Insurors view changing insurance market

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The downturns in today's economy are raising customers' insurance premiums for customers and insurers' costs of doing business, according to Springfield insurance agents. |ret||ret||tab|

Richard Ollis, commercial insurance specialist for Ollis and Company, 2274 E. Sunshine, said he's seen a real "hardening" of the insurance market in the last year. Ollis attributes the change to two factors: |ret||ret||tab|

First, insurance companies are becoming more selective in the policies they write. "The companies are asking more questions and doing more underwriting," Ollis said. |ret||ret||tab|

Second, premiums are increasing because, he said, "there are more losses than there are premiums. Insurance companies aren't making returns on their investment income."|ret||ret||tab|

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Risk|ret||ret||tab|

Luke Nixon, president of Nixon & Lindstrom Insurance, 1444 E. Sunshine, also noted an increase in commercial premiums. "They're going up 10 to 25 percent, depending on the type of risk," he said. "The people in high-hazard and high-risk areas are having to pay the most. It will take a while to reverse that trend. It's much more complicated than just making rates higher. There's expense ratios that go into that as well,"|ret||ret||tab|

Jerry Sparks, president of Gallagher-Morris Insurance, 1650 E. Battlefield, said that because insurance companies aren't making money in the stock market, they're having to make it on underwriting. "The costs of premiums are rising, which is a direct result of the economy and the stock market," he said. "The insurance companies weren't paying attention to what was going on around them. But then who wants to be the first company to raise the prices on premiums?"|ret||ret||tab|

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Business costs|ret||ret||tab|

Ollis believes the cost of doing business as an insurance agent is going up, but not substantially. "We have to have up-to-date computer systems and the Internet," he said. "The cost for salaries of qualified employees is going up as well, but on the flip side, technology allows us to do things faster and more efficiently."|ret||ret||tab|

Nixon agreed that the cost of doing business is increasing. "Employee benefits, property taxes, utilities, gasoline the prices are all going up and this impacts business. These prices are all reflective of the economy."|ret||ret||tab|

Ollis said that in the current economy, insurance agents have to market their clients more than ever. |ret||ret||tab|

"We send the accounts to more insurance companies to ensure competitive rates," he said. "We're trying to get more options for our clients. |ret||ret||tab|

This comes at an increased cost to the agent, but that's our job It costs an insurance agency money to market these accounts. That's because of the increased activity on the account and the added personnel time."|ret||ret||tab|

According to Ollis, insurance companies are becoming more selective and therefore are not as interested in certain lines of business. "Insurance companies haven't been taking in enough premiums to cover their losses," he said. "This hardening will last until the market stabilizes, which I predict will be several years away."|ret||ret||tab|

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Driving records|ret||ret||tab|

Nixon said insurance companies are now looking at a potential customer's driving records, their safety program and their claim history. "Their claim history is probably what they look at the most. In the insurance industry last year, the combined losses of property and casualty companies was 110.5 percent. "That means that for every dollar they're bringing in, $1.05 is going out. So insurance companies are trying to gain back their profitability,"|ret||ret||tab|

Nixon said the recent trend in insurance companies merging together has made it harder on insurance agents for several reasons. |ret||ret||tab|

"Companies with totally different philosophies on how to run a business are trying to work together," he said. "The mergers have reduced the number of available companies that can write coverage."|ret||ret||tab|

Ollis believes that even though the market has hardened because of the economy, it's still a good time to be an insurance agent. "|ret||ret||tab|

The clients need someone to guide them through the process of securing adequate coverage. The agent can help them look at options like higher deductibles and developing safety programs. |ret||ret||tab|

If a company is focused on safety, they're less likely to file claims. Insurance contracts can be very complex. A good agent can act as the trusted adviser on these contracts."|ret||ret||tab|

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