Insuring Better Business
Nick Rector, career agent, Farm Bureau Insurance
We just came out of the worst drought in six decades. How did it affect you and your business?
My farming clients have certainly felt an impact with the uncertainty of how well their livestock and crops will end up. When our area experiences this kind of weather, it causes farmers to possibly spend less on equipment upgrades, which impacts the business of local implement dealers and others in the economy.
Can you tell us about specific problems you saw as a result of the drought?
The biggest concern I had with my rural clients was the imminent threat of grass fires, and we’ve seen our fair share this summer in Boone County. Several of my clients had to take action by spreading out their bales of hay to avoid losing all of their hay in one fire. I know that some of my farm clients have also had to sell cattle earlier than planned due to the huge jump in price for hay being shipped in.
How is your business model adapting to the Affordable Care provision that lets children stay on their parents’ plan until they are 26?
My health insurance sales are down in 2012, but it’s tough to tell if it’s due to the new provisions or the overall economic situation. I’ve talked with other agents who have also seen a decrease in consumers shopping for health care this year, and in a younger market such as Columbia, there certainly are a lot of individuals taking advantage of being able to stay on their parents’ plan. Like many major changes in an industry, I don’t feel that we will know how successful it is for many years.
What do people need to know about the Affordable Care Act that they might not?
Beginning in 2014 the individual mandate for health coverage kicks in, and it requires most Americans to buy health care or pay a fine. In Columbia, Health Savings Accounts have been popular the past several years, but in January 2013 there will be a cap set by the federal government at $2,500 for tax-free contributions, whereas now it’s been up to the employer to set the limit.
Are there any operational hiccups we might be facing in the next few years as a result of the Affordable Care Act?
I feel that the largest changes in operations will be felt at the health insurance company level. It will be very tough for a lot of the smaller regional companies to survive the immense administrative costs that this law is costing. I realize a major part of this law was to produce more competition from providers, thus bringing the price down; however, my feeling is that you will see more of the major companies buying up the smaller competitors out of necessity.
What has been happening with home insurance since the Joplin tornadoes?
With what occurred on May 22, 2011, more than $2 billion has been paid out in claims. This caused the overall rates of home insurance in Missouri to increase. This claims experience was unprecedented in the amount of lives lost and homes and businesses destroyed. When mixed with the low-interest rates for investing purposes, the entire industry was definitely shaken.
Have the recent higher home insurance rates affected overall sales?
Personally, my year-to-date sales are on pace to outperform 2011. Being able to bundle several discounts with the lines of insurance I sell helps to soften the blow with the rate changes this year.
