View Single Post
Old August 7, 2013, 04:26 PM   #22
spacemanspiff
Senior Member
 
Join Date: January 16, 2002
Location: alaska
Posts: 3,107
Quote:
And they base their rates on the answers to such questions. An insurance company may not require a business to have sprinklers... but if it makes a major difference to the premium, it can come to the same thing. If a "no guns" sign lowered the rate for liability insurance, a business, or other organization, might need to post one, especially if it were struggling in the current economy.
I'll give a technical explanation about that first sentence I am quoting Vanya. Rates for all classes of commercial insurance (in this case talking General Liability or Casualty) all start out the same, all set in place by actuaries who work for the federal govt, and they calculate the base rates by determining overall losses paid out. Each company will then look at business they have written for each class and calculate their own loss ratios and determine a Loss Cost Multiplier that they believe they need to apply to the base rates in order to cover potential losses. That LCM can vary between each state, and they must file it with each states Division of Insurance. They also file justification for the ability to apply debits or credits, as well as possible modifications that may apply for one particular company. (Example, AIG has a plethora of companies they write business through, Alaska has at least four companies from AIG, they don't all have the same LCMs, and they dont have the same company mod factors either. On one end of the spectrum, a policy might be placed with their company that has a 15% company mod credit, and may have up to 25% credits applied, or they could be on the other end with 15% company mod debit, and another 25% debit applied. So, in this example, an insured could have premiums 40% up or down from the base rates.)
The DOI scrutinizes these filings because their interest is not to help the insurers, but to protect the insureds. Once the company has their filings approved they then get to underwriting. Which is what my office does for companys: Underwrite on their behalf.

The insurance market goes through cycles that take years to reach the peak at either end. Referred to as a 'hard' or 'soft' market. Currently the market has bottomed out and has been about as soft as it could get. Market goes 'soft' when companies compete for the business and start lowering their LCMs or simply approve the use of the credits they filed for. Companies that fail to compete lose much of their customer base to competitors. for the next several years insurance rates will rise as companies file for higher rates/debits. It will reach a peak and then little by little, in an effort to draw more business carriers will start filing for lower rates.

The DOI is supposed to keep the carriers in check, and ensure that they are not gouging the marketplace.

OK back to the OP storyline here....
that sign prohibiting guns, probably is unknown to the ALs insurance company. I highly doubt they are getting lower rates just by posting that sign.
__________________
"Every man alone is sincere; at the entrance of a second person hypocrisy begins." - Ralph Waldo Emerson
"People demand freedom of speech as a compensation for the freedom of thought which they seldom use." - Soren Kierkegaard
spacemanspiff is offline  
 
Page generated in 0.04310 seconds with 7 queries