Why are our coastal companies so much less expensive than captives?

When helping our clients with their insurance needs, we get quite a few questions. What do I look for when comparing policies? What do the different deductibles mean? How much will my insurance cost? Why are your companies so much less expensive than captives, like State Farm, Allstate, and Nationwide?

We’ve covered the first three questions in previous blog posts. If you want to check them out, simply click on the question to view that post.

Today, we’re going to focus on why the companies we work with are more affordable than the “big guys” that you see on television, like State Farm, Allstate, and Nationwide.

1. Company Appetite. Each insurance company has it’s own “appetite”. Some companies rate up best for new construction homes, some for older homes, some for inland homes, and some for coastal homes. The big companies you hear about have an appetite for homes that are inland that have less perceived exposure to hurricane speed winds. Since they don’t want to write coastal properties, they charge more to make it worth their while. Our companies’ appetites are for coastal insurance. They WANT to write these properties, so naturally their pricing is going to be more competitive.
2. Financial Backing. Our companies are A-rated by Demotech or AM Best. This means that they have sufficient financial assets and backing to pay claims in the event of another Hurricane Hugo or major earthquake. This is not to say that large captives are not financially sound, but they don’t want to put their assets on the line with the extra exposure present here.
3. Re-insurance. All of our carriers have “re-insurance” which is insurance for insurance companies. So, they are in essence backing themselves with two, three, and four layers of coverage to withstand multiple major storms every year.

Are you currently with a large captive company? Contact us at 843.763.4200 or fill out our online form here to what savings we can provide for you. We recently moved a client from State Farm to one of our coastal companies and was able to save him thousands on his premium while also reducing his deductibles.