May 8, 2025 • 35 mins
Learn the truth about your insurance policy in this eye-opening video. Don't wait for a crisis to find out what your coverage really includes.
In this enlightening episode of 'Getting Your Edge,' hosts Dennis Day and Judy Gratton dive into the complex world of insurance with expert Douglas Olson from USI Insurance Services. Olson breaks down the intricacies of insurance policies, the impact of recent natural disasters on the industry, and why your insurance policy might not cover as much as you think. The episode covers the challenges faced by insurance companies, including the reasons behind rising premiums and policy non-renewals, as well as the legalities and contractual obligations that come with insurance. Whether you're a homeowner, real estate professional, or simply an insurance consumer, this episode offers invaluable insights into what you need to know about your insurance coverage.
00:00 Introduction and Greetings
00:34 Meet Douglas Olson: Insurance Expert
01:10 Understanding Independent Insurance Agencies
02:49 The State of the Insurance Industry
04:00 Consumer Expectations and Insurance Realities
05:22 Challenges in the Insurance Market
10:48 Impact of Environmental Factors on Insurance
22:03 Insurance Companies' Financial Struggles
34:18 Concluding Thoughts and Contact Information
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dennis Day (00:00):
Hello, all this is Dennis Day, with Getting your
Edge, how to Downsize your Homeand we have a fantastic show for
you.
Thanks for showing up.
I'm here with my co-host, judyGratton.
Welcome, judy.
Judy Gratton (00:13):
Good morning on this wonderful spring morning
glooming and the daffodils arecoming out.
Dennis Day (00:27):
It's pretty nice after some of that the gloom and
doom that we have to live with.
So this is really nice and Ihave a fantastic guest for you
today.
This is Douglas Olson and he iswith the USI Insurance Service.
They are the sixth largestinsurance service in the nation
and he is here to talk about ahot topic insurance.
(00:51):
Surprisingly enough, he's goingto talk about insurance, and
there's a lot in the news latelyabout insurance.
Welcome, douglas Olson.
It's great to have you here.
Give our listeners and viewersa little background about you
and your company, usi, and yourexperience in the insurance
industry.
Douglas Olson (01:10):
My name is Douglas Olson.
I am a salaried employee forUSI Insurance Services.
Usi Insurance Services is anindependent insurance agency.
We have about 600 companiesthat we can provide to clients
throughout our company.
Independent agency is a prettyimportant distinction to
(01:30):
understand.
You probably think of the wordbroker, where we can go look at
a whole bunch of companies, butwhat a broker really does is
they just hand you off to thatcompany, they get a finder's fee
and they go back to the nextclient.
So your relationship is thenwith that insurance company that
you chose as an independentagency.
We are developing therelationship together.
(01:51):
So let's say, in four or fiveyears your situation's changed.
Now you're investing in buyinga whole bunch of properties and
now the company that isprotecting you probably doesn't
fit your needs, or you're doinga lot of traveling, or you're
downsizing or whatever the casemay be.
We still have our relationship,we can still help you and maybe
we move you to another carrier,and now the relationship hasn't
(02:11):
changed.
Just the company that's givingyou those protections are
changing and what we doeffectively is we try and
understand what your risks are.
So we have a holistic approachthat we do.
We have a proprietary system of150 years of claim history
where when we ask you somequestions, we literally have the
data and information andanalytics to back up what our
(02:31):
responses are and we offer youways to reduce those risks.
Then the byproduct iswhatever's left over, let's find
the insurance carrier that fitsyour needs the best.
I want to be as knowledgeableas possible so that I can be an
advocate for those that I help.
Dennis Day (02:47):
Douglas is our expert today.
Judy Gratton (02:49):
With everything that has been going on and
insurance companies leaving thearea.
Douglas, can you give us youroutlook on just an update of
where we are in our country?
I know that's a big question,but with all those fires in Los
Angeles and now they're in SouthCarolina and North Carolina and
tornadoes and shoot we almosthad a tornado here yesterday.
(03:12):
So what's happening?
Because people think that theycan rely on their insurance for
these events.
Douglas Olson (03:22):
That is an open loaded, got all kinds of answers
and there isn't a correct one.
There are several.
So forgive me, but I think theeasiest way to explain it is
probably give ourselves a nicesoft landing spot to think
through, and that would be thefollowing All of us, all three
(03:43):
of us here and those that willbe viewing this are going to be
a consumer at some level.
We as consumers, our moodsadjust, our demands change and
our outlook continues to adjustas each day goes by.
Why am I mentioning us asconsumers?
Because if we really are honestand we look back at the last 20
(04:03):
years of what we as consumershave asked insurance companies
to do, it's cheaper, faster.
You have to be honest aboutthat.
And what does that mean for theinsurance companies?
Well, of course, they're goingto oblige means they have found
(04:28):
ways to be efficient, which iswonderful.
There's nothing wrong with that.
But along the way as they'vedone that, what normally happens
is because consumers havebecome so price driven in, the
insurance companies are notoffering advice, because if they
offer the wrong advice to oneperson, they now have to cover
it for every one of theirclients.
(04:49):
You have to understand there'ssome legalities on the insurance
side that they have to dealwith.
They are a business.
They are an entity controlledby every insurance commissioner
in every state, responding asthe client wants by providing
less expensive products, askingless questions to push that
product to the client andaccepting your money.
(05:10):
What insurance is a contract?
If you sign your name and payfor a contract, you're bound to
that contract and that's why I'mbringing this up.
The challenge here is what wehave done as consumers, by
asking for faster, cheaper.
So in that process, with theinsurance companies not
(05:31):
explaining what those coveragesare and why there are
differences, now consumers arebuying a product that probably
is not protecting them the waythey believe.
They just assume and I'm goingto use the words we don't like
full coverage.
They just assume that's thecase.
But how can an insurancecompany that doesn't carry
(05:51):
inventory think about this train?
Loads of lumber.
They're not buying left frontfenders for 89 Mercedes 300
class cars so that they can havea less expensive fender than
their competitor.
Insurance companies are justwriting checks.
Let's be honest.
They're just trying to make uswhole when we've had that loss.
(06:13):
So that means they have nocontrol over the market.
They have no control over theweather.
They have no control overaccidents that occur or things
that go wrong accidents thatoccur or things that go wrong.
And then you add anotherelement, which is as an
insurance company.
In most days, remember, this isa 40,000 foot elevation.
Understanding, this is not fineprint, exactly how it works,
(06:36):
but let's pretend that we arecreating our own insurance
company.
That insurance company is nowgoing to have to show three
years of losses in our requestto increase insurance rates.
So, unlike a gas station or agrocery store selling eggs,
insurance carriers cannot dothat by law.
They must submit the request tothe insurance commissioner's
(06:59):
office, and that process cantake anywhere from three months
to 18 months, depending upon howin-depth that request is and
the back and forth that happenswith that insurance carrier.
Judy Gratton (07:09):
So we have to show three years of losses to even
do that.
Douglas Olson (07:13):
And there's a good reason for that.
Judy and I was trying to giveus a foundation have to show
three years of losses?
Would it be fair to you and Ias a consumer if in 2021,
grabbing completely fake numbersout of the air there were?
no losses and they just sentrefund checks to their clients
and then in 2022, they had abillion dollars in losses, more
(07:36):
than what they actually broughtin for insurance premium and
then tell that insurance companyyou can only look at the year
that you got the refunds toeverybody and that's how we're
going to tell you no on yourinsurance rates.
Or would it be more appropriateto have a three-year balance,
as you make this request, and alittle bit of a historical
perspective, where now you'rethinking about new modeled
(07:56):
vehicles that have come onto themarket with changes and safety
features and stuff like that,and they need to have that data
to know what is their realinformation?
What are they really paying outfor those vehicles or materials
and changes in buildingconstruction?
Judy Gratton (08:11):
Yes, from my point of view as the consumer
insurance, the way I envisionedthat it ran is that because all
of us are paying into this fundand not all of us will need the
money at a certain time, thatallows them to make whole people
who are damaged based on whattheir policy provides, on what
(08:40):
their policy provides.
And here I am in real estate andtell people to sell and make
sure that they've got their,that they read the contract, but
I can promise you I did notread my entire insurance policy.
It shocked me because I heardDouglas speak at another event
when you told me that if you doupgrades to your home, you're
supposed to let your insurancecompany know that, because all
these years I thought we hadfull replacement coverage and
(09:05):
I've asked my husband multipletimes and we never told them
when we totally remodeled thedownstairs or put solar panels
on the house, any of theimprovements that might have
changed the value on the home,and I'm like, oh my gosh, how is
that going to fly?
That was really eye-opening whenyou said that.
(09:26):
So it's these kinds of thingsthat I don't think people
understand at all and I thinkmaybe people in places like
California, where all the fireswere, are having rude awakenings
when they're going to, first ofall, the insurance companies, I
think are backing out of statesthat they can't afford to cover
(09:50):
.
Because that am I right on whatmy role model, my head, is that
the money comes in from all ofus, eh, and then it goes out
accordingly to the people.
Who is that basically how thethey don't make money anywhere
else?
Douglas Olson (10:08):
No, let me answer your first question.
You have a pretty goodunderstanding of how this is
supposed to work, so pleasedon't adjust that.
I'm adding to that knowledge.
I hope that makes sense.
Yes, of course we all pay into,just for simplicity, a big
bucket of money, and when thingsgo wrong, we expect the money
is going to come out Okay, as wewere talking a moment ago, it's
(10:30):
contractual right, as consumershave asked for cheaper, faster,
along.
That way, we do care about howmuch we pay for taxes and so
every year, every town, everyenvironment, they all have to
make budget decisions on whatthey're going to do.
So we also have to bring intothe element of how are we
(10:52):
managing our forests?
Now, how are we allowing housesto be built on the side of a
mountain, next to a river thathasn't flooded in 100 years,
which means probably that mightnot be the best idea, but we are
trying to allow a lot of whatwe want to do as humans to be
(11:12):
done, and so they try and putthings in place to allow us, as
humans, to do those things.
We are not necessarily wrong inwhat we're trying to accomplish
, but we must be careful and beaware that if we used to do fire
breaks and we used to managethe forest.
And the easiest way to explainit.
This isn't factual because Idon't have it in front of me,
(11:34):
but there's a great point ofreference.
Before 1900, we used to loselike 2 million acres of forest
land a year.
Then we started managing theforests, that acreage reduced by
about 80% of our loss on anannual basis because we were
managing the forest, both in howwe were logging it, how we were
(11:54):
creating roads, how we wereprotecting the environment, all
of these things that were beingdone as we build more and more
houses closer and closer inthese denser forest lands.
Let's be honest, right?
So if you go back to 1900, wedidn't have the technology and
the ability we have today.
We didn't have airplanes, wedidn't have helicopters, we
didn't have a lot of the stuffthat we have today.
(12:15):
So I think what you're going tosee is you're going to see a
retraction on some of this,because we do have to figure out
if we are going to allow thefire department let's talk about
this for a quick second Ifwe're going to allow a community
to push back on those that havebeen voted into positions to
help us better our environmentor position.
(12:36):
And let's talk about water lineshere for a second.
We cannot then be mad when ahundred houses burn down that
are on that same water pipe thatthe fire department needs to
use.
And if we are honest and wethink about this for just a
second, I know there's loss.
I'm certainly not trying tolessen that, but we also do have
(12:57):
a responsibility as we calmlywalk through a loss.
If 100 houses have burned tothe ground, that means all those
shutoff valves for toilets,sinks and the main water main
coming into that house has beenmelted so that water is flowing
at full capacity out of thatpipe.
(13:17):
And now you multiply that by100 houses 10 houses, 20 houses,
15 houses how do you think thefire department is going to have
water pressure when theyconnected that fire hydra?
Judy Gratton (13:28):
Think about that.
But in our business, in realestate, what I have noticed in
terms of insurance, for instance, we sell some condominiums down
in Long Beach, Washington.
I started getting calls frombuyers saying I can't get
insurance.
So I started reaching out toinsurance companies, and I won't
name names, but there was onelarge one who came back to me
(13:52):
and said, oh, right now we'renot insuring any condos.
I went what?
What?
I mean, that's a whole industrythat people, especially
first-time homebuyers, are goinginto.
And they did call me back threeweeks later and said oh, we're
back to insuring condos, but theidea that an insurance company
(14:13):
wouldn't insure something asbasic as condominiums the
particular condos that we sellare older.
They're within what do you say,Dennis?
Maybe 200 yards of the ocean.
Well, maybe more than that, Notmuch, though, and they don't
have fire sprinklers.
So we're running into massiveamounts of insurance on that
(14:36):
because it's almost uninsurable.
There are many companies whowon't insure, and that's a shock
, and I think people who arebuying, maybe even just general
homeowners, especially inCalifornia, when they started
receiving notices that theirinsurance was canceled.
So what's going on?
First of all, it's notnecessarily had anything to do
(14:59):
with weather Fire sprinklers.
That's just something theydidn't have before.
Another one I ran into was knoband tube wiring electrical
wiring.
A lot of insurance companieswill not insure around that.
So there are things out therethat I don't think people
realize until they're stuck thatit's something they need to pay
(15:23):
more attention to.
I think that's really why wehad you on here, is that you
need to explain to peopleInsurance is not just a one and
done thing, which I've done Oneand done with a company since
we've owned this house.
Now I'm petrified to call.
Douglas Olson (15:40):
You're bringing up a lot of amazing points, judy
, and I'm really glad you'resaying that, because it
humanizes this boringconversation known as insurance.
So I encourage you to continueasking those types of questions
and bringing that dialogue intothis, because on our side, what
we also have to worry about isthe environment.
And when we talk about theenvironment while we're not
(16:00):
going to be talking about isthere a global warming or is
there not global warming Are wemaking mistakes?
Are we not making mistakes?
I think I've alreadyarticulated we, as human beings,
can go both ways.
We can make some very goodprogress forward and we can also
make some unfortunate progressin another direction.
We're humans.
We're learning as we go.
That said, the insurancecompanies, as we talked about a
(16:22):
few moments ago, they have towait three years to show the
losses.
So when I say that, I don'twant you to think that they just
they have to stop.
They have to wait every threeyears, on an annual basis, but
they have to.
One of the requirements is toshow three years worth of
history, and they also get theopportunity to project.
And where are those projectionsgoing to come from?
(16:43):
They're ingrained in ourcommunities.
They're going to the councilmeetings.
They're going to Olympia for ushere locally.
They're going to Olympia andlistening to the Senate have
these debates and what they'regoing to do and how they're
going to spend our tax dollarsto do certain things.
And if they start hearing we'regoing to get rid of 50
full-time fire departments inthis particular area because we
(17:04):
can't afford the budget and turnthem into part-time.
Let's think about that on theinsurance side for just a moment
.
The risk must go up.
A hundred fold.
Judy Gratton (17:14):
probably Every one of those that you take out
rises the risk.
Dennis Day (17:19):
Yeah.
Judy Gratton (17:20):
And especially for the people that live in those
areas.
Would that be correct to say?
Douglas Olson (17:24):
Yeah, let's just pick on one person.
Let's say the captain of thatfire department.
That captain might be retired,that captain might have a full
time job.
He or she might have anotherjob on the side right, because
we're not having fires on adaily basis, we're not having
automobile accidents on a dailybasis in certain areas where
they're having these budgetconversations and are pulling
(17:45):
back.
That person might be 40 minutesaway, but you need them right
now.
Also a product out there that weuse quite a bit, or a reference
point, which is a protectionclass, and that is what some of
(18:05):
your clients are coming upagainst.
So the protection class inWashington State is something
that WSRB helps us keep track of, and that's what we're just
talking about.
You might have a community saywe can't afford to pay for four
full-time fire departmentbuildings, full staffed.
We need to take two of them andturn them into part-time.
That might save a milliondollars a year.
I'm not sure what those numbersmight be for that group of
individuals, but now, for every15 minutes a fire is burning,
(18:31):
it's costing the insurancecompany at minimum.
So be clear at minimum $100,000for every 15 minutes.
So if a full-time firedepartment as soon as they get
the call they're all jumping.
They might take two and a halfto three minutes to be in the
vehicle and moving down the road, versus all the part-time folks
(18:51):
have to come from their home ortheir workplace to get to the
building, to get one of theengines up and running, to get
the doors open, to get out.
That might be 15 minutesdifference.
That's not to say that's a badthing, but we have to be
realistic and know that as soonas that fire is known, most of
the time fires have been goingfor a little bit.
(19:12):
So that client is probablyalready going to cost the
insurance company $200,000 inloss.
It's not just the fire.
What damage is being done bythe fire hoses as they're trying
to knock that out?
What damage is being done towindows or roofs as they open up
to try and knock that fire out?
Oh, and what's this thing thatfires produce?
(19:33):
I think it's called smoke.
So then there's this thingsmoke damage that goes through
the home.
And now all the electronicshave to be replaced.
You can't fix those.
The furniture is going to bereplaced, the carpeting, your
clothing.
The damage isn't just what thefire does, it's also what the
smoke does.
All of this to just say you're100% spot on, judy.
(19:54):
You're 100% spot on, judy, theway that this works today.
If insurance is not a priorityon protecting the 30, 40, 50
years the first three years,whatever it is that you've been
building your assets and workingyour tail off to have a way to
retire in a blink of an eye, ifwe aren't having an honest
(20:15):
conversation with an insuranceadvisor to make sure that the
product that we have in place isactually going to do what you
want it to do on claim day andas carriers leave the market.
Let's touch on this for just aquick second.
We are talking about us here,locally.
We are talking about California, but the Senate and I think it
was May of 2024, theyconsolidated is probably the
(20:39):
right way to say it.
What we're just now discussingon how many of these policies
are being non-renewed.
So non-renewed means we'vedecided to leave the market, or
your maintenance clause issaying that your home is not
maintained the way we wish.
You don't have the debrisremoved from around your house.
You got cars on blocks parkedin your front yard.
There's multiple reasons whysomeone would be non-renewed.
Judy Gratton (21:01):
See, I don't think , and that's I keep coming back
to.
This is why people need to hearwhat you're saying, because I
didn't think about this Not thatI have cars on blocks in my
front yard, I didn't think aboutthat.
I would never have thoughtabout that.
I just thought I have a policy,something happens, you're going
to pay, and then recently usedmy policy.
(21:21):
I wish I hadn't, but it was afight with and I was angry and I
know people get that way and Ithink we need to pause here and
have a reality check of reallywhat insurance is and what we
can expect of it and how it'schanging today.
Like you said, they're movingout of markets.
You mentioned and I won'tmention the name again.
(21:44):
You can't think it's okay, butthe losses that one very large
company took was it 2024, 2023?
It was a massive amount ofmoney and I was amazed at how
much money they lost in a year.
Douglas Olson (22:03):
So I'm going to give you two answers to that.
Judy One, the company's name isState Farm.
They are the largest insurancecompany in the United States.
They're a fantastic company.
There's nothing wrong with thatcompany in any way, shape or
form.
I believe they insure 11% ofevery vehicle on the roadway in
the United States, to give youan idea of their size, and there
(22:25):
are thousands of insurancecarriers Mine might be a little
under.
Maybe they're at 13%.
I haven't looked at the currentnumbers as insurance companies
buy other insurance companiesand stuff happens.
The reason that I bring them upspecifically is because I like
to use them as a safe barometeron what's happening in the
insurance industry.
Because if I say number twohere, which is the insurance
(22:47):
industry as a whole, isn't a badplace, what does that mean?
That means for every dollar, aconsumer has paid an insurance
premium.
So if we put all insurancecompanies into a singular bucket
this is not accurate as oftoday, but it's a general
understanding for us to havethis conversation the average
for the entire industry that waspaid out was $1.05.
(23:09):
So that means for the last 7 to10 years, the insurance
industry has been writing morechecks out than they've been
taking in for insurance premium.
The reason I mention State Farmis because they were in the
billions of dollars inunderwriting losses for multiple
(23:30):
years in a row.
Now it's also a businessdecision.
And what does that mean?
Row Now, it's also a businessdecision, and what does that
mean?
So as a point of referenceagain, this is just 40,000 foot
elevation.
To make the math easy for allof us, the perfect world would
be for every dollar I bring inas an insurance company, I'm
only spending 70 cents foreverything advertising losses,
(23:52):
lawsuits, claims, buying otherinsurance companies.
You name it because I need toreinvest, because what we should
be doing is reinvesting that 30.
Because we need that bucket ofmoney to be a much bigger bucket
of money for the unknownenvironmental losses that we're
going to have or thecatastrophic unplanned losses.
We can't just think fires.
(24:13):
Think of what hurricane damagedoes oh, hurricanes, floods,
fires.
Yeah, you got it.
And then, as we allow ourselvesto build homes closer to these
areas or saturate those areaswith how we're building things
now, the insurance companies areon the hook.
If you pay $2,000 a year foryour home insurance and you
(24:34):
actually do an analysis and yougo line by line and you look at
how that coverage actuallyresponds for you on claim day,
you're more than likely getting$4 million worth of coverage
overall.
Now you're not going to get acheck for $4 million because it
depends upon the type of lossand some of the money goes this
way, some of the money goestowards that and so on.
But really that exchange for $4million in coverage for $2,000,
(24:57):
it's a pretty good exchange.
I think we can agree to that.
As we were mentioning theinsurance industry, if they were
only spending 70 cents, theycould reinvest that 30 cents and
have this extra bucket of moneyso that when things that are
unplanned or that they couldn'tproject, for example, a
hurricane, a tornado fire, anearthquake, and so that's what
(25:20):
that's supposed to do.
I'm hoping what you'reunderstanding through that is
that the insurance industry forseven plus years has not been
able to do that in anunderwriting format the way
they'd like.
Judy Gratton (25:32):
Also, Perfecting the bucket.
Douglas Olson (25:34):
Yeah, absolutely In the early 2000s.
We had this thing calledmortgage challenge in the early
2000s through 2010.
Is that right?
Judy Gratton (25:45):
With getting affordable insurance.
Douglas Olson (25:48):
No, I'm talking about.
We had a lot of banks that wereclosing on Fridays.
Dennis Day (25:52):
We had to bail out General.
Judy Gratton (25:54):
Motors, you know to fail 2006 through about 2010.
Douglas Olson (26:00):
So the reason I like using this as a reference
while we had this happening itdidn't happen overnight, would
that be fair?
There were a lot ofundercurrents that probably
developed that and it reared itshead through 2006, 7, 8, 9, and
we finally got rid of it in 11.
Think of how many mortgagecompanies aren't here anymore
because it's that time, or banksthat are now owned by somebody
(26:22):
else and we had to change theguaranteed FDIC from 100,000 to
a quarter million because of somany failures.
Please think of the insuranceindustry as being in that 2003
through 2005 era.
But the difference here is theinsurance industry is not too
big to fail, but they've beenpretty smart.
They have buckets of money.
The problem is they're drainingthe money, so are we going to
(26:43):
have to bail them out?
No.
Are insurance companies goingto make smart decisions?
Yes.
And let's be honest, if we goback and look at the mortgage
industry during that time, oneof the jokes which is accurate
is if you could go and breatheon a mirror, you could get a
mortgage.
It was true.
Judy Gratton (26:59):
Yes, absolutely true, and the sad thing was most
of those people that were onlyalive didn't get to keep those
houses.
Douglas Olson (27:05):
Yeah, and the only reason I bring that up is
this is a point of reference.
If we went back in the timemachine to 2022, imagine your
dining room table and you'reinviting over your friends and
your family and you have decidedyou want to cover your table
with all of their favorite foodsand beverages the whole table
(27:27):
and you've invited them over andnow they can choose what they'd
like.
Imagine you now as theinsurance company.
That's what insurance companieswere doing.
They were trying to take onevery single risk if you were
willing to pay the premium.
Okay, now let's fast forward towhere we are in today's
environment.
The reason you're seeing somany non-renewals or insurance
(27:51):
companies leave industries orleave certain risk areas is
they're having to retract and go.
I have to cut out this type ofrisk If I want to stop this
excessive bleeding.
We cannot continue.
They are a business.
If you think of your own budgetand you're spending $100,000 at
(28:14):
Costco a year, but you're on a$10,000 budget, you gots the
problem.
So what I'm getting at here isnow the insurance industry,
every single insurance carrier.
Where they had a dining roomsized appetite today, it shrunk
down to just a dinner plate, andthat's why you're seeing no,
(28:38):
we're not going to do condos.
We now have insurance companiesbeing absorbed by other
insurance companies.
You've probably heard thatSafeco, who's owned by Liberty
Mutual, is now being absorbed byLiberty Mutual.
We don't sponsor the Marinersanymore or the stadium and stuff
like that, but they're makingthat business decision.
Instead of there being twolines of offerings, we're
(28:59):
consolidating into one.
That's one example.
You have other insurancecarriers, like Nationwide, their
private clients and this isactually older than 30 days a
private client book of business.
They have not only decided toleave that business.
In 39 states across the UnitedStates, they're shutting the
(29:21):
entire division down.
They're not offering thatproduct anymore.
That means the million, 2million, 5 million, $15 million
homes that they were onceinsuring now has to go find
their own insurance with anothercarrier.
Yes, and I think all thenon-renewals will be done, I
think through October.
But think of that.
Think of the number of clientsin 39 states they have.
(29:41):
That's home, auto, umbrella,boats, yachts, motorcycles.
That's a big book of businessthat they've decided to walk
away from.
Wow, and going back into thelast 30 days, an insurance
carrier that you probably knowand hear a lot of it might be a
person by the name of Flo.
Judy Gratton (29:57):
One thing I don't like are the commercials.
Douglas Olson (29:59):
In your world.
This is important for yourviewers to be aware of, and all
of this is Google-able, by theway.
So this isn't I'm just sayingsomething, I'm being very
careful Progressive.
You might've heard of thatcompany and Flo's Advertising.
They recently announced thatthey've made the business
decision to no longer offerinsurance for any investment
(30:22):
properties across the entirecountry at all coverage.
So let's say you had a primaryhome and a condo in Arizona or
another home in New York orwhatever.
Nope Cannot offer that anymore.
They're canceling all thosepolicies, are going to not renew
them and we cannot offer those.
(30:43):
So they only effectively say Ionly want the primary home, the
auto and the umbrella and thetoys we'd want yeah, so they
just don't have as many policies.
Yeah, so if you're paying out adollar five for every dollar you
bring in, you're losing money.
Yeah, so as they look at theirbook of business and they look
at where are we bleeding themost, and if they cut that off,
(31:05):
maybe they're down to 95 cents.
So now they're going back inthe right direction.
So they may be doing that andwe started to touch on this a
little bit but when you alsohave insurance commissioners,
when you have an insurancecompany saying I need 28%,
that's how much we've paid outin lot.
We need 28% to at least breakeven with these current rates,
(31:27):
and you have an insurancecommissioner's office say no,
you can only have 6%, what otherbusiness choice does a business
have if they keep going andthey keep asking these insurance
commissioners for the rate thatthey actually need?
We as consumers are not happyabout those rate increases, so
we go shopping when we see thoserate increases.
Let's be fair, totallyunderstand all the elements that
are involved here, but if theinsurance commissioners offices
(31:50):
are saying no, you cannot dothat.
What other decision does aninsurance company have other
than start reducing what theyfeel is acceptable in their
underwriting guidelines andreduce what they're willing to
take on and you could look atCalifornia as a great example.
They're being forced to pay forthings after they've already
taken the insurance premium andthey've got all these agreements
, and now there's changeshappening where now they have to
(32:12):
pay for losses that they didn'teven get premium for.
That's why you have insurancecompanies leaving markets.
All of these elements we'retalking about how we've done a
poor job in underwriting, aswhen I say that, I just mean if
I only have to answer my name,phone number and address and
what kind of insurance I wantand I could get an insurance
quote and pay for it, that'sprobably not as effective as do
(32:34):
you have dogs in the house?
Are there kids in the house?
Do you have a pool in thebackyard?
We could keep going with thelaundry list of things, but if
you're not asking and answeringthose questions, are you really
getting an insurance productthat's generating the correct
premium for that risk?
And so all of these elementsare coming into.
This is why you're seeing,across the entire country,
(32:54):
insurance companies makingdecisions to pull back on what
they're willing to insure, leavethe industry in certain sectors
, whatever the case may be, andwe're still seeing consistent
increase in rates because, atthe end of the day, insurance
companies do have to at least beable to provide us a check on
claim day, and they need acertain dollar amount in the
(33:14):
kitty to be able to do that.
Dennis Day (33:16):
Can I ask a question about kind of the consumer side
?
Yeah, my insurance home andauto is on a six month cycle.
Yeah, so let's say in January Irenew my insurance policy,
everything's fine, and then myinsurance company says, hey,
we're not in this market anymore.
Douglas Olson (33:42):
Do I have my coverage till the end of that
six month cycle or is it justgone?
That's a very good question andremember early in the
conversation we used I used thisword called contract.
That contract bounds them tothat, what we call the term, the
amount of time that they'veextended to you and you've
accepted you are covered as thatpolicy.
The only way they can legallychange that is you call in and
(34:05):
say I need to add a car or Ineed to make adjustments to my
coverage.
The contract is the contractuntil you trigger the change.
Dennis Day (34:13):
Okay, thank you, because I was a little scared
that they were holy moly.
Judy Gratton (34:17):
That's what oh good, and it's been such.
Douglas, I'm so grateful thatyou joined us and spent this
time with us, and thank you.
Dennis Day (34:27):
Thank you.
Judy Gratton (34:28):
Thank you, I'm sorry, it went long.
Don't be sorry.
Like I said, we could do thisall day on this subject.
Dennis Day (34:35):
So if someone wanted to find you, Douglas, what
would they do?
Phone call, email.
Douglas Olson (34:40):
Whatever is their preference.
I'm on LinkedIn, like most ofus are.
I'm assuming Judy will provideall my information Information,
yeah, okay.
Thank you both.
Dennis Day (34:52):
Douglas Olson, thank you so much from USI.
Douglas Olson (34:56):
This has been fantastic.
Nobody has an insuranceheadache now need Advil.
Dennis Day (35:01):
I'm getting there.
Thank you for watching and orlistening.
Hope to see you soon.
Take care, bye.
Hello, all this is Dennis Day, with Getting your
Edge, how to Downsize your Homeand we have a fantastic show for
you.
Thanks for showing up.
I'm here with my co-host, judyGratton.
Welcome, judy.
Judy Gratton (00:13):
Good morning on this wonderful spring morning
glooming and the daffodils arecoming out.
Dennis Day (00:27):
It's pretty nice after some of that the gloom and
doom that we have to live with.
So this is really nice and Ihave a fantastic guest for you
today.
This is Douglas Olson and he iswith the USI Insurance Service.
They are the sixth largestinsurance service in the nation
and he is here to talk about ahot topic insurance.
(00:51):
Surprisingly enough, he's goingto talk about insurance, and
there's a lot in the news latelyabout insurance.
Welcome, douglas Olson.
It's great to have you here.
Give our listeners and viewersa little background about you
and your company, usi, and yourexperience in the insurance
industry.
Douglas Olson (01:10):
My name is Douglas Olson.
I am a salaried employee forUSI Insurance Services.
Usi Insurance Services is anindependent insurance agency.
We have about 600 companiesthat we can provide to clients
throughout our company.
Independent agency is a prettyimportant distinction to
(01:30):
understand.
You probably think of the wordbroker, where we can go look at
a whole bunch of companies, butwhat a broker really does is
they just hand you off to thatcompany, they get a finder's fee
and they go back to the nextclient.
So your relationship is thenwith that insurance company that
you chose as an independentagency.
We are developing therelationship together.
(01:51):
So let's say, in four or fiveyears your situation's changed.
Now you're investing in buyinga whole bunch of properties and
now the company that isprotecting you probably doesn't
fit your needs, or you're doinga lot of traveling, or you're
downsizing or whatever the casemay be.
We still have our relationship,we can still help you and maybe
we move you to another carrier,and now the relationship hasn't
(02:11):
changed.
Just the company that's givingyou those protections are
changing and what we doeffectively is we try and
understand what your risks are.
So we have a holistic approachthat we do.
We have a proprietary system of150 years of claim history
where when we ask you somequestions, we literally have the
data and information andanalytics to back up what our
(02:31):
responses are and we offer youways to reduce those risks.
Then the byproduct iswhatever's left over, let's find
the insurance carrier that fitsyour needs the best.
I want to be as knowledgeableas possible so that I can be an
advocate for those that I help.
Dennis Day (02:47):
Douglas is our expert today.
Judy Gratton (02:49):
With everything that has been going on and
insurance companies leaving thearea.
Douglas, can you give us youroutlook on just an update of
where we are in our country?
I know that's a big question,but with all those fires in Los
Angeles and now they're in SouthCarolina and North Carolina and
tornadoes and shoot we almosthad a tornado here yesterday.
(03:12):
So what's happening?
Because people think that theycan rely on their insurance for
these events.
Douglas Olson (03:22):
That is an open loaded, got all kinds of answers
and there isn't a correct one.
There are several.
So forgive me, but I think theeasiest way to explain it is
probably give ourselves a nicesoft landing spot to think
through, and that would be thefollowing All of us, all three
(03:43):
of us here and those that willbe viewing this are going to be
a consumer at some level.
We as consumers, our moodsadjust, our demands change and
our outlook continues to adjustas each day goes by.
Why am I mentioning us asconsumers?
Because if we really are honestand we look back at the last 20
(04:03):
years of what we as consumershave asked insurance companies
to do, it's cheaper, faster.
You have to be honest aboutthat.
And what does that mean for theinsurance companies?
Well, of course, they're goingto oblige means they have found
(04:28):
ways to be efficient, which iswonderful.
There's nothing wrong with that.
But along the way as they'vedone that, what normally happens
is because consumers havebecome so price driven in, the
insurance companies are notoffering advice, because if they
offer the wrong advice to oneperson, they now have to cover
it for every one of theirclients.
(04:49):
You have to understand there'ssome legalities on the insurance
side that they have to dealwith.
They are a business.
They are an entity controlledby every insurance commissioner
in every state, responding asthe client wants by providing
less expensive products, askingless questions to push that
product to the client andaccepting your money.
(05:10):
What insurance is a contract?
If you sign your name and payfor a contract, you're bound to
that contract and that's why I'mbringing this up.
The challenge here is what wehave done as consumers, by
asking for faster, cheaper.
So in that process, with theinsurance companies not
(05:31):
explaining what those coveragesare and why there are
differences, now consumers arebuying a product that probably
is not protecting them the waythey believe.
They just assume and I'm goingto use the words we don't like
full coverage.
They just assume that's thecase.
But how can an insurancecompany that doesn't carry
(05:51):
inventory think about this train?
Loads of lumber.
They're not buying left frontfenders for 89 Mercedes 300
class cars so that they can havea less expensive fender than
their competitor.
Insurance companies are justwriting checks.
Let's be honest.
They're just trying to make uswhole when we've had that loss.
(06:13):
So that means they have nocontrol over the market.
They have no control over theweather.
They have no control overaccidents that occur or things
that go wrong accidents thatoccur or things that go wrong.
And then you add anotherelement, which is as an
insurance company.
In most days, remember, this isa 40,000 foot elevation.
Understanding, this is not fineprint, exactly how it works,
(06:36):
but let's pretend that we arecreating our own insurance
company.
That insurance company is nowgoing to have to show three
years of losses in our requestto increase insurance rates.
So, unlike a gas station or agrocery store selling eggs,
insurance carriers cannot dothat by law.
They must submit the request tothe insurance commissioner's
(06:59):
office, and that process cantake anywhere from three months
to 18 months, depending upon howin-depth that request is and
the back and forth that happenswith that insurance carrier.
Judy Gratton (07:09):
So we have to show three years of losses to even
do that.
Douglas Olson (07:13):
And there's a good reason for that.
Judy and I was trying to giveus a foundation have to show
three years of losses?
Would it be fair to you and Ias a consumer if in 2021,
grabbing completely fake numbersout of the air there were?
no losses and they just sentrefund checks to their clients
and then in 2022, they had abillion dollars in losses, more
(07:36):
than what they actually broughtin for insurance premium and
then tell that insurance companyyou can only look at the year
that you got the refunds toeverybody and that's how we're
going to tell you no on yourinsurance rates.
Or would it be more appropriateto have a three-year balance,
as you make this request, and alittle bit of a historical
perspective, where now you'rethinking about new modeled
(07:56):
vehicles that have come onto themarket with changes and safety
features and stuff like that,and they need to have that data
to know what is their realinformation?
What are they really paying outfor those vehicles or materials
and changes in buildingconstruction?
Judy Gratton (08:11):
Yes, from my point of view as the consumer
insurance, the way I envisionedthat it ran is that because all
of us are paying into this fundand not all of us will need the
money at a certain time, thatallows them to make whole people
who are damaged based on whattheir policy provides, on what
(08:40):
their policy provides.
And here I am in real estate andtell people to sell and make
sure that they've got their,that they read the contract, but
I can promise you I did notread my entire insurance policy.
It shocked me because I heardDouglas speak at another event
when you told me that if you doupgrades to your home, you're
supposed to let your insurancecompany know that, because all
these years I thought we hadfull replacement coverage and
(09:05):
I've asked my husband multipletimes and we never told them
when we totally remodeled thedownstairs or put solar panels
on the house, any of theimprovements that might have
changed the value on the home,and I'm like, oh my gosh, how is
that going to fly?
That was really eye-opening whenyou said that.
(09:26):
So it's these kinds of thingsthat I don't think people
understand at all and I thinkmaybe people in places like
California, where all the fireswere, are having rude awakenings
when they're going to, first ofall, the insurance companies, I
think are backing out of statesthat they can't afford to cover
(09:50):
.
Because that am I right on whatmy role model, my head, is that
the money comes in from all ofus, eh, and then it goes out
accordingly to the people.
Who is that basically how thethey don't make money anywhere
else?
Douglas Olson (10:08):
No, let me answer your first question.
You have a pretty goodunderstanding of how this is
supposed to work, so pleasedon't adjust that.
I'm adding to that knowledge.
I hope that makes sense.
Yes, of course we all pay into,just for simplicity, a big
bucket of money, and when thingsgo wrong, we expect the money
is going to come out Okay, as wewere talking a moment ago, it's
(10:30):
contractual right, as consumershave asked for cheaper, faster,
along.
That way, we do care about howmuch we pay for taxes and so
every year, every town, everyenvironment, they all have to
make budget decisions on whatthey're going to do.
So we also have to bring intothe element of how are we
(10:52):
managing our forests?
Now, how are we allowing housesto be built on the side of a
mountain, next to a river thathasn't flooded in 100 years,
which means probably that mightnot be the best idea, but we are
trying to allow a lot of whatwe want to do as humans to be
(11:12):
done, and so they try and putthings in place to allow us, as
humans, to do those things.
We are not necessarily wrong inwhat we're trying to accomplish
, but we must be careful and beaware that if we used to do fire
breaks and we used to managethe forest.
And the easiest way to explainit.
This isn't factual because Idon't have it in front of me,
(11:34):
but there's a great point ofreference.
Before 1900, we used to loselike 2 million acres of forest
land a year.
Then we started managing theforests, that acreage reduced by
about 80% of our loss on anannual basis because we were
managing the forest, both in howwe were logging it, how we were
(11:54):
creating roads, how we wereprotecting the environment, all
of these things that were beingdone as we build more and more
houses closer and closer inthese denser forest lands.
Let's be honest, right?
So if you go back to 1900, wedidn't have the technology and
the ability we have today.
We didn't have airplanes, wedidn't have helicopters, we
didn't have a lot of the stuffthat we have today.
(12:15):
So I think what you're going tosee is you're going to see a
retraction on some of this,because we do have to figure out
if we are going to allow thefire department let's talk about
this for a quick second Ifwe're going to allow a community
to push back on those that havebeen voted into positions to
help us better our environmentor position.
(12:36):
And let's talk about water lineshere for a second.
We cannot then be mad when ahundred houses burn down that
are on that same water pipe thatthe fire department needs to
use.
And if we are honest and wethink about this for just a
second, I know there's loss.
I'm certainly not trying tolessen that, but we also do have
(12:57):
a responsibility as we calmlywalk through a loss.
If 100 houses have burned tothe ground, that means all those
shutoff valves for toilets,sinks and the main water main
coming into that house has beenmelted so that water is flowing
at full capacity out of thatpipe.
(13:17):
And now you multiply that by100 houses 10 houses, 20 houses,
15 houses how do you think thefire department is going to have
water pressure when theyconnected that fire hydra?
Judy Gratton (13:28):
Think about that.
But in our business, in realestate, what I have noticed in
terms of insurance, for instance, we sell some condominiums down
in Long Beach, Washington.
I started getting calls frombuyers saying I can't get
insurance.
So I started reaching out toinsurance companies, and I won't
name names, but there was onelarge one who came back to me
(13:52):
and said, oh, right now we'renot insuring any condos.
I went what?
What?
I mean, that's a whole industrythat people, especially
first-time homebuyers, are goinginto.
And they did call me back threeweeks later and said oh, we're
back to insuring condos, but theidea that an insurance company
(14:13):
wouldn't insure something asbasic as condominiums the
particular condos that we sellare older.
They're within what do you say,Dennis?
Maybe 200 yards of the ocean.
Well, maybe more than that, Notmuch, though, and they don't
have fire sprinklers.
So we're running into massiveamounts of insurance on that
(14:36):
because it's almost uninsurable.
There are many companies whowon't insure, and that's a shock
, and I think people who arebuying, maybe even just general
homeowners, especially inCalifornia, when they started
receiving notices that theirinsurance was canceled.
So what's going on?
First of all, it's notnecessarily had anything to do
(14:59):
with weather Fire sprinklers.
That's just something theydidn't have before.
Another one I ran into was knoband tube wiring electrical
wiring.
A lot of insurance companieswill not insure around that.
So there are things out therethat I don't think people
realize until they're stuck thatit's something they need to pay
(15:23):
more attention to.
I think that's really why wehad you on here, is that you
need to explain to peopleInsurance is not just a one and
done thing, which I've done Oneand done with a company since
we've owned this house.
Now I'm petrified to call.
Douglas Olson (15:40):
You're bringing up a lot of amazing points, judy
, and I'm really glad you'resaying that, because it
humanizes this boringconversation known as insurance.
So I encourage you to continueasking those types of questions
and bringing that dialogue intothis, because on our side, what
we also have to worry about isthe environment.
And when we talk about theenvironment while we're not
(16:00):
going to be talking about isthere a global warming or is
there not global warming Are wemaking mistakes?
Are we not making mistakes?
I think I've alreadyarticulated we, as human beings,
can go both ways.
We can make some very goodprogress forward and we can also
make some unfortunate progressin another direction.
We're humans.
We're learning as we go.
That said, the insurancecompanies, as we talked about a
(16:22):
few moments ago, they have towait three years to show the
losses.
So when I say that, I don'twant you to think that they just
they have to stop.
They have to wait every threeyears, on an annual basis, but
they have to.
One of the requirements is toshow three years worth of
history, and they also get theopportunity to project.
And where are those projectionsgoing to come from?
(16:43):
They're ingrained in ourcommunities.
They're going to the councilmeetings.
They're going to Olympia for ushere locally.
They're going to Olympia andlistening to the Senate have
these debates and what they'regoing to do and how they're
going to spend our tax dollarsto do certain things.
And if they start hearing we'regoing to get rid of 50
full-time fire departments inthis particular area because we
(17:04):
can't afford the budget and turnthem into part-time.
Let's think about that on theinsurance side for just a moment
.
The risk must go up.
A hundred fold.
Judy Gratton (17:14):
probably Every one of those that you take out
rises the risk.
Dennis Day (17:19):
Yeah.
Judy Gratton (17:20):
And especially for the people that live in those
areas.
Would that be correct to say?
Douglas Olson (17:24):
Yeah, let's just pick on one person.
Let's say the captain of thatfire department.
That captain might be retired,that captain might have a full
time job.
He or she might have anotherjob on the side right, because
we're not having fires on adaily basis, we're not having
automobile accidents on a dailybasis in certain areas where
they're having these budgetconversations and are pulling
(17:45):
back.
That person might be 40 minutesaway, but you need them right
now.
Also a product out there that weuse quite a bit, or a reference
point, which is a protectionclass, and that is what some of
(18:05):
your clients are coming upagainst.
So the protection class inWashington State is something
that WSRB helps us keep track of, and that's what we're just
talking about.
You might have a community saywe can't afford to pay for four
full-time fire departmentbuildings, full staffed.
We need to take two of them andturn them into part-time.
That might save a milliondollars a year.
I'm not sure what those numbersmight be for that group of
individuals, but now, for every15 minutes a fire is burning,
(18:31):
it's costing the insurancecompany at minimum.
So be clear at minimum $100,000for every 15 minutes.
So if a full-time firedepartment as soon as they get
the call they're all jumping.
They might take two and a halfto three minutes to be in the
vehicle and moving down the road, versus all the part-time folks
(18:51):
have to come from their home ortheir workplace to get to the
building, to get one of theengines up and running, to get
the doors open, to get out.
That might be 15 minutesdifference.
That's not to say that's a badthing, but we have to be
realistic and know that as soonas that fire is known, most of
the time fires have been goingfor a little bit.
(19:12):
So that client is probablyalready going to cost the
insurance company $200,000 inloss.
It's not just the fire.
What damage is being done bythe fire hoses as they're trying
to knock that out?
What damage is being done towindows or roofs as they open up
to try and knock that fire out?
Oh, and what's this thing thatfires produce?
(19:33):
I think it's called smoke.
So then there's this thingsmoke damage that goes through
the home.
And now all the electronicshave to be replaced.
You can't fix those.
The furniture is going to bereplaced, the carpeting, your
clothing.
The damage isn't just what thefire does, it's also what the
smoke does.
All of this to just say you're100% spot on, judy.
(19:54):
You're 100% spot on, judy, theway that this works today.
If insurance is not a priorityon protecting the 30, 40, 50
years the first three years,whatever it is that you've been
building your assets and workingyour tail off to have a way to
retire in a blink of an eye, ifwe aren't having an honest
(20:15):
conversation with an insuranceadvisor to make sure that the
product that we have in place isactually going to do what you
want it to do on claim day andas carriers leave the market.
Let's touch on this for just aquick second.
We are talking about us here,locally.
We are talking about California, but the Senate and I think it
was May of 2024, theyconsolidated is probably the
(20:39):
right way to say it.
What we're just now discussingon how many of these policies
are being non-renewed.
So non-renewed means we'vedecided to leave the market, or
your maintenance clause issaying that your home is not
maintained the way we wish.
You don't have the debrisremoved from around your house.
You got cars on blocks parkedin your front yard.
There's multiple reasons whysomeone would be non-renewed.
Judy Gratton (21:01):
See, I don't think , and that's I keep coming back
to.
This is why people need to hearwhat you're saying, because I
didn't think about this Not thatI have cars on blocks in my
front yard, I didn't think aboutthat.
I would never have thoughtabout that.
I just thought I have a policy,something happens, you're going
to pay, and then recently usedmy policy.
(21:21):
I wish I hadn't, but it was afight with and I was angry and I
know people get that way and Ithink we need to pause here and
have a reality check of reallywhat insurance is and what we
can expect of it and how it'schanging today.
Like you said, they're movingout of markets.
You mentioned and I won'tmention the name again.
(21:44):
You can't think it's okay, butthe losses that one very large
company took was it 2024, 2023?
It was a massive amount ofmoney and I was amazed at how
much money they lost in a year.
Douglas Olson (22:03):
So I'm going to give you two answers to that.
Judy One, the company's name isState Farm.
They are the largest insurancecompany in the United States.
They're a fantastic company.
There's nothing wrong with thatcompany in any way, shape or
form.
I believe they insure 11% ofevery vehicle on the roadway in
the United States, to give youan idea of their size, and there
(22:25):
are thousands of insurancecarriers Mine might be a little
under.
Maybe they're at 13%.
I haven't looked at the currentnumbers as insurance companies
buy other insurance companiesand stuff happens.
The reason that I bring them upspecifically is because I like
to use them as a safe barometeron what's happening in the
insurance industry.
Because if I say number twohere, which is the insurance
(22:47):
industry as a whole, isn't a badplace, what does that mean?
That means for every dollar, aconsumer has paid an insurance
premium.
So if we put all insurancecompanies into a singular bucket
this is not accurate as oftoday, but it's a general
understanding for us to havethis conversation the average
for the entire industry that waspaid out was $1.05.
(23:09):
So that means for the last 7 to10 years, the insurance
industry has been writing morechecks out than they've been
taking in for insurance premium.
The reason I mention State Farmis because they were in the
billions of dollars inunderwriting losses for multiple
(23:30):
years in a row.
Now it's also a businessdecision.
And what does that mean?
Row Now, it's also a businessdecision, and what does that
mean?
So as a point of referenceagain, this is just 40,000 foot
elevation.
To make the math easy for allof us, the perfect world would
be for every dollar I bring inas an insurance company, I'm
only spending 70 cents foreverything advertising losses,
(23:52):
lawsuits, claims, buying otherinsurance companies.
You name it because I need toreinvest, because what we should
be doing is reinvesting that 30.
Because we need that bucket ofmoney to be a much bigger bucket
of money for the unknownenvironmental losses that we're
going to have or thecatastrophic unplanned losses.
We can't just think fires.
(24:13):
Think of what hurricane damagedoes oh, hurricanes, floods,
fires.
Yeah, you got it.
And then, as we allow ourselvesto build homes closer to these
areas or saturate those areaswith how we're building things
now, the insurance companies areon the hook.
If you pay $2,000 a year foryour home insurance and you
(24:34):
actually do an analysis and yougo line by line and you look at
how that coverage actuallyresponds for you on claim day,
you're more than likely getting$4 million worth of coverage
overall.
Now you're not going to get acheck for $4 million because it
depends upon the type of lossand some of the money goes this
way, some of the money goestowards that and so on.
But really that exchange for $4million in coverage for $2,000,
(24:57):
it's a pretty good exchange.
I think we can agree to that.
As we were mentioning theinsurance industry, if they were
only spending 70 cents, theycould reinvest that 30 cents and
have this extra bucket of moneyso that when things that are
unplanned or that they couldn'tproject, for example, a
hurricane, a tornado fire, anearthquake, and so that's what
(25:20):
that's supposed to do.
I'm hoping what you'reunderstanding through that is
that the insurance industry forseven plus years has not been
able to do that in anunderwriting format the way
they'd like.
Judy Gratton (25:32):
Also, Perfecting the bucket.
Douglas Olson (25:34):
Yeah, absolutely In the early 2000s.
We had this thing calledmortgage challenge in the early
2000s through 2010.
Is that right?
Judy Gratton (25:45):
With getting affordable insurance.
Douglas Olson (25:48):
No, I'm talking about.
We had a lot of banks that wereclosing on Fridays.
Dennis Day (25:52):
We had to bail out General.
Judy Gratton (25:54):
Motors, you know to fail 2006 through about 2010.
Douglas Olson (26:00):
So the reason I like using this as a reference
while we had this happening itdidn't happen overnight, would
that be fair?
There were a lot ofundercurrents that probably
developed that and it reared itshead through 2006, 7, 8, 9, and
we finally got rid of it in 11.
Think of how many mortgagecompanies aren't here anymore
because it's that time, or banksthat are now owned by somebody
(26:22):
else and we had to change theguaranteed FDIC from 100,000 to
a quarter million because of somany failures.
Please think of the insuranceindustry as being in that 2003
through 2005 era.
But the difference here is theinsurance industry is not too
big to fail, but they've beenpretty smart.
They have buckets of money.
The problem is they're drainingthe money, so are we going to
(26:43):
have to bail them out?
No.
Are insurance companies goingto make smart decisions?
Yes.
And let's be honest, if we goback and look at the mortgage
industry during that time, oneof the jokes which is accurate
is if you could go and breatheon a mirror, you could get a
mortgage.
It was true.
Judy Gratton (26:59):
Yes, absolutely true, and the sad thing was most
of those people that were onlyalive didn't get to keep those
houses.
Douglas Olson (27:05):
Yeah, and the only reason I bring that up is
this is a point of reference.
If we went back in the timemachine to 2022, imagine your
dining room table and you'reinviting over your friends and
your family and you have decidedyou want to cover your table
with all of their favorite foodsand beverages the whole table
(27:27):
and you've invited them over andnow they can choose what they'd
like.
Imagine you now as theinsurance company.
That's what insurance companieswere doing.
They were trying to take onevery single risk if you were
willing to pay the premium.
Okay, now let's fast forward towhere we are in today's
environment.
The reason you're seeing somany non-renewals or insurance
(27:51):
companies leave industries orleave certain risk areas is
they're having to retract and go.
I have to cut out this type ofrisk If I want to stop this
excessive bleeding.
We cannot continue.
They are a business.
If you think of your own budgetand you're spending $100,000 at
(28:14):
Costco a year, but you're on a$10,000 budget, you gots the
problem.
So what I'm getting at here isnow the insurance industry,
every single insurance carrier.
Where they had a dining roomsized appetite today, it shrunk
down to just a dinner plate, andthat's why you're seeing no,
(28:38):
we're not going to do condos.
We now have insurance companiesbeing absorbed by other
insurance companies.
You've probably heard thatSafeco, who's owned by Liberty
Mutual, is now being absorbed byLiberty Mutual.
We don't sponsor the Marinersanymore or the stadium and stuff
like that, but they're makingthat business decision.
Instead of there being twolines of offerings, we're
(28:59):
consolidating into one.
That's one example.
You have other insurancecarriers, like Nationwide, their
private clients and this isactually older than 30 days a
private client book of business.
They have not only decided toleave that business.
In 39 states across the UnitedStates, they're shutting the
(29:21):
entire division down.
They're not offering thatproduct anymore.
That means the million, 2million, 5 million, $15 million
homes that they were onceinsuring now has to go find
their own insurance with anothercarrier.
Yes, and I think all thenon-renewals will be done, I
think through October.
But think of that.
Think of the number of clientsin 39 states they have.
(29:41):
That's home, auto, umbrella,boats, yachts, motorcycles.
That's a big book of businessthat they've decided to walk
away from.
Wow, and going back into thelast 30 days, an insurance
carrier that you probably knowand hear a lot of it might be a
person by the name of Flo.
Judy Gratton (29:57):
One thing I don't like are the commercials.
Douglas Olson (29:59):
In your world.
This is important for yourviewers to be aware of, and all
of this is Google-able, by theway.
So this isn't I'm just sayingsomething, I'm being very
careful Progressive.
You might've heard of thatcompany and Flo's Advertising.
They recently announced thatthey've made the business
decision to no longer offerinsurance for any investment
(30:22):
properties across the entirecountry at all coverage.
So let's say you had a primaryhome and a condo in Arizona or
another home in New York orwhatever.
Nope Cannot offer that anymore.
They're canceling all thosepolicies, are going to not renew
them and we cannot offer those.
(30:43):
So they only effectively say Ionly want the primary home, the
auto and the umbrella and thetoys we'd want yeah, so they
just don't have as many policies.
Yeah, so if you're paying out adollar five for every dollar you
bring in, you're losing money.
Yeah, so as they look at theirbook of business and they look
at where are we bleeding themost, and if they cut that off,
(31:05):
maybe they're down to 95 cents.
So now they're going back inthe right direction.
So they may be doing that andwe started to touch on this a
little bit but when you alsohave insurance commissioners,
when you have an insurancecompany saying I need 28%,
that's how much we've paid outin lot.
We need 28% to at least breakeven with these current rates,
(31:27):
and you have an insurancecommissioner's office say no,
you can only have 6%, what otherbusiness choice does a business
have if they keep going andthey keep asking these insurance
commissioners for the rate thatthey actually need?
We as consumers are not happyabout those rate increases, so
we go shopping when we see thoserate increases.
Let's be fair, totallyunderstand all the elements that
are involved here, but if theinsurance commissioners offices
(31:50):
are saying no, you cannot dothat.
What other decision does aninsurance company have other
than start reducing what theyfeel is acceptable in their
underwriting guidelines andreduce what they're willing to
take on and you could look atCalifornia as a great example.
They're being forced to pay forthings after they've already
taken the insurance premium andthey've got all these agreements
, and now there's changeshappening where now they have to
(32:12):
pay for losses that they didn'teven get premium for.
That's why you have insurancecompanies leaving markets.
All of these elements we'retalking about how we've done a
poor job in underwriting, aswhen I say that, I just mean if
I only have to answer my name,phone number and address and
what kind of insurance I wantand I could get an insurance
quote and pay for it, that'sprobably not as effective as do
(32:34):
you have dogs in the house?
Are there kids in the house?
Do you have a pool in thebackyard?
We could keep going with thelaundry list of things, but if
you're not asking and answeringthose questions, are you really
getting an insurance productthat's generating the correct
premium for that risk?
And so all of these elementsare coming into.
This is why you're seeing,across the entire country,
(32:54):
insurance companies makingdecisions to pull back on what
they're willing to insure, leavethe industry in certain sectors
, whatever the case may be, andwe're still seeing consistent
increase in rates because, atthe end of the day, insurance
companies do have to at least beable to provide us a check on
claim day, and they need acertain dollar amount in the
(33:14):
kitty to be able to do that.
Dennis Day (33:16):
Can I ask a question about kind of the consumer side
?
Yeah, my insurance home andauto is on a six month cycle.
Yeah, so let's say in January Irenew my insurance policy,
everything's fine, and then myinsurance company says, hey,
we're not in this market anymore.
Douglas Olson (33:42):
Do I have my coverage till the end of that
six month cycle or is it justgone?
That's a very good question andremember early in the
conversation we used I used thisword called contract.
That contract bounds them tothat, what we call the term, the
amount of time that they'veextended to you and you've
accepted you are covered as thatpolicy.
The only way they can legallychange that is you call in and
(34:05):
say I need to add a car or Ineed to make adjustments to my
coverage.
The contract is the contractuntil you trigger the change.
Dennis Day (34:13):
Okay, thank you, because I was a little scared
that they were holy moly.
Judy Gratton (34:17):
That's what oh good, and it's been such.
Douglas, I'm so grateful thatyou joined us and spent this
time with us, and thank you.
Dennis Day (34:27):
Thank you.
Judy Gratton (34:28):
Thank you, I'm sorry, it went long.
Don't be sorry.
Like I said, we could do thisall day on this subject.
Dennis Day (34:35):
So if someone wanted to find you, Douglas, what
would they do?
Phone call, email.
Douglas Olson (34:40):
Whatever is their preference.
I'm on LinkedIn, like most ofus are.
I'm assuming Judy will provideall my information Information,
yeah, okay.
Thank you both.
Dennis Day (34:52):
Douglas Olson, thank you so much from USI.
Douglas Olson (34:56):
This has been fantastic.
Nobody has an insuranceheadache now need Advil.
Dennis Day (35:01):
I'm getting there.
Thank you for watching and orlistening.
Hope to see you soon.
Take care, bye.
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