10/20/2024
Food for thought- I hope this helps bring a little bit of clarity to the state of the insurance industry.
Last month I had a customer who was running an errand with his daughter when a school bus (not FCPS) suddenly changed lanes into him. The impact was so hard that the edge of the front bumper of the bus hooked onto his SUV and the driver then dragged it across two lanes of traffic to get to the shoulder.
The bus driver was livid, saying she had signaled and that my customer wouldn’t let her over. But when the police showed up, she changed her story, saying it was actually our customer who made the lane change and struck the bus.
Long story short, state bus, state police, state judge = my customer got the blame.
The cost was over $60,000. Damage to both vehicles and some injuries.
“Why didn’t our insurance company fight for us?” This was a totally rational question that my customer asked. How could they? They cannot override the decision of the judge. Even with photos showing all of the debris in his lane, he wouldn’t go against the officer’s citation. The officer that, I might add, wasn’t even there when the collision happened and based his decision on “word against word” as no witnesses were available. Officers deal with this all the time, and their job is exceptionally difficult under these circumstances.
Should insurance rates go up because of this?
They did. About $25 a month for 3 years.
This means the “pool” - made up of other customers - picked up the other $59,100.
When there are more accidents in a given period of time than predicted, the pool needs more money and everyone pays.
“Why not kick out the bad drivers?”
Often, this does happen. But if we kick out the worst 5%, for example, the rest of us - now fewer - still have to pay the tab.
“Make people with accidents pay more.”
It’s not lost on me that my customer has to pay about $900 in higher premiums for such an accident. How much of the $60,000 should he have paid? If too much, he leaves the pool for either another company or join the ranks of the uninsured. It’s a delicate balance.
“Stop spending money on TV ads.” I get this one a lot, and again- it’s a rational argument.
This would solve very little. Most companies spend 30-50 times more on claim payouts than advertising. And without new customers joining the pool (who heretofore have not cost the pool any money), a shrinking number of existing customers are left to shoulder the costs.
“Cut out the middle man.”
Now, do you need an agent? I’d like to think so. Insurance is a complex system of contracts and regulations, exceptions and exclusions. No two policies or personal plans are the same.
When it’s “your day,” you want a fair payout, fast service, and minimal penalty.
Every other day, you want your premiums to be as low as possible.
We want to punish the people who cost the pool money. Until we are one.
I used to think it was a very simple business. It’s evolved, especially since COVID, and it’s anything but cut and dry.
My mission statement has always revolved around- “No surprises.” I want my customers to have the best service and information. Even if you’re not my customer, ask me a question, talk to me about an issue, I take pride in serving this community in my capacity as a Good Neighbor.
Enjoy the rest of this beautiful Sunday! My crew enjoyed a bike ride on the Monocacy River trail today. 11 days until Halloween 🎃 👻 🍬- but hey, who’s counting?
