The Den: Navigating the Evolving Insurance Landscape & the TN Powell Community with Jared Davidson

The Den: Navigating the Evolving Insurance Landscape & the TN Powell Community with Jared Davidson

In this episode, Eric Whitener, the broker owner of the Knox Fox Real Estate Group, interviews Jared Davidson, the branch manager of the Knoxville branch of Meridian Insurance. They discuss the insurance industry, the challenges facing the real estate market, and Jared's experience living in the Powell, Tennessee area for the past 20 years.

Table of Contents

What is Meridian Insurance and what do you do?

Meridian Insurance is an independent insurance agency. We offer a wide range of insurance products including auto, home, commercial, and life insurance. However, we do not deal with Medicare or health insurance. Our primary focus is to provide comprehensive insurance solutions tailored to our clients' needs.

As an independent agency, we work with multiple insurance carriers to find the best coverage and rates for our clients. This allows us to provide more personalized and flexible insurance options compared to captive agencies that are limited to one company's products.

How is being an independent insurance broker different from a captive model?

Being an independent insurance broker means we are not tied to any one insurance company, unlike captive agents who work exclusively for one insurer like State Farm or Allstate. This independence allows us to shop around multiple carriers to find the best fit for our clients' needs, both in terms of coverage and cost.

We don't charge any additional fees for our services; we are paid commissions by the insurance companies based on the premiums of the policies we sell. This means our clients get the benefit of our expertise and access to multiple carriers without any extra cost. Our business is primarily driven by referrals and networking, rather than extensive advertising, which helps us build trust and long-term relationships with our clients.

What factors are driving the increase in insurance rates?

Several factors are contributing to the rising insurance rates. One major factor is the increasing loss ratios that insurance companies are experiencing. For example, during the pandemic, auto insurance claims spiked, leading to higher loss ratios. On the home insurance side, companies have also faced significant losses, sometimes paying out $1.40 for every dollar they bring in.

Another contributing factor is the investment challenges that insurance companies face. They often invest their profits in safe assets like bonds, but with low interest rates and high inflation, these investments are not yielding the expected returns. Additionally, the cost of repairs and replacements has skyrocketed, making it more expensive for insurance companies to cover claims.

These financial pressures are leading insurance companies to adjust their rates to maintain profitability and ensure they can continue to meet their obligations to policyholders. As a result, consumers are seeing higher premiums and are increasingly shopping around for better rates and coverage options.

How do you work with clients to find the right coverage at the right price?

Our approach to working with clients is very hands-on and educational. Many times, especially with new business owners in the trades, they don't fully understand what coverages they need or why they need them. We take the time to walk them through the different options and explain the importance of each coverage.

We start by assessing their specific needs and potential risks. For instance, if someone is just starting a lawn maintenance business, we look at their current operations—whether they have 10 lawns or 90 lawns—and tailor the coverage to fit their growth stage. As their business expands, we adjust the coverage accordingly to ensure they are always adequately protected.

Our goal is to provide good service and be proactive. Many insurance companies delay sending out proof of insurance, which can hold up payments for jobs. We strive to be efficient so our clients can keep their operations running smoothly. This level of service is crucial, especially for small business owners who need to get paid promptly to maintain cash flow.

What challenges are you seeing in the trades and small business insurance space?

One of the biggest challenges is the cost sensitivity among small business owners and tradespeople. When they are starting out, they are often very price-conscious, which can lead them to underinsure or overlook important coverages. This can be risky because, without the right insurance, they could face significant financial setbacks if something goes wrong.

Another challenge is ensuring that clients understand the scope of their coverage. For example, if a handyman initially gets insurance for laying tile but later starts framing doors, their original policy may not cover these new activities. It's essential to keep the insurance updated to reflect any changes in business operations.

Additionally, the market is seeing a lot of volatility with smaller carriers pulling out due to high reinsurance costs. This unpredictability adds another layer of complexity for small business owners trying to find stable and reliable insurance options.

What are the benefits and drawbacks of being an independent insurance agent?

Being an independent insurance agent has its advantages and disadvantages. The biggest benefit is the flexibility to shop around multiple carriers to find the best fit for our clients in terms of coverage and cost. This independence allows us to offer more personalized and flexible insurance solutions compared to captive agents who are limited to one company's products.

Another benefit is the ability to build long-term relationships with clients. Since we are not tied to any one insurer, our primary focus is on meeting our clients' needs, which helps build trust and loyalty. We don't charge additional fees for our services; we are paid commissions by the insurance companies, so our clients get the benefit of our expertise without any extra cost.

However, one of the drawbacks is the constant need to stay updated with multiple carriers' policies and rates. This can be time-consuming but is necessary to provide the best possible service. Additionally, the market volatility and the financial pressures on insurance companies can sometimes make it challenging to find stable and affordable options for our clients.

What is it like living in the Powell, Tennessee area?

Living in Powell, Tennessee, is like being part of a tight-knit community. The growth in the area has brought in people from outside East Tennessee, but those moving here are excited to be part of this community. They leave their previous homes for a reason and are proud to call East Tennessee their new home.

Personally, I moved here from Maryland to attend Crown College and decided to stay because of how great the community is. My wife, originally from Birmingham, Alabama, also fell in love with Powell. We decided to put down roots here and have been living in Powell for 20 years now.

The community has a lot of history, dating back to its establishment in 1789, even before Knoxville was founded. This historical aspect adds to its charm. The area feels more like an independent small town rather than a suburb, which makes it unique.

Schools in Powell are top-notch, with multiple educational institutions like Temple Baptist Academy, Crown College, Powell High School, and Powell Middle School all located close to each other. The schools are known for their excellent facilities and strong community involvement. The area even has recreational activities like kayaking on Beaver Creek, which adds to the overall quality of life.

While the growth has brought some congestion, especially on Emory Road, it has also introduced more amenities. We now have more grocery stores, a hospital, and a variety of restaurants. Local spots like Scotties and Lente are highly recommended. The growth has brought more options for dining and shopping, making it a more vibrant place to live.

How has the growth and development in Powell impacted the community?

The growth and development in Powell have had both positive and negative impacts on the community. On the positive side, it has brought more amenities and options for residents. More grocery stores, restaurants, and even recreational activities like kayaking have been introduced, making Powell a more vibrant place to live.

However, the growth has also led to increased congestion, especially on Emory Road. This has been a point of concern for many residents. But I prefer to look at the positive aspects of growth. More housing options, including smaller developments and townhomes, are being built. This is essential for accommodating the increasing population and providing affordable housing options.

One of the challenges we face is the rising cost of living, including housing prices. This has made it difficult for young people and families to afford homes. The mentality of "if we don't build it, they won't come" doesn't work because people are already here and need places to live. The lack of affordable housing options can hurt both the elderly and the young, making it crucial to continue building more homes to moderate prices.

Despite these challenges, the overall impact of growth has been positive. The community has managed to retain its small-town feel while offering more amenities and opportunities for its residents. The schools continue to be excellent, and the sense of community remains strong. The growth has brought new life to Powell, making it a great place to live.

What advice would you give to young people looking to buy their first home?

Buying your first home is a significant milestone, and it's essential to approach it with a well-thought-out plan. Here are some pieces of advice for young people looking to buy their first home:

First and foremost, don't give up. Buying a home is a major investment, and it won't be easy. It's important to stay proactive and continue saving, even if you can't buy right now. Keep an eye on interest rates, housing prices, and make sure you're prepared to move when the time comes.

Next, make sure it's the right time for you. The question of whether it's a good time to buy a house is very personal. It depends on your financial situation, job stability, and long-term plans. If you have too much debt, focus on paying it off first to ensure you can afford the house you want without living paycheck to paycheck.

It's also crucial to be realistic about what you can afford. The median sales price in our area is around $340,000 to $350,000. Make a list of the features that are important to you in a home and prioritize them. If you can't afford everything you want right now, create a plan to get there in the future.

Lastly, remember that owning a home comes with long-term financial benefits. While renting may seem easier, it doesn't build wealth in the same way that homeownership does. When you own a home, your mortgage payment stays the same over time, while your income is likely to increase. This creates more disposable income for other investments and expenses.

In summary, buying your first home requires planning, patience, and perseverance. Stay proactive, be realistic about your financial situation, and focus on the long-term benefits of homeownership. With the right approach, you can achieve your goal of owning a home and building a stable financial future.

 

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