As an insurance agent, your auto insurance loss ratio is the ratio of premiums to the amount of claims paid by the company for your specific book of business. Maintaining a good loss ratio is important because the company gives you liberty to write more policies if your ratio of payouts is low. Occasionally companies also offer bonuses for those with a lower loss ratio. Although you can't control all factors, because accidents do occur, you can do some things to lower your automobile loss ratio.

Step 1.

Check out the area where the individual lives. Although insurance companies know where the highest crime rates occur, these are often in chart form and as averages. You have the advantage because you know your town well. Don't market to these areas.

Step 2.

Use several different companies for quotes. If you find iffy behavior in your client, don't quote companies that offer a bonus for improved loss ratio. You can't refuse to sell insurance, but you don't have to use the same company for every client.

Step 3.

Watch the client's behavior on the cell phone. If it rings constantly while you're interviewing him and he responds, chances are he answers while he drives. This can cause accidents, so use an alternative company for his application.

Step 4.

Direct your marketing list to married men and families, because married men often have fewer accidents than single men the same age. Younger women statistically have fewer accidents and tickets than men the same age, so marketing to women is another option.

Step 5.

Recommend higher deductibles for your clients. Many accidents are fender-benders that don't meet high deductibles or are so close that clients prefer to pay for the damage themselves rather than incur a claim. By recommending a higher deductible, you lower the amount of premium you receive. But that doesn't matter because the potential payouts keep your loss ratio a lot lower.

Step 6.

Secure referrals from clients you know have excellent records. Most people enjoy the company of people similar to them. The maniac driver is seldom included in the carpool-driving list. Ask your clients for names of people they consider good drivers. Explain that the fewer accidents paid by the company, the lower the premium becomes in the future.

Step 7.

Include all the information you can when you're writing an application for clients, and select your marketing list carefully. Ask about any drivers who frequently use the car. A good driver might have a crazy boyfriend or girlfriend who often drives the car. Know your clients well. Include all the information about them on the application so the insurance company can make the selection.