three decades beginning in 1990 and ending in 2010, the top ten property and casualty carriers have changed in more ways than just identity and position. A closer look also reveals changes in the types of distribution channels used by the top ten carriers. In 1990 four of the top ten carriers exclusively used the captive agency distribution channel. By 2000, two of these four also used either a direct or independent channel to stay in the top ten. By 2010 only State Farm to their credit remained exclusively faithful to the captive agency distribution channel.
Accelerating the captive’s demise in 2011, number two AllState purchased the direct writer Esurance, i.e. that cute pink haired cartoon girl, from White Mountains Insurance thus allowing it to more aggressively compete against its own captives in the on line insurance arena
There is even more evidence that confirms the fact that the captive agency distribution channel is dying. In this four part report, MyTownInsurance.com will not only explain the suspected causes for this trend but also provide some valid reasons why it needs to be reversed, and then offer some recommendations on how this can be accomplished.
The Five Reasons are...
Heavy Handed Regulatory Policies
Technology now favors the Direct Writers and the Independent Agency Distribution Channels
The Big TOMA Disconnect in Insurance Internet Marketing
The Captive’s Operating Expense Ratios have historically been higher than Direct Writers and the Independent Agency Channels
Consumer Comparative Shopping Habits continue to grow as Their Brand Loyalty Shrinks and Their Group Loyalty Increases
1. Heavy Handed Regulatory Policies
Underwriting practices influenced by politically motivated regulatory policies have limited both the independents and the captive carrier’s ability to offer all of the primary lines of insurance in every major geographic market.
The insurance industry got its first wakeup call regarding managing its PML (Probable Maximum Loss) Exposure in 1992 after hurricane Andrew made shore in Homestead Florida. Unfortunately after another 12 years of coastal growth and carrier indecisiveness 2004 proved itself to be an industry 5 bell alarm, hitting the US with 3 very destructive storms followed by 2 more in 2005, with hurricane Katrina being the deadliest of them all, as well as one of the costliest with $81 billion in damages. The end result was a more aggressive approach to both rate hikes and underwriting restrictions along the coastal areas. Obviously this did not sit well with the Gulf States insured’s and their state legislators, especially as everyone was riding the big real estate bubble which had not yet popped.
State legislators feeling the heat seemed to totally forget that if left to the invisible hand of supply and demand, saner rates and underwriting practices would prevail. Instead, even some of the basic understandings about property and flood insurance where throw under the bus and rates we’re artificially rolled back. This action further hastened the mass exodus of the well-funded and highly rated property carriers from the Gulf States, with Florida feeling the biggest void. As the old saying goes, “Capital doesn’t go where it’s not appreciated.” Or in other words, no one is going to invest in a high risk low return opportunity!
Now in 2012 Gulf States legislators are still dealing with the shortage of financially strong property insurers that are willing to reenter the markets because of their inability to charge what they know to be actuarially sound rates for coastal exposures. Smaller state specific admitted property carriers have been going under at record rates for basically the same reason. Well known captive carriers that once thrived with the ability to offer all lines of insurance to their insured’s, now find themselves rethinking their long term business models, no longer being able to offer all core lines in every state of operation. A case in point is the 2012 remake of the familiar State Farm logo. In addition to a more up to date look, gone are the words Auto, Fire and Life from the center of the three ovals. Even if this omission was coincidental, it still sends the same subtle message to the public, i.e. State Farm can no longer meet the consumer’s every insurance need in every state.
As this report series continues more details about the other causes for the demise of the captive agency distribution channel will be provided. Until then learn more about one of the solutions to help stop the demise of the captive agency channel at MyTownInsurance.com. Agents can claim a free verified individual listing for every line of insurance they sell. By doing so they'll be able to receive free insurance leads of the highest quality simply because the consumer is expecting a comparative quote from them personally!
# # #
Read the full story at http://www.prweb.com/releases/freeinsuranceleads/mytowninsurance/prweb9168693.htm