Are insurance rates non-negotiable/fixed?

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pax4235
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Are insurance rates non-negotiable/fixed?

Post by pax4235 » Sun Jun 10, 2018 8:07 am

I am wondering if insurance rates are non-negotiable/fixed. I am going to be shopping around for better auto insurance and home insurance rates. Does it matter who I contact and/or what I say or are all insurance rates fixed for the same company (i.e. Progressive, State Farm, Geico)?

Does every company use a computer algorithm to calculate your rates such that there is no method to get reduced rates via negotiation/etc? Basically, if I contact ANY agent, and no matter what I say via negotiation, will I always get the same rate/premium at an insurance company for a given policy?

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gasdoc
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Re: Are insurance rates non-negotiable/fixed?

Post by gasdoc » Sun Jun 10, 2018 8:15 am

Wow. Interesting question. I have never heard of anyone shopping around for a better rate FROM THE SAME COMPANY.

gasdoc

pax4235
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Re: Are insurance rates non-negotiable/fixed?

Post by pax4235 » Sun Jun 10, 2018 8:23 am

gasdoc wrote:
Sun Jun 10, 2018 8:15 am
Wow. Interesting question. I have never heard of anyone shopping around for a better rate FROM THE SAME COMPANY.

gasdoc
Sorry if it is a stupid question. I am guessing from your post then that insurance rates are always the same across the board from the same company and no matter who you talk to or what you say? Can other people confirm this?

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whodidntante
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Re: Are insurance rates non-negotiable/fixed?

Post by whodidntante » Sun Jun 10, 2018 8:28 am

I've tried negotiating rates. It became a discussion about making sure that I have all applicable discounts applied. I sent him a copy of my diploma and received a scientist discount, lol. I also dropped some of the unnecessary coverages in their standard package.

feehater
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Re: Are insurance rates non-negotiable/fixed?

Post by feehater » Sun Jun 10, 2018 8:31 am

I have never had an insurance company change their rates for me, even as I was calling to cancel to move to a different company that hsd better rates. I have heard of independent insurance agencies that claim they can get you better rates from a company than you could on your own, because of bulk bargaining power, but I have never seen that happen for me.
Curious to see if anyone had actual info.

Jags4186
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Re: Are insurance rates non-negotiable/fixed?

Post by Jags4186 » Sun Jun 10, 2018 8:33 am

For the most part no, they are not negotiable. Many people get a new member discount/online sign up discount/etc etc which gets the rate low enough to switch. Of course you then lose the discount and they count on you not switching. I wouldn’t be surprised if the first premium is a loss leader, or at least at cost, for most insurance companies and that is why they will not negotiate.

I highly recommend using an insurance broker. They will get you access to insurance companies that don’t sell direct. I just received home owners and auto insurance for less than I was paying Geico for auto insurance.

Broken Man 1999
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Re: Are insurance rates non-negotiable/fixed?

Post by Broken Man 1999 » Sun Jun 10, 2018 8:51 am

whodidntante wrote:
Sun Jun 10, 2018 8:28 am
I've tried negotiating rates. It became a discussion about making sure that I have all applicable discounts applied. I sent him a copy of my diploma and received a scientist discount, lol. I also dropped some of the unnecessary coverages in their standard package.
Same here.

My auto insurance is with MetLife. They asked me if I had any other MetLife products, and I told them my LTD policy was thru MetLife.

So, even tho they were sending me many multiples of the annual auto insurance premium as LTD benefits monthly, they gave me a discount.

I thought it odd, but I accepted the discount on my auto policy.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

jbmitt
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Re: Are insurance rates non-negotiable/fixed?

Post by jbmitt » Sun Jun 10, 2018 8:58 am

Insurance companies have to file their rating plans in each state and they cannot generally deviate from them. However, they can file rates for multiple underwriting companies with similar names and then can place you with whichever underwriting company.

Generally, they are quiet as to which of their underwriting companies are standard to preferred.

You may see variations such as:
Progressive Casualty Company
Progressive Indemnity Company
Progressive Direct Comoany

You would have insurance through Progressive, but your rates would be specific to the underwriting company.

afan
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Re: Are insurance rates non-negotiable/fixed?

Post by afan » Sun Jun 10, 2018 11:01 am

It could pay to be careful about the exact coverage you buy. Sometimes shopping will turn up that your current policy has you paying for more than you need.

Different companies will have different discounts, so shopping gives you a chance to find those.

But to actually give you a better rate the insurance company woualy have to calculate risks unique for you and determine prices on that basis. When large companies buy insurance that is what they get. For an individual the cost of figuring out your premiums would be more than they are going to collect from you, even if they are right about the risk.

We shop our coverage every few years and see quite a range of prices for the same coverage. Every time our current company comes out by far the cheapest. They claim this is due to longevity discounts.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

talzara
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Re: Are insurance rates non-negotiable/fixed?

Post by talzara » Sun Jun 10, 2018 1:19 pm

pax4235 wrote:
Sun Jun 10, 2018 8:07 am
I am wondering if insurance rates are non-negotiable/fixed. I am going to be shopping around for better auto insurance and home insurance rates. Does it matter who I contact and/or what I say or are all insurance rates fixed for the same company (i.e. Progressive, State Farm, Geico)?

Does every company use a computer algorithm to calculate your rates such that there is no method to get reduced rates via negotiation/etc? Basically, if I contact ANY agent, and no matter what I say via negotiation, will I always get the same rate/premium at an insurance company for a given policy?
Insurance premiums care calculated based on a rate plan, which is filed with the insurance commissioner of each state. They must charge exactly what the rate plan says they'll charge. The rate plans are so detailed that they specify if they round to the penny, the dime, or the dollar.

That does not mean that "all insurance rates fixed for the same company." A company may have multiple rate plans in effect. Policyholders are often grandfathered on a rate plan that is no longer being offered to new customers.

Even new customers may have multiple rates available. Progressive charges slightly less for an Internet quote than it does for a phone quote. Progressive also has a separate rate plan for policies purchased through an independent agent. It will be higher on average than the direct rates, but it might be higher or lower for you since it uses a different calculation.

However, there is no negotiation. If they say the rate is $123.45, then the rate is $123.45 to the penny. The only way to change it is to use a different company, use a different channel, or give them different data. Independent agents sometimes use some tricks to change the rate, but that is insurance fraud.

talzara
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Re: Are insurance rates non-negotiable/fixed?

Post by talzara » Sun Jun 10, 2018 1:26 pm

feehater wrote:
Sun Jun 10, 2018 8:31 am
I have never had an insurance company change their rates for me, even as I was calling to cancel to move to a different company that hsd better rates. I have heard of independent insurance agencies that claim they can get you better rates from a company than you could on your own, because of bulk bargaining power, but I have never seen that happen for me.
Curious to see if anyone had actual info.
This can happen if the insurance company has multiple rate plans in effect. If you are on a grandfathered rate plan, they may try to keep you by re-rating you on the rate plan being offered to new policyholders.

There are plenty of cases on Bogleheads where people have reduced their premiums after telling their insurer that they were leaving. They may think it's because they negotiated for a better deal, but it's actually because they were taken off the grandfathered rate plan.

It's not like cable television. There is no negotiation possible.

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dm200
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Re: Are insurance rates non-negotiable/fixed?

Post by dm200 » Sun Jun 10, 2018 1:30 pm

My understanding is that auto insurance rates/premiums are not negotiable.

What can be discussed and decided is the various coverage options, such as deductibles and features.

talzara
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Re: Are insurance rates non-negotiable/fixed?

Post by talzara » Sun Jun 10, 2018 1:31 pm

jbmitt wrote:
Sun Jun 10, 2018 8:58 am
Insurance companies have to file their rating plans in each state and they cannot generally deviate from them. However, they can file rates for multiple underwriting companies with similar names and then can place you with whichever underwriting company.

Generally, they are quiet as to which of their underwriting companies are standard to preferred.

You may see variations such as:
Progressive Casualty Company
Progressive Indemnity Company
Progressive Direct Comoany

You would have insurance through Progressive, but your rates would be specific to the underwriting company.
That's true, but it doesn't help the OP.

The underwriting system will place you into one of the companies. If you are placed into one company, then you cannot negotiate to be placed into a different company. The only way to move between companies is for your data to change.

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grabiner
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Re: Are insurance rates non-negotiable/fixed?

Post by grabiner » Sun Jun 10, 2018 1:56 pm

While rates are set by formulas, you can sometimes get the insurance company to update the data it uses. For example, when I lived in NJ, my insurance rate depended on my credit. My rate was set when I got a new policy in 2010, but I had to request a recheck of my credit to get a better rate in 2012 when my credit had improved.
Wiki David Grabiner

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