Latest / Connor with Honor: AI, Real Estate and Real Life / Insurance Companies Are Leaving California. What It Means for Your Home

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Insurance Companies Are Leaving California. What It Means for Your Home · Connor with Honor: AI, Real Estate and Real Life

• 0:00
  SPEAKER_01: Hey everybody, thank you so much for tuning in.
• 0:02
  SPEAKER_01: I'm Connor with Honor, local real estate agent here in Santa Clarita Valley.
• 0:06
  SPEAKER_01: And if you've been watching the news, maybe you've seen information about insurance companies pulling out of California, leaving home buyers dry and sellers panicked, where they're going to get the answers to these questions.
• 0:18
  SPEAKER_01: I have Scott Wilk with us today, fantastic individual from the Woodlands Financial Group.
• 0:24
  SPEAKER_01: And I believe they offer more than insurance.
• 0:26
  SPEAKER_01: So we'll talk to him about that.
• 0:28
  SPEAKER_01: But I wanted Scott to give us some information regarding what's happening with insurance and housing, whether you want to buy yourself something or whether you just need insurance.
• 0:37
  SPEAKER_01: He'll be able to clear some things up for us.
• 0:39
  SPEAKER_01: How are you, Scott?
• 0:40
  SPEAKER_01: I'm great, Connor.
• 0:41
  SPEAKER_01: Thank you so much for having me today.
• 0:42
  SPEAKER_01: Perfect.
• 0:43
  SPEAKER_01: Tell us just a little bit about your background.
• 0:46
  SPEAKER_01: And I have to throw to the audience real quick.
• 0:49
  SPEAKER_01: I didn't know how good you were until I started referring you.
• 0:54
  SPEAKER_01: Thank you.
• 0:55
  SPEAKER_01: I appreciate it.
• 0:56
  SPEAKER_01: And I had heard from others, but again, I'm not going to get all lavish and blow smoke, but I'll tell you, you've saved me twice now.
• 1:04
  SPEAKER_01: Go ahead.
• 1:05
  SPEAKER_00: Yeah, no, I appreciate that.
• 1:07
  SPEAKER_00: So just a little bit about me.
• 1:08
  SPEAKER_00: I've been a licensed insurance agent for about 12 years.
• 1:10
  SPEAKER_00: I own a brokerage, TWFG Insurance Services or the Woodlands Financial Group here in Santa Clarita.
• 1:16
  SPEAKER_00: I am the local Santa Clarita branch owner, but TWFG Insurance is a national insurance brokerage and actually one of the biggest uh insurance brokerages in the nation.
• 1:27
  SPEAKER_00: Um, and I mean, you know, Connor, the 12 years of an insurance agent.
• 1:30
  SPEAKER_00: Typically, insurance isn't a subject people want to talk about, but the last year or two, I'd say people have been tripping all over themselves to talk to me about insurance all the time.
• 1:38
  SPEAKER_00: Reason being, we are in an insurance crisis in California.
• 1:41
  SPEAKER_00: It's in the news constantly.
• 1:42
  SPEAKER_00: Anyone who's been trying to buy a home has found that they've had a significantly more difficult time getting insurance than they thought.
• 1:48
  SPEAKER_00: Um, rates have been skyrocketing, sometimes 2x, 3x what they were a few years ago.
• 1:53
  SPEAKER_00: Um, homeowners insurance companies are leaving California in droves.
• 1:57
  SPEAKER_00: Uh, people are getting non-renewed by literally the hundreds of thousands.
• 2:01
  SPEAKER_00: State firm alone is going to be dropping 72,000 uh policies this year, which is gonna equate to about 25% of their um of their risk in California.
• 2:11
  SPEAKER_00: And the quote from State Firm about it is this is quote, the first phase of non-renewals.
• 2:16
  SPEAKER_00: So they're already dropping 25% of their of their uh total insured value.
• 2:21
  SPEAKER_00: And uh, you know, more more non-renewals are gonna be coming.
• 2:24
  SPEAKER_00: And frankly, I think I think it's gonna be getting uh worse before it gets better.
• 2:27
  SPEAKER_00: But you know, there's there's a lot I can there's a lot I can say on this subject, and you know, I'm happy to I'm happy to answer any questions that you have for me today.
• 2:34
  SPEAKER_01: So thank you for that.
• 2:36
  SPEAKER_01: For a real estate buyer, that's where this has kind of come into play, where we get down to usually with the insurance, it was waiting till the third and maybe the fourth week in escrow.
• 2:46
  SPEAKER_01: They would gingerly call somebody I recommended, such as you, and no big deal, or they would even go with their other company that was insuring the cars.
• 2:54
  SPEAKER_01: Now of a sudden getting phone calls, Connor.
• 2:56
  SPEAKER_01: I can't get insurance.
• 2:58
  SPEAKER_01: And then Connor panics, and then Connor calls Scott, puts Scott on the call, and Scott was able to get it done more than anyone else, and you were stacked against others.
• 3:07
  SPEAKER_01: Answer me this what other obstacles do the buyers need to watch out for when it comes to purchasing?
• 3:13
  SPEAKER_01: Do they need to do this way earlier?
• 3:15
  SPEAKER_00: Yeah, and just in terms of the insurance coverage, I believe that um, you know, before we hit the insurance crisis, uh, you know, it was pretty uh quick and easy to get insurance done.
• 3:26
  SPEAKER_00: Uh back when I first started as a broker, uh, I started as a state farm agent.
• 3:30
  SPEAKER_00: 2017 is when I opened my brokerage in Valencia.
• 3:33
  SPEAKER_00: Um, you know, I would I would be able to get a quote done in 10 to 15 minutes and then a binder done in another 10 to 15 minutes.
• 3:39
  SPEAKER_00: There's one lender that I worked with who, you know, I pestered them for you know months about sending me referrals.
• 3:45
  SPEAKER_00: They never really gave me the time of day.
• 3:46
  SPEAKER_00: And then they came back and said, you know, hey, uh this agent is way is way too overpriced.
• 3:52
  SPEAKER_00: It's gonna blow up our debt to income ratios.
• 3:54
  SPEAKER_00: You know, uh actually, no, there was a different source of tell you.
• 3:57
  SPEAKER_00: So this this company that um that I that I went with, um, they had been trying to reach triple A for about two weeks to get uh policy bound.
• 4:05
  SPEAKER_00: Um, and the customer had called them and said, Hey, you know, we need to get a certificate of insurance so I can close on the escrow.
• 4:12
  SPEAKER_00: And um, you know, the customer had been waiting on hold for over an hour at that point to talk to AAA.
• 4:16
  SPEAKER_00: So they called me and said, you know, Scott, what can you do for me?
• 4:19
  SPEAKER_00: So in about 15 minutes, I had a new quote for them that was better coverage and lower rate than AAA.
• 4:23
  SPEAKER_00: And another 15 minutes they had a binder at when they'd already been waiting for over two weeks, and then um uh and then uh you know, I'd been sitting on hold for an hour trying to extend it.
• 4:33
  SPEAKER_01: Tell me, tell me this with regard to the buyers and when they call you to get insurance on a property, are there things are there properties that you you used to be able to get policies on?
• 4:45
  SPEAKER_01: You're running into like big areas in Santa Clarita, somewhere more specific.
• 4:49
  SPEAKER_01: I know some condos and townhomes are no longer offering insurance.
• 4:54
  SPEAKER_01: Can you talk a little bit about that?
• 4:56
  SPEAKER_00: Yeah, so every home is insurable, first of all, just gonna be a matter of who is gonna take it and what the rate's gonna be.
• 5:01
  SPEAKER_00: And rates have gone up and market access has gone down.
• 5:04
  SPEAKER_00: So people talk about fire zones a lot, and fire zones aren't yes or no, it's a spectrum, it's a score.
• 5:10
  SPEAKER_00: Um, so zero, uh zero being the lowest.
• 5:13
  SPEAKER_00: Um, in Santa Clarita, I would say like typically around eight is the highest I see.
• 5:18
  SPEAKER_00: I've seen um up to like zone 12, if we're talking like Big Bear, Lake Arrowhead, things like that.
• 5:23
  SPEAKER_00: And uh when I first started my brokerage in 2017, Progressive, for example, would take up to a fire line six um with needing no underwriter approval.
• 5:30
  SPEAKER_00: Um, I would say by 2020, we got to a point where um everyone was um stopping at about two and needing approval.
• 5:40
  SPEAKER_00: And now a lot of carriers won't take anything at a zero or one if they're open for business at all.
• 5:45
  SPEAKER_00: Um, one of the reasons why we're so competitive is market access.
• 5:50
  SPEAKER_00: So when I was a state farm agent, I only had access to state farm insurance.
• 5:53
  SPEAKER_00: If you go to a farmer's agent or um, you know, an all-state agent, they have they have a couple of related companies that they can broker out to, but for the most part, you know, you're you're you're gonna have very, very limited options versus going to an independent broker, you're gonna have access to a much wider market.
• 6:08
  SPEAKER_00: And not every broker um has access to the same markets.
• 6:12
  SPEAKER_00: So uh the Woodlands Financial Group is my third brokerage.
• 6:15
  SPEAKER_00: My first one I was with Goosehead Insurance.
• 6:16
  SPEAKER_00: We had about 30 uh markets that we had access to.
• 6:19
  SPEAKER_00: Then I rolled over to Penguin Insurance, which uh doubled it to about 60.
• 6:23
  SPEAKER_00: And then the Woodlands Financial Group actually acquired Penguin.
• 6:26
  SPEAKER_00: So I rolled my contract over that, bumped up our numbers to 300.
• 6:29
  SPEAKER_00: So when people ask me, you know, how come you're able to do it and get so much better rates everyone everywhere else?
• 6:36
  SPEAKER_00: It's a matter of market access.
• 6:37
  SPEAKER_00: And right now, as I mentioned, you know, so many companies are leaving the state entirely or non-renewing large amounts of their book of business, they're not issuing out new policies.
• 6:46
  SPEAKER_00: The reason why we're still able to get you guys um, you know, policies and at a reasonable rate relative to the market is just that we still have the best market access out there.
• 6:55
  SPEAKER_00: Um, I would say we only have about two or three places that are still writing condos right now.
• 6:59
  SPEAKER_00: It's it's funny how condos and renters' policies are actually the hardest for us to do right now, more than single family homes.
• 7:07
  SPEAKER_01: Wow, interesting.
• 7:09
  SPEAKER_00: Yeah, and and insurance companies want to match rate to risk.
• 7:12
  SPEAKER_00: And one of the reasons why they um, you know, are shutting down so many markets are non-renewing is they don't uh sorry if I'm taking this on a tangent, uh on a tangent on the please.
• 7:22
  SPEAKER_00: Yeah, but um insurance companies want to match their rate to their risk, and what we've seen is an incredibly uh high increase in construction costs, and insurance companies also don't have the power to charge whatever they want.
• 7:35
  SPEAKER_00: So rates are incredibly regulated.
• 7:38
  SPEAKER_00: Whenever an insurance company um wants to change their rates, they have to go through the Department of Insurance, open up their books, show their profit loss, say, hey, this is you know what we're bringing in premium, this is what we're paying out in claims, this is our operating expenses.
• 7:49
  SPEAKER_00: Therefore, to be profitable, we feel like we need to give you know X percent of an increase on our policy holders.
• 7:54
  SPEAKER_00: And um the max they can ask for is about a 6.9% increase.
• 7:59
  SPEAKER_00: Um if it if they ask for higher than that, uh just that 6.9% could take about a year to go through and get approved.
• 8:05
  SPEAKER_00: And then if it goes beyond that 6.9% increase, it goes to a public comment period and can take up to three years to get approved.
• 8:12
  SPEAKER_00: Um, so it's a it's quite a lengthy process.
• 8:14
  SPEAKER_00: And what we saw is we saw that condos were incredibly cheap policies in in California.
• 8:20
  SPEAKER_00: So when I got started, I would say my average condo policy was probably like you know 300, 400 bucks.
• 8:26
  SPEAKER_00: And with how much construction costs have gone up, grant with a condo, you're only really repairing the interior, you're not doing you know the exterior walls, but you know, with how much um, you know, a two by four piece of board pre-COVID was you know a buck 40.
• 8:40
  SPEAKER_00: And now it's up to about you know five to six bucks a board, uh depending on the day.
• 8:44
  SPEAKER_00: So, you know, that's that can be up to like a you know 5x increase in uh cost.
• 8:48
  SPEAKER_00: So that 400 bucks a year in premium is is just not gonna cut it anymore.
• 8:52
  SPEAKER_00: And with carriers not able to get the rate increases that they need, they're just shutting down product lines because they know that um statistically, by the law of large numbers, uh every piece of business they write, they're going to lose money because you know you insure a thousand homes, you're gonna have a claim rate at you know X percent of those homes at an average payout of X amount.
• 9:14
  SPEAKER_00: And you know what those claims are gonna cost versus what you're gonna bring in money, you know what the law of large numbers says, you're gonna be losing money on that.
• 9:20
  SPEAKER_00: So that's why we see the non-renewals.
• 9:22
  SPEAKER_00: That's why we see you know companies pulling out or putting moratoriums on new business, because even with the rates raising the way they are, it is still not kept pace with you know our ridiculous rate of inflation and companies are losing money hand over fist.
• 9:34
  SPEAKER_00: I want to say State Farm last year lost about 6.8 billion.
• 9:37
  SPEAKER_00: I might be slightly off on that, but that should be ballpark correct.
• 9:41
  SPEAKER_00: And that was a billion with a B, by the way.
• 9:44
  SPEAKER_01: Yeah, that that's the money in the game is incredible.
• 9:47
  SPEAKER_01: What does the future in the next several months is it gonna get better?
• 9:52
  SPEAKER_01: You mentioned it might get a little bit worse before it gets better.
• 9:54
  SPEAKER_01: What do you see happening?
• 9:56
  SPEAKER_00: Yeah, so um there has been a lot of discussion in Sacramento over the last year or two about insurance, which by the way, um special interest groups and insurance companies have been wanting to have you know deeper conversations in Sacramento for the last five years or so, and legislators really weren't interested.
• 10:14
  SPEAKER_00: I mean, I think it maybe wasn't a sexy issue when it came to uh re-elections.
• 10:18
  SPEAKER_00: Um, it insurance can be very complicated.
• 10:20
  SPEAKER_00: Maybe a lot of them didn't understand it.
• 10:22
  SPEAKER_00: It just wasn't a priority for them.
• 10:24
  SPEAKER_00: But um, the insurance carriers predicted a market crash in insurance coming about five years ago and had asked for regulatory changes and nothing happened.
• 10:32
  SPEAKER_00: And as you know, Sacramento, DC, it takes, you know, long, long times to get things done.
• 10:37
  SPEAKER_00: So it's only been the last year or so that they've really tried to reach reasonable negotiations on getting things done.
• 10:44
  SPEAKER_00: And there have been things that have been done.
• 10:46
  SPEAKER_00: Um, I mentioned how tightly rates are regulated.
• 10:49
  SPEAKER_00: There's uh certain things that insurance companies can charge for and certain things that they can't charge for.
• 10:54
  SPEAKER_00: It also applies to discounts.
• 10:55
  SPEAKER_00: There's certain things they can apply discounts to and certain things they can't.
• 10:59
  SPEAKER_00: So a term that you might hear a lot more these days is home hardening.
• 11:03
  SPEAKER_00: Um, I would say over the last four or so years, I get I'd hear this from you know customers a lot.
• 11:08
  SPEAKER_00: Hey, my home is reinforced from wildfire.
• 11:10
  SPEAKER_00: You know, I have all these features in the home that makes it more resistant to burn down.
• 11:13
  SPEAKER_00: You know, do I get discounts for that?
• 11:15
  SPEAKER_00: And the answer traditionally has been, you know, no, because state law does not allow us to use those as you know, rating factors.
• 11:22
  SPEAKER_00: That's one of the things that's changed this year.
• 11:24
  SPEAKER_00: So um, a lot of people who are on California Fair Plan, which is the state-run nonprofit that provides fire insurance to um, you know, uh houses that can't otherwise get insurance on the private market.
• 11:35
  SPEAKER_00: Um, all of their policy holders this last year got out, uh got notices sent to them saying, hey, you know, if your home has these features, we consider it to be, you know, hardened and you can get discounts for it.
• 11:46
  SPEAKER_00: Please sign this and send it back to us so we can apply the appropriate discounts.
• 11:50
  SPEAKER_00: That's new to try to provide some rate relief.
• 11:52
  SPEAKER_00: That said, when rates have gone up, you know, 2x, 3x, and that's maybe a you know 10 to 15% discount.
• 11:57
  SPEAKER_00: It's it's still a drop, it's still a drop in the bucket.
• 11:59
  SPEAKER_00: Um, the biggest regulation uh change came uh late at the end at the end of last year.
• 12:06
  SPEAKER_00: Um, and it's kind of a mixed bag in terms of you know whether of how it's gonna help and how it's gonna hurt.
• 12:13
  SPEAKER_00: Um what we can say is what I think, and not a lot of people are are talking about this, people are talking about hyperinflation being a reason why the insurance market is out of control, just because the cost of business has gone up so dramatically.
• 12:26
  SPEAKER_00: Really, if I was in charge of the world, the biggest thing that I'd be trying to address is you know the hyperinflation, trying to get prices back down.
• 12:33
  SPEAKER_00: Because one, that's gonna alleviate the stress in the insurance companies dramatically, but then that would also alleviate, you know, your price at the gas pump, your price at the grocery store, so on and so forth.
• 12:43
  SPEAKER_00: So that is the best way to fix the problem.
• 12:46
  SPEAKER_00: But with that not being proper properly addressed, this is what they're doing to try to um to try to address the issue.
• 12:52
  SPEAKER_00: With prices the way that they are with hyperinflation, rates just have to go up more than they are now because companies are still losing money.
• 13:00
  SPEAKER_00: And that's that's not popular to talk about, but um, you know, it's it's it's the truth.
• 13:04
  SPEAKER_00: If, you know, uh last I heard, State Farm was at 135% loss ratio, which meant they were paying out$1.35 in premium for every dollar they're bringing in, uh dollar they're bringing in in uh they're paying out$1.35 in claim for every dollar they're bringing in premium.
• 13:19
  SPEAKER_00: Uh Mercury, I believe, was at uh buck 25 last time, so 125% loss ratio.
• 13:24
  SPEAKER_00: Formost, which is part of farmers, is at 173% loss ratio.
• 13:29
  SPEAKER_00: Um, so if you're paying out, you know,$1.73 in claims for every dollar you're bringing in premium, that's before their expense ratio, by the way.
• 13:37
  SPEAKER_00: Their cost of their under their underwriters, their actuaries, their claims reps, you know, the buildings that they rent to run the operations out of, so on and so forth.
• 13:44
  SPEAKER_00: Usually your expense, your usually your business expenses are about 40 to 50 percent of your loss of your uh premium taken in.
• 13:52
  SPEAKER_00: So you want your loss ratio to be at 50% or less to be to be profitable.
• 13:58
  SPEAKER_00: So with the um loss ratios as high as they are, that shows how much how much money they're losing.
• 14:03
  SPEAKER_00: So rates rates just have to go up.
• 14:05
  SPEAKER_00: Um in terms of the regulatory change that was discussed and approved, it was um insurance carriers were going to agree to come back to the market.
• 14:16
  SPEAKER_00: Um, I mentioned fair plan earlier, the last resort for homeowners.
• 14:19
  SPEAKER_00: It's supposed to be the last resort, it's become the first resort with how many um companies are shut down.
• 14:24
  SPEAKER_00: Yeah, when I when I first started um as a broker, I would maybe do one or two fair plan policies a month.
• 14:30
  SPEAKER_00: Now we're doing multiple ones daily.
• 14:32
  SPEAKER_00: Um LA Times had an article a couple months back saying that Fair Plan is getting over a thousand applications for new insurance a day.
• 14:39
  SPEAKER_00: Um, and Fair Plan has had to significantly increase its staffing to meet up with that demand.
• 14:44
  SPEAKER_00: Um, is this the ultimate?
• 14:46
  SPEAKER_01: Is there an end game for the state of California?
• 14:49
  SPEAKER_01: I we don't need to get into conspiracy of left ring, right wing, but it just seems like they want to just control the entire insurance industry out here and make it state run, maybe?
• 15:02
  SPEAKER_01: Is there a goal?
• 15:04
  SPEAKER_00: Uh, not that I'm aware of.
• 15:06
  SPEAKER_00: Um, so and I mean, I don't need to get too into politics.
• 15:09
  SPEAKER_00: I will just I'll just say that a lot of and this doesn't just go to insurance.
• 15:12
  SPEAKER_00: I feel like this goes to a lot of aspects of running a state, running a country, running whatever community it is.
• 15:18
  SPEAKER_00: A lot of times the decisions that you need to make to really run things properly are not popular, and ultimately, you know, most politicians, as a general rule of thumb, are are worried about their re-elections.
• 15:31
  SPEAKER_01: Um, so they want to be popular.
• 15:34
  SPEAKER_00: Yeah.
• 15:34
  SPEAKER_00: So Ricardo, Ricardo Lara, our insurance commissioner, you he has he has um, you know, plans for other offices once he gets turned out at the end of this year.
• 15:42
  SPEAKER_00: So and that was a big that was a big issue that helped cause the this crisis as well.
• 15:46
  SPEAKER_00: I mentioned insurance companies um need basically need his permission to change their rates.
• 15:51
  SPEAKER_00: Yeah.
• 15:51
  SPEAKER_00: So while we were hemorrhaging money leading up to the uh last governatorial election where he was on the ballot, he was not approving any rate changes because he did not want uh that to hit him in his um in his election campaign.
• 16:04
  SPEAKER_00: So that expedited companies leaving the state and non-renewing because they weren't able to get through uh rate and uh rate increases they wanted because you know Ricardo Larr wanted to keep his job and tell the voters, hey, you know, I fought against the greedy insurance companies to keep your rates down.
• 16:18
  SPEAKER_00: Um, but yeah, but getting back to beginning back to the regulations, the the uh the things that were agreed upon.
• 16:23
  SPEAKER_00: So insurance companies have agreed that they're going to allow to up to 85% of their market share to be in high-risk areas.
• 16:32
  SPEAKER_00: Um, so that is gonna bring more diversity into the marketplace.
• 16:36
  SPEAKER_00: And here's the thing insurance works different than other business in terms of, you know, you as a realtor, the more buyers you get, the more money you make.
• 16:44
  SPEAKER_00: The more percentage of the market share you get, the more money you make.
• 16:47
  SPEAKER_00: That's not necessarily the case with insurance, because with insurance, we can have an excessive amounts of outputs for our customers based on claim scenarios.
• 16:55
  SPEAKER_00: So uh the term for it is saturation.
• 16:58
  SPEAKER_00: You never want too much of a saturation in a circuit certain marketplace because let's say you have too high of a market share in Castac, for example, using a local example, and then we have a big wildfire there.
• 17:09
  SPEAKER_00: You take a big bath if there's a if there's a disaster.
• 17:12
  SPEAKER_00: So insurance companies actually like competition and they like the risk to be diver uh diversely spared.
• 17:19
  SPEAKER_00: Um, so in so basically having the insurance companies agree to all come back to the mark to the market areas that will bring more competition to the areas, and um they can ensure the higher risk areas without so much saturation.
• 17:31
  SPEAKER_00: Because uh that's another reason why so many companies have pulled out.
• 17:34
  SPEAKER_00: So Cain Country and Castac being local, um, you know, local examples.
• 17:39
  SPEAKER_00: Um, whenever companies start to pull out of Castaic, what happens is the remaining companies that are still in there all of a sudden eat up that market share from the ones that are leaving, then they become oversaturated, feel like they're too exposed in the area, then they non-renew everybody, and it's just a vicious cycle.
• 17:53
  SPEAKER_00: They just they just yeah, they just all start falling like dominoes, exactly.
• 17:57
  SPEAKER_00: Um, so that so having that having that competition, that diverse spread uh to prevent anyone from getting oversaturated, that's gonna be incredibly uh incredibly helpful.
• 18:06
  SPEAKER_00: So, what the insurance companies are gonna be getting in uh in exchange for that is they're gonna have an easier time to get their rate changes through.
• 18:15
  SPEAKER_00: So I mentioned it can take up to three years to get a rate change through.
• 18:18
  SPEAKER_00: Um, they're they're going to change the process and hire more staff and do what they need to do to expedite that process.
• 18:25
  SPEAKER_00: So carriers don't have to sit on bad rate for three years anymore if they're losing money.
• 18:29
  SPEAKER_00: And that's going to encourage more companies to come back in the market.
• 18:33
  SPEAKER_00: The other thing is in state law, it codifies what they can use uh in order to ask for rate changes.
• 18:41
  SPEAKER_00: Um, and current state law says that they can only look at previous uh loss history.
• 18:46
  SPEAKER_00: So, what have the losses been in the last five years?
• 18:49
  SPEAKER_00: They're not allowed to look at future projections on what the losses, you know, could be.
• 18:54
  SPEAKER_00: Um, so and that that hurt in terms of you know the hyper the hyperinflation, because you know, we're we're now paying X amount of money per loss.
• 19:01
  SPEAKER_00: Well, that's just the last year, that's not the last five years.
• 19:04
  SPEAKER_00: And the other thing is climate change.
• 19:06
  SPEAKER_00: So what whatever, regardless of what your politics are on climate change, whether you think it's man-made, whether you think it's natural, you know, the climate had the climate has been changing and we have seen drastically different um you know weather because of it.
• 19:18
  SPEAKER_00: We've got um, you know, the hots are getting hotter, the colds are getting colder, the winds are getting windier, we've got wildfires in Louisiana and hurricanes in California.
• 19:26
  SPEAKER_00: Uh, it's funny because for the the longest time, um, whenever we had a big rainstorm here, my phone would bring off the hook with claims, uh, with claims from it, just for people having leaky roofs.
• 19:36
  SPEAKER_00: Um, and now I don't get so many of those claims anymore during a big rainstorm because we've had so many that a lot of people who everybody's got the roof, they they all know and they've they've gotten the they've gotten the issues fixed.
• 19:48
  SPEAKER_00: It's kind of this is kind of a funny story.
• 19:50
  SPEAKER_00: I was supposed to I was supposed to be on a conference call with my corporate office um in Texas earlier today, and they said that they said they had to take a rain delay on it.
• 19:56
  SPEAKER_00: And I took it as a figure of speech, but they're literally having bad rains there in a flash flood.
• 20:00
  SPEAKER_00: So when they they told me that, I said, Oh, I I thought that was a figure of speech, uh, because in California that's only what it is.
• 20:06
  SPEAKER_00: And right we we we had a good laugh about it.
• 20:08
  SPEAKER_00: So um part of this negotiation is we're gonna be able to um allow for future projections on future losses and you know climate change modeling to um to justify certain rates that we want as well.
• 20:21
  SPEAKER_00: Uh here's here's another example which shows both climate change and um you know the hyperinflation.
• 20:28
  SPEAKER_00: So the first time um there was ever a billion-dollar catastrophe was the Texas mold crisis, which what wasn't too long ago.
• 20:37
  SPEAKER_00: I want to say it was like '92, if I remember off the top of my head, but relatively recent history.
• 20:43
  SPEAKER_00: 2023 across the nation, we had 24 billion dollar catastrophes, um, just just in 2023 alone.
• 20:49
  SPEAKER_00: Uh 24 separate incidents were the where the uh claims payout were over a billion dollars.
• 20:56
  SPEAKER_00: So that's shot that's shown how significantly higher the payouts have been and how significantly more frequently they've come out, hence why rates are going up, hence why markets are closing down.
• 21:07
  SPEAKER_00: So it's you see, it's it's a lot more complic uh uh complicated and nuanced than people think, other than just the knee-jerk reaction.
• 21:14
  SPEAKER_00: Oh, insurance companies are just greedy and just want more of my money.
• 21:17
  SPEAKER_01: What's let me let me ask you this what's your biggest market segment?
• 21:21
  SPEAKER_01: Like, what do you write more of?
• 21:22
  SPEAKER_01: Auto, housing, and the reason why I want that, I want you to follow up after that answer.
• 21:27
  SPEAKER_01: What would you give a person in that space looking to purchase insurance to keep them safe?
• 21:32
  SPEAKER_00: Sure.
• 21:32
  SPEAKER_00: So um, home by a long shot.
• 21:35
  SPEAKER_00: And it's always it's always been home by a long shot for me as a broker.
• 21:37
  SPEAKER_00: As a state farm agent, I did a lot more auto just because that's kind of what they they trained us to go after and said, hey, you know, the biggest way into the house is through the garage.
• 21:46
  SPEAKER_00: Um, as a broker, especially in Santa Clarita, we were kind of, I'll joke that we were ahead of the curve in terms of uh brush fire risk, just having both uh California, uh California, uh Castayc and Canyon Country out here that were tougher areas.
• 21:58
  SPEAKER_00: Um, when I was a state farm agent.
• 22:00
  SPEAKER_00: And even though I was a Santa Clarita resident and grew up out here, I opened my State Farm agency in Simi Valley because at that time, State Farm wasn't writing business in most of our zip codes.
• 22:09
  SPEAKER_00: You know, nothing in 91384, 91387, 99381, uh 91390.
• 22:14
  SPEAKER_00: Um, people would come up to me all the time, hey Scott, I just bought a new home.
• 22:18
  SPEAKER_00: Can you get insurance for me?
• 22:19
  SPEAKER_00: What's your zip code?
• 22:20
  SPEAKER_00: 91390?
• 22:20
  SPEAKER_00: Nope, sorry, can't help you.
• 22:22
  SPEAKER_00: So um I decided why put my business here if I can't write business here.
• 22:26
  SPEAKER_00: So I put my agency in CME Valley.
• 22:28
  SPEAKER_00: And then when I became a broker, I said, Hey, I'm gonna have markets now to help these people who can't get insurance otherwise.
• 22:33
  SPEAKER_00: So, you know, I'm gonna move my office back to Santa Clarita.
• 22:36
  SPEAKER_00: And I started working right away with realtors and lenders.
• 22:39
  SPEAKER_00: I'm the preferred insurance broker for a ton of the real estate and uh lending uh businesses out here, and we help um home buyers all day, every day.
• 22:49
  SPEAKER_00: I would say for um probably my first three or four years, probably about 90% of what I did was home.
• 22:55
  SPEAKER_00: Um we've diversified a we've diversified a lot more.
• 22:58
  SPEAKER_00: I've got a bigger team now.
• 22:59
  SPEAKER_00: I started as a one-man show.
• 23:00
  SPEAKER_00: I've got um 12 people on my staff now.
• 23:03
  SPEAKER_00: Um we're licensed in nine states, not just California.
• 23:06
  SPEAKER_00: My uh collectively and my staff, I believe we speak up to five languages now.
• 23:10
  SPEAKER_00: Um so we can help a lot of people in their, yeah, including like Arabic.
• 23:14
  SPEAKER_00: So we've uh we've got uh diverse staff with who can help a lot of different market segments in their native language.
• 23:21
  SPEAKER_00: And um, you know, now that we've got a bigger uh, you know, team, I've got people focusing on commercial insurance, I've got people focusing on health, Medicare products, things like that.
• 23:29
  SPEAKER_00: So we do offer everything, but home has always been my passion.
• 23:33
  SPEAKER_00: It's what I know, you know, better than anything else.
• 23:36
  SPEAKER_00: And it's you know always been the flagship product of my agency.
• 23:40
  SPEAKER_01: What would you what would be the tip you would give a person that's gonna be trying to get their first homeowners policy or even maybe in the escrow process when they're interviewing people to talk to insurance brokers, insurance companies, what would you tell them?
• 23:54
  SPEAKER_00: Yeah, I would say shop early, first of all, because you never know when you're gonna be able to get coverage or not.
• 23:59
  SPEAKER_00: And I don't know how this happens.
• 24:00
  SPEAKER_00: So many people tell me that they'd spoke to an agent who told them I'm gonna be able to get you coverage on a policy um on a property, and then they come back later and say, I can't.
• 24:09
  SPEAKER_00: I don't know how I mean we we've never told someone that they'll take care of you.
• 24:13
  SPEAKER_00: Yeah, and I mean we we pretty much always can, but we always know that the product that we offer is unless there's some material misinformation that's you know not given to us up front, and such as, hey, you know, the home's gonna be vacant for six months, I'm gonna be doing a major renovation, something like that, and that's not disclosed to us up front.
• 24:29
  SPEAKER_00: Um, you know, as long as it's nothing like that, we we know that the quotes that we're giving you are gonna be valid.
• 24:34
  SPEAKER_00: Um so, but I would I would just say, you know, shop early, speak to someone who's an independent broker who has the ability to shop around for you with multiple carriers.
• 24:43
  SPEAKER_00: Um, you know, as bro, as insurance agents, we get paid on based on the we get paid based on the you know number of clients we have, the number of pre the amount of premium we have in our book.
• 24:53
  SPEAKER_00: And when you're talking to a state farm agent, a farmer's agent, an all-state agent, um, you know, they're gonna have a more diverse, uh, they're gonna have a less diverse product offering for you.
• 25:02
  SPEAKER_00: And they really need your business to get paid.
• 25:05
  SPEAKER_00: So they're gonna try to, you know, basically we like to say they try to shove a square peg through a round hole because different insurance companies are gonna have different niches.
• 25:11
  SPEAKER_00: So, for example, I know if it's a new construction, um, you know, that's mercury all day long.
• 25:16
  SPEAKER_00: They love new constructions.
• 25:18
  SPEAKER_00: They figure, you know, rightly so, they're less likely to have any major problems because everything is new on them.
• 25:23
  SPEAKER_00: So they're normally 20 to 30 percent below everyone else in the market.
• 25:27
  SPEAKER_00: Um, Berkshire Hathaway Guard recently exited California, but for a long time, uh, you know, Antelope Valley, Bakersfield, you know, areas like that that are maybe a bit more spread out, slightly more rural.
• 25:39
  SPEAKER_00: Um, they loved they loved uh those areas.
• 25:42
  SPEAKER_00: So I'd be quoting, you know, a home in Lancaster and you know, Mercury Nationwide Progressive, they'd be coming in like 1600 to 2400 for the year.
• 25:50
  SPEAKER_00: And Guard would be coming in, you know, 800 to 1200, significantly less.
• 25:55
  SPEAKER_00: So if you're talking to a state farm agent and their rate is 1600, they're gonna be trying to tell you why they're the best company and why, you know, you need to take that$1,600 rate versus speaking to someone like me, I can say, hey, these are what all these other companies are offering you.
• 26:07
  SPEAKER_00: However, I'm you know able to give you this one that's much cheaper.
• 26:11
  SPEAKER_00: Um, my standard of practice is I always try to give you two to three options, even if the choice is really obvious like that, um, where someone is just half everyone else, I still want to show you the other options just so you can see what else is there.
• 26:24
  SPEAKER_00: And so you can see that, you know, I did my due diligence and I'm not just trying to stick you in one place.
• 26:29
  SPEAKER_00: I would say nowadays that's a little harder for me to do, to give multiple options because with the current insurance crisis and how close the markets are, a lot of times these days there aren't multiple options anymore.
• 26:38
  SPEAKER_00: A lot of times, hey, this is the only place I can give you.
• 26:41
  SPEAKER_00: But I've got a lot of places to go to that could potentially be the only place rather than just you know one company that can either do it or not do it.
• 26:49
  SPEAKER_01: I I appreciate you taking the time today.
• 26:52
  SPEAKER_01: If somebody wants to reach out to you, Scott, what numbers where would be the best place for them to do so?
• 26:57
  SPEAKER_00: Yeah, absolutely.
• 26:58
  SPEAKER_00: So um and of course, no one no one has their numbers memorized these days anymore.
• 27:03
  SPEAKER_00: So I mean I'll give I'll give my cell.
• 27:05
  SPEAKER_00: So I mean my cell is 661-313-3762.
• 27:10
  SPEAKER_00: And then office, um, I'll pull up my office number.
• 27:13
  SPEAKER_00: So um office is 747 250 8557.
• 27:20
  SPEAKER_00: And I've got a great team of you know talented individuals.
• 27:23
  SPEAKER_00: A lot of them have a lot of years of experience that are happy to help.
• 27:27
  SPEAKER_01: Now, the other thing too, I'll I'll point out to the folks that are watching, there's a lot of accountability that goes on with Scott.
• 27:33
  SPEAKER_01: So if I'm dealing with one of his staff or one of my clients, is it always comes back?
• 27:37
  SPEAKER_01: So I like that accountability section that he has.
• 27:40
  SPEAKER_01: And I guess I guess that's probably just your modus operandi, I guess.
• 27:43
  SPEAKER_00: Yeah, and I would say we actually prefer to do a lot of our business via email rather than um phone, just because that way everything is in writing, everything is date and time stamped, especially when you're dealing with insurance coverage that can be complicated.
• 27:56
  SPEAKER_00: You know, people uh people can always come back and try to say it's like, hey, you know, you told me this, and we can go back and say, actually, no, this was our conversation.
• 28:03
  SPEAKER_00: There's there's there's never any ambiguity.
• 28:05
  SPEAKER_00: And it it's good for us to have a phone conversation.
• 28:07
  SPEAKER_00: We're doing the original conversations explaining everything, but we try to follow up with emails, and my team copies me on most of their emails as well.
• 28:15
  SPEAKER_00: So, you know, if someone tells me it's like, hey, you know, I've been, you know, so and so never got back to me, I can you know check my emails, but oh, I see and I see we did actually reach out to you at this date.
• 28:23
  SPEAKER_00: You know, the this email shows here where we sent you the quotes.
• 28:26
  SPEAKER_00: Oh, sorry, it went into my spam or something like that.
• 28:28
  SPEAKER_00: So, and then if if something does fall through the cracks, I can find that.
• 28:31
  SPEAKER_00: But I mean, you know, nine times out of ten, we're you know, everything everything is done properly.
• 28:36
  SPEAKER_00: It might just be a matter of, you know, some something got missed.
• 28:39
  SPEAKER_00: Or one of the common things I get is if I'm is if uh someone gets referred to me and um you know one of my team members is the one that helps them instead of me, they may not always realize that that person you know belongs to me.
• 28:51
  SPEAKER_00: So they might, you know, someone like Connor might hear.
• 28:53
  SPEAKER_00: It's like, hey, Scott, didn't get back to me.
• 28:54
  SPEAKER_00: It's like, well, you know, I didn't personally, but you know, one of my amazing agents was helping them, so they did get helped.
• 29:01
  SPEAKER_01: Very good.
• 29:02
  SPEAKER_01: I do appreciate your time today.
• 29:03
  SPEAKER_01: I think you did shed a lot of light on what people are looking for, and you answered a lot of questions that I know that the listeners are gonna have in the future.
• 29:11
  SPEAKER_01: Definitely I'll post your numbers here within the show.
• 29:14
  SPEAKER_01: And do you have anything in closing for everyone out there?
• 29:18
  SPEAKER_00: I appreciate the time and I could sit on a soapbox and talk about insurance all day.
• 29:23
  SPEAKER_00: So I'm, you know, always happy to talk to you.
• 29:25
  SPEAKER_00: Any questions you have, you know, let me know.
• 29:28
  SPEAKER_01: Thank you.
• 29:28
  SPEAKER_01: Any changes that come up in the market, I know you know, you know, I monitor every day moment by moment.
• 29:33
  SPEAKER_01: I'll definitely have you back on the show.
• 29:35
  SPEAKER_01: And thank you for being such a wonderman.
• 29:36
  SPEAKER_00: Yeah, I will do.
• 29:37
  SPEAKER_00: There's actually some really amazing things that are coming through for high value homes.
• 29:41
  SPEAKER_00: I don't really think there's many homes in Santa Clarita that are going to fall into quite this high value market segment, but some incredible things that are coming down the pipeline, including um the ability for sellers to be able to transfer the insurance to their buyers, which right now is not possible.
• 29:56
  SPEAKER_00: And this this one product for high value homes is so far the only thing on the market that allows for it.
• 30:01
  SPEAKER_00: But um, we believe it's gonna be very successful, and then other companies might start, you know, taking that model and applying it to their uh to their own uh policies.
• 30:11
  SPEAKER_01: What's the determination factor for high value?
• 30:13
  SPEAKER_01: Is it a number or based on something else?
• 30:15
  SPEAKER_00: Yeah, it's typically dwelling amount and um high value also has just like Firezone has tiers as well.
• 30:20
  SPEAKER_00: So a lot of companies after about 1.5 to 2 million in reconstruction costs classifies as a high value and might be out.
• 30:26
  SPEAKER_00: This company in particular I'm talking about, they need a dwelling value of about five million uh five million or more.
• 30:32
  SPEAKER_00: My highest value home I have in the books right now is about 18 million in dwelling.
• 30:36
  SPEAKER_00: Um, it's quite quite an exquisite house.
• 30:38
  SPEAKER_00: Um, so yeah, we don't we don't see a lot of houses that are you know 10 to 18 million in reconstruction cost in Santa Clarita.
• 30:45
  SPEAKER_00: That's gonna be more, you know, Beverly Hills, like LA, uh, you know, maybe Malibu, places like that.
• 30:50
  SPEAKER_00: Um, but some really, really exciting things that this company is doing that other insurance companies are, you know, interested in.
• 30:57
  SPEAKER_00: And if it's successful, it's going it's also gonna help take care of uh I don't, you know, it would take a long time for me to go over all the aspects of this new program, but um it would help with capacity issues as well, because there's different ways that they monitor and control their capacity to help make sure the risk is diversely spread out in a way that you know protects their loss ratio in the event of claims.
• 31:17
  SPEAKER_00: So if all the insurance companies start to emulate the things in this program, we could see some market relief that way as well.
• 31:23
  SPEAKER_00: I think that's uh I think that's probably pretty far down the pipeline.
• 31:27
  SPEAKER_00: Um, by the way, one of the things I didn't get to mention about the regulatory changes I mentioned earlier is the deadline to implement those is the end of this is uh the end of this year.
• 31:35
  SPEAKER_00: So it has to be implemented by January 2025.
• 31:38
  SPEAKER_00: You asked about conspiracy theories.
• 31:39
  SPEAKER_00: I'm not that big into conspiracy theories.
• 31:41
  SPEAKER_00: I will point out that January 2025 is right after the election.
• 31:45
  SPEAKER_00: So that's uh that's something to consider.
• 31:48
  SPEAKER_01: There's a lot, there is so much happening.
• 31:50
  SPEAKER_01: Artificial intelligence, yeah.
• 31:52
  SPEAKER_01: We could do a whole show on just the way we just created our master, it's gonna be fantastic.
• 31:57
  SPEAKER_00: And artificial intelligence is working on you know risk modeling now for insurance companies, they're using drone technologies to survey areas and re remap areas or re underrate homes.
• 32:06
  SPEAKER_00: Uh, so many things are happening.
• 32:07
  SPEAKER_00: Again, I could spend all day talking about this.
• 32:10
  SPEAKER_01: Thank you very much.
• 32:11
  SPEAKER_01: We'll definitely have you on again, Scott Wilk.
• 32:13
  SPEAKER_01: And uh, I appreciate your time today.
• 32:15
  SPEAKER_01: Thank you.
• 32:15
  SPEAKER_01: Thank you for your time, Connor.
• 32:16
  SPEAKER_01: Appreciate you.