Ep 10 - Navigating Rising Insurance Rates with Allen Smith of Blue Valley Insurance

Voiceover: [: 00:00:00

Now, your host.[00:00:30]

sts on the show. And we have [: 00:00:45

Mm-hmm. So. How's everybody doing today?

Allen Smith: Doing great, thank you.

Jeb Graham: [: 00:01:00

Allen Smith: yeah.

ons we wanted to have you on [: 00:01:15

Uh, when I think, when I say property casualty, I mean personal lines like their homeowner's insurance. Car insurance if they're insuring a boat and things like that. And I think the common [00:01:30] theme, and we all know it, everybody that pays any sort of insurance premiums is that the cost has gone up significantly over the last few years.

n areas and stuff like that. [: 00:01:45

Uh, that that insurance has gone up and kind of just what's going on with personal lines, insurance and, and the industry as a [00:02:00] whole.

Allen Smith: Yeah. And

Jeb Graham: thanks

guys get a lot of calls and [: 00:02:15

Um, and what I would say I. To kind of provide a little bit of a backstory of what's happened in the last decade, and I've been doing this for 18 [00:02:30] years now, and, um, I've never seen rate increases like I've seen in the last two years. Um, some of the things that, and, and we can account, we can, we know we can point to a few things.

st of building materials, as [: 00:02:45

And I woke up the next day and there was like a hundred phone calls that I had to reach out to because they had roofs. Those are easy ones to adjust though, because they were softballs. They, they broke windows. Um, we had a similar event in Shawnee, I think late last year, um, [00:03:15] where again, big stuff, uh, what we're noticing.

ted writing policies back in [: 00:03:30

Um, and that was on a $250,000 house, you know, um, that same $250,000 house now costs around 600,000 to build right. [00:03:45] Um, so just thinking about those numbers there, I think people are starting to realize like, wait a second. You know, everything does cost a lot more, number one, but number two, um, you know. In the last two or three years, because when roofs start to age out, we've got a lot of roofing companies, I'm almost wanna [00:04:00] say that insurance companies have started to subsidize roof replacement.

hat's what's been painful is [: 00:04:15

I. There's a misconception in the Midwest that we're a profitable territory. In fact, we haven't been over the last three to [00:04:30] four years, simply because the amount of money they're paying out in claims are more than the, uh, the revenue they're

Jeb Graham: getting in premium. So they've had to make Is, is that from hailstorms?

So is that like a, is that mostly from hailstorms? It's,

at's been unique is, is that [: 00:04:45

But it's the same thing kind of anecdotally on the auto, um, auto premiums have gone up dramatically. I mean, we used to talk to customers like, if you don't have any speeding tickets or accidents, your rates would trend downward. Because your car value would [00:05:15] theoretically go down and all that good stuff.

nge, you know, supply chains [: 00:05:30

And again, I'm. Here to debate that. But what insurance companies are doing is they're building in rate for factoring in those, those possibilities, right? [00:05:45] So, you know, when you get parts that are coming from examples, uh, in 2000, like 21, a common claim that we saw on, on electric vehicles like Teslas, for instance, you know, to fix, if you had a bump on a bumper, like you got a, you hit somebody's bumper that cost around five grand to replace.

[: 00:06:00

We owed a, we owed a rental car for that person for six months to a year, and that cost of the rental car was more than the value of the car. So we were totaling those cars. So, you know, and that's another thing too, you know, just. Looking at what types of [00:06:30] cars, maybe call your agent before you buy the car.

andard, you know, just a gas [: 00:06:45

What I would say right now is that things are changing and I see on the property side what I think they're gonna do, and we're already seeing the [00:07:00] changes kind of going forward, is that, you know, they're gonna change the way they cover roofs. So for those people that have gotten new roofs in the last few years because of hail events, you know, congratulations, you know, because those days are starting to come down to a point where.

ble of a thousand dollars or [: 00:07:15

Jeb Graham: that's

Allen Smith: gone.

neighborhood got a new roof [: 00:07:30

You need to tighten this thing up. Yeah. They were, I mean, I think the thing that's, that's the challenge

, this is, again, this is my [: 00:07:45

Um, your roof could be probably fine. You know, it's just kind of, you've got some normal wear and tear. You've got no leaks. But if your neighbors are getting roofs, what are you gonna do? You're gonna call the insurance company and get a roof claim. Um, again, I, [00:08:15] you know, and that's where it's been hard, is that asphalt shingles is the, you know, they, the cost of those roofs.

people that are knocking on [: 00:08:30

'cause here, like when people call, I mean we've had roofers that are actually calling on behalf of the insured. If you start getting that, that's, that's don't do that guy or that person rather. Um, the amount they're charging [00:08:45] roof, four roofs for the same roof that I know that are getting roofs for new construction or whatever is nearly three times as much.

nna look at the bottom line. [: 00:09:00

It all adds up.

Jeb Graham: Numbers don't add up. Right? Yeah.

what's what's been going on [: 00:09:15

Um, half of my companies are frankly not writing new business right now. They've just stopped altogether. Um, we've actually lost three markets in the [00:09:30] last three years. That's, and again, my last, prior 17 or 16 years before that, we'd never seen a carrier exit the market. Um, I mean, you know this 'cause you were with one of our carriers with Nationwide private client.

they said we're pulling out. [: 00:09:45

So there's a lot of uninsured people out there. So I guess where I see go, yeah, what's going forward I see in the Midwest is, is that they will start going to a payment schedule if they already haven't already. Um, so what that [00:10:15] looks like for you is that if you've got a 15-year-old roof, they may depreciate the roof by 30 or 40%.

instead of being out two to [: 00:10:30

Um, but I mean, I don't want people to think that you [00:10:45] shouldn't file a claim, but I guess what I'm getting at is, is that now more than ever, don't waste your time filing a claim unless you know Absolutely you have damage. 'cause insurance companies have kind of put a kibosh on, like, like you said earlier, like the six or seven years ago, where they just cut checks.[00:11:00]

Those days are starting to become to an end.

ot neighbors that are filing [: 00:11:15

There's, I haven't even seen hail down here. What's going on? And he goes, well, the insurance company will pay for a new roof for just your deductible. And I'm like, I'm not gonna pay a, you know, $2,000 deductible for a 2-year-old roof or whatever. [00:11:30] And he goes, well, let me get on there and I'll, I'll find some, some damage.

And I, I opted out of it, but we got. Probably six or seven people knocking on our door. 'cause we had one neighbor got a new roof and they'd been there for three years and we're like, this just doesn't, doesn't add up to, that's, that's the thing

Allen Smith: is like, um, [: 00:11:45

'cause if you got damage, you should file a claim, right? Yeah. I think at the end of the day. But, um, we are seeing a lot of claims that are frankly unnecessary. [00:12:00] You know, um, like soft metal damage is a good example. Um. Your downspouts guys, if you don't see any dents on your downspouts, it's a good chance you don't need a new roof.

hing is too, is that even if [: 00:12:15

Their money's not derived off of just roof insurance claims. In [00:12:30] fact, if it were up to them, they would do no insurance claims. 'cause if anybody's been through an insurance claim, it's not always the most pleasant experience. Right. There's delays you're dealing with. Some adjusters are better than others.

t's just, again, it's just a [: 00:12:45

And so the adjusters have to just go, are you kidding me? And then it just slows, it just, it slows the wheel and it slows everybody else [00:13:00] down because all of a sudden you get 15 of those in one day and every one of 'em, you're fighting about the amount it actually costs. And at the end of the day, the insurance companies oftentimes just give in, you know, and, and it's, uh, and it's, and it's at a point now where, I guess the long term is that we need to be careful on those.

And I, [: 00:13:15

Jeb Graham: you wanna ask the question, Eric?

Allen Smith: Yeah. Or maybe ask the

mean, you know, you've been, [: 00:13:30

You know, one of the things we always talk about in our world is things that we can control. How would a consumer go about controlling their, their insurance costs, or what are some of the things that they need to do or can do [00:13:45] to help? You know, lower that, that premium amount.

Allen Smith: Well, I, let me start with two things too, is like, what, why are rates higher and lower for certain people than other people?

goes, believe it or not, the [: 00:14:00

But the biggest factor right now that I've noticed that is hurting or helping rates is credit. Um, carriers [00:14:15] are really, you know, I guess actuarily, they're finding that people that have better credit file less claims, and it would make sense from, from just a common sense approach, right? If you are, if you've got good credit, you could be potentially taking care of your property better.

's the thing is, is that, so [: 00:14:30

Like on the same home, let's put things just for a $500,000 house on a new construction, someone with a seven 50 or higher credit score is [00:15:00] probably looking at around on a new construction thing, around 1500 bucks a year. That same person with like a six 40 credit score, which used to be okay. Or somebody that's maybe a first time home buyer that doesn't have a lot of credit or never had built up credit.

That same rate that was: 1500

Jeb Graham: that credit score, that's, that's really interesting of how, you know, keeping your credit score up is really important in a lot of regards. But I, you know, a lot of people I don't think realize that [00:15:30] how much it impacts your, well, some of our carriers didn't even rate for credit.

Um,

credit score to even quote [: 00:15:45

Jeb Graham: Yeah.

Allen Smith: So.

Jeb Graham: Well, hey, real quick, back there, just so you're talking about Lititz Mutual, and, uh, I know since I've been with you, maybe it's been like we were talking about 15 years or so.

I've probably had three or four different carriers Yeah. That we've used, maybe two or three.

Allen Smith: Mm-hmm.

Jeb Graham: Okay. [: 00:16:00

So you're basically going out to different companies, you're [00:16:15] pricing out insurance, and you're trying to find. And, and maybe just talk a little bit about the difference between a captive agent, you as an, as an independent agent, and maybe some of the costs that are saved in that regard as well.

Allen Smith: Yeah, great question and thank you for bringing that up.

I think the, um, [: 00:16:30

Um, and you sell their products and their products can be good. Um, the one thing as an independent broker, we don't have access to exclusive markets. So oftentimes I'll get calls like, Hey, can you shop me State Farm? I'm like, I'm sorry, I can't. You'll need to call the local State Farm [00:17:00] agency. Um, we have national markets as a broker though.

l direct. They have a direct [: 00:17:15

Like Cincinnati Chubb is a, is a good example of a, of a independent agent exclusive. Right, right. But, um, we've got a lot of mutual markets that you might not have heard of. And I guess the [00:17:30] benefit or the benefit of captive and if you're an agent for per se, is that it's, it's a nice, safe home. And if like.

tive agency, you just have a [: 00:17:45

They'll come in with low rates and then next year they have poor loss ratios and so they raise their rates. Okay. [00:18:00] Um, we've seen it over the last 17 years and I've had you, and I'm specifically Jeb, I think I've had you with three different companies. Right. It's just, there's times where the rates go up with a company and then we just wanna remarket and just make sure that, hey, are the rates better anywhere else?

efit of a broker is that we, [: 00:18:15

Um, and that's where it's, it's changed a little bit recently simply because we are living it even on the, on the, uh, independent channel of riding new business because of the hard market we're in.

Eric Wymore: Mm-hmm. But

: the nice thing is, is that [: 00:18:45

Nice.

Eric Wymore: So anything with teenage drivers, right? Teenage drivers coming around, talked about this story. Yeah. How do you get that rate?

Allen Smith: Well, I mean, [: 00:19:00

I know, Eric, you do too. Jeb, you've got a youthful operator right now. I think the, the, the sad part right now is that they are [00:19:15] charging a lot more for kids than they ever have before. Um, I, for all those people that are about to have kids drive, I would say, you know, estimate $200 a month before you even had a car.

ok at for just adding a kid. [: 00:19:30

There's a slight discount there, but [00:19:45] the biggest thing I can tell families, um, is to really review your policies at that point. Going forward when you're adding a kid, I know what we do for our customers is that before adding a young driver. Um, we shop it because there's such a variance between companies whenever we're [00:20:00] adding a car, uh, adding a young driver.

t. Um, but the biggest thing [: 00:20:15

But that's what people, that's what average families with three cars are [00:20:30] paying with your full operators right now. Look at your deductibles, and that's the same thing on your home, and we're gonna talk about things to review with your agent, but look at your deductibles. Maybe consider self-insuring some of those smaller things that you used to, maybe not because you didn't care, right?[00:20:45]

ree years. All right, so the [: 00:21:00

And so it's really important to talk to your kids. You know about this stuff, about safe driving, um, but distracted driving is the real cause of why insurance rates are going up so [00:21:15] much with, with auto and especially with youthful operators. Um, I don't know about you guys. Every time I stop at a stoplight, if I look to the right or left, there's somebody on their phone.

hem. And I think the problem [: 00:21:30

Kids are getting in more accidents. So are adults by the way, you know, because of distracted [00:21:45] driving, right? And the severity of accidents have actually increased. Um, when you got people going 70 miles an hour not paying attention, they're hurting people, right? Mm-hmm. So we're also seeing that. So it's just kind of like a weird, as cars get smarter, it'll be not, I mean, [00:22:00] again, I joke because there's cars that drive themselves.

That'll be kind of interesting, but, well, I was actually,

we don't need to spend a lot [: 00:22:15

Allen Smith: I think oftentimes insurance is lagging on this stuff. That's part of the reason why we see such as a huge increases after they started putting all these EVs in, right? Mm-hmm. All I can tell you is, is that all Teslas are gonna cost a little [00:22:30] bit more money than your standard just gas vehicle. Um, I haven't seen any data on it, whether or not the self-driving is gonna improve the rates or not, because they're pretty new.

they gotta notify the state [: 00:22:45

My rate went up a thousand bucks. Because you gotta Tesla, you know, or you've gotta a rivian. Um, [00:23:00] mm-hmm. You know, my neighbor right across the street, he's got a lucid, have you ever heard of those cars?

Jeb Graham: Mm-hmm.

Allen Smith: Yeah. Those are, those are pretty good, easy cars. He's got a cool car. Yeah. Uh, yeah. He, um, and again, I don't wanna speak ill of lucid or anything like that, but he had a, a chip in the windshield that needs to do so.

The windshield needs to be [: 00:23:15

To make 'em lighter. They crack all the time now. So we're seeing mm-hmm. All these glass claims. But the point I'm trying to make with this, this car specifically, and this literally was two days ago, he, it took him, uh, number one, not safe flight, [00:23:45] wouldn't do it. They couldn't do it. Okay. No body shop in town could do it.

The closest one that would mess with it was a body shop out of Nebraska, and the cost to replace the windshield was over five grand. Wow. Oh wow. It's like, what? Yeah.

you could get a used car for [: 00:24:00

Allen Smith: Yeah. Yeah. And that, and that's, yeah. And that's, that's what's crazy is that the industry from a premium standpoint has changed so dramatically.

Right. Just from, just because of the costs of all these repairs.

than, did you have one or do [: 00:24:15

Ethan Hutchenson: Yeah. Last one we got for you. Uh, here, Alan, talking about, you know, being proactive from the consumer's perspective, what can we do?

ibles, looking at discounts, [: 00:24:30

Allen Smith: Yeah, I think that, um, so we've been a bit more reactive lately simply because everybody's rates went up over 20% for the most [00:24:45] part.

ut the same? Because even me [: 00:25:00

And I don't think it's, I think it's important to tell, to tell everybody, you shouldn't move your insurance every year. And that means if you're with a captive or with any agency, because carriers are now rating two [00:25:15] like. You got two customers, right? One customer that's been with the same, same carrier for 10, 10 plus years, and you got the other customer that's been with six different companies in six years.

Who do you think is gonna get the better rate when they go to quote,

Eric Wymore: right?

I'm saying is unless you're [: 00:25:30

All right. [00:25:45] Okay. Rebuilds, uh, the cost to insure your home. That's kind of taken out of the, out of the ballpark nowadays because the carriers are pretty much saying, Hey, this is what we're gonna insure it for, whether you like it or not. All right. Um, so my customers, the ones that I see the most need, and probably [00:26:00] you guys see on your book, if they've been with a company for five plus years, A, they probably should be remarketed.

me to quote. And they've got [: 00:26:15

I ask him, do you ever file claims for, he goes, no, I self-insured anything. I'm like, well, then make your deductible. 5,000. Yeah. The premium differential you get from just [00:26:30] going from 1000 to 5,000 could be 50%. Because then the way the carriers are going, remember I told this like where they're going to is a 1% wind and hail or, or 2% in some cases, right?

house, they're ensuring one [: 00:26:45

You [00:27:00] realize you're self-insuring the roof at that point, right? Mm-hmm. So, um, I would say deductibles, um, review your discounts because there are discounts now that they're offering they hadn't before, like backup generators. Um, some of our companies are doing that. Another common one is this, like, um, you heard of the [00:27:15] automatic water shutoff devices.

off the water automatically.[: 00:27:30

And then obviously your alarm discounts. Um, and on the auto side, same thing. Look at your deductibles. Um, make sure they're rating for the proper use. If you work from home and maybe you don't put a lot of mileage on your car, they could have been just assuming you were commuter 10 miles commute, right?

If you're [: 00:27:45

Jeb Graham: Those are all good, great pieces of, uh, of advice. And I, I think like, look, the kinda what you're saying there is, is it seems like to me it's a really good time. Like, 'cause you know, the, the [00:28:00] biggest listeners of this podcast are gonna be our clients.

I think it, it creates a lot [: 00:28:15

So, so I think that's, that's a good thing. And I think, uh, you know, I know you've done a great job for me and, and for a lot of clients that we've sent you over the years, so we certainly appreciate that. And also wanna [00:28:30] wish you good luck in your golf game tonight. Uh, I hope you go out there and do well.

So, thanks Colin. You know, Alan and I are getting ready to play in a member guest. Tournament here in a, in a couple months. So, and we're planning on winning it. Is that right?

Allen Smith: Well thanks for having me guys. I really appreciate it. Yeah, thanks

r coming on and, uh, this is [: 00:28:45

Yeah.

aluable insights to help you [: 00:29:00

Disclaimer: Jeb Graham, Ethan Hutchinson and Eric Wymore are registered representatives with and securities offered through LPL Financial Member FINRA SI PC Investment advice offered through W CG Wealth Advisors, a registered investment advisor, W CG Wealth Advisors and Metcalf Partners Wealth Management is AR separate entity entities from LPL [00:29:30] Financial.

The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual to determine which strategies or investments may be suitable for you. Consult the appropriate qualified professional prior to making a decision.

and may not be invested into [: 00:29:45