By Mark Jewell, Associated Press (Courtesy of USA Today)
BOSTON — The loss or theft of personal data such as credit card and Social Security numbers soared to unprecedented levels in 2007, and the trend isn't expected to turn around anytime soon as hackers stay a step ahead of security and laptops disappear with sensitive information.
And while companies, government agencies, schools and other institutions are spending more to protect ever-increasing volumes of data with more sophisticated firewalls and encryption, the investment often is too little too late.
"More of them are experiencing data breaches, and they're responding to them in a reactive way, rather than proactively looking at the company's security and seeing where the holes might be," said Linda Foley, who founded the San Diego-based Identity Theft Resource Center after becoming an identity theft victim herself.
Foley's group lists more than 79 million records reported compromised in the United States through Dec. 18. That's a nearly fourfold increase from the nearly 20 million records reported in all of 2006.
Another group, Attrition.org, estimates more than 162 million records compromised through Dec. 21 — both in the U.S. and overseas, unlike the other group's U.S.-only list. Attrition reported 49 million last year.
"It's just the nature of business, that moving forward, more companies are going to have more records, so there will be more records compromised each year," said Attrition's Brian Martin. "I imagine the total records compromised will steadily climb."
But the biggest difference between the groups' record-loss counts is Attrition.org's estimate that 94 million records were exposed in a theft of credit card data at TJX Cos., the owner of discount stores including T.J. Maxx and Marshalls. The TJX breach accounts for more than half the total records reported lost this year on both groups' lists.
The Identity Theft Resource Center counts about 46 million — the number of records TJX acknowledged in March were potentially compromised. Attrition's figure is based on estimates from Visa and MasterCard officials who were deposed in a lawsuit banks filed against TJX.
The breach is believed to have started when hackers intercepted wireless transfers of customer information at two Marshalls stores in Miami — an entry point that led the hackers to eventually break into TJX's central databases.
TJX has said that before the breach, which was revealed in January, it invested "millions of dollars on computer security, and believes our security was comparable to many major retailers."
With wireless data transmission more common, hackers increasingly are expected to target what many experts see as a major vulnerability. Eavesdroppers appear to be learning how to bypass security safeguards faster than ever, said Jay Tumas, the head of Harvard University's network operations, at a recent conference for information security professionals.
"Within a year or two, these folks are catching up," Tumas said.
The two non-profit groups' 2007 data also show rising numbers of incidents in which employees lose sensitive data, as opposed to cases of hacking.
Besides TJX's problem, major 2007 breaches include lost data disks with bank account numbers in Britain, a hacker attack of a U.S.-based online broker's database and a con that spilled resume contact information from a U.S. online jobs site.
"A lot of breaches are due to inadequate information handling, such as laptop computers with Social Security numbers on them that are lost," Foley said. "This is human error, and something that's completely avoidable, as opposed to a hacker breaking into your computer system."
Attrition.org and the Identity Theft Resource Center are the only groups, government included, maintaining databases on breaches and trends each year. They've been keeping track for only a handful of years, with varied and still-evolving methods of learning about breaches and estimating how many people were affected.
Despite those challenges, the two non-profits say it's clear 2007 will end up a record year for the amount of information compromised, because of greater data loss and increased reporting of breaches.
Both groups acknowledge many breaches may be missing from their lists, because they largely count incidents reported in news media that they consider credible. Media coverage has risen in part because of the growing number of states requiring businesses and institutions to publicly disclose data losses. Thirty-seven states, plus Washington D.C., now have such requirements.
Because of proliferation of such laws, "it may take a year or two before things stabilize and we can see what's really happening," Foley said. "If that's the case, then we'll know whether businesses are practicing better information-handling techniques."
For protection against Identy Theft, contact The Howes Insurance Agency
Monday, December 31, 2007
Saturday, December 29, 2007
Space Heater Safety
2 children killed in Dorchester fireMidnight blaze hits triple-decker
Reported by The Boston Globe
Click here for information from the U.S. Consumer Product Safety Commission about space heater safety.
Friday, December 28, 2007
Mass. Fines Safety Insurance over Home Policy Non-renewals
Courtesy of Insurance Journal
Massachusetts Attorney General Martha Coakley's office reports it reached an agreement with Boston-based Safety Insurance Co. over allegations that the company violated the Massachusetts Consumer Protection Law by cancelling or non-renewing 31 consumer home insurance policies for insufficient reasons.
Safety has agreed to pay $41,000 to the Attorney General's Local Consumer Aid Fund and change its practices, according to the terms of a consent judgment filed in Suffolk Superior Court.
The judgment still requires approval by the Court before it becomes effective.
"Consumers are entitled under the law to a clear explanation if their homeowner's insurance policy is going to be cancelled or non-renewed," said Attorney General Coakley. "Today's settlement represents another step toward ensuring that Massachusetts consumers are treated appropriately under the law by their insurance companies."
According to the complaint, Safety allegedly failed, in some instances, to provide specific reasons for the cancellation or non-renewal of insurance policies. In notices sent to homeowners, Safety offered vague reasons such as "underwriting guidelines" for its decisions. Under the terms of the settlement, Safety is required to send notices containing specific reasons for their cancellation and non-renewal decisions to consumers.
Massachusetts Attorney General Martha Coakley's office reports it reached an agreement with Boston-based Safety Insurance Co. over allegations that the company violated the Massachusetts Consumer Protection Law by cancelling or non-renewing 31 consumer home insurance policies for insufficient reasons.
Safety has agreed to pay $41,000 to the Attorney General's Local Consumer Aid Fund and change its practices, according to the terms of a consent judgment filed in Suffolk Superior Court.
The judgment still requires approval by the Court before it becomes effective.
"Consumers are entitled under the law to a clear explanation if their homeowner's insurance policy is going to be cancelled or non-renewed," said Attorney General Coakley. "Today's settlement represents another step toward ensuring that Massachusetts consumers are treated appropriately under the law by their insurance companies."
According to the complaint, Safety allegedly failed, in some instances, to provide specific reasons for the cancellation or non-renewal of insurance policies. In notices sent to homeowners, Safety offered vague reasons such as "underwriting guidelines" for its decisions. Under the terms of the settlement, Safety is required to send notices containing specific reasons for their cancellation and non-renewal decisions to consumers.
Thursday, December 27, 2007
Car insurance tune-up heads for ‘08 collision
Dan Devine, The Boston-Baystate Banner
If 2007 was any indication of what we can expect in the fight over car insurance rates, 2008 is sure to be a heavyweight brawl.
In one corner: former Superior Court judge Nonnie S. Burnes, appointed state insurance commissioner in February by Gov. Deval Patrick.
She inherited the task of implementing the recommendations of the Massachusetts Automobile Insurance Study Group, which called for the state to curb regulation and move toward a competitive structure and market-based rates.
In the other corner: state Attorney General Martha Coakley. Her office warned Burnes that allowing insurers to set their own market rates could mean higher price tags for drivers — especially those in urban areas.
The opening bell rang in July, when Burnes announced a decision to switch to a form of “managed competition” that would allow insurance companies to set their own rates. She made the call after conducting a lengthy review and a series of hearings featuring testimony from insurance officials, consumer advocates and representatives from Coakley’s office.
Burnes disputed the higher rates claim in a July interview with the Banner, saying that a state-hired consultant charged with estimating the impact on those neighborhoods came up with drastically different figures — in some cases, even decreases.
That disparity was just one of several major disconnects during a tumultuous year among legislators, consumer advocates and, particularly, Burnes and Coakley.
Two other key issues — how to define the criteria that insurers may use in making rate and coverage decisions, and whether insurers should be allowed to consider credit scores as one of those factors — dominated discussion as Burnes’ plan came under increased scrutiny.
On the first question, despite months of calls to reconsider her stance, Burnes remained unmoved.
A special state Senate panel in August relayed worries that Burnes’ plan didn’t include adequate protections against insurers using potentially discriminatory rate-setting and coverage criteria.
State law already banned companies from using race and gender to set rates. But the draft regulations for governing managed competition, released in August, didn’t preclude insurers from considering other socioeconomic factors, like occupation or income, that some argued could stand in for the prohibited criteria.
Burnes maintained she would only allow insurers to use socioeconomic factors if they demonstrated the criteria’s use didn’t lead to discriminatory practices. Critics countered by suggesting that Burnes should change the way factors are defined — rather than establishing a set of factors that insurers are barred from using, they said, the list should include only those factors explicitly allowed.
Burnes disagreed, saying “we want to be able to give insurers the flexibility to be innovative, entrepreneurial and creative in making opportunities for consumers.”On that point, she stuck to her guns.
“Despite the urging that I received to state the factors that insurers may consider in proposing their rates … I have determined that such a structure would be too rigid to deliver to our consumers the opportunities that we seek,” Burnes wrote in an Oct. 5 letter announcing the final regulations.
Consumer advocate Stephen D’Amato, a consultant to the Cambridge-based Center for Insurance Research, told the Boston Globe that Burnes’ decision is just “pretending to protect the public without protecting the public.
”While Burnes refused to give in on the definition issue, her position on the use of credit scores did shift.
The draft regulations filed in August forbade insurers from using the scores or report information in setting rates during the transitional period between April 1, 2008, when changes go into effect, and March 31, 2009.
In a September interview with the Banner, Burnes explained that the prohibition was designed to give the Division of Insurance a chance to study the issue.
“We have heard loudly, and often from both sides, two different points of view — one that [credit scores as a criterion] are discriminatory and one that they are not,” Burnes said. “And because I don’t know, I don’t want to get it wrong.
”Burnes held a hearing on the draft regulations in September, where Coakley and several consumer groups argued against the use of credit scores not only in setting rates, but also in deciding whom to insure, or “underwriting.”
According to a published report, Burnes told a consumer advocate during the hearing that state law required her to allow companies to use credit histories in making that decision. But when the final regulations were released, Burnes had changed her tune.
“In response to what I heard at the hearing and read in the filed testimony, I am banning the use of credit information from a consumer reporting agency in underwriting, as well as in rating,” Burnes wrote in her Oct. 5 letter.
Though consumer advocates were pleased at the credit score ban, they balked at what they called “too many loopholes” in the final regulations that could be harmful to consumers.
In the two months since the regulations were finalized, Coakley has worked to ensure that no such harm is done.
While she has said she supports the onset of competition — a claim loudly disputed by insurance company officials — Coakley has issued several “informational bulletins,” raising concerns about potential problems with insurers’ rate filings. She has also triggered public hearings calling for several insurance companies to justify their proposed 2008 rates.
Hearings for five insurers are scheduled to take place next month — including Safety Insurance, one of the eight companies whose rates Burnes has already approved. The disagreement over Safety’s filing could set the stage for a high-stakes clash between the attorney general and insurance commissioner early in 2008 — perhaps a fitting continuation of a frequently combative 2007 in the Commonwealth’s auto insurance market.
Click here to send a letter to the editor
If 2007 was any indication of what we can expect in the fight over car insurance rates, 2008 is sure to be a heavyweight brawl.
In one corner: former Superior Court judge Nonnie S. Burnes, appointed state insurance commissioner in February by Gov. Deval Patrick.
She inherited the task of implementing the recommendations of the Massachusetts Automobile Insurance Study Group, which called for the state to curb regulation and move toward a competitive structure and market-based rates.
In the other corner: state Attorney General Martha Coakley. Her office warned Burnes that allowing insurers to set their own market rates could mean higher price tags for drivers — especially those in urban areas.
The opening bell rang in July, when Burnes announced a decision to switch to a form of “managed competition” that would allow insurance companies to set their own rates. She made the call after conducting a lengthy review and a series of hearings featuring testimony from insurance officials, consumer advocates and representatives from Coakley’s office.
Burnes disputed the higher rates claim in a July interview with the Banner, saying that a state-hired consultant charged with estimating the impact on those neighborhoods came up with drastically different figures — in some cases, even decreases.
That disparity was just one of several major disconnects during a tumultuous year among legislators, consumer advocates and, particularly, Burnes and Coakley.
Two other key issues — how to define the criteria that insurers may use in making rate and coverage decisions, and whether insurers should be allowed to consider credit scores as one of those factors — dominated discussion as Burnes’ plan came under increased scrutiny.
On the first question, despite months of calls to reconsider her stance, Burnes remained unmoved.
A special state Senate panel in August relayed worries that Burnes’ plan didn’t include adequate protections against insurers using potentially discriminatory rate-setting and coverage criteria.
State law already banned companies from using race and gender to set rates. But the draft regulations for governing managed competition, released in August, didn’t preclude insurers from considering other socioeconomic factors, like occupation or income, that some argued could stand in for the prohibited criteria.
Burnes maintained she would only allow insurers to use socioeconomic factors if they demonstrated the criteria’s use didn’t lead to discriminatory practices. Critics countered by suggesting that Burnes should change the way factors are defined — rather than establishing a set of factors that insurers are barred from using, they said, the list should include only those factors explicitly allowed.
Burnes disagreed, saying “we want to be able to give insurers the flexibility to be innovative, entrepreneurial and creative in making opportunities for consumers.”On that point, she stuck to her guns.
“Despite the urging that I received to state the factors that insurers may consider in proposing their rates … I have determined that such a structure would be too rigid to deliver to our consumers the opportunities that we seek,” Burnes wrote in an Oct. 5 letter announcing the final regulations.
Consumer advocate Stephen D’Amato, a consultant to the Cambridge-based Center for Insurance Research, told the Boston Globe that Burnes’ decision is just “pretending to protect the public without protecting the public.
”While Burnes refused to give in on the definition issue, her position on the use of credit scores did shift.
The draft regulations filed in August forbade insurers from using the scores or report information in setting rates during the transitional period between April 1, 2008, when changes go into effect, and March 31, 2009.
In a September interview with the Banner, Burnes explained that the prohibition was designed to give the Division of Insurance a chance to study the issue.
“We have heard loudly, and often from both sides, two different points of view — one that [credit scores as a criterion] are discriminatory and one that they are not,” Burnes said. “And because I don’t know, I don’t want to get it wrong.
”Burnes held a hearing on the draft regulations in September, where Coakley and several consumer groups argued against the use of credit scores not only in setting rates, but also in deciding whom to insure, or “underwriting.”
According to a published report, Burnes told a consumer advocate during the hearing that state law required her to allow companies to use credit histories in making that decision. But when the final regulations were released, Burnes had changed her tune.
“In response to what I heard at the hearing and read in the filed testimony, I am banning the use of credit information from a consumer reporting agency in underwriting, as well as in rating,” Burnes wrote in her Oct. 5 letter.
Though consumer advocates were pleased at the credit score ban, they balked at what they called “too many loopholes” in the final regulations that could be harmful to consumers.
In the two months since the regulations were finalized, Coakley has worked to ensure that no such harm is done.
While she has said she supports the onset of competition — a claim loudly disputed by insurance company officials — Coakley has issued several “informational bulletins,” raising concerns about potential problems with insurers’ rate filings. She has also triggered public hearings calling for several insurance companies to justify their proposed 2008 rates.
Hearings for five insurers are scheduled to take place next month — including Safety Insurance, one of the eight companies whose rates Burnes has already approved. The disagreement over Safety’s filing could set the stage for a high-stakes clash between the attorney general and insurance commissioner early in 2008 — perhaps a fitting continuation of a frequently combative 2007 in the Commonwealth’s auto insurance market.
Click here to send a letter to the editor
Activist vows to fight insurance rate hikes
By Sarah Shemkus
STAFF WRITER, Cape Cod Times
In 2008, Eastham activist Paula Aschettino plans to take her battle over homeowners insurance rates to the Statehouse, the Division of Insurance and, if need be, directly to the governor's office.
"If we do not find that we get any attention, then we will call our citizens to action and go picket at his doorstep," said Aschettino, founder of Citizens for Homeowners Insurance Reform, a regional activist group she formed a little more than a year ago.
Homeowners coverage first became a concern on the Cape and Islands in 2004, when insurance companies began pulling out of the area, claiming there was an unacceptably high risk of catastrophic storm damages.
As companies fled, thousands of homeowners were forced into the FAIR Plan, the state's insurance program that provides coverage for those unable to obtain coverage on the private market.
At the same time, FAIR Plan premiums were going up. In 2006, rates went up by 25 percent on the Cape and Islands. The agency's request for an additional 25 percent increase is currently pending, although state officials may not make that decision until late January or February.
Aschettino became active in the fight after she was dropped by her insurer and had to find alternative coverage. Watching her fellow Cape residents also struggling, she decided to take action.
Her efforts started in October 2006, with a petition demanding changes in several insurance company practices.
That initial petition was so successful that she formed a grass-roots group to fight for insurance reform.
This year, her organization forced the issue into the spotlight, bringing statewide attention to what had previously been viewed as a Cape Cod problem.
"At the beginning of this year, it wasn't on people's radar screen, at least in Boston," said state Sen. Robert O'Leary, D-Barnstable, an advocate for insurance reform. "That's changed — people are aware of the issue now."
Aschettino and her fellow activists have worked to promote potential solutions throughout the year.
They have organized letter-writing campaigns in opposition to the proposed FAIR Plan rate increase and rallied local residents to testify at hearings held by the Special Commission on Homeowners Insurance, a panel the Legislature created to study the issue.
The group also staged a Boston demonstration in front of the annual meeting of the Property Casualty Insurers Association of America, in an attempt to raise awareness among insurance companies about the Cape and Islands' plight.
"I am pleased with what was accomplished in one year," Aschettino said recently. "I feel enthusiastic."
Heading into the new year, her top priority is educating both consumers and lawmakers.
She also hopes to hold public outreach forums to update residents about the ongoing FAIR Plan rate increase struggle and the report issued last month by the special commission.
Most of the 4,000 current members of her group are from the southeastern part of the state; she hopes to add homeowners from the Boston area and the North and South shores.
"That's going to give us more voice," Aschettino said.
Though she has already made significant progress in promoting her cause, Aschettino sees a lot more work left to be done in 2008.
"They are going to hear from us frequently, and see us in the Statehouse," she said. "I think we are going to be very powerful this year, more so than we have been."
STAFF WRITER, Cape Cod Times
In 2008, Eastham activist Paula Aschettino plans to take her battle over homeowners insurance rates to the Statehouse, the Division of Insurance and, if need be, directly to the governor's office.
"If we do not find that we get any attention, then we will call our citizens to action and go picket at his doorstep," said Aschettino, founder of Citizens for Homeowners Insurance Reform, a regional activist group she formed a little more than a year ago.
Homeowners coverage first became a concern on the Cape and Islands in 2004, when insurance companies began pulling out of the area, claiming there was an unacceptably high risk of catastrophic storm damages.
As companies fled, thousands of homeowners were forced into the FAIR Plan, the state's insurance program that provides coverage for those unable to obtain coverage on the private market.
At the same time, FAIR Plan premiums were going up. In 2006, rates went up by 25 percent on the Cape and Islands. The agency's request for an additional 25 percent increase is currently pending, although state officials may not make that decision until late January or February.
Aschettino became active in the fight after she was dropped by her insurer and had to find alternative coverage. Watching her fellow Cape residents also struggling, she decided to take action.
Her efforts started in October 2006, with a petition demanding changes in several insurance company practices.
That initial petition was so successful that she formed a grass-roots group to fight for insurance reform.
This year, her organization forced the issue into the spotlight, bringing statewide attention to what had previously been viewed as a Cape Cod problem.
"At the beginning of this year, it wasn't on people's radar screen, at least in Boston," said state Sen. Robert O'Leary, D-Barnstable, an advocate for insurance reform. "That's changed — people are aware of the issue now."
Aschettino and her fellow activists have worked to promote potential solutions throughout the year.
They have organized letter-writing campaigns in opposition to the proposed FAIR Plan rate increase and rallied local residents to testify at hearings held by the Special Commission on Homeowners Insurance, a panel the Legislature created to study the issue.
The group also staged a Boston demonstration in front of the annual meeting of the Property Casualty Insurers Association of America, in an attempt to raise awareness among insurance companies about the Cape and Islands' plight.
"I am pleased with what was accomplished in one year," Aschettino said recently. "I feel enthusiastic."
Heading into the new year, her top priority is educating both consumers and lawmakers.
She also hopes to hold public outreach forums to update residents about the ongoing FAIR Plan rate increase struggle and the report issued last month by the special commission.
Most of the 4,000 current members of her group are from the southeastern part of the state; she hopes to add homeowners from the Boston area and the North and South shores.
"That's going to give us more voice," Aschettino said.
Though she has already made significant progress in promoting her cause, Aschettino sees a lot more work left to be done in 2008.
"They are going to hear from us frequently, and see us in the Statehouse," she said. "I think we are going to be very powerful this year, more so than we have been."
Wednesday, December 26, 2007
AG putting up roadblocks
By Boston Herald Editorial Staff
The winner of a growing turf war between Insurance Commissioner Nonnie Burnes and Attorney General Martha Coakley may turn out to be Massachusetts drivers. After all, the skirmish appears to center on which one can deliver the lowest auto insurance rates.
But drivers will only benefit over the long term if Coakley drops what appears to be a push for a return to the old, heavily-regulated way of doing things.
In recent weeks, Coakley has raised the ire of the state’s auto insurers by issuing multiple warnings about next year’s rate filings, then ordering public hearings on the filings of five companies.
Coakley argues that the state’s five largest carriers are “overcharging” customers - overestimating their losses, and taking advantage of loosened regulations to pad their profits.
Under the old system, Coakley keeps insisting, drivers might have been entitled to a deeper cut in rates than those insurance companies are now proposing. (A 7 or 8 percent average rate reduction - much more for some drivers - apparently doesn’t cut it.)
But that’s just the point - that was the old system. Under a competitive auto insurance system, drivers will for the first time have the option of bailing on a company that fails to offer the best deal.
For her part, Burnes (a former judge and architect of “managed competition”) has made it clear that she’s comfortable with at least eight of the companies’ rate filings, certifying them last week. Eleven more are pending. Burnes will, however, hold hearings on the five carriers that Coakley has flagged. One of them, Commerce Insurance, Burnes has raised her own concerns about.
The attorney general is rightfully concerned that drivers under the new system be educated on their options, and learn how to choose a carrier that offers them the best deal. It is appropriate for her to examine the filings and ensure that no company is sidestepping the sensible and fair regulations that Burnes has established.
But given the misguided call by some lawmakers to scrap competition before it even starts - and the heavy hand that Coakley now appears to be wielding - we can’t help but be concerned. Coakley says she isn’t anti-competition. Now is her opportunity to prove it.
The winner of a growing turf war between Insurance Commissioner Nonnie Burnes and Attorney General Martha Coakley may turn out to be Massachusetts drivers. After all, the skirmish appears to center on which one can deliver the lowest auto insurance rates.
But drivers will only benefit over the long term if Coakley drops what appears to be a push for a return to the old, heavily-regulated way of doing things.
In recent weeks, Coakley has raised the ire of the state’s auto insurers by issuing multiple warnings about next year’s rate filings, then ordering public hearings on the filings of five companies.
Coakley argues that the state’s five largest carriers are “overcharging” customers - overestimating their losses, and taking advantage of loosened regulations to pad their profits.
Under the old system, Coakley keeps insisting, drivers might have been entitled to a deeper cut in rates than those insurance companies are now proposing. (A 7 or 8 percent average rate reduction - much more for some drivers - apparently doesn’t cut it.)
But that’s just the point - that was the old system. Under a competitive auto insurance system, drivers will for the first time have the option of bailing on a company that fails to offer the best deal.
For her part, Burnes (a former judge and architect of “managed competition”) has made it clear that she’s comfortable with at least eight of the companies’ rate filings, certifying them last week. Eleven more are pending. Burnes will, however, hold hearings on the five carriers that Coakley has flagged. One of them, Commerce Insurance, Burnes has raised her own concerns about.
The attorney general is rightfully concerned that drivers under the new system be educated on their options, and learn how to choose a carrier that offers them the best deal. It is appropriate for her to examine the filings and ensure that no company is sidestepping the sensible and fair regulations that Burnes has established.
But given the misguided call by some lawmakers to scrap competition before it even starts - and the heavy hand that Coakley now appears to be wielding - we can’t help but be concerned. Coakley says she isn’t anti-competition. Now is her opportunity to prove it.
Mass. AG seeks to reduce workers comp. insurance rates
Boston Business Journal
The Massachusetts attorney general's office said Monday the state will initiate a hearing to seek reductions in workers compensation insurance rates for 2008.
"Businesses, particularly small businesses, can't afford to overpay for insurance coverage in these hard economic times," said Attorney General Martha Coakley in a statement.
Workers compensation insurance pays lost wages, compensation for permanent injuries, and reimbursement for injury related services caused by job-related injuries. The insurance companies, through their trade group, the Workers Compensation Rating and Inspection Bureau, must file with the commissioner at least every two years to update their rates. Rates are then set by the Commissioner of Insurance through an administrative rate hearing process.
In May of this year, the AG's office and the Patrick administration said a 16.9 percent rate rollback was approved by the commissioner in the previous year's rate case. As part of that settlement, the AG's office won the right to trigger another rate hearing in 2008; normally the WCRIB would not have had to file until 2009.
The Massachusetts attorney general's office said Monday the state will initiate a hearing to seek reductions in workers compensation insurance rates for 2008.
"Businesses, particularly small businesses, can't afford to overpay for insurance coverage in these hard economic times," said Attorney General Martha Coakley in a statement.
Workers compensation insurance pays lost wages, compensation for permanent injuries, and reimbursement for injury related services caused by job-related injuries. The insurance companies, through their trade group, the Workers Compensation Rating and Inspection Bureau, must file with the commissioner at least every two years to update their rates. Rates are then set by the Commissioner of Insurance through an administrative rate hearing process.
In May of this year, the AG's office and the Patrick administration said a 16.9 percent rate rollback was approved by the commissioner in the previous year's rate case. As part of that settlement, the AG's office won the right to trigger another rate hearing in 2008; normally the WCRIB would not have had to file until 2009.
Thursday, December 20, 2007
State approves rates for 8 auto insurers
Cape Cod Times
December 20, 2007
BOSTON — The Massachusetts insurance commissioner has approved 2008 rates for eight auto insurers after finding their rate proposals fair to consumers.
The eight are the first to win clearance as the state shifts to a system in which auto insurers rather than regulators set rates.
Insurance Commissioner Nonnie Burnes has cleared rate proposals from State Farm; Fireman's Fund; Quincy Mutual; Praetorian; Safety; OneBeacon; Amica; and Farm Family.
Their new rates will take effect for new policies and renewals beginning next April.
Filings made last month by 11 other insurers remain under review.
Attorney General Martha Coakley has argued five insurers have proposed rates that are unfair to consumers.
Hearings have been scheduled before Burnes, starting with Commerce Insurance on Jan. 9.
Hearings will also be held in January for Safety Insurance Co., Premier Insurance Co., Hanover Insurance Group and Arbella Insurance Co.
Massachusetts is the only state in which auto insurance rates are set by regulators. This approach has driven many insurers from the state since the 1990s.
In an effort to drive down prices, attract more insurance companies and give consumers more coverage choices, Burnes has introduced the new rate-setting system known as managed competition.
The first round of proposed rates under this plan were submitted at the end of November and will be effective for renewals and new policies as of April 1.
Most of the filings by the 19 insurers now writing policies in Massachusetts include some of the same discounts, such as price breaks for insuring multiple cars or using public transit. Some companies, however, have come up with more innovative discounts aimed at certain target markets.
Some consumer advocates, however, say the first round of rate requests don't cut insurance premiums enough.
December 20, 2007
BOSTON — The Massachusetts insurance commissioner has approved 2008 rates for eight auto insurers after finding their rate proposals fair to consumers.
The eight are the first to win clearance as the state shifts to a system in which auto insurers rather than regulators set rates.
Insurance Commissioner Nonnie Burnes has cleared rate proposals from State Farm; Fireman's Fund; Quincy Mutual; Praetorian; Safety; OneBeacon; Amica; and Farm Family.
Their new rates will take effect for new policies and renewals beginning next April.
Filings made last month by 11 other insurers remain under review.
Attorney General Martha Coakley has argued five insurers have proposed rates that are unfair to consumers.
Hearings have been scheduled before Burnes, starting with Commerce Insurance on Jan. 9.
Hearings will also be held in January for Safety Insurance Co., Premier Insurance Co., Hanover Insurance Group and Arbella Insurance Co.
Massachusetts is the only state in which auto insurance rates are set by regulators. This approach has driven many insurers from the state since the 1990s.
In an effort to drive down prices, attract more insurance companies and give consumers more coverage choices, Burnes has introduced the new rate-setting system known as managed competition.
The first round of proposed rates under this plan were submitted at the end of November and will be effective for renewals and new policies as of April 1.
Most of the filings by the 19 insurers now writing policies in Massachusetts include some of the same discounts, such as price breaks for insuring multiple cars or using public transit. Some companies, however, have come up with more innovative discounts aimed at certain target markets.
Some consumer advocates, however, say the first round of rate requests don't cut insurance premiums enough.
Wednesday, December 19, 2007
Protect Your Home Against Damage from Freezing Weather
As if slippery sidewalks and snow-covered cars aren’t bad enough during the winter, you face another potential headache: ruined carpets and water damage to your ceilings and walls from leaks caused by ice dams or bursting pipes. You can avoid the resulting aggravation and expense by taking several basic steps right now to prevent this kind of damage.
First Things First
If you're handy with a hammer and screwdriver, you can do much of the work yourself. Work involving your home's structure may require a building contractor, however, or even a registered design professional such as an architect or engineer.
Before making any structural changes to your home, check with your local building officials to be sure what you're doing complies with local building codes.
Ice Dams
An ice dam is an accumulation of ice at the lower edge of a sloped roof, usually at the gutter. When interior heat melts the snow on the roof, the water will run down and refreeze at the roof's edge, where temperatures are much cooler. Eventually, the ice builds up and blocks water from draining off of the roof. This, in turn, forces the water under the roof covering and into your attic or down the inside walls of your house. Once an ice dam forms, the potential damage can be serious. Take these steps now to avoid trouble later:
Unfortunately, ice dams may be unavoidable if your home has recessed lighting near the roof. Heat generated from these lights melts snow, which then contributes to ice dam buildup. The only sure way to avoid this problem is to eliminate recessed light fixtures near the roof.
Freezing Pipes
Frozen water in pipes can cause water pressure buildup between the ice blockage and the closed faucet at the end of a pipe, which leads to pipes bursting at their weakest point. Pipes in attics, crawl spaces and outside walls are particularly vulnerable to freezing in extremely cold weather, where holes in your house’s outside wall for television, cable or telephone lines allow cold air to reach them.To keep water in pipes from freezing, take the following steps:
First Things First
If you're handy with a hammer and screwdriver, you can do much of the work yourself. Work involving your home's structure may require a building contractor, however, or even a registered design professional such as an architect or engineer.
Before making any structural changes to your home, check with your local building officials to be sure what you're doing complies with local building codes.
Ice Dams
An ice dam is an accumulation of ice at the lower edge of a sloped roof, usually at the gutter. When interior heat melts the snow on the roof, the water will run down and refreeze at the roof's edge, where temperatures are much cooler. Eventually, the ice builds up and blocks water from draining off of the roof. This, in turn, forces the water under the roof covering and into your attic or down the inside walls of your house. Once an ice dam forms, the potential damage can be serious. Take these steps now to avoid trouble later:
- Keep the attic well ventilated. The colder the attic, the less melting and refreezing on the roof.
- Keep the attic floor well insulated to minimize the amount of heat rising through the attic from within the house.
Unfortunately, ice dams may be unavoidable if your home has recessed lighting near the roof. Heat generated from these lights melts snow, which then contributes to ice dam buildup. The only sure way to avoid this problem is to eliminate recessed light fixtures near the roof.
Freezing Pipes
Frozen water in pipes can cause water pressure buildup between the ice blockage and the closed faucet at the end of a pipe, which leads to pipes bursting at their weakest point. Pipes in attics, crawl spaces and outside walls are particularly vulnerable to freezing in extremely cold weather, where holes in your house’s outside wall for television, cable or telephone lines allow cold air to reach them.To keep water in pipes from freezing, take the following steps:
- Fit exposed pipes with insulation sleeves or wrapping to slow the heat transfer. The more insulation the better.
- Seal cracks and holes in outside walls and foundations near water pipes with caulking.
Keep cabinet doors open during cold spells to allow warm air to circulate around pipes (particularly in the kitchen and bathroom). - Keep a slow trickle of water flowing through faucets connected to pipes that run through an unheated or unprotected space. Or drain the water system, especially if your house will be unattended during cold periods.
For more information about protecting your home from damage in freezing weather, check these other publications from the Institute for Business & Home Safety: "Natural hazard mitigation insights: Ice Dams" and "Natural hazard mitigation insights: Freezing and Bursting Pipes."
Review your homeowners insurance policy periodically with your insurance agent or company representative to make sure you have sufficient coverage to protect the investment you’ve made in your home. Report any property damage to your insurance agent or company representative immediately and make temporary repairs to prevent further damage.
For information about filing an insurance claim after an ice dam or bursting pipes have caused damage to your home, contact your insurance agent or insurance company.
Insurance Information Institute 110 William StreetNew York, NY 20038
Tuesday, December 18, 2007
AG, auto insurers clash over rates
Coakley calls for hearings on Hanover, Arbella
By Bob Kievra TELEGRAM & GAZETTE STAFF
rkievra@telegram.com
In a sign that the road to managed competition has grown bumpy for the state’s auto insurers, an industry trade group lashed out at Attorney General Martha Coakley yesterday, the same day her office said the Hanover Insurance Group Inc. of Worcester and Arbella Mutual Insurance Co. of Quincy would overcharge customers by more than $25 million in proposed 2008 rates.
Ms. Coakley called for state regulatory hearings on the two companies a week after she made a similar request for three of the state’s largest automobile insurers, including the Premier Insurance Co. of Worcester, which does business as Travelers of Massachusetts, Webster-based Commerce Group Inc. and Safety Insurance Co. of Boston. Ms. Coakley said the three, which collectively control 49.4 percent of the market, are seeking to overcharge customers by more than $100 million.
Massachusetts auto insurers are in a period of transition after state regulators scrapped the former system of establishing a single rate for all companies to charge. Instead, the state is permitting companies to establish their own rates, subject to certain conditions and regulatory approval by Insurance Commissioner Nonnie S. Burnes.
In the past week, Ms. Coakley has challenged the rate filings by five insurers, which sets in motion a hearing before Ms. Burnes. The first scheduled hearing is Jan. 9 for Commerce Insurance. A preliminary hearing on the Commerce filing will be held tomorrow.
In questioning the Hanover and Arbella filings, Ms. Coakley said that each filing included a variety of shortcomings, including inflated expenses and loss projections and a built-in profit provisions far greater than those permitted by previous insurance commissioners.
In an interview, Ms. Coakley said it remains unclear whether managed competition will result in lower rates for consumers or just bigger profits for insurance companies.
Had the old system remained in place, rates for 2008 would have likely been reduced by approximately 11 percent, she said. “This is not a slight on the Massachusetts insurers,” she said. “But keep in mind that we make people buy insurance in Massachusetts. Our job is to make sure that in this year of transition, the companies play fair.”
Ms. Coakley said the insurance commissioner will have the ultimate authority over the rates but said her job is to question the process, seek out information and promote transparency that assists the person buying insurance
Hanover and Arbella officials defended their rate filings.
Vincent V. Nieroda, president of Hanover’s personal lines group for Massachusetts, said the property and casualty insurer, with 3.6 percent of the market, was not surprised that a rate hearing was requested. Hanover’s proposal calls for an 8.2 percent reduction in automobile rates next year.
“The attorney general has targeted the major players in the market for hearings on this matter,” he said.
Arbella, the state’s third-largest insurer, with 9.3 percent of the market, is seeking rates that would reduce premiums by 7.7 percent.
The company, which insures 375,000 automobiles, said in a statement the attorney general “has inexplicably singled out companies who filed for the largest rate decreases, an action that appears to be anything but pro-consumer.”
Those comments were echoed by a statement earlier in the day from James. T. Harrington, executive director of the Massachusetts Insurance Federation, a trade group representing many of the state’s property and casualty insurers.
Mr. Harrington said the attorney general is using all of her resources to prevent managed competition from occurring, which gives pause to any national insurers who are contemplating entering the Massachusetts market.
“Regrettably, she has decided to focus on scaring consumers away from choice by making baseless and inflammatory claims relative to potential impacts,” Mr. Harrington said.
James A. Ermilio, executive vice president and general counsel at Commerce Group Inc., said the state’s largest auto insurer intends to mount a strong defense of its proposed premiums.
“I don’t want to get into the merits but the fact is we’re going to defend our rate filings vigorously,” he said. “We believe very strongly in what we have put forward.”
Susan K. Scott, senior vice president and general counsel at Travelers of Massachusetts, said the company’s rate filing is fair and reasonable and met all of the state’s requirements.
“We want our rate to be competitive,” she said. “We’re trying to grow our market share in Massachusetts and we hope we can have a just and fair and speedy hearing so that we can turn our attention to that.”
A spokeswoman for Ms. Burnes said the Division of Insurance will consider Ms. Coakley’s request for hearings and will schedule them as may be appropriate.
The Division of Insurance is also conducting its own review of the rate filings.
By Bob Kievra TELEGRAM & GAZETTE STAFF
rkievra@telegram.com
In a sign that the road to managed competition has grown bumpy for the state’s auto insurers, an industry trade group lashed out at Attorney General Martha Coakley yesterday, the same day her office said the Hanover Insurance Group Inc. of Worcester and Arbella Mutual Insurance Co. of Quincy would overcharge customers by more than $25 million in proposed 2008 rates.
Ms. Coakley called for state regulatory hearings on the two companies a week after she made a similar request for three of the state’s largest automobile insurers, including the Premier Insurance Co. of Worcester, which does business as Travelers of Massachusetts, Webster-based Commerce Group Inc. and Safety Insurance Co. of Boston. Ms. Coakley said the three, which collectively control 49.4 percent of the market, are seeking to overcharge customers by more than $100 million.
Massachusetts auto insurers are in a period of transition after state regulators scrapped the former system of establishing a single rate for all companies to charge. Instead, the state is permitting companies to establish their own rates, subject to certain conditions and regulatory approval by Insurance Commissioner Nonnie S. Burnes.
In the past week, Ms. Coakley has challenged the rate filings by five insurers, which sets in motion a hearing before Ms. Burnes. The first scheduled hearing is Jan. 9 for Commerce Insurance. A preliminary hearing on the Commerce filing will be held tomorrow.
In questioning the Hanover and Arbella filings, Ms. Coakley said that each filing included a variety of shortcomings, including inflated expenses and loss projections and a built-in profit provisions far greater than those permitted by previous insurance commissioners.
In an interview, Ms. Coakley said it remains unclear whether managed competition will result in lower rates for consumers or just bigger profits for insurance companies.
Had the old system remained in place, rates for 2008 would have likely been reduced by approximately 11 percent, she said. “This is not a slight on the Massachusetts insurers,” she said. “But keep in mind that we make people buy insurance in Massachusetts. Our job is to make sure that in this year of transition, the companies play fair.”
Ms. Coakley said the insurance commissioner will have the ultimate authority over the rates but said her job is to question the process, seek out information and promote transparency that assists the person buying insurance
Hanover and Arbella officials defended their rate filings.
Vincent V. Nieroda, president of Hanover’s personal lines group for Massachusetts, said the property and casualty insurer, with 3.6 percent of the market, was not surprised that a rate hearing was requested. Hanover’s proposal calls for an 8.2 percent reduction in automobile rates next year.
“The attorney general has targeted the major players in the market for hearings on this matter,” he said.
Arbella, the state’s third-largest insurer, with 9.3 percent of the market, is seeking rates that would reduce premiums by 7.7 percent.
The company, which insures 375,000 automobiles, said in a statement the attorney general “has inexplicably singled out companies who filed for the largest rate decreases, an action that appears to be anything but pro-consumer.”
Those comments were echoed by a statement earlier in the day from James. T. Harrington, executive director of the Massachusetts Insurance Federation, a trade group representing many of the state’s property and casualty insurers.
Mr. Harrington said the attorney general is using all of her resources to prevent managed competition from occurring, which gives pause to any national insurers who are contemplating entering the Massachusetts market.
“Regrettably, she has decided to focus on scaring consumers away from choice by making baseless and inflammatory claims relative to potential impacts,” Mr. Harrington said.
James A. Ermilio, executive vice president and general counsel at Commerce Group Inc., said the state’s largest auto insurer intends to mount a strong defense of its proposed premiums.
“I don’t want to get into the merits but the fact is we’re going to defend our rate filings vigorously,” he said. “We believe very strongly in what we have put forward.”
Susan K. Scott, senior vice president and general counsel at Travelers of Massachusetts, said the company’s rate filing is fair and reasonable and met all of the state’s requirements.
“We want our rate to be competitive,” she said. “We’re trying to grow our market share in Massachusetts and we hope we can have a just and fair and speedy hearing so that we can turn our attention to that.”
A spokeswoman for Ms. Burnes said the Division of Insurance will consider Ms. Coakley’s request for hearings and will schedule them as may be appropriate.
The Division of Insurance is also conducting its own review of the rate filings.
Monday, December 17, 2007
Life Risks Are at the Top of Americans’ Minds Compared With People of 10 Other Countries.
Note: for Life Insurance Quotes, contact The Howes Insurance Agency
December 17th 2007
Death, serious illness, financial hardship, and reduction in standard of living - the life risks covered by insurance - are on the minds of Americans, more so than people in 10 other countries surveyed, according to a study by the global research firm, Gfk Group for AXA Equitable Insurance Company. The survey, titled The 2007 AXA Equitable Protection Report was developed by the global insurance company to improve its understanding of the issues, attitudes and behaviors surrounding life risks and protection coverage.
The survey revealed that 87 percent of married Americans (or those with life partners) have had a conversation about life risks with that person. However, a third of them discuss it merely in passing. Less than 50 percent of Americans surveyed have spoken to an insurance agent or broker about preparing for these risks.
Ken Gelman, Vice President and Director of Customer Insights for AXA Equitable Life Insurance Company said that the survey findings reveal that many Americans seem to be trapped in a "cycle of anxiety." Gelman went on to say, "Despite their concerns, Americans lag in acting to protect against the impact of such negative life events."
A Coverage Disconnect
A large percentage of Americans (63%) believe life insurance protects their loved ones and provides peace of mind. Yet, contradictorily, over one third have not purchased insurance coverage. Eighteen percent have chosen to have no coverage of any kind.
"Americans are thinking and talking frequently about life risks," commented Gelman on this disconnect, "but their desire for peace of mind does not always result in action to protect their partners and children. And yet, when given an opportunity to explain, almost half can't state reasons as to why they don't act."
Why the Lack of Action?
The reason most frequently cited by Americans for not purchasing life insurance is that it is a benefit provided through their employer. Americans are the most likely to be covered by employer-provided insurance and are less likely to purchase insurance products themselves, compared to their global counterparts.
By utilizing employer-sponsored plans, many Americans experience a serious gap of coverage. These group life insurance plans typically tie the coverage amount to a multiple of an employee's income. The average group coverage of all American households is $153,900. A calculation of existing coverage and needs, developed as part of the protection report, shows that, on average, Americans 25 to 65 years of age have an insurance gap of $180,000. Families with financially dependent children have the highest gap -- $371,000.
According to Gelman, many Americans have been lulled into a false sense of security despite the disparities in coverage. "This is true even for high net worth respondents. Our study reveals that those who feel confident about their insurance coverage are often the most unrealistic about their protection needs," he said.
Almost fifty percent of those with the greatest amount of coverage gap -- $755,000 -- describe themselves as "feeling well insured."
Other key findings from the U.S. respondents include:
Women are overall are more likely to talk about life risks than men.
Twenty-seven percent of females with financially dependent children say that while they are aware of life accidents, they do not think about the consequences.
Health is the number one priority.
When surveyed, the majority of Americans say serious illness is the negative event they most likely may experience. Very few believe that they'll be involved in a plane crash or terrorist incident.
There's a widespread distaste for risk.
One in four Americans responded that they are acutely aware of life accidents and hate taking risks.
"While we cannot eliminate all anxiety," Gelman said, "the more we know about perceptions and behaviors toward risks and insurance, the better equipped we are to provide advice and solutions that provoke Americans to act to secure their loved ones against hardships."
The AXA Equitable Protection Report is a major component of the company's continued effort to improve its understanding of the issues, attitudes and behaviors surrounding life risks and protection coverage. This improved understanding will aid in the development of superior financial planning products and solutions.
About the Survey Survey respondents included both workers and non-workers age 25 to 65 in four distinct life-stage categories:
Single: Singles less than 40 years of age with no dependents
Pre-nester: Couples (married or living as a couple) with no children
Nester: All types of households with at least one financially-dependent child
Post-nester: All types of households with no more financially-dependent children or households composed of one person over the age of 40 with no children.
A total of 4,009 people were interviewed in Australia, Belgium, France, Germany, Hong Kong, Italy, Japan, Spain, Switzerland, the United Kingdom and the United States. The primary sample from the United States consisted of a pool of 360 people. This sample constituted a national representation in terms of gender, age, occupational status and region.
The entire survey can be viewed at http://www.axa-equitable.com.
- U.S. Insurance News
December 17th 2007
Death, serious illness, financial hardship, and reduction in standard of living - the life risks covered by insurance - are on the minds of Americans, more so than people in 10 other countries surveyed, according to a study by the global research firm, Gfk Group for AXA Equitable Insurance Company. The survey, titled The 2007 AXA Equitable Protection Report was developed by the global insurance company to improve its understanding of the issues, attitudes and behaviors surrounding life risks and protection coverage.
The survey revealed that 87 percent of married Americans (or those with life partners) have had a conversation about life risks with that person. However, a third of them discuss it merely in passing. Less than 50 percent of Americans surveyed have spoken to an insurance agent or broker about preparing for these risks.
Ken Gelman, Vice President and Director of Customer Insights for AXA Equitable Life Insurance Company said that the survey findings reveal that many Americans seem to be trapped in a "cycle of anxiety." Gelman went on to say, "Despite their concerns, Americans lag in acting to protect against the impact of such negative life events."
A Coverage Disconnect
A large percentage of Americans (63%) believe life insurance protects their loved ones and provides peace of mind. Yet, contradictorily, over one third have not purchased insurance coverage. Eighteen percent have chosen to have no coverage of any kind.
"Americans are thinking and talking frequently about life risks," commented Gelman on this disconnect, "but their desire for peace of mind does not always result in action to protect their partners and children. And yet, when given an opportunity to explain, almost half can't state reasons as to why they don't act."
Why the Lack of Action?
The reason most frequently cited by Americans for not purchasing life insurance is that it is a benefit provided through their employer. Americans are the most likely to be covered by employer-provided insurance and are less likely to purchase insurance products themselves, compared to their global counterparts.
By utilizing employer-sponsored plans, many Americans experience a serious gap of coverage. These group life insurance plans typically tie the coverage amount to a multiple of an employee's income. The average group coverage of all American households is $153,900. A calculation of existing coverage and needs, developed as part of the protection report, shows that, on average, Americans 25 to 65 years of age have an insurance gap of $180,000. Families with financially dependent children have the highest gap -- $371,000.
According to Gelman, many Americans have been lulled into a false sense of security despite the disparities in coverage. "This is true even for high net worth respondents. Our study reveals that those who feel confident about their insurance coverage are often the most unrealistic about their protection needs," he said.
Almost fifty percent of those with the greatest amount of coverage gap -- $755,000 -- describe themselves as "feeling well insured."
Other key findings from the U.S. respondents include:
Women are overall are more likely to talk about life risks than men.
Twenty-seven percent of females with financially dependent children say that while they are aware of life accidents, they do not think about the consequences.
Health is the number one priority.
When surveyed, the majority of Americans say serious illness is the negative event they most likely may experience. Very few believe that they'll be involved in a plane crash or terrorist incident.
There's a widespread distaste for risk.
One in four Americans responded that they are acutely aware of life accidents and hate taking risks.
"While we cannot eliminate all anxiety," Gelman said, "the more we know about perceptions and behaviors toward risks and insurance, the better equipped we are to provide advice and solutions that provoke Americans to act to secure their loved ones against hardships."
The AXA Equitable Protection Report is a major component of the company's continued effort to improve its understanding of the issues, attitudes and behaviors surrounding life risks and protection coverage. This improved understanding will aid in the development of superior financial planning products and solutions.
About the Survey Survey respondents included both workers and non-workers age 25 to 65 in four distinct life-stage categories:
Single: Singles less than 40 years of age with no dependents
Pre-nester: Couples (married or living as a couple) with no children
Nester: All types of households with at least one financially-dependent child
Post-nester: All types of households with no more financially-dependent children or households composed of one person over the age of 40 with no children.
A total of 4,009 people were interviewed in Australia, Belgium, France, Germany, Hong Kong, Italy, Japan, Spain, Switzerland, the United Kingdom and the United States. The primary sample from the United States consisted of a pool of 360 people. This sample constituted a national representation in terms of gender, age, occupational status and region.
The entire survey can be viewed at http://www.axa-equitable.com.
- U.S. Insurance News
A Time for Good Cheer – and Safe Practices
By Nim Traeger and Bruce Lunning December 14, 2007
During the holiday season, many companies organize parties for their employees. The idea is for everyone to socialize, celebrate the year's successes and have a good time. However, employers need to keep safety in mind while spreading holiday cheer.
Serving alcohol at workplace parties may be commonplace, however the results can be disastrous if employees over-indulge and decide to drive. Many employers may not be aware that under host alcohol liability laws in most states, employers can be held liable for what happens long after a party is over and their employees have left.
To make your season's greeting stand out, offer some tips to help your business customers keep their company holiday celebrations safe and claim-free.
Deciding not to serve alcohol at the company holiday party is one solution – but not one that is universally embraced. According to a 2006 survey of 110 top U.S. companies by Battalia Winston International, 94 percent organize office parties during the holiday season – and 86 percent of them serve alcohol. Additionally, according to the National Highway Traffic Safety Administration, there is an alcohol-related traffic fatality every 29 minutes in the U.S.
In fact, more than 35 states have laws that hold social hosts liable when their guests cause an accident because their driving was impaired due to alcohol use. So, if your customers decide that there will be alcohol available at their company party, the following tips may help them to be a more responsible host this holiday season:
* Pre-party – Do not send the wrong signals with your choice of invitations. Prominently displaying cocktail glasses or beverages on invitations may tell people that the event is mostly centered on drinking. This could be damaging if a lawsuit results from drunken driving. Focus on socializing and showing appreciation, and downplay the opportunity for drinking alcoholic-based beverages.
* Food and beverages – Serve food with a high protein or starch content to slow alcohol absorption. Avoid salty snacks that tend to make guests drink more. Do not allow guests to mix their own drinks, and do not serve punch that obscures the amount of alcohol that is being consumed. Consider giving employees one or two free drink tickets. Requiring them to buy additional drinks may slow consumption. Employers also could consider serving a signature non-alcoholic drink in a festive glass.
* Training – Ensure bartenders are professionally-trained in responsible alcohol service. Be sure that your bartender is adequately instructed to observe guests for signs of intoxication and refuse service to anyone who has had too much to drink.
* Traffic flow – Arrange the traffic flow so that guests walk past the food first as they enter the party. Place the bar in a location that is less accessible. Include several other beverage areas or self-serve beverage areas that only offer non-alcoholic drinks.
* Timing – Stop serving alcohol at least one hour before the end of the event. Schedule a program or speaker at that time, which will entice people to stay rather than immediately drive home. Do not have a "last call" for drinks.
* Post-party/Transportation - Remind employees and guests to be moderate in their behavior and alcohol consumption and offer them alternative transportation, if needed.
The end of the year is a great time for employees to get together and celebrate the year's accomplishments. Spread the word to your customers as your gift for the season that by taking some simple steps to keep celebrations safe, everyone can enjoy each other's company next year.
Nirmal A. Traeger is the director of casualty services for Travelers Risk Control. Bruce Lunning is a senior risk control specialist, general liability and product safety, for Travelers.
During the holiday season, many companies organize parties for their employees. The idea is for everyone to socialize, celebrate the year's successes and have a good time. However, employers need to keep safety in mind while spreading holiday cheer.
Serving alcohol at workplace parties may be commonplace, however the results can be disastrous if employees over-indulge and decide to drive. Many employers may not be aware that under host alcohol liability laws in most states, employers can be held liable for what happens long after a party is over and their employees have left.
To make your season's greeting stand out, offer some tips to help your business customers keep their company holiday celebrations safe and claim-free.
Deciding not to serve alcohol at the company holiday party is one solution – but not one that is universally embraced. According to a 2006 survey of 110 top U.S. companies by Battalia Winston International, 94 percent organize office parties during the holiday season – and 86 percent of them serve alcohol. Additionally, according to the National Highway Traffic Safety Administration, there is an alcohol-related traffic fatality every 29 minutes in the U.S.
In fact, more than 35 states have laws that hold social hosts liable when their guests cause an accident because their driving was impaired due to alcohol use. So, if your customers decide that there will be alcohol available at their company party, the following tips may help them to be a more responsible host this holiday season:
* Pre-party – Do not send the wrong signals with your choice of invitations. Prominently displaying cocktail glasses or beverages on invitations may tell people that the event is mostly centered on drinking. This could be damaging if a lawsuit results from drunken driving. Focus on socializing and showing appreciation, and downplay the opportunity for drinking alcoholic-based beverages.
* Food and beverages – Serve food with a high protein or starch content to slow alcohol absorption. Avoid salty snacks that tend to make guests drink more. Do not allow guests to mix their own drinks, and do not serve punch that obscures the amount of alcohol that is being consumed. Consider giving employees one or two free drink tickets. Requiring them to buy additional drinks may slow consumption. Employers also could consider serving a signature non-alcoholic drink in a festive glass.
* Training – Ensure bartenders are professionally-trained in responsible alcohol service. Be sure that your bartender is adequately instructed to observe guests for signs of intoxication and refuse service to anyone who has had too much to drink.
* Traffic flow – Arrange the traffic flow so that guests walk past the food first as they enter the party. Place the bar in a location that is less accessible. Include several other beverage areas or self-serve beverage areas that only offer non-alcoholic drinks.
* Timing – Stop serving alcohol at least one hour before the end of the event. Schedule a program or speaker at that time, which will entice people to stay rather than immediately drive home. Do not have a "last call" for drinks.
* Post-party/Transportation - Remind employees and guests to be moderate in their behavior and alcohol consumption and offer them alternative transportation, if needed.
The end of the year is a great time for employees to get together and celebrate the year's accomplishments. Spread the word to your customers as your gift for the season that by taking some simple steps to keep celebrations safe, everyone can enjoy each other's company next year.
Nirmal A. Traeger is the director of casualty services for Travelers Risk Control. Bruce Lunning is a senior risk control specialist, general liability and product safety, for Travelers.
Friday, December 14, 2007
Insurer defends '08 auto rate plan
Commerce to argue filing fully complies with state guidelines
By Bruce Mohl
Globe Staff / December 14, 2007
Sounding a combative tone, the state's largest automobile insurer says it intends to vigorously defend its 2008 rate plan at a hearing before state regulators on Jan. 9.
Both the state Division of Insurance and Attorney General Martha Coakley have raised concerns about the rate filing of Commerce Insurance of Webster, but a top official at the firm said yesterday the company believes its filing is in full compliance with the regulations and guidelines issued for managed competition by Insurance Commissioner Nonnie S. Burnes.
"We are going to stand by our filing and vigorously defend it," said James Ermilio, senior vice president and legal counsel at Commerce, which insures approximately one-third of the state's cars.
While other automobile insurers have indicated they would change their filings in the wake of concerns raised last week by the Division of Insurance, Commerce's pledge to defend its rate plan indicates the transition to managed competition is unlikely to go smoothly.
After 30 years of letting state regulators create one set of auto insurance rates for all the carriers, the Patrick administration this year decided to move to managed competition, in which each company creates its own rates but they must be individually approved by state regulators.
Coakley earlier this week requested hearings before Burnes on the rate filings of Commerce, Premier Insurance of Worcester, and Safety Insurance of Boston, saying they were attempting to overcharge customers by over $100 million. She also said rates would be lower if state regulators continued to set them. Coakley has until next week to decide whether to request additional hearings on other companies' rate filings.
A spokeswoman for the Division of Insurance said the hearing requested by the attorney general on the Commerce rate filing would be held on Jan. 9, with a prehearing to set ground rules scheduled for Wednesday. The spokeswoman, Kimberly Haberlin, said the hearing would focus on whether elements of Commerce's rates were excessive and whether the company was using any discriminatory rating factors. Haberlin said concerns raised by the Division of Insurance about Commerce's filing would be addressed at the same hearing.
Four major concerns have been raised about the Commerce filing. The Division of Insurance last Friday said Commerce, Liberty Mutual Insurance of Boston, Electric Insurance of Beverly, and Arbella Mutual Insurance of Quincy had violated division guidelines by basing discounts on how much bodily injury coverage a customer had purchased. The division also said Commerce had incorrectly incorporated a discount it offers to members of the American Automobile Association into its rates rather than offering it separately as a group discount.
Coakley has raised broader concerns. She accused Commerce, Premier, and Safety of padding their profits and on Wednesday accused Commerce and Liberty of developing their rates in a way that could lead to unexpected higher rates for urban drivers.
Although the rate filings of other companies have been criticized by state regulators, Ermilio said Commerce feels as if it has been singled out. Ermilio said Commerce took a very conservative approach in crafting its rate plan while many of its competitors were far more aggressive in interpreting division guidelines. He said his chief concern was that all companies be treated equally.
He said managed competition so far seemed unlike the systems in place in other states. "We're treading in new waters," he said.
The rate plans filed by companies last month are for policies renewing after April 1. Ermilio said Commerce would like to start sending out policies to agents and customers by mid-February, which means any disputes about rates would have to be settled fairly quickly.
Bruce Mohl can be reached at mohl@globe.com.
By Bruce Mohl
Globe Staff / December 14, 2007
Sounding a combative tone, the state's largest automobile insurer says it intends to vigorously defend its 2008 rate plan at a hearing before state regulators on Jan. 9.
Both the state Division of Insurance and Attorney General Martha Coakley have raised concerns about the rate filing of Commerce Insurance of Webster, but a top official at the firm said yesterday the company believes its filing is in full compliance with the regulations and guidelines issued for managed competition by Insurance Commissioner Nonnie S. Burnes.
"We are going to stand by our filing and vigorously defend it," said James Ermilio, senior vice president and legal counsel at Commerce, which insures approximately one-third of the state's cars.
While other automobile insurers have indicated they would change their filings in the wake of concerns raised last week by the Division of Insurance, Commerce's pledge to defend its rate plan indicates the transition to managed competition is unlikely to go smoothly.
After 30 years of letting state regulators create one set of auto insurance rates for all the carriers, the Patrick administration this year decided to move to managed competition, in which each company creates its own rates but they must be individually approved by state regulators.
Coakley earlier this week requested hearings before Burnes on the rate filings of Commerce, Premier Insurance of Worcester, and Safety Insurance of Boston, saying they were attempting to overcharge customers by over $100 million. She also said rates would be lower if state regulators continued to set them. Coakley has until next week to decide whether to request additional hearings on other companies' rate filings.
A spokeswoman for the Division of Insurance said the hearing requested by the attorney general on the Commerce rate filing would be held on Jan. 9, with a prehearing to set ground rules scheduled for Wednesday. The spokeswoman, Kimberly Haberlin, said the hearing would focus on whether elements of Commerce's rates were excessive and whether the company was using any discriminatory rating factors. Haberlin said concerns raised by the Division of Insurance about Commerce's filing would be addressed at the same hearing.
Four major concerns have been raised about the Commerce filing. The Division of Insurance last Friday said Commerce, Liberty Mutual Insurance of Boston, Electric Insurance of Beverly, and Arbella Mutual Insurance of Quincy had violated division guidelines by basing discounts on how much bodily injury coverage a customer had purchased. The division also said Commerce had incorrectly incorporated a discount it offers to members of the American Automobile Association into its rates rather than offering it separately as a group discount.
Coakley has raised broader concerns. She accused Commerce, Premier, and Safety of padding their profits and on Wednesday accused Commerce and Liberty of developing their rates in a way that could lead to unexpected higher rates for urban drivers.
Although the rate filings of other companies have been criticized by state regulators, Ermilio said Commerce feels as if it has been singled out. Ermilio said Commerce took a very conservative approach in crafting its rate plan while many of its competitors were far more aggressive in interpreting division guidelines. He said his chief concern was that all companies be treated equally.
He said managed competition so far seemed unlike the systems in place in other states. "We're treading in new waters," he said.
The rate plans filed by companies last month are for policies renewing after April 1. Ermilio said Commerce would like to start sending out policies to agents and customers by mid-February, which means any disputes about rates would have to be settled fairly quickly.
Bruce Mohl can be reached at mohl@globe.com.
ISO Gives Ice Storms Cat Rating
BY DANIEL HAYS, National Underwriter Online News Service, Dec. 13, 4:03 p.m. EST
Insurance Services Office in Jersey City said the ice storm that slammed into the Midwest on Monday has been rated an insurance catastrophe.
Gary Kerney, ISO assistant vice president, Property Claim Services, said“PCS declared a catastrophe for damage from ice and freezing. The definition pertains to the insured property damage in the Midwest including Oklahoma, Kansas, Missouri, Nebraska, Iowa and Illinois.”
ISO rates as catastrophes events which inflict an insured loss of $25 million.
Oklahoma Gov. Brad Henry yesterday declared a statewide state of emergency, and more than one million persons in the affected states were said to have been without power after the storm hit.
Insurers in reaction were gearing up to deal with an expected avalanche of claims.
Safeco said its claims team members have mobilized in the affected areas and are surveying damages in order to expedite the claims process.
Robert Johnston, Safeco's National Catastrophe Team Leader, said: "There’s a wide range of damage spread across several communities. Our goal is to provide immediate support and assistance to our customers when and where they need it.”
Mr. Kerney at PCS noted that “power outages are still widespread through the region, and we expect claims reporting to pick up in the days ahead.”
After the storms hit a half-inch to an inch of ice covered much of central and northeast Kansas, with one-quarter to one-half inch across much of the southern half of the state and one-tenth of an inch to a half-inch across northwest Kansas, according to the National Weather Service.
Insurance Services Office in Jersey City said the ice storm that slammed into the Midwest on Monday has been rated an insurance catastrophe.
Gary Kerney, ISO assistant vice president, Property Claim Services, said“PCS declared a catastrophe for damage from ice and freezing. The definition pertains to the insured property damage in the Midwest including Oklahoma, Kansas, Missouri, Nebraska, Iowa and Illinois.”
ISO rates as catastrophes events which inflict an insured loss of $25 million.
Oklahoma Gov. Brad Henry yesterday declared a statewide state of emergency, and more than one million persons in the affected states were said to have been without power after the storm hit.
Insurers in reaction were gearing up to deal with an expected avalanche of claims.
Safeco said its claims team members have mobilized in the affected areas and are surveying damages in order to expedite the claims process.
Robert Johnston, Safeco's National Catastrophe Team Leader, said: "There’s a wide range of damage spread across several communities. Our goal is to provide immediate support and assistance to our customers when and where they need it.”
Mr. Kerney at PCS noted that “power outages are still widespread through the region, and we expect claims reporting to pick up in the days ahead.”
After the storms hit a half-inch to an inch of ice covered much of central and northeast Kansas, with one-quarter to one-half inch across much of the southern half of the state and one-tenth of an inch to a half-inch across northwest Kansas, according to the National Weather Service.
MassMutual Sponsors Anticipated PBS Documentary on Retirement
The “TV Generation” won’t want to miss this program. After all, their future could depend upon it.
MassMutual Financial Group has announced that it is the exclusive national sponsorship of a two-hour PBS documentary that will examine the financial challenges of the baby boomer generation.
“Retirement Revolution” will air in April on PBS stations across the United States. Massachusetts Mutual Life Insurance Company (MassMutual) will be the sole sponsor of the documentary, produced by WTTW National Productions, a division of WTTW in Chicago.
The documentary explains the origins of retirement and how the concept has changed over the past several decades. Through personal stories and expert perspectives, the program will offer viewers practical considerations that can help individuals prepare for a retirement and take control of the process.
“Retirement is an extremely complex and fascinating issue that impacts each individual differently, and we are pleased that MassMutual shares our goal of providing much-needed education and insight,” said Parke Richeson, WTTW’s executive in charge of production.
Richeson also said that “Retirement Revolution” will help boomers understand the financial maze they must navigate and help give them a stronger foundation from which to build their future.
Ian Sheridan, corporate vice president and chief marketing officer for the Retirement Services Division, said MassMutual’s sponsorship of “Retirement Revolution” shows that the insurer and PBS share a similar goal: “to help educate the millions of Americans approaching retirement by giving them the tools and insight needed to assess how to secure their own financial future.”
“This sponsorship is a natural fit for MassMutual, as our financial professionals are committed to helping consumers prepare for various financial goals, including retirement by listening to their needs, demystifying the process, and guiding them to the next steps in building a more secure financial future,” Sheridan added.
“Retirement Revolution” will have a companion Web site, where visitors can view segments of the program, support other viewers’ interest in taking the next steps in addressing their retirement issues and opportunities, and conduct financial research.
- U.S. Insurance News
MassMutual Financial Group has announced that it is the exclusive national sponsorship of a two-hour PBS documentary that will examine the financial challenges of the baby boomer generation.
“Retirement Revolution” will air in April on PBS stations across the United States. Massachusetts Mutual Life Insurance Company (MassMutual) will be the sole sponsor of the documentary, produced by WTTW National Productions, a division of WTTW in Chicago.
The documentary explains the origins of retirement and how the concept has changed over the past several decades. Through personal stories and expert perspectives, the program will offer viewers practical considerations that can help individuals prepare for a retirement and take control of the process.
“Retirement is an extremely complex and fascinating issue that impacts each individual differently, and we are pleased that MassMutual shares our goal of providing much-needed education and insight,” said Parke Richeson, WTTW’s executive in charge of production.
Richeson also said that “Retirement Revolution” will help boomers understand the financial maze they must navigate and help give them a stronger foundation from which to build their future.
Ian Sheridan, corporate vice president and chief marketing officer for the Retirement Services Division, said MassMutual’s sponsorship of “Retirement Revolution” shows that the insurer and PBS share a similar goal: “to help educate the millions of Americans approaching retirement by giving them the tools and insight needed to assess how to secure their own financial future.”
“This sponsorship is a natural fit for MassMutual, as our financial professionals are committed to helping consumers prepare for various financial goals, including retirement by listening to their needs, demystifying the process, and guiding them to the next steps in building a more secure financial future,” Sheridan added.
“Retirement Revolution” will have a companion Web site, where visitors can view segments of the program, support other viewers’ interest in taking the next steps in addressing their retirement issues and opportunities, and conduct financial research.
- U.S. Insurance News
Thursday, December 13, 2007
Urban drivers facing rate hikes, AG warns
Insurance would cost less overall with old system, she says
By Bruce Mohl
Globe Staff / December 13, 2007
Attorney General Martha Coakley raised new concerns yesterday about the rates the state's automobile insurers plan for 2008, saying that she fears many drivers, particularly in urban areas, will face unexpected increases.
On average, auto insurance should cost less next year. Based on documents the companies filed, Coakley said, the average decline will be about 6 percent for auto policies renewed after April 1.
In her fourth informational bulletin on auto insurance, Coakley described the planned rates as disappointing. She said rates overall would have fallen by double-digit percentages had state regulators continued to set them.
The attorney general also said that some of the bigger insurers actually raised their "manual rates," which the bulletin described as the ones used by agents to determine how much a policyholder will pay. She said Commerce Insurance of Webster and Liberty Mutual Insurance of Boston raised their manual rates 10 percent and then offered customers discounts off of those higher base rates.
Liberty has said that its discounts - for good students, long-term customers, people with high bodily injury coverage, and drivers who also have homeowner policies with Liberty - will reduce premiums for some drivers by as much as 35 percent.
Coakley's bulletin said some compa ny discounts will not be available in urban areas, although it didn't explain why. The bulletin said the average rate for someone in an urban area may end up being higher than the average rate in other parts of the state. The bulletin did not explain why.
"We are concerned that many consumers will experience unexpected rate increases in the next year," Coakley's bulletin said.
After 30 years with a system under which state regulators set all auto insurance rates, the Patrick administration is moving ahead with a system called managed competition that lets companies set their own rates, subject to regulatory approval.
The standards have not been established yet, although Insurance Commissioner Nonnie S. Burnes has issued a number of informational bulletins offering guidance to the companies.
Coakley, who represents consumers in the rate-setting process, has asked Burnes to hold hearings on the rate filings of Commerce, Premier Insurance of Worcester, and Safety Insurance of Boston.
Coakley has until next week to request hearings on other companies.
The attorney general's bulletins are a way for Coakley to communicate her concerns to all the companies at once. Yesterday's bulletin seemed to indicate she was having trouble verifying that drivers will receive the discounts the companies are promising.
Coakley declined to comment, as did Burnes. Officials at Commerce and Liberty also declined to comment.
Stephen D'Amato, a consultant to the Center for Insurance Research in Cambridge and a critic of managed competition, said Coakley is raising serious concerns.
"The way for drivers to get rate reductions under this new system is to qualify for these company discounts, and it's not so important to have a good driving record," he said. "In my opinion, most of the discounts are proxies for prohibited rating factors."
Burnes has prohibited companies from using such factors as a driver's occupation, educational level, income, and, at least initially, credit history, in setting rates because of the potential for discrimination.
Two insurance industry officials, who asked not to be identified for fear of alienating regulators, said they were surprised by Coakley's bulletin, because it criticizes a rate-setting approach the Division of Insurance had been telling companies to use.
The officials also said they've acknowledged all along that some drivers will see their rates go up under managed competition. When they filed their rate plans last month, most companies said premiums would fall for 70 to 80 percent of customers and rise for 20 to 30 percent.
Liberty, for example, said rates will fall for 82 percent of its customers and rise for 18 percent.
During the first year of managed competition, companies cannot raise the premiums of individual customers by more than 10 percent.
The restriction is designed to protect drivers perceived as higher risks from rate shock. But officials say the 10 percent cap means that other drivers, perceived by the companies as better risks, will pay slightly more than they would have if the cap had not been in place.
Bruce Mohl can be reached at mohl@globe.com.
By Bruce Mohl
Globe Staff / December 13, 2007
Attorney General Martha Coakley raised new concerns yesterday about the rates the state's automobile insurers plan for 2008, saying that she fears many drivers, particularly in urban areas, will face unexpected increases.
On average, auto insurance should cost less next year. Based on documents the companies filed, Coakley said, the average decline will be about 6 percent for auto policies renewed after April 1.
In her fourth informational bulletin on auto insurance, Coakley described the planned rates as disappointing. She said rates overall would have fallen by double-digit percentages had state regulators continued to set them.
The attorney general also said that some of the bigger insurers actually raised their "manual rates," which the bulletin described as the ones used by agents to determine how much a policyholder will pay. She said Commerce Insurance of Webster and Liberty Mutual Insurance of Boston raised their manual rates 10 percent and then offered customers discounts off of those higher base rates.
Liberty has said that its discounts - for good students, long-term customers, people with high bodily injury coverage, and drivers who also have homeowner policies with Liberty - will reduce premiums for some drivers by as much as 35 percent.
Coakley's bulletin said some compa ny discounts will not be available in urban areas, although it didn't explain why. The bulletin said the average rate for someone in an urban area may end up being higher than the average rate in other parts of the state. The bulletin did not explain why.
"We are concerned that many consumers will experience unexpected rate increases in the next year," Coakley's bulletin said.
After 30 years with a system under which state regulators set all auto insurance rates, the Patrick administration is moving ahead with a system called managed competition that lets companies set their own rates, subject to regulatory approval.
The standards have not been established yet, although Insurance Commissioner Nonnie S. Burnes has issued a number of informational bulletins offering guidance to the companies.
Coakley, who represents consumers in the rate-setting process, has asked Burnes to hold hearings on the rate filings of Commerce, Premier Insurance of Worcester, and Safety Insurance of Boston.
Coakley has until next week to request hearings on other companies.
The attorney general's bulletins are a way for Coakley to communicate her concerns to all the companies at once. Yesterday's bulletin seemed to indicate she was having trouble verifying that drivers will receive the discounts the companies are promising.
Coakley declined to comment, as did Burnes. Officials at Commerce and Liberty also declined to comment.
Stephen D'Amato, a consultant to the Center for Insurance Research in Cambridge and a critic of managed competition, said Coakley is raising serious concerns.
"The way for drivers to get rate reductions under this new system is to qualify for these company discounts, and it's not so important to have a good driving record," he said. "In my opinion, most of the discounts are proxies for prohibited rating factors."
Burnes has prohibited companies from using such factors as a driver's occupation, educational level, income, and, at least initially, credit history, in setting rates because of the potential for discrimination.
Two insurance industry officials, who asked not to be identified for fear of alienating regulators, said they were surprised by Coakley's bulletin, because it criticizes a rate-setting approach the Division of Insurance had been telling companies to use.
The officials also said they've acknowledged all along that some drivers will see their rates go up under managed competition. When they filed their rate plans last month, most companies said premiums would fall for 70 to 80 percent of customers and rise for 20 to 30 percent.
Liberty, for example, said rates will fall for 82 percent of its customers and rise for 18 percent.
During the first year of managed competition, companies cannot raise the premiums of individual customers by more than 10 percent.
The restriction is designed to protect drivers perceived as higher risks from rate shock. But officials say the 10 percent cap means that other drivers, perceived by the companies as better risks, will pay slightly more than they would have if the cap had not been in place.
Bruce Mohl can be reached at mohl@globe.com.
Mass. Attorney General to Look into Commerce Insurance Sale to Mapfre
The pending acquisition of Commerce Insurance Group, Inc. by Spain's largest insurer, Mapfre S.A., is being investigated by the Massachusetts attorney general.
In a filing with the Securities and Exchange Commission, Commerce reported that it has received notice that Attorney General Martha Coakley plans to investigate "whether the proposed merger may violate the Massachusetts Antitrust Act or the Massachusetts Consumer Protection Act."
Commerce is the largest auto insurer in the state, which has only 19 companies writing auto.
Spain's largest insurer, Mapfre S.A., has agreed to buy the Webster, Mass.-based personal lines insurer for $2.21 billion in cash in a move to expand its presence in the U.S. market.
Commerce is ranked as the 20th largest personal automobile insurance group in the country by A.M. Best Co., based on 2006 direct written premium information.
The Mapfre-Commerce transaction is also subject to other regulatory approvals.
Source: Insurance Journal
In a filing with the Securities and Exchange Commission, Commerce reported that it has received notice that Attorney General Martha Coakley plans to investigate "whether the proposed merger may violate the Massachusetts Antitrust Act or the Massachusetts Consumer Protection Act."
Commerce is the largest auto insurer in the state, which has only 19 companies writing auto.
Spain's largest insurer, Mapfre S.A., has agreed to buy the Webster, Mass.-based personal lines insurer for $2.21 billion in cash in a move to expand its presence in the U.S. market.
Commerce is ranked as the 20th largest personal automobile insurance group in the country by A.M. Best Co., based on 2006 direct written premium information.
The Mapfre-Commerce transaction is also subject to other regulatory approvals.
Source: Insurance Journal
Wednesday, December 12, 2007
Motorists Perplexed When Cruising in the Cold, According to GMAC Insurance and Road Safe America
ST. LOUIS and ATLANTA, Dec. 10 /PRNewswire/ --
Today, in a continuing effort to make the nation's roads safer, GMAC Insurance and its non-profit partner Road Safe America announced survey results revealing that many American drivers are unsure of proper vehicle operational procedures when driving in freezing temperatures. The survey, which sampled licensed Americans from all 50 states and the District of Columbia, indicates that more than one- third of drivers cannot correctly identify the proper use of cruise control, and nearly two-thirds underestimate how full they should keep their gas tanks.
Specifically, the survey found that 36 percent of licensed drivers -- approximately 72 million people -- believe it's safe to drive with their cruise control activated if the temperature is below freezing. However, the two organizations assert that the safest course of action is to avoid using cruise control altogether. Despite clear weather, accumulated moisture on roadways combined with freezing temperatures could lead to icy conditions, which are sometimes undetectable.
Respondents were also unclear on the minimum amount that should be in a vehicle's gas tank: 31 percent indicated it didn't matter, four percent responded one-eighth of a tank, 28 percent answered one-quarter tank and 37 percent said one-half tank. GMAC Insurance and Road Safe America recommend keeping the gas tank as full as possible (at least one half full), maximizing the length of time vehicle occupants can run the engine as a source of heat in an emergency.
Gary Kusumi, president and CEO of GMAC Insurance, points out that while not all Americans live in areas that experience freezing temperatures, it is important for everyone to understand proper vehicle operational procedures.
"As responsible drivers, we should have a good idea of proper driving protocols in a variety of circumstances," Kusumi said. "It's critical to know how to stay safe in situations that we don't necessarily encounter every day, such as driving during freezing weather."
Ready, Set, Go: Five Steps To Prepare For Winter Travels
In addition to driving without cruise control activated and keeping gas tank levels at least half full, GMAC Insurance and Road Safe America compiled the following checklist to help keep people safe and prepared for driving in freezing temperatures:
1. Create a Safety Kit. Be prepared with safety essentials in your car, including extra windshield wiper fluid, warm gloves and a hat, flashlight, remote jump starter, tire gauge, safety flares and a blanket.
2. Give Your Vehicle a Check Up. Avoid unnecessary accidents by taking a few minutes to check your vehicle before heading out: -- Use a small tire gauge to check your tires, as cold weather will lower their pressure. -- Make sure taillights, headlights, blinkers and the horn are in good working order.
3. Play it Safe in the Dark. With shopping season in high gear, heavy traffic is more common, and nightfall comes earlier. When driving at night: -- Avoid using any light inside your vehicle. -- Use edge lines and center lines of the roadway as guides. -- If street lights cause glare, dim your dashboard lights and use your sun visor.
4. Prevent Glare. Snowfall and other precipitation can serve up severe road glare: -- Be prepared with a pair of sunglasses. -- Avoid foggy blotches on your windows by cleaning the inside of your windshield regularly. -- Consider using winter wiper blades designed to handle heavier road debris and snow.
5. Buckle Your Bundles. Loose gifts can be dangerous distractions, and according to a GMAC Insurance survey, less than half of drivers (43 percent) secure their packages on the floor or buckle them down. Avoid "projectile presents" by driving slower and securing gifts in the backseat or placing them on the floor.
The survey was administered by TNS, a leading market information resource and the world's largest provider of custom research and analysis. The national sample was comprised of 5,175 total licensed respondents, aged 16-60+, balanced to the latest U.S. Census data.
For more information about GMAC Insurance, visit www.gmacinsurance.com. For more information about Road Safe America, visit www.roadsafeamerica.org.
Today, in a continuing effort to make the nation's roads safer, GMAC Insurance and its non-profit partner Road Safe America announced survey results revealing that many American drivers are unsure of proper vehicle operational procedures when driving in freezing temperatures. The survey, which sampled licensed Americans from all 50 states and the District of Columbia, indicates that more than one- third of drivers cannot correctly identify the proper use of cruise control, and nearly two-thirds underestimate how full they should keep their gas tanks.
Specifically, the survey found that 36 percent of licensed drivers -- approximately 72 million people -- believe it's safe to drive with their cruise control activated if the temperature is below freezing. However, the two organizations assert that the safest course of action is to avoid using cruise control altogether. Despite clear weather, accumulated moisture on roadways combined with freezing temperatures could lead to icy conditions, which are sometimes undetectable.
Respondents were also unclear on the minimum amount that should be in a vehicle's gas tank: 31 percent indicated it didn't matter, four percent responded one-eighth of a tank, 28 percent answered one-quarter tank and 37 percent said one-half tank. GMAC Insurance and Road Safe America recommend keeping the gas tank as full as possible (at least one half full), maximizing the length of time vehicle occupants can run the engine as a source of heat in an emergency.
Gary Kusumi, president and CEO of GMAC Insurance, points out that while not all Americans live in areas that experience freezing temperatures, it is important for everyone to understand proper vehicle operational procedures.
"As responsible drivers, we should have a good idea of proper driving protocols in a variety of circumstances," Kusumi said. "It's critical to know how to stay safe in situations that we don't necessarily encounter every day, such as driving during freezing weather."
Ready, Set, Go: Five Steps To Prepare For Winter Travels
In addition to driving without cruise control activated and keeping gas tank levels at least half full, GMAC Insurance and Road Safe America compiled the following checklist to help keep people safe and prepared for driving in freezing temperatures:
1. Create a Safety Kit. Be prepared with safety essentials in your car, including extra windshield wiper fluid, warm gloves and a hat, flashlight, remote jump starter, tire gauge, safety flares and a blanket.
2. Give Your Vehicle a Check Up. Avoid unnecessary accidents by taking a few minutes to check your vehicle before heading out: -- Use a small tire gauge to check your tires, as cold weather will lower their pressure. -- Make sure taillights, headlights, blinkers and the horn are in good working order.
3. Play it Safe in the Dark. With shopping season in high gear, heavy traffic is more common, and nightfall comes earlier. When driving at night: -- Avoid using any light inside your vehicle. -- Use edge lines and center lines of the roadway as guides. -- If street lights cause glare, dim your dashboard lights and use your sun visor.
4. Prevent Glare. Snowfall and other precipitation can serve up severe road glare: -- Be prepared with a pair of sunglasses. -- Avoid foggy blotches on your windows by cleaning the inside of your windshield regularly. -- Consider using winter wiper blades designed to handle heavier road debris and snow.
5. Buckle Your Bundles. Loose gifts can be dangerous distractions, and according to a GMAC Insurance survey, less than half of drivers (43 percent) secure their packages on the floor or buckle them down. Avoid "projectile presents" by driving slower and securing gifts in the backseat or placing them on the floor.
The survey was administered by TNS, a leading market information resource and the world's largest provider of custom research and analysis. The national sample was comprised of 5,175 total licensed respondents, aged 16-60+, balanced to the latest U.S. Census data.
For more information about GMAC Insurance, visit www.gmacinsurance.com. For more information about Road Safe America, visit www.roadsafeamerica.org.
Study: Vehicle Crash Tests Predict Car But Not Truck Safety
Frontal crash tests in laboratories are strong predictors of passenger cars' safety on the road, though they fail to accurately project driver fatality risks for trucks, according to a recent Virginia Commonwealth University study.
The study examined the frontal crash test ratings that vehicles received from the National Highway Traffic Safety Administration, NHTSA, and compared them to fatality rates in the vehicles. It also compared a smaller sample of test ratings given by the privately funded Insurance Institute for Highway Safety, IIHS, which uses a 40-percent frontal offset crash test, with the vehicles' fatality rates.
The results indicate that the crash tests held by NHTSA and the IIHS are successful in predicting real-world crash outcomes for passenger cars -- the ratings NHTSA and IIHS bestowed on passenger cars generally matched the cars' safety record on the road. However, the ratings for trucks did not match real-world outcomes. For example, in the case of both NHTSA and IIHS, trucks that received the worst possible crash-test rating had on average lower driver fatality rates than trucks that received the best possible crash-test rating.
"If you're thinking about buying a passenger car, then the crash test scores can be useful to you," said study co-author David Harless, professor of economics in the VCU School of Business. "But if you are thinking of buying a truck, we have no evidence that the tests are meaningful in terms of real-world performance in serious crashes."
The study was published in the September issue of Accident Analysis & Prevention.
Harless and co-author George Hoffer, professor of economics at VCU, limited their research to instances of multiple crash tests in a given vehicle line, controlling for the differences in driver behavior in different lines of vehicles. The study examined the testing of vehicles in the 1987-2001 model years. IIHS had fewer vehicle lines to review, because it did not begin its testing program until 1995. The study authors urged caution concerning their findings regarding the IIHS tests, particularly for trucks, because of the small sample of vehicle lines they were able to include in their research.
Hoffer said questions have persisted over the years about the value of NHTSA's frontal crash test ratings because of the difficulty of simulating a real-world crash in a laboratory. A tiny percentage of automobile accidents mirror the circumstances of a direct head-to-head collision between vehicles of similar size – the scenario NHTSA creates in its lab tests.
However, Hoffer said, "it turns out that the government does as good a job as the private sector does at predicting the relative death rate for passenger cars. The tests can be seen as complimentary of each other, though they are quite different."
Source: Virginia Commonwealth University
The study examined the frontal crash test ratings that vehicles received from the National Highway Traffic Safety Administration, NHTSA, and compared them to fatality rates in the vehicles. It also compared a smaller sample of test ratings given by the privately funded Insurance Institute for Highway Safety, IIHS, which uses a 40-percent frontal offset crash test, with the vehicles' fatality rates.
The results indicate that the crash tests held by NHTSA and the IIHS are successful in predicting real-world crash outcomes for passenger cars -- the ratings NHTSA and IIHS bestowed on passenger cars generally matched the cars' safety record on the road. However, the ratings for trucks did not match real-world outcomes. For example, in the case of both NHTSA and IIHS, trucks that received the worst possible crash-test rating had on average lower driver fatality rates than trucks that received the best possible crash-test rating.
"If you're thinking about buying a passenger car, then the crash test scores can be useful to you," said study co-author David Harless, professor of economics in the VCU School of Business. "But if you are thinking of buying a truck, we have no evidence that the tests are meaningful in terms of real-world performance in serious crashes."
The study was published in the September issue of Accident Analysis & Prevention.
Harless and co-author George Hoffer, professor of economics at VCU, limited their research to instances of multiple crash tests in a given vehicle line, controlling for the differences in driver behavior in different lines of vehicles. The study examined the testing of vehicles in the 1987-2001 model years. IIHS had fewer vehicle lines to review, because it did not begin its testing program until 1995. The study authors urged caution concerning their findings regarding the IIHS tests, particularly for trucks, because of the small sample of vehicle lines they were able to include in their research.
Hoffer said questions have persisted over the years about the value of NHTSA's frontal crash test ratings because of the difficulty of simulating a real-world crash in a laboratory. A tiny percentage of automobile accidents mirror the circumstances of a direct head-to-head collision between vehicles of similar size – the scenario NHTSA creates in its lab tests.
However, Hoffer said, "it turns out that the government does as good a job as the private sector does at predicting the relative death rate for passenger cars. The tests can be seen as complimentary of each other, though they are quite different."
Source: Virginia Commonwealth University
Tuesday, December 11, 2007
Several Mass. Auto Insurers under Pressure to Amend Rates for 2008
At least two insurers whose 2008 Massachusetts auto insurance rates have been questioned by officials have agreed to revise them and other insurers are under pressure to do the same.
Massachusetts Insurance Commissioner Nonnie Burnes last Friday raised concerns with filings by four insurers: Commerce Insurance Co., Liberty Mutual, Electric Insurance Co. and Arbella Mutual. She said the filings erred in partly basing premiums on how much bodily injury coverage a customer buys.
Burnes told the carriers that giving premium breaks to insureds because they have higher bodily injury limits violates the state's guidelines for its new managed competition system set to go into effect next April.
According to a department spokesperson, Liberty Mutual and Arbella Mutual have already indicated their willingness to fix their filings.
Commerce and Electric have not yet responded to the insurance department.
Commerce is also being told to revise the way it handled its group discounts in its filing.
Meanwhile, Attorney General Martha Coakley said she also wants to probe the rate filings of Commerce along with those of Premier Insurance Co. and Safety Insurance Co. to see if their rates should be lower than filed.
Coakley charged that collectively these insurers' that write about 45% of the market seek to "overcharge" Massachusetts drivers by more than $100 million.
According to the insurance department, the average statewide rate decrease for all 19 insurers is 7.8 percent, with Commerce at 8.1% and Premier and Safety both at 6.3%.
Coakley said her office would seek hearings into the rate filings of these three companies and suggested that the filings of two other insurers warranted further administrative review by Burnes.
Coakley said that the rate filings of Fireman's Fund and State Farm, which together comprise only 1% of the Massachusetts market, contain "some troubling aspects" but that her office decided not to call for hearings on these insurers' filings. She maintained that the filings calculated excess profits and used "unorthodox methods" to project losses and the expenses that are "excessively higher than average companies in the market."
She urged Burnes look more closely at the "suspect provisions" of these small market share insurers.
"Increased competition has the potential to bring down rates and serve consumers' interests," said Coakley. "However, under the managed competition reform, rates are still subject to regulation and approval, and the law prohibits excessive rates. Particularly during this transition to a more competitive market, these insurers' complex filings demand close scrutiny."
The attorney general's office has until December 17 to make final recommendations regarding the remaining insurer filings.
Following Coakley's comments on Monday, Burnes issued a statement suggesting that her department will work with Coakley's office to review all the rates.
"The efforts of both the Commissioner and the Attorney General demonstrate that the strong consumer safeguards built into managed competition are working. We look forward to reviewing her concerns and continuing to work together to make the promise of lower rates for good drivers, more choices and better products a reality for consumers across Massachusetts," Burnes stated.
Source: Insurance Journal
Massachusetts Insurance Commissioner Nonnie Burnes last Friday raised concerns with filings by four insurers: Commerce Insurance Co., Liberty Mutual, Electric Insurance Co. and Arbella Mutual. She said the filings erred in partly basing premiums on how much bodily injury coverage a customer buys.
Burnes told the carriers that giving premium breaks to insureds because they have higher bodily injury limits violates the state's guidelines for its new managed competition system set to go into effect next April.
According to a department spokesperson, Liberty Mutual and Arbella Mutual have already indicated their willingness to fix their filings.
Commerce and Electric have not yet responded to the insurance department.
Commerce is also being told to revise the way it handled its group discounts in its filing.
Meanwhile, Attorney General Martha Coakley said she also wants to probe the rate filings of Commerce along with those of Premier Insurance Co. and Safety Insurance Co. to see if their rates should be lower than filed.
Coakley charged that collectively these insurers' that write about 45% of the market seek to "overcharge" Massachusetts drivers by more than $100 million.
According to the insurance department, the average statewide rate decrease for all 19 insurers is 7.8 percent, with Commerce at 8.1% and Premier and Safety both at 6.3%.
Coakley said her office would seek hearings into the rate filings of these three companies and suggested that the filings of two other insurers warranted further administrative review by Burnes.
Coakley said that the rate filings of Fireman's Fund and State Farm, which together comprise only 1% of the Massachusetts market, contain "some troubling aspects" but that her office decided not to call for hearings on these insurers' filings. She maintained that the filings calculated excess profits and used "unorthodox methods" to project losses and the expenses that are "excessively higher than average companies in the market."
She urged Burnes look more closely at the "suspect provisions" of these small market share insurers.
"Increased competition has the potential to bring down rates and serve consumers' interests," said Coakley. "However, under the managed competition reform, rates are still subject to regulation and approval, and the law prohibits excessive rates. Particularly during this transition to a more competitive market, these insurers' complex filings demand close scrutiny."
The attorney general's office has until December 17 to make final recommendations regarding the remaining insurer filings.
Following Coakley's comments on Monday, Burnes issued a statement suggesting that her department will work with Coakley's office to review all the rates.
"The efforts of both the Commissioner and the Attorney General demonstrate that the strong consumer safeguards built into managed competition are working. We look forward to reviewing her concerns and continuing to work together to make the promise of lower rates for good drivers, more choices and better products a reality for consumers across Massachusetts," Burnes stated.
Source: Insurance Journal
AG seeks insurance review
Orders 3 firms to defend auto rates
By Herald staff and wire reports
December 11, 2007
Attorney General Martha Coakley has ordered three major auto insurers to defend their proposed rates at public hearings.
Coakley says proposals from the three would collectively overcharge Massachusetts drivers by more than $100 million.
At issue are annual rates that would take effect next spring for customers of Commerce Insurance, Premier Insurance and Safety Insurance.
Together, the companies insure about 45 percent of the state’s drivers.
All three filed for a rate decrease of 6 percent. Coakley believes the rate proposals aren’t justified, and would bring the companies excessive profits.
Coakley has the power to call rate-review hearings as the state introduces greater competition to its heavily regulated auto insurance market.
Massachusetts is shifting to a system where the market, rather than state regulators, sets rates.
Insurance Commissioner Nonnie Burnes has described the new “managed competition” system as a “success,” based on rate proposals that include different discounts for drivers.
The state is hoping that a less regulated system will attract other insurance companies into the Massachusetts market.
But Coakley has been skeptical.
“Particularly during this transition to a more competitive market, these insurers’ complex filings demand close scrutiny,” she said in a statement yesterday.
By Herald staff and wire reports
December 11, 2007
Attorney General Martha Coakley has ordered three major auto insurers to defend their proposed rates at public hearings.
Coakley says proposals from the three would collectively overcharge Massachusetts drivers by more than $100 million.
At issue are annual rates that would take effect next spring for customers of Commerce Insurance, Premier Insurance and Safety Insurance.
Together, the companies insure about 45 percent of the state’s drivers.
All three filed for a rate decrease of 6 percent. Coakley believes the rate proposals aren’t justified, and would bring the companies excessive profits.
Coakley has the power to call rate-review hearings as the state introduces greater competition to its heavily regulated auto insurance market.
Massachusetts is shifting to a system where the market, rather than state regulators, sets rates.
Insurance Commissioner Nonnie Burnes has described the new “managed competition” system as a “success,” based on rate proposals that include different discounts for drivers.
The state is hoping that a less regulated system will attract other insurance companies into the Massachusetts market.
But Coakley has been skeptical.
“Particularly during this transition to a more competitive market, these insurers’ complex filings demand close scrutiny,” she said in a statement yesterday.
Monday, December 10, 2007
Hanover to Lower Motorcycle Insurance Rates in Mass. Next Spring
December 10, 2007
The Hanover Insurance Group, Inc. reported that it is lowering insurance premiums in Massachusetts for new and renewal motorcycle policies by 8.5 percent.
The new rates will be effective on April 1, 2008. They are the first to be placed on file by the Division of Insurance under the state's managed competition system.
Source: The Hanover & Insurance Journal
The Hanover Insurance Group, Inc. reported that it is lowering insurance premiums in Massachusetts for new and renewal motorcycle policies by 8.5 percent.
The new rates will be effective on April 1, 2008. They are the first to be placed on file by the Division of Insurance under the state's managed competition system.
Source: The Hanover & Insurance Journal
Sunday, December 9, 2007
Political elbows aimed at auto insurance reform
December 9, 2007
THE BOSTON Globe and the attorney general are playing politics with auto insurance reform rather than reporting facts about managed competition ("So much for insurance savings," Editorial, Dec. 2).
There is no credible evidence to support the claim that rates would have decreased by 11 percent if the commissioner had continued to set the rates.
The Globe should have informed readers that the attorney general's recommended rate reductions that were part of the old state-set rate determination process were always considerably higher than the final rate approved by the insurance commissioner. In fact, in 2006 when the previous attorney general was seeking higher office, the recommended rate decrease was twice what was finally approved.
The Globe also should have noted that despite the frequently large differences under the old system between the attorney general's rate recommendations and the final rates as determined by the commissioner, the attorney general almost never challenged those final rates in court, and when he did, he invariably lost.
The rate recommendations of the attorney general are political posturing. Come April, deserving drivers, good drivers - young, old, urban, and suburban - will experience rate decreases that will dwarf all of our political expectations.
ROBERT P. SPELLANE Representative 13th Worcester DistrictBoston
The writer is vice chairman of the Joint Committee on Financial Services.
THE BOSTON Globe and the attorney general are playing politics with auto insurance reform rather than reporting facts about managed competition ("So much for insurance savings," Editorial, Dec. 2).
There is no credible evidence to support the claim that rates would have decreased by 11 percent if the commissioner had continued to set the rates.
The Globe should have informed readers that the attorney general's recommended rate reductions that were part of the old state-set rate determination process were always considerably higher than the final rate approved by the insurance commissioner. In fact, in 2006 when the previous attorney general was seeking higher office, the recommended rate decrease was twice what was finally approved.
The Globe also should have noted that despite the frequently large differences under the old system between the attorney general's rate recommendations and the final rates as determined by the commissioner, the attorney general almost never challenged those final rates in court, and when he did, he invariably lost.
The rate recommendations of the attorney general are political posturing. Come April, deserving drivers, good drivers - young, old, urban, and suburban - will experience rate decreases that will dwarf all of our political expectations.
ROBERT P. SPELLANE Representative 13th Worcester DistrictBoston
The writer is vice chairman of the Joint Committee on Financial Services.
Friday, December 7, 2007
Mass. Police Officer Indicted for Insurance Fraud
December 7, 2007
A grand jury has indicted a Springfield, Mass. police officer in connection with insurance fraud and larceny.
Prosecutors say Anthony Trabal was charged with motor vehicle fraud and two counts of attempted larceny for allegedly claiming wages he wasn't entitled to receive.
Trabal is accused of submitting claims to the city of Springfield and Liberty Mutual Insurance Co. for wages he lost during six months of unpaid leave following an off-duty car accident. Those claims were denied.
State insurance, fraud and unemployment experts launched investigations after Liberty Mutual determined that disability certificates submitted to support Trabal's claim were fake.
The 41-year-old is scheduled for arraignment in Hampden Superior Court on January 3.
Source: Insurance Journal
A grand jury has indicted a Springfield, Mass. police officer in connection with insurance fraud and larceny.
Prosecutors say Anthony Trabal was charged with motor vehicle fraud and two counts of attempted larceny for allegedly claiming wages he wasn't entitled to receive.
Trabal is accused of submitting claims to the city of Springfield and Liberty Mutual Insurance Co. for wages he lost during six months of unpaid leave following an off-duty car accident. Those claims were denied.
State insurance, fraud and unemployment experts launched investigations after Liberty Mutual determined that disability certificates submitted to support Trabal's claim were fake.
The 41-year-old is scheduled for arraignment in Hampden Superior Court on January 3.
Source: Insurance Journal
Thursday, December 6, 2007
Commission report offers solutions to home insurance dilemma, pleasing few
By Steve Myrick, The Martha Vineyard Times - December 6, 2007
When the remnants of Hurricane Noel blew over Martha's Vineyard last month with wind gusts topping 70 miles per hour, Wesley Brown was one of many local homeowners who's property was damaged by the lashing winds. A heavy old tree came crashing down, clipping a rain gutter and taking out a porch post.
In all the years he has insured his Oak Bluffs home, Mr. Brown doesn't remember filing a property claim, and he won't be filing a claim for this damage, either.
Like many Island property owners, his insurance premiums have skyrocketed in recent years. When his insurance company stopped writing policies of any kind on the Vineyard, his only viable option was the FAIR (Fair Access to Insurance Requirements) Plan, a state organized agency considered the insurer of last resort.
The FAIR Plan recently raised its estimate of his home's value, which nudged him into a category of insurance requiring a five percent deductible for wind damage. For Mr. Brown, that means he has to pay the first $33,000 of damage. The harm to his porch didn't merit even a moment's consideration.
"I don't know who came up with the name FAIR Plan, but it's anything but fair," said Mr. Brown. "It's really put a lot of people in a terrible bind."
The matter of $33,000 deductibles was one of many issues addressed in a report issued last Friday by the Special Commission on Insurance, appointed to recommend solutions to the perfect storm of complex, sometimes arcane market conditions that have caused significant premium pain for many Vineyard homeowners. (The report is available here.)
Of the 18-page report, eight pages are dissenting opinions signed by eight of the 16 commissioners, indicating the level of disagreement among the legislators, industry representatives, and public advocates appointed to the panel. Among those signing on to a strongly worded dissent are state representative Eric Turkington and senator Robert O'Leary, who represent Martha's Vineyard residents at the statehouse. The lawmakers did not disagree with the reports recommendations, but they feel it does not go nearly far enough.
"It is imperative," wrote the dissenters, " that we take immediate steps to protect consumers beyond those endorsed by the majority of the Commission.
"There is nothing in the report that will change the cost of protecting Island property. The state legislature and the governor will have to agree on new legislation before any of the report's recommendations make it to the bottom line of anyone's insurance bill.
Catastrophic changes
Among the most significant reforms recommended is creation of a state-run catastrophic event fund. Such a fund would build up a reserve of money that would mitigate insurance company losses should a catastrophe like a strong hurricane, a powerful earthquake, or even a calamitous act of terrorism strike Massachusetts. Insurance industry representatives on the commission argue that these catastrophes are more likely now than in the past. Many insurance companies purchase re-insurance, a kind of insurance for the insurers, to protect themselves in the event that many of their customers experience large losses at the same time. All agree the cost of re-insurance has soared, following large losses experienced after several destructive hurricanes in Florida, and after the September 11 attack on the World Trade Center in New York City.
If a catastrophic event fund reduces the risk for insurance companies, the commission majority reasons that many insurers who left the market would come back, introducing more competition and reducing the cost of premiums.
"I think that's a good step," said Ken Ward, vice-president of Martha's Vineyard Insurance. "If you could write a homeowners policy without wind, you could write it for significantly less. If you take that away, the Cape and Islands is a very safe and profitable place for companies to write insurance."
Mr. Brown says such a fund makes sense from his point of view as a consumer. "That sounds like a good idea," he said. "That would take some of the burden off the insurance companies so they can make their rates a little better. They ought to make all the insurance companies that do business in Massachusetts take a fair share of high risk insurance."
A conspicuous omission from the report, however, is any recommendation about how a catastrophe risk pool should be funded. Sen. O'Leary has filed a bill to create a catastrophic event fund that would be funded jointly by state taxpayers and insurance companies. The goal is to establish a $6 billion reserve, the estimated cost of recovery for a rare but very powerful hurricane.
Models for mayhem
Another recommendation of the special commission is appointment of an independent body to study the accuracy and reliability of the scientific models insurance companies use to predict the risk of catastrophic losses. Currently, those formulas are trade secrets, guarded zealously by the companies that create the models and sell their proprietary expertise to insurers.
The complex equations take into account weather patterns, building codes, property values, and a host of other factors. The changing climate and the rising value of coastal properties mean the models calculated dramatically higher risk in recent years, which has resulted in dramatically higher premiums for consumers.
During the commission hearings, consumers criticized this secretive process of predicting risk, and called for more transparency. While recommending an independent study of the models, the report leaves conspicuously absent any suggestion of how the models should be reviewed, who should do it, or what should happen if a review panel finds the models inaccurate.
Dissent divided
Minority factions of the commission issued two separate dissenting reports.
A report issued by three commission members representing the insurance industry strongly opposes the catastrophic event fund. They contend that such a fund would have unintended consequences, including an increase in insurance costs to all consumers, and the possibility of insurance insolvencies. The dissenters also dispute majority's contention that a catastrophic event fund would reduce the risk to insurers, drawing them back into the Massachusetts marketplace. They say it's more likely that more companies will leave, creating an even more dysfunctional market.
"We do not believe that a catastrophe fund will lower premiums for coastal homeowners," wrote the dissenters. "Premiums have not gone down in Florida, the only state with such a fund, and we see no reason that Massachusetts will be any different. It would be unfair to give people false hope that their premiums will go down."
A minority of five commissioners, including Rep. Turkington and Sen. O'Leary, issued a separate dissent. While supporting a catastrophe fund and many other recommendations, the dissenters charge the commission's proposals don't go nearly far enough to help consumers on the Cape and Islands. They contend that the two risk-forecasting models adopted by the FAIR Plan vary widely in their predictions, and that the models have not been calibrated to reflect historic conditions in Massachusetts.
The group advocates a new hurricane risk model, created and maintained with state funds, with all formulas open to public scrutiny.
"The FAIR Plan must not be allowed to use a model in support of its rate filing unless that model's underlying data, formulas, and calculations are fully disclosed," says the dissenting report.
Middle Ground
While the report offers long-term solutions to the property insurance dilemma, many Island homeowners are faced with a more immediate concern.
On December 15, the FAIR Plan deductible for wind and hail damage, already increased for many, will be increased for all Island homeowners. The deductible will rise from two to five percent of the home's value.
The median price of a home sold on the Vineyard last year was $695,000. Using that figure as an example, the FAIR Plan will only cover damage in excess of $34,750, the five percent deductible.
Also pending is a FAIR Plan request for a 25-percent increase in premiums, in addition to the 25-percent increase approved and implemented last year. The state attorney general is challenging last year's increase before the state's highest court, requesting instead, a 29-percent decrease in premiums.
The insurance commissioner is expected to rule on this year's request for a rate increase early in 2008.
"The commission, they study things, but there's not a lot in here that triggers a reduction to the premium, or the added risk that the citizens are asked to take on," said Paula Aschettino, a Cape Cod-based grass-roots organizer who testified before the insurance commission. "We cannot stop, and won't stop, to look for the proper way to make our rates reasonable. At the moment they are unreasonable and excessive."
"Is there an answer? Yeah, of course," said Mr. Ward. "The answer is probably some place in the middle, which isn't really going to satisfy the folks that feel they're paying too much, and it isn't going to satisfy the insurance people."
When the remnants of Hurricane Noel blew over Martha's Vineyard last month with wind gusts topping 70 miles per hour, Wesley Brown was one of many local homeowners who's property was damaged by the lashing winds. A heavy old tree came crashing down, clipping a rain gutter and taking out a porch post.
In all the years he has insured his Oak Bluffs home, Mr. Brown doesn't remember filing a property claim, and he won't be filing a claim for this damage, either.
Like many Island property owners, his insurance premiums have skyrocketed in recent years. When his insurance company stopped writing policies of any kind on the Vineyard, his only viable option was the FAIR (Fair Access to Insurance Requirements) Plan, a state organized agency considered the insurer of last resort.
The FAIR Plan recently raised its estimate of his home's value, which nudged him into a category of insurance requiring a five percent deductible for wind damage. For Mr. Brown, that means he has to pay the first $33,000 of damage. The harm to his porch didn't merit even a moment's consideration.
"I don't know who came up with the name FAIR Plan, but it's anything but fair," said Mr. Brown. "It's really put a lot of people in a terrible bind."
The matter of $33,000 deductibles was one of many issues addressed in a report issued last Friday by the Special Commission on Insurance, appointed to recommend solutions to the perfect storm of complex, sometimes arcane market conditions that have caused significant premium pain for many Vineyard homeowners. (The report is available here.)
Of the 18-page report, eight pages are dissenting opinions signed by eight of the 16 commissioners, indicating the level of disagreement among the legislators, industry representatives, and public advocates appointed to the panel. Among those signing on to a strongly worded dissent are state representative Eric Turkington and senator Robert O'Leary, who represent Martha's Vineyard residents at the statehouse. The lawmakers did not disagree with the reports recommendations, but they feel it does not go nearly far enough.
"It is imperative," wrote the dissenters, " that we take immediate steps to protect consumers beyond those endorsed by the majority of the Commission.
"There is nothing in the report that will change the cost of protecting Island property. The state legislature and the governor will have to agree on new legislation before any of the report's recommendations make it to the bottom line of anyone's insurance bill.
Catastrophic changes
Among the most significant reforms recommended is creation of a state-run catastrophic event fund. Such a fund would build up a reserve of money that would mitigate insurance company losses should a catastrophe like a strong hurricane, a powerful earthquake, or even a calamitous act of terrorism strike Massachusetts. Insurance industry representatives on the commission argue that these catastrophes are more likely now than in the past. Many insurance companies purchase re-insurance, a kind of insurance for the insurers, to protect themselves in the event that many of their customers experience large losses at the same time. All agree the cost of re-insurance has soared, following large losses experienced after several destructive hurricanes in Florida, and after the September 11 attack on the World Trade Center in New York City.
If a catastrophic event fund reduces the risk for insurance companies, the commission majority reasons that many insurers who left the market would come back, introducing more competition and reducing the cost of premiums.
"I think that's a good step," said Ken Ward, vice-president of Martha's Vineyard Insurance. "If you could write a homeowners policy without wind, you could write it for significantly less. If you take that away, the Cape and Islands is a very safe and profitable place for companies to write insurance."
Mr. Brown says such a fund makes sense from his point of view as a consumer. "That sounds like a good idea," he said. "That would take some of the burden off the insurance companies so they can make their rates a little better. They ought to make all the insurance companies that do business in Massachusetts take a fair share of high risk insurance."
A conspicuous omission from the report, however, is any recommendation about how a catastrophe risk pool should be funded. Sen. O'Leary has filed a bill to create a catastrophic event fund that would be funded jointly by state taxpayers and insurance companies. The goal is to establish a $6 billion reserve, the estimated cost of recovery for a rare but very powerful hurricane.
Models for mayhem
Another recommendation of the special commission is appointment of an independent body to study the accuracy and reliability of the scientific models insurance companies use to predict the risk of catastrophic losses. Currently, those formulas are trade secrets, guarded zealously by the companies that create the models and sell their proprietary expertise to insurers.
The complex equations take into account weather patterns, building codes, property values, and a host of other factors. The changing climate and the rising value of coastal properties mean the models calculated dramatically higher risk in recent years, which has resulted in dramatically higher premiums for consumers.
During the commission hearings, consumers criticized this secretive process of predicting risk, and called for more transparency. While recommending an independent study of the models, the report leaves conspicuously absent any suggestion of how the models should be reviewed, who should do it, or what should happen if a review panel finds the models inaccurate.
Dissent divided
Minority factions of the commission issued two separate dissenting reports.
A report issued by three commission members representing the insurance industry strongly opposes the catastrophic event fund. They contend that such a fund would have unintended consequences, including an increase in insurance costs to all consumers, and the possibility of insurance insolvencies. The dissenters also dispute majority's contention that a catastrophic event fund would reduce the risk to insurers, drawing them back into the Massachusetts marketplace. They say it's more likely that more companies will leave, creating an even more dysfunctional market.
"We do not believe that a catastrophe fund will lower premiums for coastal homeowners," wrote the dissenters. "Premiums have not gone down in Florida, the only state with such a fund, and we see no reason that Massachusetts will be any different. It would be unfair to give people false hope that their premiums will go down."
A minority of five commissioners, including Rep. Turkington and Sen. O'Leary, issued a separate dissent. While supporting a catastrophe fund and many other recommendations, the dissenters charge the commission's proposals don't go nearly far enough to help consumers on the Cape and Islands. They contend that the two risk-forecasting models adopted by the FAIR Plan vary widely in their predictions, and that the models have not been calibrated to reflect historic conditions in Massachusetts.
The group advocates a new hurricane risk model, created and maintained with state funds, with all formulas open to public scrutiny.
"The FAIR Plan must not be allowed to use a model in support of its rate filing unless that model's underlying data, formulas, and calculations are fully disclosed," says the dissenting report.
Middle Ground
While the report offers long-term solutions to the property insurance dilemma, many Island homeowners are faced with a more immediate concern.
On December 15, the FAIR Plan deductible for wind and hail damage, already increased for many, will be increased for all Island homeowners. The deductible will rise from two to five percent of the home's value.
The median price of a home sold on the Vineyard last year was $695,000. Using that figure as an example, the FAIR Plan will only cover damage in excess of $34,750, the five percent deductible.
Also pending is a FAIR Plan request for a 25-percent increase in premiums, in addition to the 25-percent increase approved and implemented last year. The state attorney general is challenging last year's increase before the state's highest court, requesting instead, a 29-percent decrease in premiums.
The insurance commissioner is expected to rule on this year's request for a rate increase early in 2008.
"The commission, they study things, but there's not a lot in here that triggers a reduction to the premium, or the added risk that the citizens are asked to take on," said Paula Aschettino, a Cape Cod-based grass-roots organizer who testified before the insurance commission. "We cannot stop, and won't stop, to look for the proper way to make our rates reasonable. At the moment they are unreasonable and excessive."
"Is there an answer? Yeah, of course," said Mr. Ward. "The answer is probably some place in the middle, which isn't really going to satisfy the folks that feel they're paying too much, and it isn't going to satisfy the insurance people."
In the Wake of California’s Wildfires
This article contains valuable tips for homeowners. - The Howes Insurance Agency
...wildfires burned through 517,450 acres of Southern California, destroying 2,923 structures and damaging an additional 504. The fires, spurred by the Santa Anna winds, spread across seven counties, leaving many people homeless and many independent agents working overtime to assist customers.
Southern California is picking up the pieces after the worst wildfire outbreak since 2003 and independent agents, including Mike Stromsoe of Stromsoe Insurance Agency in Murrieta, Calif., are doing everything they can to help. Stromsoe, whose own home is located less than a mile from one of the fires, has spent most of the past week in the Fallbrook Community Center answering victims’ questions and setting up claims.
“People would come up to the table and I had a list of all our companies and the special claims numbers we had set up, and we were able to quickly get them set up with claims department,” he says. “Some carriers were on site….and handed over checks right there.
“I wrote a list every day before I started and the thing at top of my list every day was to be compassionate,” he continues. “Just watching them (victims) have to go through this and knowing they have to start all over again was tough. The industry so far has done a very good job and our local community and Fallbrook --- I just can’t say enough. There were more volunteers at the center than there were people who needed help.”
Stromsoe estimates that about 41 of his insureds were affected by the fires, but says the fires should act as an important reminder to all agents and their customers to make sure proper coverages are in place.
“From an insurance standpoint, the No. 1 thing is coverage,” he says. “I think it’s an ongoing process to make sure our clients have the right coverage in place. I can’t tell you the number of people who said ‘I’m not sure if I have enough coverage.’”
According to an estimate from California Insurance Commissioner Steve Poizner, approximately a quarter of the homes destroyed by fire were underinsured.
“I am issuing a declaration which will expedite additional insurance adjusters to California to assist survivors of the fire storms with the prompt processing of insurance claims resulting from this catastrophic event,” Poizner said in a statement last week. “During this state of emergency, I want to ensure Californians that I will do all that I can to help them through this crisis and rebuild as quickly as possible. For many, the first step on the road to recovery is to cut through the red tape and have their loss documented and processed for a claim. We want to remove any unnecessary delays to the system and make sure we have enough adjusters on the job.”
The Insurance Information Institute expects that insurers will pay as much as $1.6 billion in claims to thousands of policyholders in California as a result of the fires. The state’s last major wildfire outbreak in 2003 caused $1.1 billion in losses.
Policyholders whose homes or businesses were destroyed in the fires shouldn’t expect to see an increase in their premiums or have policies canceled, according to the I.I.I., and rates shouldn’t go up for homeowners who don’t live in fire-prone areas of the state. Rates for insureds outside the state also shouldn’t be affected by the fires, according to Robert Hartwig, I.I.I. president.
“The homeowner and commercial markets in California are generally healthy and competitive and, for the most part, events like this are already factored into rates,” Hartwig says. “Despite the magnitude of the loss, this event at this point is well within the range of what insurers anticipated and, in and of itself, should not drive up rates.”
While the wildfires have subsided, many homeowners in the San Diego area are still at risk for another homeowners’ peril --- flooding.
A fire, be it a wildfire or house fire, can clear away everything in its path and leave an area completely barren --- making it more vulnerable to flooding. Agents should encourage their insureds to purchase flood insurance, not just in wildfire-prone areas, but everywhere.
The following is a list of tips on preparing for disaster-related losses compiled from the Big “I,” IBA West and the I.I.I. that agents can pass along to customers:
1. Be prepared for any loss before the loss occurs by having all important documents in one place. These items include: copies of personal identification ( i.e. birth certificates, Social Security cards, passports and driver’s licenses) bank information and credit card numbers; health insurance cards and copies of prescriptions; copies of all insurance documents, including phone numbers for agents and policy numbers; travelers checks for emergencies and a listing of important telephone numbers and contacts.
2. Talk with an agent once a year and review coverage details. Know policy limits and discuss how to insure special items or valuables. Discuss a home inventory and basic disaster plan with an agent. (The I.I.I. has developed a downloadable home inventory software program, “Know Your Stuff,” to document belongings. For more information, click here.)
3. Understand how a policy will provide assistance in the event of an emergency evacuation and/or the partial or total loss of a home.
4. Get instructions from an agent on what steps to take in the event of a loss. Find out who to call, what to do to ensure the loss is contained, what documentation will be required and what to expect during the claims process.
5. Have an evacuation plan for family and pets. Make sure everyone knows what to do and where to go. Also, hold a real-time test of the plan to make sure it works. (The I.I.I. video news release “Ten-Minute Challenge” outlines the importance of practicing for an emergency evacuation.)
Trusted Choice®, the Big “I” and IBA West have been working together to help residents in California affected by the wildfires. IBA West provided assistance to 39 catastrophe centers during the fires and has created a consumer insurance guide, “Southern California Fires: The Recovery Process Begins,” which includes guidelines to coverage for homeowners, renters, auto, RV, motor homes, trailers and watercraft coverage. (For more information on the guide, click here.)
“We got materials out to agents and brokers and offered help to emergency services and in some cases we staffed desks over the weekend answering insurance questions,” says Andrew Valdivia, IIABA’s California director. “I think as an association we were very well prepared because initially what was considered a small, local event turned out to be a regional event and we performed very well during the catastrophe.”
Trusted Choice® also has committed to providing financial assistance to victims of the fires through the Trusted Choice® Disaster Relief Fund. The fund was created to help independent agents, their customers and their communities during catastrophes. For more information on how to apply for a grant or make a tax-free contribution, visit www.independentagent.com.
Michelle Payne (michelle.payne@iiaba.net) is Big “I” writer/editor.
Pa. pair held anew in identity scam case
The Associated Press
PHILADELPHIA -- A young couple accused of financing a lavish lifestyle through a large-scale identity theft scheme surrendered Wednesday to face additional theft and burglary charges, police said.
Jocelyn Kirsch, 22, and boyfriend Edward Anderton, who turned 25 Wednesday, used the scam to live affluently in Philadelphia and take international vacations, authorities said.
They were initially arrested Friday and charged with identity theft, forgery, unlawful use of a computer and related offenses. They posted bail and were freed but turned themselves in Wednesday to face the additional charges.
Police said that during a weekend search of the couple's upscale apartment, they found $17,500 in cash, dozens of credit cards, fake driver's licenses, keys to unlock many of the apartments and mailboxes in their building, and an industrial machine that makes ID cards.
Kirsch "can't believe that she got herself into this," said her lawyer, Ronald Greenblatt. "It's not like she's blaming anybody else but herself."
It was unclear whether Anderton had a lawyer. A preliminary hearing for the two is set for Thursday.
Anderton is a University of Pennsylvania graduate who was recently fired from a job as a financial analyst. Kirsch is a student at Drexel University.
Contact The Howes Insurance Agency for protection against identity theft.
Wednesday, December 5, 2007
Mass. Insurance Agents Support Managed Competition But Oppose Credit Scoring
Insurance agents in Massachusetts support the state's move to managed competition in private passenger auto insurance but oppose insurers' use of credit scoring in rating or underwriting.
In an online Insurance Journal poll completed by 76 Massachusetts agents, 56% said they support the move from fix-and-establish auto rates to a managed competition format, while 38.7% said they oppose it and 5.3% are undecided or have no opinion.
"It's about time that we are given the same opportunities to secure business that they have in other states," noted one pro-managed competition agent.
The current regulations for managed competition ban the use of credit scores by insurers. A majority of agents agree with this prohibition in rating (77.3%) as well as in underwriting (65.8%).
"Think competition is OK. Think credit scoring or socio-economic factors are unfair to good drivers," wrote one agent who captured the majority's viewpoint.
Not all agree that the change is necessary.
"Auto rates were doing just fine under the present system. Premiums have been coming down. As they say, 'if it isn't broke, don't fix it,'" commented one agent opposed to the switch.
For a complete report on agents' views of the change to managed competition, see the Dec. 3 issue of Insurance Journal East magazine.
In an online Insurance Journal poll completed by 76 Massachusetts agents, 56% said they support the move from fix-and-establish auto rates to a managed competition format, while 38.7% said they oppose it and 5.3% are undecided or have no opinion.
"It's about time that we are given the same opportunities to secure business that they have in other states," noted one pro-managed competition agent.
The current regulations for managed competition ban the use of credit scores by insurers. A majority of agents agree with this prohibition in rating (77.3%) as well as in underwriting (65.8%).
"Think competition is OK. Think credit scoring or socio-economic factors are unfair to good drivers," wrote one agent who captured the majority's viewpoint.
Not all agree that the change is necessary.
"Auto rates were doing just fine under the present system. Premiums have been coming down. As they say, 'if it isn't broke, don't fix it,'" commented one agent opposed to the switch.
For a complete report on agents' views of the change to managed competition, see the Dec. 3 issue of Insurance Journal East magazine.
Subscribe to:
Posts (Atom)