A press release from BusinessWire has indicated that the Great Western Insurance Company (GWIC) of Ogden, Utah, has had  A.M. Best upgrade their Long-Term Issuer Credit Rating to “bbb+” from “bbb”.  The outlook of the Long-Term ICR has been revised to stable from positive while the outlook of the Financial Strength Rating is stable.

The release continues with “GWIC is a prominent insurer in the pre-need space through it extensive funeral home distribution network targeting the growing senior population.  GWIC continues to report positive operating earnings, which historically have benefited from an effective underwriting process and prudent expenses management.”

Historically, GWIC’s business profile has been modest with limited geographical diversification and an exclusive reliance on pre-need insurance products.  A.M. Best does say that GWIC’s stepping into a final expense product and its geographic expansion will be items to watch going forward.

Funeral Director Daily take:  When you operate a funeral home it is important to know all you can about the company that you choose to trust your client’s pre-arrangement dollars to.  Instead of just using a product because you know the sale rep or it offers a high commission you need to choose your product, or products, based on where it puts you in the market place.  Here’s four items I always thought about:

1. Strength of company.  Things such as the A.M. Best rating help, however, as a funeral director I just didn’t believe that I had the financial expertise about the markets to make solid judgments on this.  I read the ratings and would get nervous if a rating fell — for that reason I am not so sure that I ever used a product after I saw a rating fall.  However, I also relied on the State of Minnesota Department of Commerce.  They are experts and if they okayed the financial strength of a company that went a long way with my okay of that company.
2. Face Value over Premium Value.  I always liked to give the consumer what I termed a “bonus” to them.  Most of our policies were Single Premium policies and were issued with a Face Value somewhat higher than the one-time premium.  Most of these values were based on age and the “bonus” value decreased with the age of the applicant.  In any regard, I liked showing consumers that they walked in and put $5000 down and walked out with an immediate coverage of $5500.  That $500 was what I called their “bonus”.
3. Guaranteed Growth Rate.  I always looked for policies that would offer a guaranteed growth rate of about 3%.  I was in the business for 37 years and always knew that our prices would increase about 3% per year.  If I could get that growth on the Face Value I felt very confident that our clients Pre-Need value would keep up with the price of services going forward.
4. Commission.  I always liked a really good commission.  However, you have to be realistic — and if you are asking for an increased bonus Face Value and guaranteed growth of at least 3% — well, then you have to give somewhere else or you insurance company will eventually not be able to pay claims.  I was willing to give on commissions and get less for each policy with the understanding that higher Face Value and good growth would build satisfied customers which would increase my market share over time.  That is exactly what happened.

So, there you have my philosophy.  Make sure that you know and understand your philosophy.  It may be different than mine. . . maybe you need higher commissions to compete with somebody else’s sales force.  That’s ok.  Just know your insurance company partners, how they work, and how they can help you.[wpforms id=”436″ title=”true” description=”true”]