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Competition for car insurance getting stronger

A car insurance brochure.
A car insurance brochure.
Photo: RGA

Competition in the car insurance business is getting intense these days. Blame it on the prevalence of many insurance companies offering all types of car insurance bargains available in the market today.

Just like any place across the country, the city of Carson is home to many car insurance agencies whose dependence on the big car companies in Southern California cannot be ignored. If at all, these big car companies are the lifeblood of the car insurance industry for them to survive in the dog-eat-dog
competition of attracting customers from the cross-section of society. But that is not the case.

"Most car insurance agencies still rely on the number of regular customers that they had established long time ago," says Raymond L. Santos, owner of the RLS Insurance Agency which represents the Farmers Insurance Group in the city of Carson. Santos has been in the car insurance business since 1996 which gave him the edge over the others in so far as the tricks of the car insurance operations are concerned.

Although Santos admitted that the presence of the big car companies in Carson like Toyota, Nissan, Honda, GM, Kia and Hyundai should have been the steady sources of revenues for the Carson-based car insurance agencies. "But only few people are buying cars these days because of the economic
recession," he explained in an interview Tuesday.

Even then, "car insurance agents cannot just walk-in and convince the car company manager to tap their insurance products and services that are available as this is not allowed under the established corporate policies of the mother company," he said. He believed that it has legal constraints that should
not be taken for granted at all. "But there are others who violate corporate regulations by directly talking to insiders at these big car companies," he pointed out.

The reason why he is still around, despite the close competition that is going on, could be attributed to the long established clientele that he had, not to mention the practice of networking wherein some friends would refer new customers to him. "But finding new customers is a hard struggle these days," he explained." The problem stemmed from the many car insurance agencies that had sprouted all over Carson. Consequently, "survival of fittest" is now the name of the game.

However, he admitted that the scope for the car insurance market is getting too constricted these days. He put the blame on the "free-for-all" system which now hounds the survival of the car insurance industry in Carson and elsewhere in the country. Those who sell the cheapest insurance coverage may get new
customers, depending on the manner of exposure used by the insurance agent concerned.

For how long, these insurance agencies can endure the pain of attracting new customers, they have no idea. But Santos admitted that right now his business operation is running well. Santos added: "It is not picking up and it is not coming down, too."

Last two years was not good for the car insurance business, he said.  Although he looks forward when the buying frenzy for new cars will pick up this year. After all, those who will benefit from this are the car insurance agencies themselves and their customers as well. But more new cars running on the roads will mean more insurance revenues for car insurance agencies and brokers alike.

And while the California's Department of Motor Vehicles (DMV) requires all vehicle owners to get insurance coverage, the car insurance industry will hang on tight for a long time to come. Otherwise, any vehicle owner without an insurance coverage will be in trouble with the law.

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