Hunter NelsonOwner of Nelson Insurance Agency

High Risk Insurance Profit vs Service Explained

11 Sept 2026 · 1 min

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In this monologue, Hunter Nelson explains why high‑risk insurance is attractive to insurers and managing general agents (MGAs). He argues that because high‑risk policies are the most profitable segment, MGAs often target them, dramatically raise premiums, and then cut costs on service. To reduce expenses they outsource claims handling to low‑cost third‑party administrators (TPAs), which can lead to poorer customer experiences. Nelson acknowledges that not all MGAs are bad, but highlights a common trade‑off: the pursuit of profit can erode service quality and damage reputation compared with traditional insurers that provide more comprehensive support.

Chapters

I'm going to insure everybody that's really tough to insure, raise the prices like crazy because actually high-risk insurance is most profitable to insurance companies. So these MGAs like to get in this high-risk space, do a really poor job because the high-risk space usually needs more service, more attention, whatever the case is. And they're going to say, I'm going to cut all the corners and not do a great job there. I'm going to get a really cheap claims party service called the TPA, a third-party administrator. To handle this thing, and best of luck. I'm gonna make a lot of money off it. Now, I don't want to talk poor on these guys. Most of them are really good, but I'm just saying you can have a bad group of people who are not going to do as good of a job as a normal insurance company. The reputation's not there.