Agent: Often times when I am shopping a renewal for a customer I get quotes from several different carriers. There can be a wide range in premium prices for the exact same coverage on the same property! Why is there such a range?
Differing quotes from different carriers happen because insurance companies have histories and cultures that guide their preferences and their fears. A lack of understanding or experience with the risk can affect premium price setting, sometimes regardless of the data.
Let’s say the risk is a rural property, outside of the city.
If the insurance company is based in Iowa and has a history of rating rural risks, they have a higher comfort level and perceived expertise in gauging that type of property. They are more likely to welcome that risk. The company culture is based in understanding rural properties and may perceive it as lower risk, because they know the ins and outs of rural properties. Even if that company has offices in the city, the company culture can drive underwriting practices in this way.
A company with urban headquarters might be more skeptical of rural properties, just based on fear of the unknown. The experience of the people within the company may cause them to assign higher premiums to that type of risk to cover the company’s lack of understanding. They don’t quite have the appetite for it.
History and culture matter!
Got a question we can answer about carrier behavior or any other topics? Comment below, or email us at firstname.lastname@example.org with "Blog Question" in the subject line.
RT Specialty, LLC
180 N Stetson Ave, Suite 4600
Chicago, Illinois 60601