08/15/2024
Let’s put a few myths to bed that I see floating around out there:
1. “Insurers are making record profits while raising rates”
This is very easy to fact check. Insurers of autos and homes have been losing their shorts since 2021. Billions and billions of dollars to quote Carl Sagan. Some have gone under. The rest have tightened their eligibility rules.
2. “80% of your insurance premiums go into the pocket of your agent”
This whopper is being bandied about at times by lead aggregators - folks that get you to click their bait and sell your information to 6 or more insurance companies and charge each company $10-50 for the same lead and will continue to sell it for years to come.
The agent makes about 8% on your premium before salaries, rent, utilities, furniture, marketing, taxes, etc. This leaves about 2-3%, or $2-3 a month on a $100 a month premium.
3. “All insurance companies are the same. Just go with what’s cheapest.”
Two problems here - pricing is constantly changing and adjusting so there is a difference between cheapest today and who is consistently priced right year after year.
Second - companies are not the same. Why would they be? What other industry can you think of where it’s all the same? It’s not. There are good carriers and bad ones.
Nobody is happy with increasing rates. But insurance has faced the double whammy of inflation AND rates being held down for over three years during Covid. They can’t “write off the loss” or print money or borrow it. They are required to maintain a large reserve in case of catastrophic loss. Of which we’ve had many lately.
Thanks for reading this.
Thank you Scott Smith for this insight.
