This is very simple, Mercury's problems are a
result of bad decision making. Approximately 2 years ago
Mercury dropped their auto rates then assuming that
agents would make up the revenue loss by writing more
new business. This trick didn't work. Mercury's
combined ratio is now approaching 100%, this is a no-no in
the insurance business.
I'll tell you this,
CHEAP RATES are not gonna help Mercury grow. Mercury
must face reality and refocus its efforts towards
Mercury should also face the facts that their is a mass
exodus of tallent leaving the company. How Mercury can
allow a 5 year dedicated employee to leave because of
its failure to pay is just stuppid. Don't they
realize it will take 2 new people to replace that 5 year
Stock holders should make MC and all the others
ran across "Luddites" preparing to teach an
economics class. None of my students had heard of them
My lecture was on off the wall economist or
There once was an economist in Europe who thought the
world's problems could be solved by harnessing the wild
beast and turning the seas into lemonade. He probably
was in charge of the medieval equivalent of the Fed.
filed rates and implementing those rates is huge.
I get a big kick out of Progressive ads where they
say they will tell you who is the most competitive.
Most agents have a tough time coming up with the same
premium twice for any given risk for most companies.
There are so many credits and subjective rates. How
Progressive can truthfully claim to know how to determine
premiums for all the competitor insurance companies is
What happened to questionus?
Shouldn't he be crowing?
The insurance departmeht
probably wouldn't let me use the word mockery in the name
of the company. That's too blatant.
The stock did indeed fall on the resignation of
Essentially he was considered a very pro
free market insurance person. His resignation makes it
likely that a more consumer oriented person will be put
in charge in CA going forward. That could make it
more difficult to get rate hikes.
At least one
brokerage downgraded MCY (short term) (21st century also)
because they do such a high percentage of their business
in CA. More or less an uncertainty factor.
Most of the releases I have seen remain very positive
on the company long term. I agree.
The problem is we are losing all of our good
people, period. And not necessarily to other Insurance
companies, but to other professions. The high tech (I know
Mercury and MC don't know the meaning of the words)
industry is taking people from the company. Until our top
people figure this out, we will continue to lose these
people. I know it is hard to understand, but to keep
people you actually need to pay them.
might not be the people you want to keep. This is
a risk-taking industry, but you don't necessarily
want risk-takers for employees.
MCY's future is
based on the success of its past. The "high tech"
industry's future is based, in a large part, on conjecture.
Today, I traced an order I placed with Amazon 15 days
ago. They told me it will be 3 - 5 more weeks before I
receive the three books I've ordered. Within two blocks
of my business there are three book stores. If
Amazon can't deliver better service how many more books
will I order from them?
Amazon is relying on
human beings to deliver service.
E-tailing is smoke and mirrors. It's the same old song no
matter what key you sing it in.
If the "high
tech" industry is paying wages above those offered by
MCY... it might be because they are seeking a rare skill
or talent. It is also possible they are paying for
the risk involved in being employed by a shaky
MCY has to meet the market to keep the people they
want to keep... and I bet they are. That's why I'm
I guess I don't know the meaning of
the words "high tech" either. I don't see the romance
in creating a sales medium that attracts active
buyers looking for the lowest price of the day.
Insurance is not a commodity that can be sold at a
reasonable profit without a meaningful two way
You seem to want MCY to pay higher wages than are
necessary and to spend money on technology that isn't
needed. How will that help the shareholders?
any of those that left go to work for INSweb???
A combined of 100 is not a no-no in the insurance
business. The vast majority of MCY's competitors are
significantly above 100. State Farm would kill for a combined
of 100. PGR just announced another earnings warning.
MCY has had excellent experience and expense ratios.
It would appear they know a little about the
management of an insurance company.
secondary to attitude. If the talent that left was sullen
or sour, good riddance.
CHEAP rates can be a
huge factor in determining retention ratios. Companies
only have service, rate and coverage to offer. Beyond
that, they must rely on marketing. You don't believe in
low rate... where would you spend your finite dollars
in order to increase retention?
dissatifaction is epidemic to the insurance industry... if you
believe these boards. Why would a shareholder put any
value in these posts given the universal amount of
whining from disgruntled employees?
BTW: Those who
believe spelling must conform to a single standard didn't
learn to play together nicely in "Kinder"garten.
You make excellent points in your post. I've been
an agent for about 8 years, though I don't sell
Mercury, I know a lot about them and the way they do
business in California. The insurance industry in CA sucks
right now. Mercury, AAA, 21st Century and Progressive
have all droped their rates so low that they're all
not profitable. Now they're all trying to get
approval from the Department of Insurance to raise their
As far as many of Mercury's competitors having a
combined ratio over 100, I really can't speak on that too
much. I can say that many of the direct writers are
suffering from adverse selection. I don't think it's a good
thing to have a combined ratio over 100, maybe it's ok
for a short time if you're a mutual company but not a
corporation. Wall Street has punished Mercury because it's not
I also know that it is VERY dumb to
let good adjusters go to Progressive, AAA, Allstate,
etc... to save money. Mercury's got a reputation for
letting its best and brightest go to save a few bucks.