209: Insurance Struggles: The Perfect Storm

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Insurance may seem like a dry topic, but truthfully a storm is brewing in the world of insurance and it will impact everyone. In this episode we interview Marc Petersen who owns American Advantage – Petersen Group, a 2nd generation independent insurance agency in Wisconsin. His agency partners with 20+ of the leading insurance companies to offer home insurance at a competitive price. American Advantage doesn’t work for an insurance company, they work for their clients. That client forward attitude made Marc a great fit for answering all of our questions about the world of insurance. We are tackling the current challenges in the industry and what caused them. We are also learning all about 4 point inspections and what might cause a home to not be approved for insurance. This episode is full of information you need to be able to share with your buyers AND sellers! A big thank you to our community members and email list friends that collected insight from other insurance agents all around the country that we also shared in this episode. You can find Marc at aapetersen.com or email, marc@aapetersen.com.

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The following is a rough transcript provided by Otter.ai.

Marc 0:00
My house burned to the ground, you have the option to rebuild or take the cash and run.

Alissa 0:08
Like how close can we get and still get insurance.

Marc 0:13
Pick your segment of who you’re going after and go deep reinsurance and not to get insurance nerded out here, but about 70% of homes nationwide are underinsured.

Alissa 0:30
But I was able to prove it. I’m paying more, but I feel much better. Hi, y’all. Welcome to hustle humbly. It’s Alyssa and Katie. And we are two top producing realtors in the Baton Rouge market.

Katy 0:42
We work for two different companies where we should be competitors. But we have chosen community over competition.

Alissa 0:47
The goal of our podcasts is to encourage you to find your own way in business to stop

Katy 0:51
comparing yourself and start embracing your strengths. Hi, Alyssa. Hey, Katie. It’s episode number 209. Today we have a guest in the virtual studio. Mark Peterson and everyone who listens who’s been a listener may know his lovely wife Chelsea has been on the show three times. Yeah. So she’s our most repeated guests. And now we get to hear Mark, talk to us about insurance. So Mark, tell us who you are what you do, like your 32nd bio.

Marc 1:22
All right, yeah, that’s, that’s big shoes to fill. Yeah, my lovely wife is Charles Peterson. I have an insurance agency that we own. With my brother. It’s a second generation family agency. We are based out of Wisconsin. And we have 13 employees, we do about 50% personal lines, auto home and 50% commercial lines for businesses. But primarily, we are in the Midwest, we’re licensed in about 30 states, but primarily Midwest is our footprint. And I think the big thing is we are an independent agency. So as we get talking here, you’ll hear kind of my trends on that. So being an independent, we represent the client to the insurance company. So it’s a different way to look at it, as opposed to some agents work for an insurance company. And then that is their only company they represent. So yeah, we have a growing agency, it’s a lot of people. That’s kind of my bio.

Alissa 2:28
So y’all broker two companies.

Marc 2:31
Yeah. So we actually represent about 20 different insurance companies.

Alissa 2:36
I feel like that’s almost what you have to do whenever there are insurance struggles out there. Because if you’re limited to what one company can do, at least you have options to check others.

Marc 2:48
Big time, that is a huge piece to it. And we truly do represent the client. So if you have a claim situation, you know, we kind of go to bat for you. It’s not like, if the insurance company pays more money, it doesn’t affect us at all. So

Katy 3:02
yeah, that’s a great point. Because it’s sometimes hard. You’re in a struggle with your insurance company, if there isn’t an independent agent in there. Like if you just went to Allstate and bill your insurance, and then Allstate doesn’t want to pay your claim, like there is no one who’s there to help you with that process. Homeowners insurance can be a pretty dry topic, I would say. However, it’s so important and it’s becoming such a struggle in so many places. So we thought about getting like a local agent to us in Louisiana, but our struggles are different than your struggles. But I think there are struggles kind of nationwide about getting homeowners insurance. Are there any things that are specific to the markets that you service that you’re seeing as far as a struggle with getting a homeowner’s insurance policy in place?

Marc 3:50
Yeah, it’s it’s a wild time right now. You know, a kind of related to the home market with interest rates, you know, when interest rates are low, every there’s a lot of activity everyone’s looking to buy whatever the rates go up, everyone tightens up not as many sales you know, that whole that whole game and the insurance it’s the same way it’s they have hard markets and soft markets. So last 15 years, we’ve been in a soft market, insurance companies wanting to write business now take out coastal states, because that’s a different world. But you know, when I’m talking kind of more in the Midwest, insurance companies were making money, they wanted to continue to grow. Well, all sudden, a lot of storms hit building costs have gone through the roof. A lot of different factors, kind of like the perfect storm of now insurance companies are pulling back. And that’s exactly what you’re you’re saying there. Katie So, in the Midwest, we’re pretty blessed. You know, we have no coastal exposures. We have no wildfires in California. We have a good stable of regional insurance companies, which again is a little bit different. Some parts of the country only have the big nationwide, you know, insurance companies so We are pretty blessed in the Midwest. Now it’s it’s starting to trend where, you know rates are going way up, we have had some companies pull out. So it’s just an interesting time right now.

Alissa 5:12
I don’t know if you’re how much you’re following what’s going on in Louisiana, but we have had so many insurance companies pull out. We’re really struggling with our flood insurance, you know, being in a state that’s affected by hurricanes. And I mean, we’ve just been through the wringer with insurance, and this year has been when they have left the most. So it’s been very challenging. Yeah. And we’re

Katy 5:39
a couple of options. So when they tell you the price is this, you’re just like, okay.

Marc 5:47
Yeah, it’s a, again, it’s a wild time. And I feel bad for those states, because what are you going to do, you can’t force an insurance company to go in and offer rates and all that and, and the government kind of steps in I know, Florida has, you know, their state pool, or however that thing works? But

Katy 6:06
yeah, it’s hard. Okay, in your area. So it sounds like you’re in a kind of nice spot. I guess. As far as the threats to insurance. Do you have any obstacles to homeowners getting insurance in your area? Do you come across any problems? Or is it pretty smooth sailing, as far as there’s some options? So

Marc 6:23
you know, the obvious things like older homes, a big thing for us is galvanized plumbing. Do you guys have that? Where you are. So you know, homes with galvanized plumbing? Probably two thirds of our companies don’t want them. So you’re limited, right? They’re older furnaces, water heaters, stuff like that, is traditionally, you know, harder to place. The big thing right now is roofs. So I think I think about 45% of insurance claims on homes, is wind and hail. So that is a massive percentage of them. So in in in the Midwest lately, we’ve just gotten pounded with hail and tornadoes and storms and all that. So these insurance companies making major changes on underwriting for roofs, a lot of them once the roof hits age of 15 years or older, they could change it to like an actual cash value, meaning if it’s 20 grand, and we put a new roof on, and they say it’s 70% of its life is gone. Bill only pay 30% for the roof. So you got to really be careful on that. So that is definitely the main challenge that we’re having right now. And that’s gotta be nationwide.

Alissa 7:42
It is nationwide, we have had a few deals this year in our office where the insurance company said they wouldn’t insure it. But the roof was actually in really good shape. It just was in an area where there wasn’t a lot of trees. It wasn’t aged poorly. It was an architectural shingle. But because it was 16 years old, they just said

Katy 8:05
no, it’s just like a hard black and white. Yeah, on the age, even though

Alissa 8:09
it was in good condition. It was not leaking. Like there’s no reason to replace this roof right now.

Katy 8:15
Right? It does feel counterintuitive to go in and replace a roof. That’s fine. Yeah.

Marc 8:20
Right. It is very frustrating. And you know, we come across that often. And again, I think that’s where you go back to having an independent agent, because they have multiple companies that they check if you’re just going to stay farm and State Farm tells you the roof is they’re not going to do it. Well. That is what it is. So the independent agent really hopefully can have options.

Alissa 8:43
Yeah, and I had a situation recently where it was a first time homebuyer young couple we’ve really been struggling because the budget was low. And we’ve been looking and looking and we finally find this house that checks most of the boxes and the roof will probably need to be replaced in two to three years. And our biggest fear was getting insurance to close but then after closing the insurance inspector comes out and says, Hey, based on what we see you have you know, three months to replace your roof and she was like we like actually wouldn’t be able to do that. So what happens in that situation so I told her she needs to get someone on the phone at whatever insurance company they choose and find out what the policy is and she ended up fine she was transparent with everyone about the age of the roof and that it it’s not leaking we had an inspection but you can see see the age from the road and she found one that said if we come out and do an inspection we always give 12 months so that we give them time you know something but we I learned through that process that she talked to several different companies and some give three months notice some Give six and some gift 12. And so I was like, that’s interesting. I didn’t even know that

Katy 10:04
Mark, how many insurance companies go and put eyes on a roof when they write a policy? Is it pretty much everyone?

Marc 10:10
It’s it’s almost everyone now. And that’s changed in the last five years. You know, it used to be higher value homes, it used to be certain segments. And now it’s kind of they all do it. They all do

Alissa 10:24
it, what’s the timeframe on them doing it? Because it seems like we get the policy written, you know, maybe they 10 to 15 of our contract, and then we are closing 10 to 15 days later. But it seems like the insurance inspectors aren’t going out for maybe 60 days. And so homeowners are surprised after closing. So that’s it like, do you know if there’s the average timeframe that they have?

Marc 10:49
It vary so much, and that it is so frustrating on our side as being the agent because we think everything’s good, and some companies will do the inspection right away? And so I just had one that I think I issued, like last September, and it just came through. And now there’s a problem. And I said, how you’re literally what nine months? i Every insurance companies so different on their prices.

Alissa 11:14
And we’re I’m just now starting, I don’t know how often they were really going out in the years past. But I have noticed this year more than ever, my clients who I closed are getting contacted two to three months is what it seems after we

Marc 11:29
average. Yeah, nothing I wanted to mention is for real estate agents, the advising part on roofs, like you’re talking about is you know, if you guys can get ahead of of this, if you if you have a house that you can tell there’s an issue, you know, maybe advising right away, you’re either gonna have to replace this or let’s try to find something else. And again, that you know, there’s it’s tough conversation, but just being upfront with so many people try to get the sale and closing in these clients have these major problems with the insurance payable?

Katy 12:01
If you don’t tell your clients that that your roof was potentially going to be inspected by your insurance after closing, how would they ever know that? Especially repeat homebuyers? Right. Interesting. What about some of the other systems like do we’ve had, I’ve noticed where water heater age has become sort of like this hard thing to like, if your water heater is older than I think it was 40 years I had when I was like, oh, doesn’t matter if it works. It’s gotta go. Like we’re not going to insure this unless it’s it’s new. Are there like some kind of specific parameters on water heater or things like that?

Marc 12:37
Yeah, good question. And again, it’s it vary so much with every carrier, but if I had to say usually about 30 years is probably average on water heater, you know, anything older than that, there’s a high likely chance of something could go wrong. Yeah, but these companies in the last two years have just tighten up crazy. And again, they’re losing money. You know how insurance works. And this may be a good thing, someone can wrap their head around the premiums that come in. So for every $100, that insurance company brings in, they pay out about $60 of it for insurance claims. So they try to keep their claims under 60% of the premium they bring in. And then they have about 30 35% in administrative costs, you know, commissions, blah, blah, blah, about 35% of that, and they work on a 5% profit margin is pretty standard in the industry. So in the scheme of things, though, insurance claims are huge, and everyone thinks they make so much money, but their profit margin, if you looked at it is actually pretty low in comparison to like, Pepsi, Coca Cola has like an 18% profit margin, you know, if you look at it like that, it is thin.

Katy 13:45
Yeah. And they can’t control the price of build materials. So they sort of have to just adjust based on that. Right.

Marc 13:53
Yeah, big time. And that’s another big issue we’re having right now. So not only are insurance companies, you know, they’ve lost money last few years. So they’re raising rates, it’s kind of a double hit, because with building costs and inflation all that have gone through the roof. So the standard, you know, in our agency, that probably the average home cost is 400,000. We’re seeing probably 15 to 25%. increases on the coverage, we call it coverage a are your dwelling amount for insurance, so that 400,000 is going to 500,000. So not only are you getting a base rate increase, your your home value is going up,

Katy 14:29
they’re they’re valuing it 15 to 20%. Higher to like rebuild basically.

Marc 14:35
Exactly. It’s wild. And they’ve said that I think I think the numbers about 70% of homes nationwide are underinsured, and I probably believe it.

Katy 14:45
Yeah. Right. If you look at the value of your home and how much it went up in the last two to three years, that makes total sense to me, though, but could you rebuild? Who knows if you could rebuild it for that price or not? I’ll tell you a great story. So But Jay is a veteran, and we have access to USAA. So when we were building our last house, I called to get the quote for homeowners insurance from USAA. In fact, it was fine. The price was good terms, great. We pick the policy, and then they send like an update. And they’re like, Well, we had to change your home’s value based on the cost to rebuild, and we like aggregate data from nearby houses. So instead of it being $300,000 value, it has to be 500,000. And I call it and I’m like, but listen, I literally just built this house, like it just finished. So I know how much it cost. And it wasn’t $500,000. Like, you can’t tell me that it’s going to cost me $500,000 to build it when I just built it for 300,000. Like, I know, like I actually have the numbers. And they were like, well, that’s what we have to do. And I had to switch insurance because it increased my premiums so much. I’m like, This doesn’t make any logical sense. Wow. But I think that happens probably more now. Because they’re

Marc 15:59
just very often. Yeah, and unfortunately, a lot of agents try to skim on the coverage amount for premiums to get people in the doors and then what happens is these inspections come back on the back end and it goes up. So it’s a problem. And again, I think it’s going to take a few years to shift out and let the companies get back where they need to be to make money I guess or be insured properly.

Alissa 16:25
So I just redid all the insurance on our Tennessee cabin in Gatlinburg, because we bought it in January of 2020 right before everything shut down and paid 299 for it and then I probably added about 150,000 value to it. And then when the market just went crazy, I was getting all these offers real offers for like 850 908 5900 And so I had to go through this process with my insurance company because I was like because you know, they have fires at times and I wanted to make sure I wasn’t insured for 300 I wanted to be insured for 900 If something burned to the ground and I had to go through a little bit of a process to show that it was worth that much more in such a short period of time from buying it but I was able to prove it and so I’m paying more but I feel much better you know

Marc 17:24
Yeah, that’s a good that’s a good point and so with insurance home insurance everyone when you ask like hey what should we you know insure your home for everyone thinks market value and obviously that is what you think the house is worth but actually what insurance companies they don’t even really care about the market value they want to know house burned to the ground what does it cost to rebuild that that is you know, straight rebuild costs is what they look at so you know because part of your value you also have the land cost right and and that will always be there even if the house burns down so advising you know when people get a house it’s truly Hey, If this would burn to the ground what does it cost to rebuild the exact house not necessarily what you’re paying for it it could be it could go either way you know the rebuild process could be double what the market value is or vice versa but yeah, it’s a it’s a and that’s where an agent needs to advise you on

Katy 18:23
okay, I didn’t know that you could total a house like like you total a car right like I never even considered the thought that you would total a house right because every even with hurricanes every damage like with an insurance claim I’ve ever heard of like you repair even if you had a flood like we had all these houses flood locally in 2016 Everyone got whatever insurance they were gonna get and re build well, and when was Ida hurricane items 2021 I think I had clients who had a very small house on a very nice piece of property where when they bought it in fact Alyssa was the listing agent my buyers bought it from her so when they bought it I said this is great if you ever want to add on to this house it was just a small two bedroom house but on this really nice property in a nice location and like you could add on and definitely get your money back because of the comps and what’s around you. I think you could put money into this piece of land and you would get it back. Well their house a huge tree fell it was right by their bedroom window and for the record in our inspections I said you guys need to have these trees looked at they’re really close to the house this one over here not close to the house but was die dying dead have whatever lane you need and they had an arborist come like during our inspection process the seller made some concessions while they got the dead tree removed but the tree that was closest to the house wasn’t I guess all the way dead it was sort of like a keep an eye on it situation. Well during Ida this tree luckily they had gone to the neighbors because it fell where their master bedroom would have they could have and most likely would have been killed in this house.

Alissa 19:59
They just Got a feeling before it happened and grab the cat and store Yeah, in the middle of a storm

Katy 20:05
the they call their insurance. So the house the hate was around 200,000 when they bought it, okay, they call their insurance, the insurance comes in they’re like this house is is totaled, it’s gonna cost us more to build what you had and the value of like when you bought it, and they had to tear it down. And the insurance literally issued them a check to take to their mortgage company and pay off their mortgage. And so they own the land outright. And they had to go get like a construction loan like they that insurance was that was done. Yeah. And they started again. I mean, when they were fortunate they had those, they were able to do that. Yeah, financially speaking like they were qualified to get a loan, they built a bigger house. I just have you ever seen houses.

Marc 20:46
That’s a great story. And a great point, every state’s different Wisconsin, if house burned to the ground, you have the option to rebuild or take the cash and run you don’t have to rebuild. I know other states they make you rebuild. And it might depend on, you know, the local municipalities and stuff like that, too. But yeah, you can get a check and get out of town. And they could

Katy 21:10
have just paid off their mortgage and then, like sold the lot and then just left like they didn’t have. Yeah.

Marc 21:14
And Alyssa, this is also when you talked about your value of your house. That’s why you want your coverage A to be what you want. Because if you know or I say coverage, it your replacement cost on your house. If it burns to the ground, you don’t want to rebuild, you want the market value, you know, so at least there that coverage, a mound with what the land value could be as well. That’s a great point.

Alissa 21:36
Yeah, and it wasn’t an easy process. You know, I think they’re really testing you to see like, Are you sure you want you know, we we’re not going to increase everybody. But if you’re sure, I mean, there was a lot of hoops to jump through to get to get it upgraded. But it worked out. I

Katy 21:50
mean, that makes sense to me. Yeah. Okay. Do you feel there are a lack of carrier options? Like, I know your area maybe isn’t nationwide, though. Is it? Is it? Is it shrinking? Like the options for people for their insurance?

Marc 22:06
Yeah, big time. You know, there was just a big story in California State Farm and Allstate are not writing new homes. We have a regional carrier in Iowa, that’s not ready new homes, Florida, you hear every day that a new companies leaving in Louisiana. So it is again that we haven’t seen this type of a marketplace in the last 1520 years. And it there’s going to be pain everywhere. So yeah, it’s it’s a problem. Again, in the Midwest, we’re pretty lucky because we have a good stable of Midwestern companies that only write business in the Midwest, which traditionally, has been a safe spot. You know, for these companies. They always try to diversify the nationwide companies want Midwestern business?

Katy 22:56
And make some money? Yeah, right.

Marc 22:59
Right. Well, it’s and it’s funny is how insurance kind of works is insurance companies buy insurance is called reinsurance and not to get insurance nerd nerded out here, but they buy insurance, or the cost of the reinsurance that they’re buying is either not there or super expensive. So it’s, it’s really putting pressure on the main companies to underwrite better clean up their book of business, stuff like that. So, yes, are we

Alissa 23:27
seeing people get out like carriers leave a state because of an increase in natural disasters? Or just because of the increase in materials? Or is it a combination?

Marc 23:40
You know, it’s a combination of all that in home insurance specifically, and I’ll give you a great example, in our hometown, we got hit by a hailstorm. And it was insane. Every house in our whole city got a new roof. But what happened was the storm was like Friday night at 6pm. By Saturday morning at like 7am We had like 10 knocks on our door of the storm chaser contractors. So they’re on it like that, and they’re hitting every house. So rewind the clock 1015 years ago, hailstorm would rip through the people that knew they had damaged they’d get it they’d file a claim Well, now these guys are like forcing everyone to file a claim and if they have damaged rightfully so, but it’s just change it so the cost of the storms have just like tripled in cost of what these companies are

Katy 24:29
paying. It’s the predatory salesmanship of the roofer or the fence guy or the whoever that shows up after the storm the here when we had the flood it was all the people who needed to dry out your house, right? Like look, you still need it’s not like you don’t need the roof. But if your roof is not leaking, sometimes hail damage is it’s like it’s not black or white. It’s a little bit or a lot or like maybe they but it makes total sense that that behavior is then affected. It’s the same as locally. We have lots of purse single injury lawsuits for we have a lot of all of the advertisements you see locally, billboards TV, it’s all personal injury lawyers who are trying to encourage you to sue the insurance company when you’re in an accident. And so our car insurance is also really, really high. But I can see I never like put that together on homeowners insurance, it kind of makes sense, though. Same thing.

Marc 25:25
It’s kind of like Uber where they have surge pricing the price of this because there’s lack of contractors, you know, if a roof costs 20 grand now it’s 35. So it’s just, it’s wild. And, and also the lack of contractors out there. And I mean, again, we all know the issues that we’re having. It’s it’s a, it’s a wild time.

Katy 25:45
Yeah. All right. Talk to me about we’re gonna go back to the inspection thing on new policies. I’ve heard a little bit recently about four point inspection. Do y’all have that? Do some of your carriers require that I think in Florida, everyone out seems to be saying they have to get these four point inspections before they can get their homeowners insurance. Are you familiar with that at all?

Marc 26:07
So I have my Florida license. I like five years ago, I was all gung ho, he had some connections down there. I wrote about eight policies and had eight issues. So yes, I know four point inspections. Ish, they, you know what it’s they check off the roof. The four points is rouge, roof, HVAC, plumbing, electrical. So they, in essence, go in and look at those that give the insurance company a report,

Alissa 26:39
right? Some of our home inspectors here have even made it like an add on, where if you need a four point inspection, they will send you a separate document with just those items for you to send to the insurance company to get insurance, but I just started hearing about it

Katy 26:56
just hearing it here. So I’m not sure if there’s certain places. Yeah,

Marc 27:00
that’s pretty standard, I think. Yeah. So you know, that might be the trend as these companies try to do more underwriting, you know, outside of what they’re offering the upfront. So are there

Alissa 27:12
common things that you see happen to homes that people are surprised insurance doesn’t cover? We had situations recently, where flooding is different than like, a toilet leaking and flooding your home? You know, that’s not flood insurance, because that’s inside the home and not caused by a natural disaster or something like that.

Marc 27:35
Yeah, great question. And, you know, water is always a problem. How, you know, how did the water come in the house? You know, if it’s from a pipe leaking, pretty straightforward covered. But you know, in Wisconsin, I don’t, I don’t think you guys have basements. But in Wisconsin, we have basements common thing crack in the foundation, the basement water seeps in. Unfortunate, that’s something that’s not covered. So insurance companies are starting to add on different coverages for like inland flood, where again, I don’t mean to get too technical here, but you can buy coverage for these different water exposures now, which is awesome. They didn’t even offer it a while back. Another big thing is mold. I just had a claim where the attic of a house, it was not properly ventilated, or whatever. And there was the whole attic was full of mold and ended up being about 45,000 to clean it up. And the standard policy has 10,000 in property damage for mold. And that’s pretty straightforward across all insurance carriers. So mold can be, you know, a thorn in your side. You know, in the roofs. I think that also with the age of roofs if someone has an older roof, and they don’t know that the insurance company changed the coverage on them, because what happens is that like, not every company but a lot of them at 15 years or 20 years old, they will change it to what we call Actual Cash Value and they just send out

Katy 29:06
I guess you wouldn’t realize that happens they probably send you a notice but it just

Marc 29:10
they’ll send it in your renewal tucked on page three saying this change to Actual Cash Value meaning depreciation comes into play and it’s a terrible thing.

Alissa 29:22
Like you really have to review your policy every year. But know what to

Marc 29:31
know your roof ages and know how your company responds to roofs because that really is a huge pain point right now.

Alissa 29:40
I have a personal question to myself. For sure. Okay, so I have a few rental properties. And they were all bought at different times. And they are kind of spread out on which insurance company they’re with. It’s sort of a pain in the butt because you get, you know, notices, and I’m like, wait, which person was this? And who’s carrying this one? And pardon me, it was like, Maybe I should just get them all under one company. But then I thought maybe that’s a bad idea. Because if that one company has something happen, like, is

Katy 30:18
it better to have them diversify, diversifying her insurance?

Alissa 30:22
I don’t know. I don’t know what the answer is.

Marc 30:25
There’s no right or wrong. But what I would tell you is, it usually is best to put everything with one carrier. Ease in mind everything you know. So again, in the Midwest, we have regional carriers that have true package policies. So you have one effect, the date, your auto, your home, your rental properties, your umbrella are all on one policy, which makes it just so easy. But it doesn’t have to be I think the thing you should be concerned about is making sure you have an umbrella policy. And again, not Yes, making sure your umbrella policy goes over all of your rental properties. And sometimes carriers will not allow that if they’re not with the same insurance company. Oh, so that is kind of the rub, why we always want it to be with one company to make sure your coverages flow back and forth.

Alissa 31:13
Okay, makes sense that I’ll go check on that right now.

Katy 31:16
Okay. I have, I think my last question, it’s more of I want you to tell our listeners, because I find this fascinating and it comes up so much with homes, your commercial line, you have a specific niche, and I want you to share with us what your niche is for your commercial insurance.

Marc 31:34
Yeah, you know, great topic. So we have, again, our agency 50 50% per sign as a commercial about 47% of our commercial lines are tree care companies. So arborist I heard you say the word before Katie.

Katy 31:49
Yeah, I like an arborist. Yeah. But I think it’s because we need that so much. Here. We have so many old trees, we do have hurricanes. You know, I’m sure people everywhere need to check the health of their trees. But I thought it was fascinating, because I’m also just fascinated by niche in any business. That that was, how did y’all get into that? Like, what, what? And for that to be so much of your commercial business?

Marc 32:12
Yeah, so my brother went to school for forestry. And then that was kind of his passion. And then my dad had the independent insurance agency. So we kind of mesh the two. But it’s been really fun, you know, with with anything, and my wife preaches us through and through is pick your segment of who you’re going after, and go deep. And once people know what you do, and and all that. It’s the sky’s the limit. So yeah, we have probably, I don’t know, 600 Treat care companies nationwide. Again, we’re in, like I said, 30 some states. It’s been really fun. We built a brand around it. It’s called Arbor risk. And instead of

Alissa 32:53
Arbor wrist, yes, yes. Very cool. I bet Chelsea came up with that. Yeah.

Katy 33:01
I love that. Okay. Well, do you have any other insurance questions?

Alissa 33:04
I don’t think so. I was curious about this interview. Because it’s like, Y’all, you and Chelsea’s careers, are so opposite. Like, hers is so creative and colorful, and like, pretty rare. You

Katy 33:18
don’t get much more like straight laced than insurance. Yeah.

Marc 33:23
You know, what about insurance? Is it homeowners, homeowners need it to get a mortgage, you have to have insurance. So it’s part of the ecosystem of everything. And yeah, it’s dry. Stinks. But you get it’s a people business, you have the relationship. It’s just like you guys, you you get to know your customers, your advisors for them. I can’t stress the importance of independent agents that is on your behalf as opposed to the the direct carriers or going direct to progressive or whoever. But it is interesting dynamic with Chelsea’s business. And

Katy 33:57
yeah, sure. Well, I

Alissa 33:59
think you did a great job.

Katy 34:00
Yes, thank you. This was very helpful. We needed to we’ve put it off long enough. We needed to discuss it. So everyone, I mean, new agents need that type of information on kind of like the basis of your insurance. It’s so important for your homeowners. Are there any places you would like to share with our audience where they can find you? They are in your area and wanted to maybe use your office for their insurance or if they

Marc 34:24
Our website is a peterson.com. So we’re American advantage Peterson group. Again, like I said, we can do anything in the Midwest. I would love to we partner with a lot of mortgage brokers and real estate agents to help them out in the buying process. So yeah, go to our website and connect with us there.

Katy 34:47
Sounds good. Thank you. Thank you, Mark. Yes, was wonderful. For everyone to listen, and now they’ve now they’ve seen all the Petersons on the show. Except Henry, we gotta get Henry on your hands. Yeah, yeah. Okay. All right. Well, thank you have a good day. Bye bye. All right. Take care. Hi, Alyssa. Hey, Katie. Welcome back to part two of insurance struggles. The Perfect Storm. Yes. Yes me from our mark interview which you just listened to, he gave us the perfect name, the perfect storm. So kindly, our I believe, email list or community, whichever one responded to an email request to reach out to their preferred insurance agent and get their answer to this question. What are the specific struggles in your area that your clients are having acquiring homeowners insurance,

Alissa 35:42
and we wanted to do this because we’re in Louisiana? Yo, Mark is Midwest, correct. And there’s still so much of the country but every part of the country has a different struggle.

Katy 35:52
Yeah. And some overlap. Yeah. And some nationwide. So it was kind of fun to hear some other perspectives and we’re gonna share those with you. Yeah, I think that’s good. Are you ready? Yeah, I’m ready. I’ll go. Because the first person who helped us was Gretchen powers and Gretchen is actually an inch, not the insurance agent. This is a realtor. Okay, but she’s in Juneau, Alaska. And I find this to be fascinating. She said, we have restrictions in our area of Juneau because some homes are in designated avalanche and mudslide zones. That’s crazy. You can get insurance in the avalanche loans, but not for in a slide zone. Wow. I can’t believe there’s like a difference right? Slide zones, meaning mudslides, which include mud rock and trees, not snow. Lenders will not finance properties if they fall in a mudslide zone since they are uninsurable, which makes sense we can’t give you a loan if you can’t get insurance. I wonder how many people own their Welsh Juneau is the capital. You know, she said homes in some areas of downtown Juneau can only be sold to cash buyers and it diverts buyers to other nearby areas who want close proximity to that area.

Alissa 37:09
Like how close can we get and still get insurance? Yes. Kind of like our grandchild. Yeah. Like a lot of people just don’t carry insurance because they are one they are in the ocean. Mason, they are in the Gulf. They’re

Katy 37:21
basically on in the Gulf. Okay, do you want to catch one now?

Alissa 37:26
Yeah. So Benjamin Payne with USI services. He is in Roswell, Georgia. Okay. He said the biggest issue facing insurance consumers in the Atlanta office is the dramatic increase in premiums over the past few years, due to the higher costs of constructions and increased litigation. I think that’s going to be something we see more and more. Yeah, he said, I’ve seen auto and home insurance premiums double from what they were a few years back. And here in Baton Rouge, we actually just had a big company that was looking at coming and opening a division in Baton Rouge, okay, and you know, our legislature and everything had gone out of their way to cater these people and bring them in and show them like the best that we have to offer. They got off the air they got off the plane at the airport and we’re taking their ride to the hotel and said I think we already know our answer. It’s not going to work here because all of the billboards were personal injury billboards,

Katy 38:32
What type do you remember what type of company it

Alissa 38:34
was? I don’t but it really didn’t have that much to do with in like a competing industry? No, it was they were they just said we don’t want to have a business in such a volatile, litigious state. It’s a very litigious state and just all of your billboards welcoming us has let us know that we can’t do business here come and maybe he’ll Yeah, maybe you’ll get sued. So I think that’s a huge message to the attorneys out there. What well, I

Katy 39:01
mean, that they’re just advertising their business.

Alissa 39:04
I know, right? I

Katy 39:05
don’t know. We’re not gonna dig into that. Okay, let’s let’s do another but you know, it did come up when we were talking to Mark Yeah, about how you know, kind of like these more predatory salesmanship things that happen when there’s one hailstorm and suddenly everyone gets a roof because the roofers are beating down your door, telling you you have hail damage, you need to get a new roof. Okay. Our friend James got his insurance agent Colton. Zamzar Zamzar la zams la, from Lincoln, Nebraska in Lincoln, Nebraska. And Colton had lots of good points, but we wanted to share this when that this is the challenge loss history. further scrutiny is being placed on prior claims even if the claims weren’t your fault, or were from a previous owner. We’ve seen people get denied from coverage due to too many, typically two to four weather related claims on a home within a five year span, despite not being able to control the weather that gets people declined or not renewed.

Alissa 40:06
Yeah. What is it called the the sheet that you have to request a clue report a clue report clear showing what claims the property has

Katy 40:18
the credit report for insurance? Yeah, yeah. I mean, you have to be careful with that.

Alissa 40:23
Whenever I was buying one of my flip houses, the previous owner had done a claim for a busted pipe, and it kind of affected me,

Katy 40:30
I’ll tell a quick story. While we’re on this, I had a sink overflow in my personal home in 2020. And it touched the wood floor, the wood floor was ruined, and like a large area of the house. Well, I call my insurance agent and he’s like, Can you repair it without making a claim? Like, I maybe it’s like, I mean, if it’s less than a couple $1,000 You should definitely not make a claim. I’m like, Oh, my God, like, what is the point of the insurance? Well, as it turned out, because of the way my floors were laid? It basically the entire house of wood floor had to be changed, which is not $2,000 or less. No, it was a lot. So I did make a claim. But now I’m sort of like, financing it. Be careful. Right, and my premiums went up. Yeah. So like, ensure they go up a lot. Not right away. And recently, it’s kind of hard to say, is it going up more now because of that, or is it going up now? Because everyone’s is right. Yeah. Okay, who do you have next? Okay, so

Alissa 41:33
next I have quarry path with goose head insurance and Chambersburg. Pennsylvania. Okay, good. Oh, Pennsylvania. Yeah. They said the biggest struggle right now up there is the roof. But along with that is that sellers are not disclosing how old the roof actually is. And when it was last replaced, maybe some sellers, sometimes you don’t know. And sometimes I go back and look at previous property disclosures to see if I can find it. Yeah. But not knowing they sometimes people think maybe it would help if we just, if it looks okay, you could say well, maybe it’s 12 years old, even though it’s really 16 years old.

Katy 42:11
And I guess like Mark was saying some insurance have like a hard stop. Yeah. So there, they need to know the exact age or they’re just not going to do it.

Alissa 42:19
Right. So like if you say it’s 14 years old instead of 15. No, but he said many insurance companies are doing inspections and requiring certain repairs or total replacement to keep your insurance. Okay. So they’re their inspectors are really cracking down over there. Okay.

Katy 42:40
I have Nancy wells with the WELS agency in metro Atlanta. Okay. She said the industry is suffering significantly on the auto loss ratio side. State Farm last year reported 8 billion in auto losses. Many companies will not write a new home without Auto support. So like, you know, pairing the two together, right, especially if the home is older. Many companies are canceling clients after one claim. Oh, wow. That is quick. Well, Bo

Alissa 43:13
Murray with State Farm in Nampa.

Katy 43:17
Yeah, Nampa, Idaho, Idaho.

Alissa 43:21
He said probably the biggest challenge for them right now is prior home claims. Interesting. Another challenge we face is insuring a home in an area that presents a wildfire hazard. Yeah, wildfires seem to have become increasingly worse over the last decade. And this has caused insurance companies to have an elevated level of scrutiny and which areas they will cater to Yeah. Just recently, I’ve been having a few insurance agents say oh, we no longer do that zip code. Right. That’s so they’re still in our city. Right. But they won’t go to every zip code. Very interesting. Very interesting.

Katy 43:57
Okay. Ashley, a rural in in Mandeville, so in Louisiana said one of the specific struggles is the limited market in general, where we used to have 20 plus homeowners insurance carriers, we are down to a handful. And if the roof is older than five years, which many homes are la citizens or a cert or surplus lines carrier, not backed by the state are one of the only options and then it’s more expensive? Yeah. So it’s just like a such a limited amount of options and especially when your roof is a little bit and look, I wouldn’t even call a roof that was six years old, old. No, you some people might even call that. Yeah, I would. Yeah. Okay.

Alissa 44:42
My last one is from John Deere Pascal. Okay. Okay with Allstate in South Carolina. He said you need to be careful about saying give me the cheapest coverage so I can just move forward and close on my loan. Yeah. Especially with interest rates being so high. People are worried about that. Your monthly note. Yeah, insurance is not the place that you want to cut back on. Right? So he said to ask yourselves when you’re shopping, worst case scenario, heaven forbid you had a terrible accident. What are you going to pay for? Like what is going to come out of pocket? So saving a little bit upfront? For less coverage may not be the smartest thing to do. Right. So he was just saying that when it has gotten so high, he is seeing more consumers really push for cutting costs. Yeah. Which hurts you if something happens? Yeah, so be careful.

Katy 45:34
Yeah, I, I find all this very interesting. And in a little nerve racking and in disturbing, yeah. Because I don’t know that there’s not like good solutions. But you as your advocate of your client needs to at least make sure they’re aware. Yes, Hey, your roof is gonna get checked, possibly after closing, you know, hey, you need to check the coverage, you know, are you getting the right? Like amount of coverage? What is your deductible in Louisiana, there’s a difference between your hurricane deductible and your regular deductible, right? So you need to partner with an agent in your area and insurance agent to tell you the challenges where you are right, and to make sure that your clients are aware of what they need to be like, you know, checking.

Alissa 46:18
And I think that even more this is so time sensitive with getting your insurance solidified during your inspection period. Oh, yeah. Right during your due diligence timeframe, because if you find out after you’re out period, that insurance is way too high, doesn’t matter. It doesn’t matter unless it kicks you out of being qualified. You have to buy the house, you’ll be in breach if you don’t. And I think that’s in our due diligence check it is that we have which is hustle humbly podcast.com/may Make sure so you can go download that. And it sort of just your guide of during your due diligence period. It’s not just about having a home inspection. It’s about making sure you can get insurance and that you’re comfortable with everything else about the home. Correct. Check that out. Yep. This was a great episode. I

Katy 47:04
thought it was entertained. Yeah, I thought it was going to be vital, vital information. Great. Are you ready for a toast? Yeah, so we sort of messed up because we were recording this differently than normal. Yeah. And we didn’t ask Mark for his toast. But we did talk about Chelsea. And I feel certain if I had to guess who he would toast. It would have been her. Yeah. However, what we’re gonna do is we are going to toast to

Alissa 47:28
who we are going to toast to mark and Chelsea, the power couple our

Katy 47:32
couples and baby Henry. That’s right. We’ve now had them all on the show with the exception of Henry, and we want to say cheers, and thank you, Mark was so kind to come into good. A little Midwest perspective. Yeah. And tell us about his fun tree, his Arbor risk. Arbor risk is Arbor risk. niche. And so cheers to Chelsea and Mark. Thank you. I know they listen. Yeah. And they’ve been such advocates for the podcast, and they’re just such knowledgeable people. Yeah. Thanks, God. Yeah, thanks for being you. Very well rounded kappa they really are. Okay, so cheers and goodbye. Cheers.

Alissa 48:10
Thank you so much for tuning in to the hustle humbly podcast. If

Katy 48:12
you enjoy this episode, please go to rate this podcast.com/hustle humbly and leave us a review or drop a comment if you’re listening on Spotify. If you have

Alissa 48:21
an episode topic or someone you’d like to toast on the show, please email us at team at hustle humbly podcast.com

Katy 48:27
Find us on social media at hustle humbly podcast. Don’t forget to find all of the free resources at hustle humbly podcast.com/resources See you next week. This is the good lie.

Two Realtors fostering community over competition through light-hearted conversations.



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