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Savings Opportunities

Compared to 2010, more agents in 2012 reported that families insured by mass-market carriers were likely missing a variety of savings opportunities. The survey asked about 11 savings opportunities, and the average percent of agents reporting each savings opportunity as likely missed in 2012 was nearly 28 percent, an almost 6-point increase. Responses by savings opportunity ranged widely — from 81 percent for having a deductible that was needlessly low to 9 percent for missing an accident-free credit in their auto insurance.

Families should consider how much they could pay for a loss without significantly affecting their lifestyle, and then ask their agent to estimate the premium savings they could achieve with a range of deductibles up to their maximum amount.

Families should consider how much they could pay for a loss without significantly affecting their lifestyle, and then ask their agent to estimate the premium savings they could achieve with a range of deductibles up to their maximum amount.

Percent of Agents Reporting Savings Opportunity As Likely Overlooked
2012 2010 Ppt. Chg.
Deductibles too low 81% 78% + 3
Package discounts 62% 55% + 7
Loss prevention credits — home, car alarms, etc. 50% 36% + 14
Paying low collector car rates for a collector car 31% 19% + 12
New or rehabilitated home credit 22% 13% + 9
Storing infrequently worn jewelry in a bank vault 20% 16% + 4
Good student discount 11% 5% + 6
Credit rating (can it easily be lowered?) 10% 5% + 5
Accident-free credit 9% 10% - 1
Accident prevention course credit 9% 6% + 3
Other 3% 3% 0
Average (excludes "other") 27.7% 22.1% 5.6%

To help families and their advisors understand the dynamics and potential of the most commonly missed savings opportunities, this white paper offers the following explanations:

Increasing Deductible Amounts

81 Percent Said Likely Overlooked Savings Opportunity

Many HNW families insured by mass-market carriers have homeowners and auto insurance policies with deductibles of $250, $500, or $1,000. Ironically, they pay a substantial amount in premium for these low deductibles, but they don't file a claim after a minor accident. They worry their insurance rates will go up, and they can easily afford to pay for repairs entirely out of their own pocket.

Instead, these families should consider how much they could pay for a loss without significantly affecting their lifestyle, and then ask their agent to estimate the premium savings they could achieve with a range of deductibles up to their maximum amount. This process allows them to assess the trade-off between risk and savings. Some of the wealthiest clients insured by ACE select deductibles of $1 million or more.

The savings can be substantial. Using the ACE Platinum Portfolio policy as an example, the annual savings in premium for insuring a $1 million home with a $2,500 deductible versus a $500 deductible could be about $900. So, the homeowner must weigh the risk of paying an additional $2,000 for a loss ($2500 minus $500) against the certainty of saving $900 per year in premium. Since ACE's typical client files a claim for a home only once every 21 years, taking the higher deductible would be the better choice. The total premium savings would.

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