Do You Want the Good News or the Bad News??

The good news is that only 25% of consumers shopped their auto insurance in the last year. This is down from 33% for the prior year.

The bad news is that 43% of all those shoppers changed insurance carriers. To put it in a different perspective, almost 11% of all of the insurance buying public changed insurance companies last year.

This information came from JD Powers and Associates research paper of April 29, 2012. The full report can be seen at the JD Powers  website.

Even though fewer consumers are shopping their insurance, more are actually changing insurance carriers.

Some of reduction in shoppers may be attributed to the drop in cost savings by changing insurance companies. In 2011 the savings by changing insurance companies was around $412. That savings has dropped to $359.

All of this does not seem to be slowing down the amount of money that the insurance companies spend in trying to increase their market share. The industry spent an amazing $5.7 billion last year in advertising.

A couple of interesting items to note are that 52% of shoppers started their process online and 32% got all of their insurance quotes online. Last year 34% of insurance shoppers said they prefer to buy their insurance online.

For information on license training or insurance continuing education visit our website at www.itaamerica.com

Crop Insurance For Marijuana Growers

It looks like the marijuana growing business is going mainstream. Growers in states where medical marijuana is legal can now purchase crop insurance that will provide protection for unforeseen losses. This got us to thinking about how the conversation between an insurance agent and a pot grower might go. We decided to listen in.

Grower: "What does this insurance do for me?"
Agent: "It pays for losses, including lost profits, in case a natural disaster destroys your crop. It also covers theft."
Grower: "Theft? Does it cover Dennis E. Anderson or Alfred T. Friggin confiscating my plants?"
Agent: "Who?"
Grower: "You know, DEA or ATF."
Agent: "I don't think so, since marijuana is considered a controlled substance by the Feds."
Grower: "How much will this cost me?"
Agent: "Between $1200-$2000 with a $5,000 deductible."
Grower: "If I lose some plants, will I get paid in cash?"
Agent: "Probably by check."
Grower: "Bummer. What do you call a natural disaster?"
Agent: "The policy pays for bugs, fire, hail, windstorm and most acts of God."
Grower: "Acts of God? That is cool. He would bless us because we help thousands of people fight pain everyday. We also help people sleep at night with our special blended AK-47 assault dose."
Agent: "AK-47?"
Grower: "Yo man, it will blow your head off and you'll sleep like a baby."

Insurance Ranks Well in Best To Worst 200 Jobs

Career Cast recently completed a survey and rated 200 jobs in the US from the best to the worst. Insurance agents came in a solid #68; ahead of some notable and high paying jobs and behind a few strange ones.

Let's start with a look at the criteria for the survey. Career Cast based their survey on hard evidence broken into 5 key categories; Physical Demands, Work Environment, Income, Stress and Hiring Outlook.

Insurance agents scored well in most of the categories in the survey. Although I take some exception to many of the factors that went into the methodology of the survey, I do believe that overall, insurance agents were given fair treatment. You can view the methodology that Career Cast used by visiting this site,  http://www.careercast.com/jobs-rated/2012-jobs-rated-methodology.

I found a number of surprises in the jobs survey; both in jobs ranked higher than insurance and jobs ranked lower. The number one job was Software Engineer, no surprise there. But the number two job was Actuary! I find that hard to believe....must be the lack of exposure to anything risky like people, food, stress, and upward mobility!

Other notable jobs that scored better than insurance in the survey were; Financial Planners at #4, Web Developers at #15, physicians at #40, Loan Officer #59 and Executive Assistant and #67.

There were also some interesting jobs that came in worse than insurance. Actually more than two-thirds of all of the jobs scored worse than insurance. Some of the notable "worse" jobs were; School Principal at #74, Recruiter (probably not insurance!) at #78, Insurance Underwriter at #79 (must be the death threats!), Attorney #87 (I thought they would score around 195!), Clergy at #93, Military General #141, Real Estate Agent at #155 (strange!), and the very worst of the jobs at #200 is Lumberjacks.

Overall I was rather pleased that insurance agents, although maligned by many, is still one of the best jobs in America.

Insurance agentsTo view the complete list of the best and worst 200 jobs in America go to:  http://www.careercast.com/jobs-rated/2012-ranking-200-jobs-best-worst

Watch Out! Your License Plate Maybe Telling Secrets

Connecticut lawmakers are considering adding a small transmitter embedded in the license plates of cars that will send out signals that will verify that an insurance policy is in force. 

It seems that in Connecticut more than 10%, or 250,000 vehicles, are being driven without insurance. The police write approximately 65,000 citations each year for driving without insurance. Of the 65,000 citations issued only a fraction actually paid a fine. This new law has the potential to provide as much as $29 million of increased revenue each year. 

This attempt to crack down on uninsured drivers does have some critics. Many believe that it violates privacy laws as anyone with an RFID scanner will be able to secure information from the embedded transmitter.

We will let you know if this potential law sees the light of day.

Have You Considered Securing a Consultant's License?

Many insurance agents are getting an additional license in their state-a Consultant's License. Most states allow this added license without an additional exam. Just complete a simple application and pay appropriate fees.
So why would an agent want to add this license? There are several reasons, not the least of which is the new healthcare law which will limit the percentage that insurance companies can charge for expenses (15% or 20% depending on total insurance company premium). Insurance company expense ratios include commissions paid to insurance agents. Downward pressure on expense ratios mean downward pressure on commissions which means agents must find other income sources to make up the lost revenue-become a Consultant.
Consultant's can charge a fee for their services because they are working on behalf of the client. Be sure and check with your appointed carrier to see if their contract allows you to do fee-based work.
Small businesses will need to comply with literally thousands of pages of new health insurance regulations in the future. They will welcome the advice and counsel of a professional insurance agent. This will provide an incredible opportunity for a knowledgeable agent, but it has to be worth their time and effort. Commission income will not be sufficient to compensate for the knowledge, time and effort that will be expected of insurance professionals.
If you would like more information on how to obtain a license as a Consultant, drop me a note or visit our website at www.itaamerica.com.

Self-driving cars and insurance

Over the last 6 months many articles have been written about self-driving cars.  There was a story about Google doing some testing on self-driving cars as a natural extension of their project to video tape every street in the world. In fact, Google has more than 140,000 miles logged in with self-driving cars. A story in the Wall Street Journal yesterday (L. Gordon Crovitz; The Car of the Future Will Drive You) discussed how the Executive Chairman of Ford Motor Company, Bill Ford, spoke to a group about how in the next few years, cars will automatically be able to maintain safe distances, using a network of sensors, V-to-V (vehicle to vehicle) communications and real-time tracking of driving conditions which are fed into the vehicle's navigation system.
Self-driving vehicles are sometimes called unmanned ground vehicles (although a person is in the drivers seat) or as the auto industry calls them "semiautonomous driving technology." Regardless of the name, self-driving vehicles are loaded with technology and may one day change the world. Some are saying that these type of vehicles will be commonplace within 7 years.
The most amazing thing is that the technology is already available for the self-driving automobile to hit society's mainstream.
If this is truly the future of driving what impact could it have on insurance?
Many are saying that self-driving cars have the potential to reduce auto accidents by up to 90% and others are saying that we can reduce traffic fatalities by as much as 50%. It does not take a genius to figure out that if auto accidents are reduced by such a large amount it cannot be good for the insurance industry, the body repair shop industry, glass shops, doctors, nurses, physical therapists, lawyers, and a host of supporting industries.
Let's focus on the insurance agent. We know there is a lot of pressure on insurance agents in the current environment from the direct writers like Geico and Progressive and it could be downright disheartening to add the insult of a reduced need for insurance agent services if cars start driving themselves. Before someone jumps off the cliff and starts looking for a new career, or before we go back to texting while driving, or let the dog sit on our lap, let's take a step back at look at this whole scene.
First of all, very few of the scientific advances of the crystal ball group have ever come to pass. We have not entered the era of The Jetson's as many predicted. There will be huge lobbying efforts from dozens of industries and industry groups to reduce or eliminate the scaling of the self-driven auto. Literally thousands of laws will have to be written to address hundreds of issues related to driving. I find it extremely difficult to believe that thousands of cars will be driving 100 mph on the freeway in a tight formation less than a foot from each other.
On the other hand, how cool would it be able to relax in rush hour traffic?

GEICO going after the remaining 90% of auto insurance market

In a special annual report to Berkshire shareholders, Warren Buffett says GEICO is poised to grow well into the future. An insurance company that just 18 years ago held only a 2% share of the auto insurance market is now at 9.3% and is going after the remaining 90%. According to Buffett; "Don't bet against (GEICO) acquiring chunks of it year after year in the future."

GEICO's current 9.3% auto market share generates $15 billion in premium. Buffett is proud that GEICO's  operations have maintained an underwriting profit for nine consecutive years while State Farm has had an underwriting loss in 8 of the last 11 years.

With over $900 billion in annual advertising costs (about 6% of premium) I guess we will continue to see the gecko, the caveman and who knows what other creepy icon they come up with for many,  many years.