This Is our Village

Saturday, December 18, 2010


I have one more insurance question in two parts.

Part One: I have now been told by two insurance agents, one an agent selling insurance to cover our buildings and the other my homeowner's insurance agent, that insurance rates from the SAME COMPANY are the SAME no matter who the agent, provided the particulars are the same. (By the particulars, they mean the “plug-in” factors such as dollar amount and details of coverage, amount of deductibles, and of course it being the same association or apartment, with all their respective particulars.)

Is this right? Both these agents said that the only way a rate quoted for a given association's buildings or (in the case of homeowner's, a given apartment) using the same insurance COMPANY could be less would be if the PARTICULARS were changed—for example, if Agent A left out a feature of the coverage or Agent B upped the deductible.

Part Two: Insurance agents get a commission from the companies they sell for, I’m sure. I imagine this can differ depending on factors. Imaginary case: Can an agent, who’s making, say, a 10% commission, dip into his commission to give a customer a lower premium on his insurance? Could he, for example, use 3% of his commission to reduce his charge to the customer? Or is that a no-no?
Your BLOGMEISTER responds; but this time with data suppled by our Insurance Committee Chair.

Answer to #1-An admitted company files rates for a certain type of insurance--example: Allstate Homeowners in West Palm Beach--rates are for territory (West Palm Beach), type of building occupancy(residential, business, etc) and construction (fire resistive, joisted masonry), limits (how much insurance you need-building value, contents limit, etc), and loss history (any paid losses, etc). So you can have variances in premium with the same company and still be correct. Insurance is not one size fits all.

Answer to #2-An agent can choose to reduce his/her commission as they see fit. Depending on how much they are planning on servicing the account, this is either a good idea or a poor one. Let's consider UCO and the Associations for example. UCO is an easy account to service. Premium is paid as requested, hardly any losses, not much of an activity producer. The Association policies are a whole different story. Multiple locations, multiple billing activity (monthly through management companies or by Associations), constant loss activity (that requires follow-up to make sure the claims are getting processed properly), and constant questions and services that our residents require from their agent and the UCO Insurance committee. This work is all labor intensive and requires that an agency have the manpower to accomplish it. Reduce your income too much and you will not be able to service an account as you should.
Thanks for the question Lanny and thanks Toni for the well considered reply!
Dave Israel


  1. Thank you, Dave and Toni. You have cleared up Part Two for me, but not Part One.

    I already UNDERSTAND that insurance rates will differ depending on type of building and all the particulars you mention. What I am asking is whether the insurance COMPANY (not agent) rate for the SAME association (same 3 buildings) getting the exact same coverages is the same regardless of what agency sells you the policy.

    I know now from what you've told me in answer to Part Two that the rate to the buyer could differ if the agent chose to relinquish part of his commission. Forget that for now so we don't muddy the waters. Used car dealers and insurance agents love to do that so they can compare apples with oranges. What I am asking is this:

    We have Agent A and Agent B. They both sell coverage X provided by Able Insurance Company. I want this coverage X on my 3 buildings—the same amount of coverage, the same deductible, everything the SAME. Is the Able Insurance Company charge the same no matter which agency sells it? Two insurance agents have told me it is.

    If what they say is true, then the only way one agency quote for the exact SAME coverage by the SAME insurance company on the SAME property can differ from another agency quote is through adjustment of the commission, as I see it. Other than making an adjustment in the commission, the only way the rates could differ would be if one agency changed the ACTUAL COVERAGE in some way. That is the point these two agents are making.

  2. Hi Lanny,
    December 19, 2010 12:14 AM,

    I believe the key variable, given your hypothetical, is which agent has been granted a letter of Agency, and is thus your Agent of Record.

    Once this letter is presented to the best available market (Insurance company), other Agents who lack AOR will not get the lowest rate, they will be blocked!

    Perhaps Toni can further elucidate on this point?

    Dave Israel


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