Episode 11: Insurance is on fire

The insurance industry is in upheaval, and real estate agents are feeling the heat. Rising premiums, sky-high deductibles, and insurance companies pulling out of entire states are creating a perfect storm. This episode breaks down the complex insurance landscape, exploring the shift from big-name insurers to smaller, independent providers. We'll discuss how real estate agents can navigate these challenges, protect their clients, and stay ahead of the curve. 

Transcript

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if you have some of these large, massive companies that were doing a great job, you may want to ask them, what's my deductible? If I had hail, if I had water, if I had fire, what's my replacement cost? Now's a good time to ask that because you'd be surprised your replacement cost is significantly less. And then we got two quotes on it and one was 13. The other one was, pushing 18,000. Oh my goodness. Right. Everybody I'm meeting with real estate agents that are part time are getting in the business. The first question they ask me is, how are you going to navigate these choppy waters with Nar in these lawsuits? And I'm like, this is just a change. It's yeah, Hey, Colby, sway here with Adam Riley, like always. we are towards the end of July. We're actually complaining about the heat right now. remind us in the winter, because a lot of people complain about the heat. And then come the winter, we're literally begging for heat. help. So that's always strange. I thought today we could talk about the insurance industry, and, it's kind of, fascinating to see what's going on with a lot of these changes. Like, I guess obviously, primarily we work around the real estate transactions, and we're used to working in the real estate side. So there's a lot of things going out there with brokerages and contract changes and lawsuits and all these scary things. But a lot of things are not really changing. It's just real estate agents are buying into it. Like I had a realtor the other day reach out and said, hey, this is the end of the world. It's not. But they found some clickbait. so there's two kinds of insurance is just to keep it simple. You have the ability to go to a big insurance company, State Farm, Allstate, American family. Just keep it simple. And then you also have the ability to go on the independent side, which is we'll say, you know, more of like the progressive or travelers or something like that. So there's two different ways to shop for insurance. You can go into your local office and say, hey, what do you have? What are your rates? How do you, you know, what are you looking for? And then the other option is more of the broker side, which is our company, which is here's what I'm looking for. Can you find me a company? And I always try to explain it to people like this. Where? Like Expedia, if you will, like, we shop hotels and we try to find the best prices to go Yeah, the Yeah, Yeah. And that's what's gone up 75 to 40%. Sure. Yeah. Okay. Yeah. insurer. I mean, a very common deductible that you hear all the time as a real estate agent, there's $1,000 deductible to 2500 max. That's. Yeah, on a house. Right. you do 2500 to keep the rate low. And a thousand was kind of standard. Yeah. And, so just think of that, right? Like, you know, if you're used to something happens to your car, it's the same thing. It's relative. It's about $500. Well, what they're finding is it's a percentage and then there's a replacement cost. And then there is, something they're carving out, which is if it's hail, it's this if it's wind, it's this, if it's fire, it's this. And what you're finding is, you know, states like Nebraska and Iowa, we have a lot of hail and those deductibles are getting almost out of hand where clients are not realizing it. And they're kind of like going with the flow. So we'll just say Adam calls his local large company and says, hey, my rate went from a thousand to, you know, $1,000 for the year to $3,000. What the insurance agencies are doing is they're saying, oh, Adam, I got your back. No problem. Let me lower this back down to 1800 or $1600. Cost of living has gone up, whatever the make up something. But then they increase your deductible from $1,000 to 5000 or $10,000. And they're not necessarily being upfront about that, because these large companies want to keep the client and they don't want to cause concern. Yeah. Like I mean, I even think of Stacy and I's, our average rental deductibles, $10,000 because we're going with trying to keep our premium lower. Yeah. And but we're going with the higher deductible, which is like a flip we just did a week before closing. Guess what happens. You had a nice hail storm come through. And now I need a $17,000 roof and $10,000 deductible later. So that bit us in the butt, right? Yeah. but overall, it's the. That's the route we're going. Yeah. But still, that's. Yeah, they used to be I think for us it used to be like 25. Hundred, 2500 was like, kind of the max for most people Yeah, That's what they say, right? So what about the folks that are with like, I'm going to use State Farm, for example, or farmers or just the big guys, right. Because I I've learned lately, over the last six months, there is so many smaller insurance companies out there that I've never heard of. Like, what is it, HIPAA? Hippo. Yeah, like they're in there. They have like awesome rates and you know, but I've never even heard of them. But they focus on the bigger guys. For example, there's some clients that have been with them for like ten years. Do they do they are they do offer like loyalty sort of programs too. Yeah. So we're really this is applying to the folks that haven't been with the these companies super long. Yes and no. Though. Because what what you're finding is we had a client the other day come into our office 18 years with the company, and they went to replace something at their house, and they learned about a $10,000 bill they were unaware of. Got it. got it. Yeah. the plus Those costs are still high. Yeah, So that's also impacting that. And then the the next thing is we've had more storms and you got to think across the United States. But you look at the hurricanes or floods or near us, we had tornadoes, right. Or we had flooding in Iowa, Nebraska, which is obviously devastating. Now on that real quick because I don't I just heard this this last week where I'm going again, I'm, I'm going to keep going to saying State farm or farms. I don't know which company is. But my understanding that I heard was those bigger entities like, let's take Florida, for example. They're they are confined to that state. So whatever happens with that big insurance company that happens in and especially Florida specifically because there's so many hurricanes, it doesn't necessarily affect the rest of the market. I heard that specifically about Florida. Have you heard that? I've heard that. and sometimes. But you even think of Nebraska. Think of all the the storm damage we've had lately. It's a about percentages. Right? So each state has different allocations and and Yeah, yeah. And I heard I just heard that about Florida specifically that they're like they're the yeah, they're like circle red line. Like, hey, there's a separate because there's so much. And that's why their insurance down there is so high. I mean, I know I've heard that go over the last few years people were selling in Florida because couldn't afford it. they couldn't. Yeah. Just insurance. Yeah. you know. So it's talking like your normal, you know, loan on a property. It was your rate obviously has change. And then on top of that you your, your monthly statement has gone up so much because now your insurance Yeah your premiums tripled for some boats. Yeah. So you thought your monthly payment goes from 1800 on a house to 2700. And that's a big difference. Yeah. I mean even I'm thinking on the real estate agent side, like you almost need to reach out to whoever they're going to use insurance to get, like, hey, give me a rough idea of what their premiums are going to be because you need to put that on their cost sheet and so that their lender needs to know that too. Yeah. And the lenders work Closely with Yeah. Yeah, right? So there's just a perfect storm. If you will, with insurance. So the reason why we bring this up is these large entities or companies are starting to see massive jumps that they've never seen before, and they're starting to have massive layoffs. Like a lot of these companies are figuring out how can technology make it easier and lower the cost, But I type stuff like I type stuff, you know, like, so there's that piece of it. There's a combination of people working from home, people not reporting into work. So there's a large combination of that They don't need their big commercial spaces. Exactly. So then you have that. So there's just a lot going on. So if you think about it as a real estate agent or a mortgage lender, why does this matter? The reason why it matters is because if you previously used one of these bigger companies, you probably had someone that did fantastic and did a great job with your clients and you always trusted in, relied on them and it helped your referral business. But today, if you're not working with somebody on the broker channel, what you're going to find is a lot of these clients, sadly, are not getting told the truth. And when they go file a claim, they're going to say, hey, you recommended Tammy. She, you know, like she recommended this, this and this. Well, she didn't tell me about deductibles.$10,000. Adam, what am I going to do? I can't afford that. Why would you recommend Tammy and making that name up at this massive company? It makes us kind of look bad again. So the reason why I think we are bringing it up today is we're on the independent side. So we have the ability to shop a lot of companies, and we can try to find who is changing what they're changing to, whether it's a percentage deductible, whether it's the premiums. I can take your policy and I can bring you over to another company and then another company in another company, kind of like I mentioned Expedia. So if, if, if some hotel chain gets out of hand, I can go to another hotel chain Yeah. If it's an I again thinking of like these last six months, like I'm going to call no names. And these companies still have been around for a long time. But they, they have they've been like killing it on giving awesome premiums, deductibles, stuff like that. So I think that's really cool. And I will say too, because, you know, this, my dad switched over to our brokerage and he was with his guy for 15 plus years. That caused some drama there, I know, but he just had a big storm damage and he even said he goes the claim process like they they sent the check right away like there was no fighting. And he was like that was by far the smoothest process of me getting my money for the damage that was done to the house that I've ever experienced in the insurance world, too. So that made me feel really happy too. but again, yeah, these, these smaller companies that I've never even heard of, those are the ones that are like, wow, this is actually really impressive. The other thing too, what do you have to say? I'm like, you know, you were hearing about some of these companies, like, let's use Nebraska specifically that they're starting to pull away from doing business here. Like, what do you have to say on that? Because I've heard that they'll pull away sometimes for six months, sometimes for a year. What? Just until things cool down and then they'll start quoting again. There's certain states that are worse for claims. And really that's what it is. It's a claims game and it's surprising to me because you think almost any business just think of any business. You know, I'm drinking this water and this this water company would want more business. They would want to do more waters. Right? Like, And they're they're not a sponsor for a sponsor. But my point is, like you would think they would want clients. It's the opposite on the insurance field. So the insurance has identified and it's like a red yellow green again to keep it simple. And there's algorithms and AI that help the insurance companies. But there is red which is we don't want any clients in this state. And they've actually sent letters. So more than likely clients listening to this have gotten letters from their insurance company. I actually my neighbor across the street works at a massive company. I won't say which one they sent 75% of their clients notices. They didn't want them anymore. Wow. Yeah. not talking to somebody that's in, let's say, Florida that it's like, oh, I don't know anybody in Nebraska like it. They live in these communities. So they are mitigating mitigating their risk and they're actually coming in. So they'll the regional smaller players you haven't heard of are doing a lot better than the national, bigger companies. It's funny too, because like Elon Musk in this book, I was I listened up his autobiography, basically, and it was almost like the the bigger I'm going to paraphrase this, but the bigger the conglomerate, they can get away with more stuff. And they they've been gotten sloppy. And there's regulation though, and all this stuff where the smaller guys, they are forced to be creative on how and how to make their business work too. So that kind of is in line with what you're saying on. Yeah, they've just got to be creative on making it work in today's type of environment. So, so some of those areas that are marked red and Nebraska is one of them for most companies actually, is there like we don't want to do business. So out of 50 states they're pausing anywhere between 40 states, you know, or 12. And we're actually in the top 5 to 8 with most of these companies where they don't want to do business with Nebraska. just because the premium amount doesn't, equate to the losses they're saying. Yeah. And I'll go ahead. oh, no, I was going to say and then the other thing to think about is why I bring this up is in the past, Adam, these large companies have done such a great job of bringing a great customer service and bringing younger people in or new people to the business and saying, hey, we're going to teach you what to do. And then one day you can take, a part of my business for my company, and you can run with it. They're not seeing that right now, because those clients, let's just make this number up. 100 clients. They're seeing 60 to 70% of these clients leaving them, in a given year. shopping them for something. shopping for something else. So again, if you have 100 clients and these larger companies have tens of thousands of clients, but if they have a hundred clients and 60 of them leave, it's difficult because now you're like, well, what am I? What am I trading here for? What am I working here for? I don't see a pathway where I can be successful. So these companies that had such a large scale tipped in their direction have now tipped back into the independent side, which is, struggled to compete with a pricing standpoint. And they don't have these smaller regional players. They're only national. So they're denying claims. They're increasing premiums, they are messing around with deductibles, and they're no longer providing the amazing service. Yeah. And we've seen it too on our side where we've had big companies that we would broker out to that have left Nebraska. Yeah. So and again it's just force and our insurance agents get more creative on going and finding other better options for folks. And they are. Yep. Well, and the other thing that's always been prevalent is on the independent side for our company, I should say that we go above and beyond and explain some of the minor or minor details. That sounds boring because it's, you know, to me it's like, oh, that's insurance, you know? But our insurance producers have been trained from the franchise that if you go above and beyond, explain some of these things, people are shocked what hail damage actually costs, what replacement cost. So Oh yeah, but simple. yeah. Well, and back on like when you're when you are having to file a claim, I've noticed to like, you know, I'm only the one. The deal that I just told at the beginning there were I mean, that was a very simple like, I'm going to say it wrong, but like it was there's one pitch, you know, there was it was just a single gable roof, super simple roof to do. And sure, in my mind I'm like, oh, back in the day, you could have done that roof for six, maybe $8,000. And then we got two quotes on it and one was 13. The other one was, pushing 18,000. Oh my goodness. Right. Yeah. Like way more than it was. Way more than everyone is really expecting. I think everyone was thinking like Max $10,000. But I will say to though, when you are having to file a claim, yes, we have the insurance stuff they're dealing with that's not going away, but it it does matter who like if you have a good contractor on your side helping you work with the insurance company. So it's a makes for you. Yeah. Because like maybe assurance cam says oh well this is like a this is $20,000. Now it depends on your policy. And all that too, like you're talking about. But depending what your policy is, it is good to have someone say, well this is a 20, this is actually going to cost 29,000 or whatever that is to help them push. That depends on what their policy is. Well and sometimes we'll try to do a repair instead of a replacement. Correct. Yeah. We can't match. you can't. Yeah. Yeah, yeah. Yeah, well, it's a it's a writer in the policy. Right. That there. Is it exclude it. Yeah. Totally tall. Wow. Yeah, but some for them a check, some for them to check and then they're finding riders. Now some companies have gone back from 15 years or excuse me, from 15 years back down to ten back to 15. But some insurance companies, they're very straightforward. They're saying, hey, just, you know, if you're and they're sending a letter and they're saying, hey, your premiums change 200 bucks, you don't read it. No one reads that. Yeah. you do read the fine print. and no one reads it. Yeah. Yeah. yeah. Like what, 30% you think like what have you heard. Anywhere between 40 to 75% Oh, still. Okay. Yeah. more. Yeah. And he was with the same company for 15 plus. Years And we split up to 2 or 3 different companies. And he's saving $4,000. So my point of saying that is the bundle, whether it was with cable, with cell phone, with insurance, the bundles, if you break them, you'll get a bad you'll actually get a better discount. So it's kind of surprising you. So everything you kind of heard about bundling is just not necessarily the case, when it comes to insurance today. Okay. so again, I'm very happy that we have the independent side. I'm very happy we have the ability to shop around as a real estate agent. Why does it matter to you? Your clients unwittingly might be put with a bad person that you've been relying on for years. Or they just don't know any better, too? Yeah. you know? And again, I'm not saying they're willingly like, oh, this person is Yeah, they're not trying to screw someone over. Yeah. Yeah. Yeah. Yeah. Make sure it's talking about their premium and their what their deductible is going to be, especially when they go to resell it. If they run into it, especially during storm season. We know that what you find is when you go to sell your house they are like with their company. And then the new buyer can't buy this house because the roof is 15 years old Yeah. Yeah. Yeah, like even a good, simple practice could be writing in the offer, saying this is subject to the house being fully insurable. Yeah, yeah. And we've been seeing more and more of that. So, yeah, we'll go we'll go into deeper into that. And yeah, hearing that Exactly. Yeah, Yeah, I can reach out to partners in the city and explain what's going on and try to be an asset, an asset or a resource. What I can't do is I can't control these large companies. I can't control the deductibles, I can't control the percentages. But I can explain and educate myself on what's going on. Yeah, 100%. So awesome. Yeah. Thank you.