Agency Perspective by Bryan Carroll

To be Preferred or Profitable? That is the question.

If you can believe it, I am thinking about profitability. We are looking to increase revenue, a simple idea. Everyone has a few clients on the books that deal in rental property. The majority of the properties do not look like the preferred risk property we love to show our underwriter. I propose they can be our most profitable line of business.

First, rental dwellings should only be written in the basic policy form. We need to think of limiting our risk when it comes to homes the owner does not occupy. Second, no coinsurance. The rate is nearly triple when compared to 80% or 90% coinsurance. Interestingly, I have found I am still competitive at the higher premium. We are required to run dwelling cost estimators on these properties as a course of business since August of this year. The estimate values have forced me to go to no coinsurance in order to do my job accurately. For the last year I have watched this line become more and more profitable as the higher coinsurance policies became a lower percentage of my book of business.

The issue most of us will face is getting these policies through underwriting. We proclaim KFB to be a preferred risk company? Are we as a company interested in perpetuating our image as preferred risk or writing profitable lines of business? My question stated differently, is would you rather have:

Option A
Ten rental homes insured at $40,000 each and costing on average $900 each with total premium $9,000.

Option B
One $400,000 preferred risk superior rated home at $1,400 premium.

To me this is a no real thought needed answer for option A. At the very least, do yourself and Kentucky Farm Bureau the favor of collecting the premium on the table. It is worth the argument to get these policies to issue. This is a profitable line of business when written this way. You may even consider a minimum deductible of 2,500? This makes the agent more competitive and takes a pile of risk away. This is probably not a new thought for some agents, but for me it was a game changer. I hope a few of my fellow agents can benefit as well.

Good Luck
Bryan Carroll
Agency Manager Boyd County


  1. Willie Colston LUTCF says

    Thanks Bryan for your insight and perspective!

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