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THE INSURANCE NERD BLOG

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Ask The Insurance Nerd Here!

Until we get our questions forum up and running, if you’ve got insurance questions you want answered, no strings attached, click for our CONTACT US page and submit your question. I’ll answer it in the blog here within a few days (or maybe hours).

 

The Insurance Nerd – our story

Welcome to The Insurance Nerd Blog. Here, we’ll dive into all kinds of insurance topics. We’re going to start with posts mostly about some of the most frequently asked questions about insurance and related topics. We’ll do our best to be timely and accurate, but this is a blog, not a legal brief. It’s intended to help bring up basic topics and explain them in easily understood terms and as concisely as possible.

 

But to start with, here’s a quick, “how we got here” for McGinniss Himmel Insurance.

In early 2009 we, Michael Himmel and Allen McGinniss, had spent several years working at a captive insurance agency in town. With major insurance companies leaving Florida and the home insurance market in turmoil, we saw a need going unfulfilled. So we decided to opened branch of the VanAllen Insurance Agency with the goal of helping guide homeowners to the right company and right coverage’s.

 

We started in June of 2009 with some hand me down desks, two computers, a few used phones, and two clients. Those clients consisted entirely of two very knowledgeable insurance agents… scared completely out of their minds.

 

Since then, we’ve added an experienced and energetic team member in Kira Meiners, finally gotten rid of those desks, and cultivated a client base which now allows us to stand on our own.

 

On January 1, 2015 the Tallahassee branch of the VanAllen Insurance Agency officially become the McGinniss Himmel Insurance Agency. We’re all still be here: same agents, same address, same phone number just like before. Only now there is a new sign out front.

 

We’re really excited. This transition marks a big step for us. It is the first step in allowing us to REALLY focus on what we’ve always wanted to do. Our goal is to protect individuals and families from the unexpected in life through education and appropriate guidance about their insurance needs and options.

 

Keep checking back. More actual insurance information from the Nerd shortly.

Auto - Why Are Car Insurance Rates Going Up So Dang Much!?!?
3/07/2024

Here’s the short version on why auto rates are going crazy. 

 

 

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Social inflation - More than ever, people are suing immediately even for minor incidents. People have been conditioned that they, “may be owed compensation” for an accident. As the economy overall becomes more difficult, the number of people who previously would not have sued purely for a “payday" goes up. 

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https://www.travelers.com/resources/business-topics/insuring/4-factors-causing-social-inflation 

https://www.iii.org/article/social-inflation-hard-to-measure-important-to-understand

https://content.naic.org/cipr-topics/social-inflation#:~:text=Issue%3A%20Social%20inflation%20is%20a,monetary%20relief%20for%20their%20injuries. 

 

OK, rates are up. How do we manage the increases?

 

  • Make sure your liability limits are appropriate to protect your assets and income.  

  • Make sure you have as high a deductible as you can handle. 

  • Remove extras you may not want. Do you want OEM parts coverage or increased payout on damage to your car? Do you need rental car or can you go without it? Do you have the right amount? Remove those bells and whistles if you have them and dont want them. 

  • Work towards improving your credit. Fom a cold and purely statistical standpoint, people who have poor credit scores file more claims and have more severe claims. Why? There’s all kinds of speculation, but regardless of the cause, there is a strong correlation between more frequent/ more severe claims, and poor credit. It doesn't mean that if you have poor credit you aren't a good insurance risk or good insurance customer or good person. It just means that most people with that same factor, have more frequent and more costly claims. Work to clean up and improve your credit where you can. 

  • Pay your 6 month policy in full or on automatic EFT payment. Many companies give a pretty substantial discount for paying in full at your renewal. Often 8-12%. Some also give a discount for paying on automatic payment which also avoids any credit card processing fees. 

  • Participate in their telematics discount when available. Things like Nationwide’s SmartRide program, or Safeco’s RightTrack program. https://www.nationwide.com/personal/insurance/auto/discounts/smartride/ 

  • https://www.safeco.com/products/righttrack 

  • Talk to your independent insurance agent. They can look at your policy and go through all these kind of options and items with you. A short conversation will help ensure what you have matches what you really need.

Home - Special Session Market Update
1/12/2023

The Florida Legislature convened and completed their 2022 special session in December. They did make some significant changes which will keep the industry from completely imploding.

 

Everyone that lives in a home in Florida needs to understand, what was done is not enough to cause rates to stabilize let alone decrease in the near term. It took us 8 years to get to the valley of this crisis... it wont be turned around overnight. It will take several years (2-3 at best) for rate decreases to be felt as a result of that legislation. Here’s why:

  1. Insurance companies will need a little over a year to see if this all sticks. The concern is that either, 1) the attorneys / court system will reverse this legislation (like happened in mid-2022), or 2) The major reforms will be completely or largely reversed in the 2024 FL Regular Legislative Session. 

  2. The Insurance companies will need to see what the actual expense savings are as a result of the changes. It takes time to have claims, then work through those claims, and then have the actuaries figure out what the actual rate adjustment should be. Not to mention then it takes time to submit filings to the Office of Insurance Regulation, time for them to review/amend/discuss and approve, and then time for rate changes to be programmed within the insurance company systems. 

  3. It takes time for new insurance companies to raise capital, submit their filings, appoint agents to sell their products and write policies for them. If these changes stick (fingers crossed), new carriers will attempt to enter the Florida Homeowners market and compete by offering better policies or lower rates. That process is full of time consuming hurdles such as raising capital, hiring people, and working through the regulatory process. 

  4. Reinsurance rates will take time to come back down. Reinsurance is the insurance that companies buy to protect against giant catastrophes that cost more than they can afford to pay for. Reinsurance companies have lost oodles of money over the past 8 years, so many have had a hard time convincing investors to give them money to operate. Those who have are requiring higher returns due to the increased risk of loss. We will need a year or two of stability before capital begins to flow back into the reinsurance market, bringing competition between reinsurers, and thus lower expenses to the home insurance companies and homeowners. 

 

This is a critical time. We have to stay the course, be patient, and allow the time needed for the insurance market to heal from the massive damage done over the past 7+ years. If we want quicker results, additional action is needed surrounding the roofing fraud and abuse. But that’s another post for another time. 

Auto - 2022-2023 Auto Insurance Market Predictions
8/10/2022

Unfortunately, we’re about to see some pretty significant auto rate increases. Some carriers have already taken a little bit of a rate increase, and the rest are about to. 

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Auto Insurance is pretty simple. Like most insurance, all they have to do is bring in more premium than they pay out in claims and expenses. The amount being paid in auto claims has gone up dramatically since 2021. In 2020 insurance companies gave back some of their premiums they collected and didn’t take rate increases because people were driving so much less for a short period of time. At this point 2+ years later, most people are back to work driving to and from work going to lunch and doing all the things they used to be doing. At the same time, people are still distracted while driving and playing on their phones and doing all the normal stupid human tricks that cause auto accidents. Not to mention just plain old bad luck.

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With the slight increase in car accidents there has been a major increase in repair costs and replacement vehicle costs. 

The amount of technology in vehicles has gone up and has caused the cost of repair to increase because now you’re using professionals who need to be able to make repairs but also be able to work on the computers and the cameras and do the calibrations necessary to keep all of your vehicles technology operating. 

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Not to mention the cost of the technology manufacturing itself. 

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For example what used to be about a $350 expense for a windshield replacement is now, more often than not, over $1200. There is now an additional 800 or so dollar expense needed just to re-calibrate the camera in the front of the vehicle that shines through the windshield. That’s just one example; there are many more. 

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Additionally, the cost of labor is going up which means the cost to repair cars is going up. The supply chain problems have caused the price of parts and equipment to go up because the supply of them is down. On top of that, because of the supply issues, repair times have gone from 2 to 4 weeks, 1 to 2 months. When you damage someone else’s vehicle and it’s not drivable, you (or your insurance), are responsible to pay for a replacement vehicle during the entire time while their vehicle is not drivable. Even if that’s simply because parts are not available to repair the vehicle. So when you damage someone else’s car and it’s not drivable, what used to cost the insurance company $40 per day in a rental car for 21 days, is now costing $44 per day (general inflation price increase) over 45+ days, because of the issues with getting vehicles repaired timely.

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And that increase cost in rental car is just another increased expense on top of all of the others. 

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These are the main factors causing the major increase that is about to come in car insurance. If you’ve been with an insurance company for several years and your rates go up, just because you find somewhere else that happens to be 5-8% cheaper at the time you shop for it, doesn’t mean you should switch. That insurance company may be taking a 25% rate increase at your next renewal. 

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When you look to switch, make sure you ask the agent or whoever you’re speaking with when their last rate increase was and how much it was. If they haven’t taken a rate increase in the last nine months or it wasn’t more than 10%, I can say with almost complete certainty that the insurance company will need a 12%-20% rate increase over the next six months. That doesn’t mean you should not switch, that just means you need to be aware of the landscape and ask the right questions to try to figure out what may happen over the next six months, so that you don’t save $100 today and cost yourself $300 at renewal.

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