Longtime Insurance Customers Get Ripped [overcharged]

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drawpoker
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Longtime Insurance Customers Get Ripped [overcharged]

Postby drawpoker » Mon Jun 15, 2015 5:02 pm

Okay, I get renewal notices for both auto and H.O, from StateFarm - increases are 18.27 % on the auto, 10 % on the H.O. Been a long-time customer (43 years to be exact on auto) so something seems fishy.

Well, lo and behold, the concept of discounts to long-time customers has gone out the window. Replaced by something called "Price Optimization". Basically, the insurance companies use data mining and other sources to make a profile of a long standing customer who is most likely to accept price increases and not bolt, taking her business elsewhere.

http://www.npr.org/2015/05/08/403598235 ... n-cost-you

What jumped out at me - they know if you are still sticking with DirecTV even though Verizon is cheaper. (Yep, that's me) Also, if you continue to buy steak and other expensive cuts of meat at the grocery store, yep, they have that too.
They put all of this into some program that comes up with an index number for the customer - the number being an educated guess what his/her price tolerance level is.

When I complained about the steep premium hikes to the local agent here first he gave me a lot of double-talk, mumbo-jumbo, and insisted I was still receiving the 10 Year accident-free discount. I challenged this as it could not possibly be true (I went over the figures again and again). Then, when I confronted him about this "Price Optimization" strategy, he used another name for it - "predictive modeling", and claimed that every StateFarm customer's rate was subject to it. Bull, I don't believe him.

So, have just spent half hour with an indep agent representing several company lines for both auto and home. Here's a tip he gave me I wanted to pass along here ;

Since Maryland allows insur. companies to use credit scores in auto insurance, just not in H.O., this broker said he is going to get a quote from Peninsula first. (my current FICO score is 840) According to him, Peninsula Insur. Co. heavily relies on credit scores in underwriting auto, much more so than other companies he deals with. Anybody else here heard that?

We shall see. He is supposed to get back to me tomorrow with what he comes up with - wish me luck!

btw, in researching this whole sordid subject, did learn some states (FL and Calif I think) have ordered insur companies to cease and desist with this form of discriminatory pricing, maybe other BH know of others.

miles2go
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Re: Longtime Insurance Customers Get Ripped

Postby miles2go » Mon Jun 15, 2015 5:15 pm

Just went through this nonsense with Progressive and Homesite. Shopped around and AAA beat it by almost $1k for combined coverage including umbrella. YMMV but it pays to shop around very few years. Lots of posts on this site about this so I'm not surprised about our two experiences. Can't believe you made it so many years with just one auto insurer!
...and [many] miles to go before I retire.

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Re: Longtime Insurance Customers Get Ripped

Postby Carefreeap » Mon Jun 15, 2015 5:32 pm

I shop around about every three years. I think I'm probably due this year but all of my increases with State Farm have been in the 2% range.

We are kind of a PITA with a primary, four rentals including a vacation rental, two cars, a motorcycle, umbrella and a high value personal property policy (art).

Everything except the condo is with State Farm which is with USAA. The policy with USAA is nearly $300 cheaper. To give State Farm credit the loss of rents rider is a lot better but I think the probability of needing that is pretty low. What I like is State Farm's umbrella covers the condo even though the primary is with another company. Also State Farm will cover the vacation rental. Not only would USAA not cover the vacation rental their umbrella wouldn't cover it either. Also surprisingly USAA's auto insurance was significantly more expensive than State Farm's; perhaps $600/yr for both cars.

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mlebuf
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Re: Longtime Insurance Customers Get Ripped

Postby mlebuf » Tue Jun 16, 2015 2:58 am

Being burned by a high State Farm rate increase is not new. In 2004 I was a loyal customer for 35 years and they increased my annual homeowners premium 70 percent. I had not filed a claim in years. The agent told me it was because they had lots of claims for mold creating the need for a rate increase. I took my business elsewhere. Later I read in a WSJ article that during the great bull market, State Farm had invested a disproportionately high percent of their reserves in the stock market, got severely burned and that was what caused them to raise rates. I'm now a Amica customer and very satisfied. I filed a major claim with Amica after a major construction defect in our home required rebuilding a significant part of a large master bathroom. The repairperson who discovered the defect works with lots of insurance companies and referred to State Farm as "Snake Farm." It's sad because for years they were a premier insurer that offered reasonable rates and great service.
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David Jay
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Re: Longtime Insurance Customers Get Ripped

Postby David Jay » Tue Jun 16, 2015 3:27 am

I'm just impressed with the 840!

(I'm only at 820, even with a perfect payment history, never late on the mortgage, zero balance the credit card every month, etc.)
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Re: Longtime Insurance Customers Get Ripped

Postby mbres60 » Tue Jun 16, 2015 7:49 am

It usually pays to shop around. Contact other insurance companies besides that independent agent (they usually only deal with a small amount of insurance companies and they could be the highest price ones). For at least 22 years we had Geico. We didn't shop around after that but when we finally did we saved more than $500. Since then we have changed a couple of times. After Geico we had Liberty Mutual for about 5 years. When we had two years of what we considered a big increase we called around and found AAA could give us a good rate and we saved a bunch of $$ too (don't remember how much). Two years later we had a big increase. Called around but everyone else was even higher! We stayed with AAA. Last year did it again but AAA was still less expensive (they deal with about 4 companies so last year we switched to one of their other companies to get savings).

In summary, every few years you have to check around. It can be a PITA as it is time consuming but usually worth your time.

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goodenyou
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Re: Longtime Insurance Customers Get Ripped

Postby goodenyou » Tue Jun 16, 2015 7:59 am

mlebuf wrote:Being burned by a high State Farm rate increase is not new. In 2004 I was a loyal customer for 35 years and they increased my annual homeowners premium 70 percent. I had not filed a claim in years. The agent told me it was because they had lots of claims for mold creating the need for a rate increase. I took my business elsewhere. Later I read in a WSJ article that during the great bull market, State Farm had invested a disproportionately high percent of their reserves in the stock market, got severely burned and that was what caused them to raise rates. I'm now a Amica customer and very satisfied. I filed a major claim with Amica after a major construction defect in our home required rebuilding a significant part of a large master bathroom. The repairperson who discovered the defect works with lots of insurance companies and referred to State Farm as "Snake Farm." It's sad because for years they were a premier insurer that offered reasonable rates and great service.


My same experience with State Farm. Switched to Amica as well. State Farm would not underwrite an umbrella policy and I switched. I had a battle every year with the unreasonable increases in h.o. premiums.
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wfrobinette
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Re: Longtime Insurance Customers Get Ripped

Postby wfrobinette » Tue Jun 16, 2015 9:47 am

drawpoker wrote:Okay, I get renewal notices for both auto and H.O, from StateFarm - increases are 18.27 % on the auto, 10 % on the H.O. Been a long-time customer (43 years to be exact on auto) so something seems fishy.

Well, lo and behold, the concept of discounts to long-time customers has gone out the window. Replaced by something called "Price Optimization". Basically, the insurance companies use data mining and other sources to make a profile of a long standing customer who is most likely to accept price increases and not bolt, taking her business elsewhere.

http://www.npr.org/2015/05/08/403598235 ... n-cost-you

What jumped out at me - they know if you are still sticking with DirecTV even though Verizon is cheaper. (Yep, that's me) Also, if you continue to buy steak and other expensive cuts of meat at the grocery store, yep, they have that too.
They put all of this into some program that comes up with an index number for the customer - the number being an educated guess what his/her price tolerance level is.

When I complained about the steep premium hikes to the local agent here first he gave me a lot of double-talk, mumbo-jumbo, and insisted I was still receiving the 10 Year accident-free discount. I challenged this as it could not possibly be true (I went over the figures again and again). Then, when I confronted him about this "Price Optimization" strategy, he used another name for it - "predictive modeling", and claimed that every StateFarm customer's rate was subject to it. Bull, I don't believe him.

So, have just spent half hour with an indep agent representing several company lines for both auto and home. Here's a tip he gave me I wanted to pass along here ;

Since Maryland allows insur. companies to use credit scores in auto insurance, just not in H.O., this broker said he is going to get a quote from Peninsula first. (my current FICO score is 840) According to him, Peninsula Insur. Co. heavily relies on credit scores in underwriting auto, much more so than other companies he deals with. Anybody else here heard that?

We shall see. He is supposed to get back to me tomorrow with what he comes up with - wish me luck!

btw, in researching this whole sordid subject, did learn some states (FL and Calif I think) have ordered insur companies to cease and desist with this form of discriminatory pricing, maybe other BH know of others.


Welcome to the world of Big Data. Predictive Analytics competencies within organizations are growing rapidly and will only improve with time. If the small to medium guys aren't using them now they will be soon or they will be out of business. I'm afraid unless you move to a cash only lifestyle, your data will continue to be widely available for all to use.

Who do you think is paying for all those CC and loyalty rewards programs?

I have a list of over 3000 demographic data points from 1 single data provider that I can obtain for a fee. All I need is a name and address and this information becomes mine for any purpose that I choose. By the way, that fee only covers 12 months of use on a 1 time append. I have to pay for refreshes, incremental appends and rent it next year if I want to continue using it. The price of a single element runs from $10/M to $65/M. No one company owns all of elements either. Amex has a few, Visa has a few, Axciom has a few, the 3 credit bureaus, the list goes on to include local and state governments.

You can't opt out of these lists either. You can only opt out of the marketing programs that use them.

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Re: Longtime Insurance Customers Get Ripped

Postby livesoft » Tue Jun 16, 2015 9:52 am

Sorry, but whenever I see the thread title, I'm thinking that a health insurance company has figured out a way to give me 6-pack abs and make me swole without effort on my part.
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drawpoker
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Re: Longtime Insurance Customers Get Ripped

Postby drawpoker » Tue Jun 16, 2015 11:27 am

David Jay wrote:I'm just impressed with the 840!

(I'm only at 820, even with a perfect payment history, never late on the mortgage, zero balance the credit card every month, etc.)


Actually, I just checked and it has slipped from 840 in April to 828 as of May 26. Probably because I did a zero rate balance transfer to a Chase card last month.

I've been getting the scores online since January with my Citicard rewards card. Am assuming they are accurate, altho the illustrative art work they use shows the scale goes to 900, not 850. Also, they tell you what is hurting the score (in my case, home equity loan used to re-fi a regular mortgage less than 3 years ago - balance owed is still on the high side of credit "limit" amount)

I don't know your age David Jay but I've got AMEX and other accounts going back to 1977 :shock: :shock:
So, if you are as old as the hills that helps boost score.

Getting back to the topic, I just got back from the Nationwide sales office. The agent had taken down all my information and was going to work up quotes for me when the office manager, or broker In charge, not sure which, came out of her office and politely told me to leave, they would email me the quotes instead.

Apparently she overheard me complaining about insurers using this "price optimization" or "predictive modeling" tactics. I didn't see any other customers inside at the time, either in lobby or other agent's cubicle, but I guess she was afraid someone might come in and be exposed to all this seditious speech coming from me.

So, the best defense was a speedy and firm offense. Duh

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Re: Longtime Insurance Customers Get Ripped

Postby midareff » Tue Jun 16, 2015 12:07 pm

I was a long time Liberty Mutual customer and decided to shop when I retired and was getting ready to order a new car. They wanted to bump about 40% going from a 9 year old Jeep to a MB. I shopped it at the Hartford and State Farm and both were about 40% less than the Jeep policy. I called Liberty and they offered to re-write the policy, same coverage, at the same numbers of State Farm and Hartfold. I called Geico and they were much cheaper yet. Took Geico and three years later, same policy renewal costs.

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Re: Longtime Insurance Customers Get Ripped

Postby Mick » Tue Jun 16, 2015 2:18 pm

You have to watch other things as well. Our homeowner's renewal had additional coverage added to cover inside appliances or other garbage. This was added with an additional premium of course and was an opt out only thing. You didn't complain and opt out you had to pay the premium. Since many HO policies are paid by the mortgage holder this was really a ripoff in my opinion.

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Taylor Larimore
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State Farm to GEICO

Postby Taylor Larimore » Tue Jun 16, 2015 2:31 pm

Bogleheads:

About two years ago I switched my auto insurance after being a long-time customer of State Farm, to GEICO. My GEICO premium was about half. My recent renewal has not increased the premium.

Best wishes.
Taylor
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drawpoker
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Re: Longtime Insurance Customers Get Ripped

Postby drawpoker » Tue Jun 16, 2015 6:33 pm

Thanks, taylor, but the online quote GEICO gave me is $170 per year higher than what State Farm wants to charge me on next renewal. (I had a very minor fender bender, at fault, less than $2,000 payout, 18 months ago).

btw, what does GEICO consider to be "Persistency" ? In their view of things?

When I clicked on the discounts that were applied for my quote, it listed 5 :
Restraints
Anti-theft
Driving experience
Financial responsibility
Persistency

I understand the first 4, but what is "persistency" ? Being stupid, and persisting with the same insurance company for TOO MANY YEARS?
Is that it?

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Re: Longtime Insurance Customers Get Ripped

Postby dbltrbl » Tue Jun 16, 2015 7:05 pm

After 37 years with State farm I decided to comparison shop in 2009. On my 3 autos and home insurance combined my Savings was more than 1000.00 with Liberty Mutual so went with the. I had excellent service and rapport with State farm agent and he apologized that he cant match it. Fast forward 5 years to 2014 shopped again and this time state farm was 700.00 cheaper than liberty mutual. Geico and others were same or more expensive. I ended up going with a local insurer, KY farm bureau as they were about 850.00 cheaper and my neighbor's son is an agent. :D

Moral of story shop around every three years or so.

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Re: Longtime Insurance Customers Get Ripped

Postby madbrain » Tue Jun 16, 2015 7:07 pm

drawpoker wrote:I understand the first 4, but what is "persistency" ? Being stupid, and persisting with the same insurance company for TOO MANY YEARS?
Is that it?


Yes, I think that's essentially what it comes down to :)

In reality, the insurers want to be able to charge more for people who have lapses in insurance coverage, and give discounts to long-term customers (ie. charge new customers more) to make it more expensive for consumers to switch.

In California, the insurance industry has tried many times and put this to a vote, but the last couple of times, the voters did not buy it, either in 2010 or 2012 .

http://ballotpedia.org/California_Propo ... %282012%29
Last edited by madbrain on Tue Jun 16, 2015 8:32 pm, edited 1 time in total.

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Re: Longtime Insurance Customers Get Ripped

Postby Alan S. » Tue Jun 16, 2015 7:23 pm

I moved from State Farm last fall after experiencing continued HO and Auto rate increases. What stood out most was the total re structuring of their HO rates in which the base premiums increased substantially in order to allow more credits for such things as loyalty. The entire rating structure made no sense whatsoever other than to make it appear that you were getting large amounts of credits which failed to come close to covering the base rate increases. It remains to be seen if this approach is part of the optimization strategy or just an independent rating approach designed to obscure any transparency to the policyholder.

In past years, insurers would raise rates due to their bad underwriting which resulted in experience used to justify rate increases in states where they had to file their rates. In effect, the insured paid for the company's bad results.

If optimization is actually happening as described, the story is different. Your rate is up because you are a sucker and our massive data bank indicates that there is a good chance you will just pay the increase and not shop around. If so, this approach is probably doomed not only to fail, but it will cost companies by degrading their book of business.

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Re: Longtime Insurance Customers Get Ripped

Postby snowshoes » Tue Jun 16, 2015 7:57 pm

I'd suggest doing it annually. Possibly along side rebalancing ones investment's date maybe. If you consider the compounded savings its substantial, just ask yourself if you'd rather X in your pocket or X in MegaCorp's pocket/bonuses.

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Re: Longtime Insurance Customers Get Ripped

Postby bottlecap » Tue Jun 16, 2015 7:58 pm

As a longtime customer, shouldn't you show a little loyalty and just quietly pay the increased premiums? Surely you owe State Farm something for all those low premiums they charged you throughout the years...

I'm kidding, but it does seem that people think loyalty should run only one way and only when the prices are low.

Bottom line is that you have to shop around every once in a while and go with the best deal. If no one did that there would be limited economic growth. Having to exercise your right to vote with your dollars is good for business.

Good luck,

JT

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Re: Longtime Insurance Customers Get Ripped

Postby LadyGeek » Tue Jun 16, 2015 8:27 pm

livesoft wrote:Sorry, but whenever I see the thread title, I'm thinking that a health insurance company has figured out a way to give me 6-pack abs and make me swole without effort on my part.

Perspective is everything, as I didn't even think about that until you mentioned it. :) I changed the thread title.

OP: If you want to change the title again, just edit the Subject: line in Post #1.

Be aware of your claim history, which is used by the insurance industry. You can check this for free, see the wiki: CLUE database
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Re: Longtime Insurance Customers Get Ripped

Postby autonomy » Tue Jun 16, 2015 8:51 pm

bottlecap wrote:As a longtime customer, shouldn't you show a little loyalty and just quietly pay the increased premiums? Surely you owe State Farm something for all those low premiums they charged you throughout the years...


If the increased premiums are reasonable, than yes. I'm staying with my ISP because they've been trouble free and are always nice when I call them. I visit a certain mechanic because I trust them with my car and know they won't hassle me. I could find a cheaper mechanic, but the hassle/worries wouldn't be worth it.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Spirit Rider » Tue Jun 16, 2015 9:03 pm

Customer loyalty in the insurance industry has been economically punished for decades. The only thing different now is the level they can go to personalize this.

The states that prohibited consideration of credit scores harmed most rate payers. Lower credit scores have one of the highest actuarial correlations to claim payments.

Regular rate shopping is the only solution to the state of affairs. Trying to understand modern auto insurance rate trends is like trying to understand the airlines or Amazon pricing.

There is no best company. Only a best rate for a specific customer with specific circumstances in a specific year. If any of those change a different company may have a better rate.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Cindyjrn » Tue Jun 16, 2015 9:12 pm

You're really supposed to shop for insurance every 2-4 years, depending on your level of frugality. Been that way for a long time, this is nothing new.

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Re: Longtime Insurance Customers Get Ripped

Postby drawpoker » Tue Jun 16, 2015 9:19 pm

autonomy wrote:
bottlecap wrote:As a longtime customer, shouldn't you show a little loyalty and just quietly pay the increased premiums? Surely you owe State Farm something for all those low premiums they charged you throughout the years...


If the increased premiums are reasonable, than yes. I'm staying with my ISP because they've been trouble free and are always nice when I call them. I visit a certain mechanic because I trust them with my car and know they won't hassle me. I could find a cheaper mechanic, but the hassle/worries wouldn't be worth it.


bottlecap was just being facetious. After all, it is no secret, biggest reason StateFarm raises premiums is due to their B A D I N V E S T M E N T returns. Losing $$$ in the equities markets where they invest their dough, just like the rest of us. It is just an unfortunate fact of life that the various state insurance commissioners allow this - Just Becuz - the companies can show a "revenue" loss. Duh

( Does that mean I can go to the supermarket, the hardware store, liquor store, dry cleaners, et al, and insist on a steep discount on their prices? Due to my alleged "investment" losses? )

Same thing! Just the Reverse of the argument. For the insurance companies sticking it to the policy holders.

autonomy, reason I am really steamed is because - as I posted earlier - State Farm is making a farce of their so-called "accident forgiveness" hype. I ran the figures, over and over, and confronted my agent that I was, indeed, losing the 15% Ten-Year Accident=Free discount. He just played word games, used mumbo jumbo, double speak, terms to try and fool me, and insist I am still getting that discount.

What I believe - although I can't prove it - is that by jacking up rates for certain long-term policy holders like me under this "Price Optimization" modeling, State Farm can continue to claim I am getting the Ten Year Accident-free discount. Although in reality, I am not, due to all this "creative" mathematics B.S. at play here. :twisted: :annoyed :x :x

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby drawpoker » Tue Jun 16, 2015 9:27 pm

Cindyjrn wrote:You're really supposed to shop for insurance every 2-4 years, depending on your level of frugality. Been that way for a long time, this is nothing new.


Oh? Is that so? How do you figure that?

When the company keeps reeling you in with "multi-line" discount; 3 year "claim-free" discount on the H.O. ; "Ten Year Accident-Free Discount of 15%" on the auto, and on and on.
In my case, I just looked again at the H.O declaration pages. Duh, they tell me I am getting $144 for "multi-line" discount; also, $141 discount for " claim-free". How can anyone (layman, not an insurance pro) actually verify the truth in this? We can't.

[OT comment removed by admin LadyGeek]

Sorry to have to disagree with you but for many years it was accepted Fact that insurers companies did Reward their best customers with substantial discounts and perks.

From my understanding, gleaned from sources like Forbes, Money, and NPR, it has been only in the last 2 or 3 years that consumers are getting ripped off by this new "predictive modeling" in setting rates.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby LadyGeek » Tue Jun 16, 2015 9:43 pm

I removed an off-topic comment. As a reminder, see the Board rules:

We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones.

Please stay factual.
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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby rrppve » Tue Jun 16, 2015 9:50 pm

In California, the state Insurance Commissioner does an annual survey of rates from all the licensed insurance companies. It's a handy one stop comparison. I've been with Wawanesa for years. Think they are only licensed in CA and OR.
https://interactive.web.insurance.ca.gov/survey/survey?type=autoSurvey&event=autoStart

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Cindyjrn » Tue Jun 16, 2015 9:50 pm

My best friend owns a local State Farm agency and is also an independent broker for many companies. He's been shopping our auto and homeowners insurance every couple years for the last ten years. Long time? I don't know, how long is a long time to throw money away on what amounts to nothing more than peace of mind for a lot of people. It's nice to have great customer service or a longstanding relationship with a company for some people, but for others that haven't filed an insurance claim in this century it's not that big of a deal. On our last insurance check up in June 2014, he found a way to once again lower our rates back to what they had been a few years ago, saving us a total of $800 on our homeowner's and auto insurance combined. No homeowner's claims ever and the last auto claim we made was in 1998. Both of us (late 40s) have perfect driving records, no tickets in over 15 years, no accidents ever. YMMV.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Adam11 » Tue Jun 16, 2015 9:54 pm

A lot of folks are saying to shop around every year or two, but I do it every six months. If you have a clean driving record and no claims, you can always find a cheaper rate than the current one. I felt like I was burned long ago by a "family friend" at a local insurance agency for years and the bad taste still hasn't left my month. Currently I'm flip-flopping between GEICO and esurance every six months. If the renewal rate drops, I'll stay...but if it goes up by a single dollar, I'm gone. Since doing this over the last decade+ I've rarely stayed with the same insurer for more than a year. It takes some legwork and can be a PITA, but if you stay on top of the details with timing it's like clockwork.

When speaking of loyalty, I simply feel that my driving record should be rewarded because I've paid a lot over the years and gotten absolutely nothing for it (and, knock on wood, hope to continue receiving nothing). I'm loyal to me.

On the otherhand, if you have a blemished driving record YMMV.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Cindyjrn » Tue Jun 16, 2015 9:57 pm

Adam11 wrote:A lot of folks are saying to shop around every year or two, but I do it every six months. If you have a clean driving record and no claims, you can always find a cheaper rate than the current one. I felt like I was burned long ago by a "family friend" at a local insurance agency for years and the bad taste still hasn't left my month. Currently I'm flip-flopping between GEICO and esurance every six months. If the renewal rate drops, I'll stay...but if it goes up by a single dollar, I'm gone. Since doing this over the last decade+ I've rarely stayed with the same insurer for more than a year. It takes some legwork and can be a PITA, but if you stay on top of the details with timing it's like clockwork.

When speaking of loyalty, I simply feel that my driving record should be rewarded because I've paid a lot over the years and gotten absolutely nothing for it (and, knock on wood, hope to continue receiving nothing). I'm loyal to me.

On the otherhand, if you have a blemished driving record YMMV.


Thank you. You're right on the mark.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby drawpoker » Tue Jun 16, 2015 10:18 pm

Cindyjrn wrote:My best friend owns a local State Farm agency and is also an independent broker for many companies. .......


Well, that really boggles the mind. :? :?

In my area, the State Farrm agents are contractually liable to only one God - State Farm. They cannot sell or broker for any other insurance company.

It is news to me that an indep. insurance broker can sell policies for StateFarm = whether auto or homeowner

Link, please ?

jingo
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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby jingo » Tue Jun 16, 2015 10:42 pm

Insurance companies use credit score, and some other personal information in their pricing models. It pays to shop around since different companies have slightly different models.

michaelsieg
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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby michaelsieg » Tue Jun 16, 2015 11:26 pm

Had the same issue with Statefarm.
They increased our HO insurance without telling us (only found out as escrow payments went up) and they also stepwise increased our car insurance. After a fender bender they were going to go up further on my policy, so I called Geico, and their rate (despite the fender bender) was about half. Interestingly, Geico contracts the HO insurance with other insurances, that offer was expensive. I got a better deal with Travelers afterwards. Geico also offered a less expensive umbrella policy than Statefarm. After all the switches, we safe about $800/year.

Spirit Rider
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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Spirit Rider » Tue Jun 16, 2015 11:28 pm

drawpoker wrote:Sorry to have to disagree with you but for many years it was accepted Fact that insurers companies did Reward their best customers with substantial discounts and perks.

Sorry to have to disagree with you, but you probably fell for marketing. They may have rewarded you with substantial discounts and perks all the while raising the base rates to more than compensate. If you were not comparative shopping, you were still probably being ripped off.

They may have just started predictive modeling, but they have been taking advantage of loyal customers for decades. You can take solace in the fact that staying for decades is no worse than staying for 5 years. They typically adjust from the new customer rates to standard sucker rates in the first 5 years.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby abuss368 » Tue Jun 16, 2015 11:37 pm

If you have 15 minutes, GEICO can save you on your car insurance!
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NOLA
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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby NOLA » Wed Jun 17, 2015 12:45 am

Switched to GEICO for both Auto & Home and saved quite a bit. We live in New Orleans, where the premiums are really high. Spoke to a client who runs a State Farm Office and from what I understand, GEICO uses the national average to give you a quote, while most companies uses the local average. Not sure if this is true or not, but so far so good. The auto insurance seems to go up by 2-3% per renewal so it's not too bad, but I think it's time to shop again.

Anyway, was wondering if one shops 4-5 different companies, will our credit score etc drop? Just like it can if we shop for credit cards or auto loans.

dolphinsaremammals
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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby dolphinsaremammals » Wed Jun 17, 2015 3:10 am

drawpoker wrote: Also, if you continue to buy steak and other expensive cuts of meat at the grocery store, yep, they have that too.


Is this a benefit for vegetarians? :D I wonder if they look at my pets' vet bills.

Snake Farm, how appropriate.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Carefreeap » Wed Jun 17, 2015 9:55 am

rrppve wrote:In California, the state Insurance Commissioner does an annual survey of rates from all the licensed insurance companies. It's a handy one stop comparison. I've been with Wawanesa for years. Think they are only licensed in CA and OR.
https://interactive.web.insurance.ca.gov/survey/survey?type=autoSurvey&event=autoStart


Thank you for providing that link.

I tested our rates for both the cars and the house. While State Farm wasn't the cheapest I'd say our premiums are within 10% of the lowest. Given the complexity of our situation I'm o.k. with that.

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HOT, DIGGITY DAM !

Postby drawpoker » Wed Jun 17, 2015 3:31 pm

Just to give an update - indep agent just forwarded a quote for me from Cincinnati Insurance Co : (AM Best rated A+)
They are $2 (two dollars) higher on the H.O. but $112 cheaper on the auto. (Very same coverages but policy limits on liability actually higher than SnakeFarm)

Still waiting on quote from Peninsula, agent still thinking they will come in even lower because of the FICO score.

Yippeeee!

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby drawpoker » Wed Jun 17, 2015 3:40 pm

NOLA wrote:.... was wondering if one shops 4-5 different companies, will our credit score etc drop? Just like it can if we shop for credit cards or auto loans.


One agent I have been dealing with told me it was a "soft pull", not a "hard pull", when they do the credit check.

Of course, that could be a bald-faced lie. I would rather hear it from a much more trusted source. (?)

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby madbrain » Wed Jun 17, 2015 5:08 pm

Spirit Rider wrote:The states that prohibited consideration of credit scores harmed most rate payers. Lower credit scores have one of the highest actuarial correlations to claim payments.


How could "most rate payers" have been harmed by forbidding the use of credit scores in setting premiums ?
Most rate payers don't have high credit scores. So if anything, it's likely the opposite.
Even if there is actuarial correlation between credit scores and claim, that is hardly justification to allow this sort of discrimination. Correlation is not causation.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby afan » Wed Jun 17, 2015 8:08 pm

Interesting. Long time SF customer. Shopped our home, auto, umbrella and investment property coverage last fall. Two different independent agents. Quoted from 5 different insurance companies. Our SF rates were the best and is was not even close.

But I agree we seem to be at risk to be optimized. Some of the articles I read suggested they could, um "discover" new discounts for you when they realized you were ready to bolt.
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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Spirit Rider » Wed Jun 17, 2015 8:38 pm

madbrain wrote:
Spirit Rider wrote:The states that prohibited consideration of credit scores harmed most rate payers. Lower credit scores have one of the highest actuarial correlations to claim payments.

How could "most rate payers" have been harmed by forbidding the use of credit scores in setting premiums ?
Most rate payers don't have high credit scores. So if anything, it's likely the opposite.
Even if there is actuarial correlation between credit scores and claim, that is hardly justification to allow this sort of discrimination. Correlation is not causation.

Those with higher credit scores are harmed by paying higher premiums than the actuarial basis would require. They are subsidizing those deadbeats with bad credit and a higher propensity for claims payouts.

Basic insurance principles are by definition discriminatory. Why not have everybody pay the same auto premium regardless of age, sex, driving infractions, drunk driving, accidents, etc... Why not have all life insurance premiums be the same regardless of age, family history, life style factors (smoking, drugs, alcohol, obesity, etc...), risk factors (cholesterol, triglycerides, blood sugar, etc...), etc...

Actuarial basis is the fundamental determination of risk. Determination of risk is the fundamental underpinnings of insurance.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby drawpoker » Wed Jun 17, 2015 9:45 pm

Spirit Rider wrote: insurance principles are by definition discriminatory. Why not have everybody pay the same auto premium regardless of age, sex, driving infractions, drunk driving, accidents, etc... ... Determination of risk is the fundamental underpinnings of insurance.


Yeah, I get that. Certainly, there should be people who are regarded as preferred risks, people as standard risks, and those who come in below that.

My issue - in having to delve into all these damn different companies - why isn't there any more uniformity among the companies re risk factors?

For ex, me trying to get a H.O. quote, --- some ask if you are a smoker, some don't.

The last one who didn't ask - I spoke up - WTF ? Don't you regard people who don't smoke, and do not allow any visitors or guests to smoke either, as more of a preferred risk when underwriting H.O. ?

I just got a blank look and no response other then, hey, did you hear about that axhole over in XXXville last nite ? Got burned up and died in fire.... they are saying she fell asleep with a cigarette............

WTF ?

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby madbrain » Wed Jun 17, 2015 9:56 pm

Spirit Rider wrote:The states that prohibited consideration of credit scores harmed most rate payers.

Spirit Rider wrote:Those with higher credit scores are harmed by paying higher premiums than the actuarial basis would require.


Which is not "most rate payers". Most rate payers who don't have higher credit scores might actually benefit.

Basic insurance principles are by definition discriminatory.


I don't think so. Insurance is about spreading risk between multiple insured. It can be done in a number of ways, that may or may not be discriminatory.

Why not have everybody pay the same auto premium regardless of age, sex, driving infractions, drunk driving, accidents, etc... Why not have all life insurance premiums be the same regardless of age, family history, life style factors (smoking, drugs, alcohol, obesity, etc...), risk factors (cholesterol, triglycerides, blood sugar, etc...), etc...


Those would be examples of a non-discriminatory way to set premiums. I don't believe this is ever done for auto or life insurance, but it is done in some places for health insurance premiums, though other factors such as income may be taken into account and could be considered a form of income discrimination by some.

Actuarial basis is the fundamental determination of risk. Determination of risk is the fundamental underpinnings of insurance.


Yes, but it's not necessarily done at the individual level - it's often done at some group level, usually due to some regulation or another. Insurance companies don't have enough information to predict each individual's future claims with 100% accuracy, they would need precogs from "Minority report" for that. If they had that ability, they would set the premiums exactly at the individual's exact future costs for the policy duration + their profit margin. At that point, nobody would purchase any policy anymore, as the policy would be completely worthless if it could never expected to pay more in claims than the policy cost for any individual. In reality, there are no precogs, and the insurance companies can only take guesses at future claims. Insurance companies are generally subject to some sort of regulation, otherwise the health insurance companies would only insure people that have never been previously sick as they used to, or the auto insurance companies would only insure those that have never been in accidents or ever had any kind of ticket, etc. Without regulation, they would become non-insurance companies, ie. being insured would be the exception rather the rule, and it's not generally in the public interest to have a small percentage of insured. Auto insurance is required of all drivers. Health insurance is, also. Pricing insurance higher for those who can afford it the least - or denying coverage altogether - is not generally in the public interest, as it leads to more uninsured. It may be in the insurer's profit interest, at least in the short-term.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby madbrain » Wed Jun 17, 2015 10:06 pm

drawpoker wrote:My issue - in having to delve into all these damn different companies - why isn't there any more uniformity among the companies re risk factors?

For ex, me trying to get a H.O. quote, --- some ask if you are a smoker, some don't.

The last one who didn't ask - I spoke up - WTF ? Don't you regard people who don't smoke, and do not allow any visitors or guests to smoke either, as more of a preferred risk when underwriting H.O. ?

I just got a blank look and no response other then, hey, did you hear about that axhole over in XXXville last nite ? Got burned up and died in fire.... they are saying she fell asleep with a cigarette............

WTF ?


Each insurer can set their rates based on a variety of allowable factors, depending on local regulations.
If they didn't ask whether you or your guests smoke, and you would rather that they did, you can always take your business to an insurer that chose to use that factor, which it sounds like you did.

Only someone higher up in the insurance company could determine if it makes sense for them to ask. Maybe those types of claims are sufficiently rare that it doesn't. Maybe it's because people change their smoking habits over time, but they may not report it to their insurer at renewal time. Maybe it's because the insurer has no way of checking veracity about the guests not smoking. These are only guesses.

NOLA
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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby NOLA » Thu Jun 18, 2015 12:37 am

drawpoker wrote:
NOLA wrote:.... was wondering if one shops 4-5 different companies, will our credit score etc drop? Just like it can if we shop for credit cards or auto loans.


One agent I have been dealing with told me it was a "soft pull", not a "hard pull", when they do the credit check.

Of course, that could be a bald-faced lie. I would rather hear it from a much more trusted source. (?)


Ok thanks.

Yeah, it's so tough to know. Not sure if anyone really knows.

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Re: Longtime Insurance Customers Get Ripped [overcharged]

Postby Spirit Rider » Thu Jun 18, 2015 9:48 am

madbrain wrote:
Spirit Rider wrote:The states that prohibited consideration of credit scores harmed most rate payers.
Those with higher credit scores are harmed by paying higher premiums than the actuarial basis would require.

Which is not "most rate payers". Most rate payers who don't have higher credit scores might actually benefit.

Ok, we are both imprecisely using most. 50% of rate payers have above average credit scores and 50% have below average credit scores. The fact remains that those with above average credit scores are subsidizing those with below average credit scores to the degree of difference if insurance companies are not allowed to use a known risk factor.

Basic insurance principles are by definition discriminatory.
I don't think so. Insurance is about spreading risk between multiple insured. It can be done in a number of ways, that may or may not be discriminatory.

I am using the base definition of discrimination which is to make a distinction, to differentiate. Not a societal norm. It is the fundamental basis of actuarial weightings.

Why not have everybody pay the same auto premium regardless of age, sex, driving infractions, drunk driving, accidents, etc... Why not have all life insurance premiums be the same regardless of age, family history, life style factors (smoking, drugs, alcohol, obesity, etc...), risk factors (cholesterol, triglycerides, blood sugar, etc...), etc...
Those would be examples of a non-discriminatory way to set premiums. I don't believe this is ever done for auto or life insurance, but it is done in some places for health insurance premiums, though other factors such as income may be taken into account and could be considered a form of income discrimination by some.

You are hung up on using a societal definition of discrimination and you are quite simply wrong about not being used for auto/life insurance rating. These are always done in auto/life insurance rating. Auto insurance is most definitely rated based on your age, sex, driving record, claim history, location (even down to the neighborhood). Life insurance is most definitely rated for age, sex, lifestyle factors, risk factors, family/personal medical history, etc...

Actuarial basis is the fundamental determination of risk. Determination of risk is the fundamental underpinnings of insurance.
Yes, but it's not necessarily done at the individual level - it's often done at some group level, usually due to some regulation or another.
.
.
.

It may not be done at an individual level, but each risk factor can be applied in several tiers. So the combinations can be quite extensive.

Yes, insurance is intended to be a pooled risk. However, in its perfect design it is about shared risk or probabilities. In a given risk pool we pay for the probability we will need to make a claim, not the risk of high risk entrants. When the government forces the corruption of the risk pool by forcing known high risk entrants, it is nothing more than socialism in disguise.

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Re: Longtime Insurance Customers Get Ripped

Postby fishboat » Thu Jun 18, 2015 10:40 am

wfrobinette wrote:
Welcome to the world of Big Data. Predictive Analytics competencies within organizations are growing rapidly and will only improve with time. If the small to medium guys aren't using them now they will be soon or they will be out of business. I'm afraid unless you move to a cash only lifestyle, your data will continue to be widely available for all to use.

Who do you think is paying for all those CC and loyalty rewards programs?

I have a list of over 3000 demographic data points from 1 single data provider that I can obtain for a fee. All I need is a name and address and this information becomes mine for any purpose that I choose. By the way, that fee only covers 12 months of use on a 1 time append. I have to pay for refreshes, incremental appends and rent it next year if I want to continue using it. The price of a single element runs from $10/M to $65/M. No one company owns all of elements either. Amex has a few, Visa has a few, Axciom has a few, the 3 credit bureaus, the list goes on to include local and state governments.

You can't opt out of these lists either. You can only opt out of the marketing programs that use them.


+1 People tend to focus on the FICO score as "it". There are dozens built up on the "digital breadcrumbs" that everyone leaves in their wake as they wander through life.

Here's some light reading: http://www.worldprivacyforum.org/wp-content/uploads/2014/04/WPF_Scoring_of_America_April2014_fs.pdf

An snip form above: "Scores such as the medication adherence score, the health risk score, the consumer
profitability score, the job security score, collection and recovery scores, frailty scores,
energy people meter scores, modeled credit scores, youth delinquency score, fraud
scores, casino gaming propensity score, and brand name medicine propensity scores are
among the consumer scores that score, rank, describe, and predict the actions of
consumers. "


And some more: http://www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-was-pregnant-before-her-father-did/

With respect to long time insurance customer..10 years ago I purchased my current (1998) car. I'd been with Allstate for over 20 years on auto & HO at that point. I got a auto ins quote from Allstate (for the truck I've had for 20 years now & the 1998 Merc I had just purchased) for $1180/year. I thought that was a bit high. I ended up transferring to Erie Insurance for $750/yr for both vehicles, same coverage. Now, ten years later, I still have the same vehicles(boglehead-ish?), the annual rate for both is about $810.

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* B U M P *

Postby drawpoker » Fri Jun 19, 2015 4:27 pm

Bumping this back up to give everyone the Final Act of my saga, searching the wilderness.

GEICO, Allstate, Nationwide, Travelers, all came back with quotes very much on the high side, even higher than my current Snake Farm. All except Allstate were doing bundling both auto and H.O. ( Allstate was so ridiculously high on the H.O. quote, didn't even bother to ask them for auto. )

Peninsula Insurance, the one that is known to get positively orgasmic over customers' high FICO scores, turned me down on the H.O. Because my house is less than 5 miles from the Choptank. Duh. Broker said between Isabel and Sandy, less than 10 years apart, the company really took a beating on reinsurance. So, even though they are based in Salisbury, they now turn up their nose for most anything between Chesapeake Bay and Delaware Bay.

So, today I signed with Cincinnati Insurance Co. I am getting same coverage as I had with Snake Farm except I bumped up the deductible on comprehensive from $500 to $1,000. No big deal, intended to do that anyway.

Here is where it gets sweet - I am getting way more liability protection on both policies; on the auto, Cincinnati does not underwrite less than 100,000 / 300,000/ 100,000 Snake Farm had me insured for only 50,000/ 100,000/ 25,000. Higher than the mandated Maryland minimums, but not by much. On the H.O., it gets even better - liability $500,000; medical payments $5,000 - Snake Farm was $300,000 and $3,000 respectively.

Am also getting water/sewer back up included for practically nothing; no extra pricey premium (unlike Snake Farm)

And the price? Cost for both exactly $114 less per year than what Snake Farm wanted at next renewal.

This was a good lesson for me. I imagine if I had a fancier house, or newer vehicle with more safety stuff (like backup camera) the savings would be even greater.


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