So why is their name on paperwork you got for your renters insurance? Is this a case of fraud? Should you cancel your credit card? Who is this American Bankers company that you’ve never heard of? And why is your actual policy number on this paperwork from a company you’re not familiar with?
Relax, You’re Not A Victim
That’s right. If you received paperwork from American Bankers Insurance Company of Florida, it’s not because you’re a victim of some sort. But to understand why this happened, you need to understand a bit about how insurance companies work. Every insurance company has a brand and a national name that they trade under. In the case of the paperwork you got, that brand name is Assurant renters insurance.
If you bought Assurant renters insurance, the declarations page will likely say American Bankers Insurance Company of Florida. That’s the “writing company” that they use. Assurant does business in a number of different types of insurance. Back when they used to write health insurance, the writing companies were Time Insurance Company and John Alden Insurance Company.
Why Is There A Different Writing Company On My Declarations Page?
There are four major reasons that you’ll see a different writing company on your renters insurance declarations page, other than the brand name that you bought the policy from. When you dig deeper, there are other reasons that companies do this, as well, but here are the most common reasons.
Spread The Risk
Renters insurance companies write many types of business. It’s just good risk management to spread out the risk from different types of business among different companies that are subsidiaries of the insurance company, in order to prevent one large catastrophic loss from impacting the entire company.
If you buy a policy that’s written through American Bankers insurance, that company is a separate subsidiary of Assurant. That means that no matter how many losses there are on renters insurance policies, it won’t affect their other lines of business. Their health insurance customers are safe from those losses, and they know their claims will be paid by a separate company and a separate pool of funds. Even the investments of those funds are separate.
Writing Companies In Multiple States
If an insurance company wants to do business in multiple states, there are significant regulatory hurdles to entering a new state. Further, a writing company that is compliant with the requirements of one state may actually not be able to do business in another state because of steps they’ve taken to comply with the requirements of the first state! The rules are specific and unique to each state, and it makes more practical sense in many cases to have a separate company to do business in each state.
This also ties back to spreading the risk, as well. If you have a company writing Texas Renters Insurance, there are unique types of risk and even unique policy forms to be found there. Ideally, the risks faced by the Texas writing company should not impact Los Angeles Renters Insurance policyholders.
Want To Start An Insurance Company? Not So Fast!
If you want to start an insurance company… You don’t start an insurance company. Generally speaking, outside of captives which are a unique situation unto themselves, it’s far more efficient to buy an insurance company and change the types of policies that it offers.
There’s an added benefit to this, as well, from a marketing standpoint. There’s a non-standard auto insurance company out there claiming to have been around for close to fifty years. The brand certainly hasn’t been around that long. The company that owns them hasn’t been around that long. But the writing company that they purchased has, in fact, been writing insurance for the period of time that they claim and so it’s a valid and legitimate statement for them to make.
Already Writing Insurance And Want To Sell Different Kinds? Why Write When You Can Sell?
One large insurance company with a massive marketing budget started out selling auto insurance. They decided they wanted to add renters and homeowners insurance, but they didn’t want to go through the process of starting or acquiring a company to write those products. Instead, they function as an agency. They advertise those products under their brand name, but if you buy a Geico renters insurance policy, it may say American Bankers Insurance Company of Florida, too because they’re an agency for Assurant.
Why Does This Matter?
It’s perfectly normal to see the name of an insurance company that is not the brand name you bought the policy from on your declarations page. It’s not cause for panic or alarm, it’s just the way the insurance industry works. If you still have questions about your renters insurance policy, just call (800)892-4308 or click to get covered - whether you need renters insurance quotes online or coverage anywhere else!
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