I start most Saturday mornings in the same way—I read Nicole Vinson’s blog,
which is always very informational and entertaining, and I do some research on
insurance practices around the country.
This Saturday, I woke up in Missouri
after settling a large residential fire loss against Start Farm. This got me
thinking about insurance companies that write policies in the state of Missouri
and wondering who wrote the most policies. Here is what I found:
According
to the Missouri Department of Insurance, there are 163 insurance companies that
are authorized to provide property and casualty policies to homeowners.1 As
of 2014, State Farm had 26.63% of the market share, followed by American Family
at 14.94%. This comes as no surprise to those that work in the insurance
industry.
These two companies are the ones most mentioned in conversations
about property damage occurring to a home in Missouri. The next three companies
are Safeco Insurance (5.42%), Shelter (5.41%), and Farmers (4.8%).
The other
158 companies combine to write 42.8% of the policies, with 59 companies holding
0% of the market share. Meaning that there are 104 carriers who are actually
writing policies, and only 17 of those write over 1% of the policies in
Missouri. Since State Farm and American Family write 40% of the policies, I
turned my focus to them.
In
2014, State Farm received $478,209,348 in premiums and paid out $261,613,988 in
claims. Therefore, their loss ratio was 59.55%. Loss ratios are an indication
as to the profitability of the company.
For example, if the loss ratio was 100%
this would indicate that the company was in poor financial condition. In 2014,
American Family received $268,168,598 in premiums and paid out $136,330,552 in
claims, for a loss ratio of 53.26%.
How does this compare to the other carriers
that write fewer policies? Liberty Mutual wrote 1% of the policies in Missouri
in 2014. They received $18,173,129 in premiums and paid $8,999,363 in claims
for a loss ratio of 45.20%. Thus, in 2014 with regard to homeowner claims,
Liberty Mutual was more profitable than State Farm and American Family if you
are looking strictly at profitability as a percentage. Obviously overall the
latter companies made more money.
Why
are loss ratios important? We all understand that insurance companies are in
business to make a profit. They have to pay to keep the lights on and pay
employees. I become concerned when those payments become incentive based such
that claims handlers are rewarded for underpaying claims, or when claims are
adjusted based upon the financial interest of the company rather than the best
interest of the policyholder.
I don’t know what the statistics are for
homeowners who make claims, get denied and do nothing to assert their policy
rights versus homeowners that hire us to pursue their claims and get the
recovery they deserve. But I can look at some of the above statistics and infer
that there are many policyholders out there that simply find the claims process
to be too arduous and don’t have the energy to take on a big multi-million
dollar company.
This is what some insurance companies count on, how they make
money, and how they stay in business. According to their website, State Farm
was started in 1922, they insure more homes in the U.S. than any other carrier
and they are ranked number 41 on the Fortune 500 list of the largest companies.2 Notably,
this list ranks companies based upon total revenue.
It
is easy to see why you may need assistance with your claim. Consult a
professional and get the advice that will put your claim into the ‘paid’ column
and not just the ‘premium received’ column.
1 Information available at www.insurance.mo.gov.
2 See www.statefarm.com/about-us/company-overview/company-profile/state-farm-story
2 See www.statefarm.com/about-us/company-overview/company-profile/state-farm-story
No comments:
Post a Comment