Local Insurance Agent

by Corey | Home Insurance

I want to emphasize the importance of having a local insurance agent. This matters now more than ever before. We all know the annoyance of having to navigate through an automated phone system in order to get to the right department for your needs. Even when you are lucky enough to get to the right department, what are the chances that you actually get a person that can handle your request or answer your questions?

A lot of people may not fully understand that local insurance agents still represent the largest insurance companies with the best coverages and premiums. The difference between dealing with the local agent and the company directly comes down to one major thing, SERVICE.

The bigger the company, the more likely they are to try to replace service from an actual person with automation. It almost never goes over well. Just yesterday I went to my mobile carrier’s website looking for a phone number to get assistance. There was no page that offered a phone number to call for them. An automated chat, FAQ page, and a multitude of other options were offered but none of these things could assist me with my problem. I was left to search the phone number on Google because I couldn’t find it on their own company website.

I can’t think of many other industries where talking with a local agent matters more than in insurance. Sometimes you just need to talk to a real live person that you know and trust to help you make a decision. That can be done by phone, email or text. You want them to meet you on your terms and not some 800# or virtual chat. I don’t care what kind of technology you have, it doesn’t compare to good, old fashioned customer service from a local agent who actually cares.

Many new entrants into the insurance market have tried to bypass the agent and allow you to get an insurance policy online. It may be easy to purchase but what happens when you have a question, or worse, a claim. Who will be there for you? A chat bot or an undertrained customer service rep will likely be your source of help. 

I believe there is a need for technology in insurance. We allow our clients to get quotes from our website for auto insurance, home insurance, and commercial insurance.  We allow them to request certificates of insurance online as well as many other service related items. We have a dedicated service page that allows all of the important common insurance requests shown below. We will also always be available for one on one service if needed though.

Online Insurance Service Options

• Request certificates of insurance
• File an insurance claim
• Make a policy change request
• Make an insurance payment
• Request policy documents
• Get an insurance quote
• Schedule an insurance consultation
• Contact an agent

These things are helpful and necessary for many day to day insurance needs and that is why we added them to our website. It doesn’t have to be one or the other though. You can have technology and service from a real local person. I made a promise long ago that I would always have a live person that can answer the phone every time in our agency. In most cases, that same person can handle whatever questions or request you have.

Ways Local Agents Excel at Service

• You can gain rapport
• They know your situation due to your history with them
• You can reach them immediately by phone or email
• You don’t have to start over with a new representative each time
• You have an office you can actually visit if needed
• A small business feel accentuates empathy for you

I am admittedly biased, but I truly believe that independent insurance agencies do service better than the big captive companies and online insurance companies. Local agents “have your back” more and really have a vested interest in you and your needs.

Of course you don’t have to take my word for it though.  Our website has a sample of some of our longtime, satisfied clients providing great survey responses. Our company Google page is also packed full of 5 star reviews by our satisfied clients as well. We take great pride in these and work hard to continually exceed client expectations because we are service obsessed.

In closing, we all want things fast today.  At times we may not want to talk to a person.  We choose, rather, to do certain things online. I am fully onboard with all of those things and use them myself whenever possible. When things go bad or when a website can’t answer my questions, I still want someone to talk to or email to assist me. Let us never get too big to take care of our clients the way they deserve. At least until the machines take over everything, like in the movie Terminator.

Insurance Rates Explained

by Corey | Home Insurance

The insurance industry is in an unprecedented time lately with having to deal with the response to rising inflation.  Now more than ever, you should be watching what is happening to your insurance rates.  We will discuss in this article just why insurance rates seem to be increasing lately and what some of these driving factors are.

We are all experiencing a decrease in how far our dollar goes lately.  We feel it at the gas pump, in the grocery store, when we buy a car, heat our homes, and when we book that much needed vacation.  It is painful to to see what we can buy this year compared to last year.  Even Dollar Tree announced that they will now be selling their $1 products for $1.25. 

The news tells us that inflation is at the highest level (8.5% in March 2022) in 40 years.  I don’t know about you, but I feel like many things are way higher than 8%.  Some things yes, but others feels more like 20-30% higher.

The Consumer Price Index (CPI) measures inflation year over year on the average price paid for consumer goods and services.  This is an average across the nation and doesn’t account for regional differences in prices.  When you look closely at the breakdown of what is included in the CPI, you see a major variance in certain items against others.  For instance, as of the time of this writing, we see the rate for food up 7.9% which is the same as  the overall rate of inflation.  Gasoline for our vehicles, on the other hand, is up 38%.

For the sake of this article, we are looking at how inflation affects your insurance rates so we will be focusing on the main drivers of what impacts insurance.

Inflation Rates on Insurance Related Items

• Used Cars and Trucks  41.2%
• New Vehicles  12.4%
• Motor Vehicle Maintenance and Repair  6.3%
• Residential Construction  14.8%
• Wage Offerings 6%

The cost of these mentioned items drive up the cost of your insurance rates directly.  Comparing these items to the 30-year average for inflation which is 2.49%, and you can see why things are out whack at this current moment.  Insurance was designed to spread the risk, so even if you have not had a claim recently, your insurance rates are impacted by those who have had losses.  When these losses occur, there is a much higher cost to the insurance company to put the insured back to where they were before they had the loss.

Some other factors that are driving up the costs of insurance carriers in settling claims are below.  These all play a factor in pricing and how carriers are forced to raise premiums so they can still make a profit.  After all, if insurance companies don’t make a profit, then they go out of business which lowers the amount of competition which in turn raises rates even higher.

Insurance companies pay close attention to their loss ratios.  That is the ratio of premiums taken in compared the claims paid out.  If this ratio goes up due to higher losses, they must make the difficult decision to raise premiums accordingly to bring the loss ratio back down.  In some cases companies can run with loss ratios above 100%, meaning they pay out more in claims than they take in from premiums.  Obviously they cannot sustain a loss ratio like this for long.

Additional Influences on the Cost of Settling Insurance Claims

• The Wage-Price Spiral- This is an economic term that explains the increase in prices as a direct result of higher wages.  When workers make more money, they have a demand for more goods and services which in turn, causes an increase in prices.
• Increased Wage Payouts for Workers- The more a company has to pay their workers to produce a given product or service, the more this increase gets passed down to the customer.
• Level of Construction Activity- When construction activity is high, there is a greater opportunity to submit estimates for work and these bid margins tend to be higher.

Let’s give some examples of why insurance carriers see increased loss ratios and how they must respond to these increased costs.

Example 1:

George has an accident on the highway on his way to work.  He has not sustained any injuries but his vehicle is a total loss.  When his insurance company issued the policy he was under, they based the premium on the value of the vehicle at the time the policy was taken out.  Since that time, the value of his vehicle has shot up 40%.  The insurance company must take the hit and replace his vehicle per the terms of the policy.  The insurance company will take the financial hit for not taking enough in rate to cover the amount of the loss.

Example 2:

Anita has a fender bender in a parking lot and has to have her vehicle repaired.  She has called multiple body shops and the closest one is 3 weeks out in being able repair her car.  She will be forced to drive a rental car while the car is being repaired with a rental car company who just had to raise rates due to the cost of their inventory being so much higher.  The body shop has raised their pricing because of the cost of their labor going up 10%.  With so few body shops being able to repair the vehicle due to unusually high demand, she has no choice but to pay them what they are asking.  Her auto insurance company has to pay these inflated costs to settle the claim.

Example 3:

A burst water pipe has caused significant damage to Bob’s home.  He will have to replace his flooring and several walls.  Due to higher than normal demand and not enough contractors, the labor cost has increased 20% on all of the estimates to complete the work.  The flooring to match the rest of the home is on a 2 month back order and the cost of lumber is up 42%.  All of these items has taken a claim that would have settled for $32,000 a year ago cost $49,000 today.  The home insurance company has the dwelling limit down about 20% lower than it should be because inflation has risen drastically so quickly.  The insurance company will pay this price for not taking enough premium on this risk.

OK, so the bad news is insurance rates are higher.  You have a better understanding now of why they are.  That still doesn’t help you with how much money you see going out of your bank account to pay the premiums when you haven’t had any recent claims.  So what do you do about it?  The way I see it, you have 3 choices.

1. Grin and bear it.  Break out that wallet and just pay the higher premiums, hoping that one day they will come back down when this whole inflation thing gets under control.
2. Self Insure.  You can pay cash for your car and home so there are no bank requirements to insure them.  Then you pray really hard that nothing happens so you don’t end up in financial ruin if it does.
3. Talk with your agent on what your choices are.

I’m going to guess that the best option for you is option 3.  I will tell you what we are doing for our clients and have done since we have been in business.  We have systems in place to track our client’s renewal rates.  When a threshold is met for increased premiums, it triggers an action for us to shop out all of the insurance companies to make sure they are still with the best insurance company for them.

We like to stay in contact with our clients to make sure that their needs are being met and that we are still getting them the best premium and coverage options available. 

Ways to Save on Insurance

• Have your insurance agent shop out your policies to make sure the insurance company you are with is still giving you the best premium.
• Consider raising your deductibles.
• Bundle your home and auto insurance when possible.
• Consider not filing small claims that may end up impacting your insurance rates later.
• Make sure you are receiving every possible discount you can on your policies.
• Lock in your auto rate for a year if possible.
• Ask for a policy review to make sure your policy matches your needs.

I hope this article has helped explain the squeeze on the consumer lately on insurance and gives you an idea on some things you can do about it. Please feel free to reach out to us with any questions at 704-494-9495.

NC Home Insurance Rate Increase

by Corey | Home Insurance

The NC Insurance Commissioner, Mike Causey, announced on November 10, 2020 that the NC Rate Bureau (NCRB) has requested an increase on NC home insurance rates.  The requested increase is 24.5% statewide.  The proposed rate hike would go into effect on August 2021.  If accepted by the NC Department of Insurance (NCDOI) all NC home insurance writers would be obligated to comply and increase their rates.

Before you get too concerned, it is worth noting that the actual rate increase will probably be settled much lower.  The final rate increase cannot be implemented without the approval of the NC DOI.  Typically in these rate hike requests the NCDOI will negotiate the rates lower than suggested.  The last time this has taken place was in 2018 when the NCRB requested a rate increase of 17.4% and it was negotiated down to 4%.  

It is tough to say how much lower the 24.5% will be whittled down to.  I personally don’t see it going any lower than a 6% hike and it will likely be higher than that.  The primary factor in the need for a larger rate increase is due to the increased wind and hail claims in North Carolina.  Most notably the number of roof replacements stemming from such losses.  Some of these claims are from legitimate storms but most, I fear, are not.

I have been saying for a decade that there are entirely too many roofs being replaced on older roofs that are attributed to wind and hail losses.  The true cause of the damage to these roofs though is often just normal wear and tear.  In most cases, the claims come from roofs 15-20 years of age or older.  I often joke that wind and hail somehow never seems to find its way to newer neighborhoods with roofs less than 10 years old.  I suspect that we will only trend with higher rates until a decision is made on rectifying this problem.

Insurance companies and the NC DOI really need to determine their stance on this.  A distinction should really be made on the causation of the damage to a roof.  Is it wind and hail? (a covered peril) or is it normal wear and tear? (not a covered peril).  If we are using our home insurance policies as a form of warranty than we have to expect higher insurance rates.  

To put some perspective on this, you can compare it to needing to replace your hardwood floors.  If you have not updated them in 25 years, you can expect some wear and tear and when it comes time to replace them you wouldn’t expect to be able to file a claim for that loss.  

With continued rate increases on home insurance, there has never been a more important time to have an independent insurance agent working for you.  Aside from state mandated regulations raising home rates, you can expect carriers to have fluctuations in their rates over a several year span as well.  You need an agent that will keep a watchful eye on your policies and be there to step in and move it to another carrier if your current company gets out of line on their home insurance premiums.

Over the years last 15 or so years I have seen the best rates shift from Farmers to Hartford to Bankers to Heritage and now to Homeowners of America.  That is a generalization of course.  These are the companies that have been the most competitive across the board during this timeframe.  We also see companies like Travelers, State Auto, Kemper, and Universal Property and Casualty win a good bit on premium too.  

It is so important to have an independent insurance agent as your advocate not only on rates, but also on making sure you are adequately covered.  You just can’t trust one individual insurance company to have your back year after year.  Let us know how we can help by reaching out to us at 704-494-9495 or by emailing us at contact@pegramonline.com.  You can always reach me directly at coreyi@pegramonline.com as well.  I would be happy to discuss this topic further with you or answer any other questions you may have.

Does Your Business Need Cyber Insurance?

by Corey | Home Insurance

8 Questions Regarding Cyber Insurance and Your Business.

Cyber insurance is relatively new in comparison to other business insurance types.  It is increasingly being a necessity for many businesses today though.  Some industries require it while others simply want it to protect themselves.   

You have worked hard to build your business and maintain it.  It can only take one unfortunate situation to cost you a significant amount of money or even put you out of business. 

With cyber insurance being so new, many companies don’t fully know exactly what it is and if they have a need for it.  We have put together a handy questionnaire to help you assess your need for this valuable product.

Ask yourself these 8 questions when determining if cyber insurance is right for you.

      1.  Do you have employees? 

Most breaches come from mistakes made by your employees.  You may tell yourself that you wouldn’t make any mistakes that would cause a data breach.  The same may not be said for those who work for you. 

Even when an employee has the best of intentions, mistakes can be made.  Simply opening an email that is suspect could lead to someone accessing your customer’s or vendors information wreaking havoc on maintaining the success of your business. 

Also, keep in mind that we are all humans and even us as business owners can make a simple mistake.  Oftentimes you don’t even need to make a mistake.  You have just experienced bad luck in becoming the target.   

     2.  Does your business have a website? 

Your website could be hacked which could cause valuable information getting stolen.  You could also face business disruption due to your website being down.  Further, you could be at risk of defamation in printed word and copyright and trademark infringements. 

You should also make proper considerations to ensure your business website is ADA compliant.  Your cyber insurance policy may protect against some of that backlash.

     3.  Does your business accept credit or debit cards or other mobile friendly payments? 

Cyber criminals are most often trying to obtain customer credit card numbers in these data breach situations.  This can be especially detrimental if you store any payment information. 

In fact, 40% of all cyber crimes come from an attempt to steal client credit card information 

     4.  Does your business use email? 

A lot of information is delivered by email and could get into the wrong hands which can come back as a claim against your business. 

You could also have someone hack your email and send out phishing emails that could come back on your business. 

     5.  Does your business keep records of customer information? 

If you keep records of customer data than you could be at risk of this data being stolen. 

That includes but is not limited to the following: 

• Social Security Numbers 
• Date of Birth 
• Drivers License Numbers 
• Credit Card Info 
• Bank Account Info 
• Addresses 
• Email Addresses 
• Medical Records 
• Company Tax ID Numbers 

     6.  Do your employees use personal devices? 

Stolen phones, laptops, and tablets could contain valuable customer data that could be detrimental if it got into the wrong hands. 

Even if a hacker can’t get into your network, they may have a much easier time getting into your employee’s devices. 

     7.  Does your business have a social media presence? 

I don’t have to tell you that we live in very sensitive times.  If you or an employee posts a comment on Facebook, Instagram, Next Door, etc, and it is seen as discriminatory or harmful to another person it can be very damaging to your business.   

Remember, the intentions of your comments don’t even matter these days.  Only how someone received your comments. 

    8.  Do you know exactly how to react if you had a cyber breach? 

Let’s say the worst thing happens, and you are a victim of a data breach.  There are certain things that need to happen immediately.  If you have cyber insurance, the company will immediately go to work to rectify the situation and acting quickly can be the difference between an unfortunate situation and something that may put you out of business. 

Let’s discuss some of those common claims paid by cyber insurance companies. 

Common Claims Paid by Cyber Insurance 

1. Paying ransomware. 
2. Covering fraudulent funds transfer from your bank. 
3. Reimburse you for lost income from a network or website interruption. 
4. Cover legal fees in suits made against your company from a data breach. 
5. Pays legal fees for slanderous comments made by your company on social media. 

I hope this has helped shed some light on the world of cyber insurance and how it can be useful to your business. 

If you have any questions or would like a quote on this valuable coverage, please don’t hesitate to reach out to us at 704-494-9495.  We directly represent the best companies and the most competitive premiums in the industry.   You can also click here for my previous article on this topic.