Insurers use marketing to fill their niche

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By JODIE FAWL / Lincoln Journal Star

Other companies offer some of the same benefits of the new motor vehicle insurance plans being offered by Allstate, said Bob Marshall, owner-operator of Mid-Alliance Insurance Associates in Lincoln an independent insurance company.

“We’re all trying to be competitive and give a good product,” Marshall said. “Every company has their own way of marketing, They all want to fit the niche where they know they’re going to make money.”

Pricing auto insurance has become more complicated in recent years, Marshall said.

It used to be agents could ask a few questions about driving records, use of the vehicle, and age of the driver and then give a quote for auto insurance.

Today, profiling of customers determines the price of a policy, he said.  Auto insurance rates can be reduced by a good credit score.

Insurance companies believe people who handle money responsibly tend to be responsible drivers, according to the Insurance Information Institute Web site.

While banks look at a credit report to determine a borrowers ability to pay back a loan, insurance companies use the report to develop an insurance score which, according to the institute, is a measure of stability in a person’s life. Policyholders with the low insurance scores are more likely to experience insurance losses.

The Federal Fair Credit Reporting Act allows for the use of credit reports for insurance underwriting , said Bruce Ramge, chief of market regulation for the Nebraska Department of Insurance.

“Insurance companies have done data analysis that shows people who are responsible with their credit are less likely to file claims,” Ramge said.

Insurance companies look for the ideal customer who is less likely to file a claim, and agents look at financial information as one way to find them, Marshall said.

“I can’t just pull out a book and give you a quote,” Marshall said. “I have to have a computer to compare various rating models.”

Customers should look for the best deal when buying, he said.

“When you look for auto insurance you need to shop around because there are so many variables,” he said. “Each situation is different. Depending on the right mix it can make a substantial difference in pricing.”