Sun Tzu’s famous quote “If you know your enemy and know yourself, you need not fear the result of a hundred battles” can also be applied to being a responsible policyholder with your insurer. It is important to understand how insurers view claims and policyholders in order to maintain a positive relationship and avoid negative consequences such as higher yearly increases, higher excess on claims, and contract cancellation.
To be a responsible policyholder, consider the following:
- Reverse roles and think how you would view your claim history if you were the insurer
- Take care of your belongings and self-insure as much as possible to avoid many small claims
- Avoid over-claiming and only claim what is necessary to restore you to the same position
Insurers pay attention to two key data points: Loss Ratio and Number/Size of Claims.
- Loss ratio is the claims vs premium received. An ideal ratio is below 60%, between 60% and 80% is concerning, and above 80% is a loss for the insurer.
- The number and size of claims also play a role. Frequent small claims may label you as a “habitual claimant” and result in increased excess and coverage removal. Few or no claims can result in discounts from current or alternative insurers.
By tracking these data points, you can stay informed about your status as a policyholder and make necessary adjustments to maintain a positive relationship with your insurer.
With all future claims we will add this crucial information to better equip you.
