The Howes Insurance Agency

Report: Insurance industry faces major changes next 5 years

2009-12-09T13:12:00.001-05:00

NU Online News Service, Dec. 8, 11:43 a.m. EST

The insurance industry will undergo increasing consolidation as part of the fallout from government intervention and potential tax law changes following the financial crisis, a consulting firm is advising.

And insurance industry stability and certainty may not return for a few years as insurers react to regulatory reform, PricewaterhouseCoopers LLP said.

PwC projects in a report that within five years the industry landscape could look markedly different and Americans may find their insurance policies underwritten by a handful of large, well-capitalized firms that can demonstrate financial strength and economies of scale.

Titled “Emerging from the Storm: The Day After Tomorrow for Insurance,” the PwC analysis outlines nine key developments the firm said are expected to reshape the insurance industry and their strategic implications during the next five years.

The most significant of these developments for U.S. insurers, PwC said, will likely be sweeping regulatory changes resulting from proposed legislation to reform health insurance and increase federal oversight of the insurance and financial industries.

Creation of a Federal Insurance Office could provide federal policymakers with the information and resources to better respond to crises, mitigate systemic risks and help ensure a well-functioning financial system, but it could also lead to dual regulation at both the state and federal levels, according to the report.

Bill Chrnelich, PwC insurance sector partner, said, “Insurers are in the business of managing risk and measuring probability. They don’t like uncertainty, yet they are facing two massive reform initiatives, the outcomes of which are unknown but could alter their destiny.”

He noted, “Some insurers are taking a cautious wait-and-see approach, while others see this period as a once-in-a-generation opportunity to shape their future.”

According to PwC, the insurers most likely to succeed once regulatory changes are enacted are those that closely monitor developments and create business strategies that anticipate the most likely possibilities for reform.

PwC said the U.S. insurance market remains highly fragmented, and there is a strong underlying rationale for consolidation and restructuring, which means merger and acquisition activity may be set to accelerate rapidly.

This could particularly occur, according to the firm, as larger, better-capitalized firms consume smaller firms.

The report said consolidation is expected to help deliver the capital stability and economies of scale that will be important in attracting customers and demonstrating financial strength, not only to ratings agencies but also to third-party distributors whose “ownership of the customer” makes them a key determinant of an insurers’ fate.

PwC found that the faith of investors, who had become accustomed to high yields but were unaware of the related risks, “appears to have given way to shock, disillusionment and caution.”

A pursuit of innovation, said PwC, appears to have been displaced by a focus on stability, risk management and demand for simpler, more straightforward and transparent policies and investment products such as index-linked investments.

As an example of this, the firm mentioned the recent resurgence in demand for whole life insurance.

But it cautioned that the apparent desire for guarantees could create dilemmas for insurance companies that want to scale back such products as they seek to limit risk.

Potentially higher costs of risk and guarantees, along with what may be higher commission payments to distributors, could change product economics, and insurers will need to better understand component costs, pricing and profit profiles, the report advised.

PwC predicted that governments will be looking closely at insurance companies’ tax status as the industry is a major source of potential tax receipts and has moved significant business capacity to other jurisdictions in recent years.

Insurers, PwC said, can expect renewed scrutiny of their tax planning techniques, as well as more stringent requirements for transparency and information exchange relating to clients.

As a result of the financial crisis, the consultants noted, many insurers have been forced to raise prices, restrict the pursuit of new business, or withdraw from high risk and peripheral markets.

It forecasted that as insurers withdraw from some of their geographic markets and scale back particular lines of business, the market shares and opportunities for those that remain could sharply increase, leading to a significant reconfiguration in the list of leading players.

Companies with a better understanding of their risks, said PwC, are likely to be in a stronger position to capitalize on potential openings that less-informed and less-assured competitors may miss.

PwC warned that without an industry consensus on a genuinely relevant, intelligible and comparable basis of accounting and disclosure, insurers may find it increasingly difficult to compete for capital.

Further, with funds constrained, many portfolio investors could simply choose to put their money elsewhere, leaving the insurance industry with major challenges, according to the firm’s analysis.

PwC said in a statement that “it seems imperative that the industry come together to develop a basis of relevant disclosures that reflect the nuances of their business and satisfy analyst and investor demands.”

As the government exerts a stronger influence over the insurance market as a result of bailouts, regulatory reform and greater control over pensions, health care, trade credit and mortgage support, the relationship between the public and private sectors could change, PwC suggested.

With the appointment of the Special Master for Troubled Asset Relief Program Executive Compensation in the United States, insurers are likely to base much more of their performance-related pay on risk-adjusted measures aligned to their business strategy. They also are expected to face tougher regulation over how compensation is governed, said PwC.

The firm also found that for reinsurers, while demand is likely to increase within emerging markets, this is unlikely to offset the decline in reinsurance buying in developed markets and may force many reinsurers to rethink how they sustain profitability and growth.

The trend toward higher retention of straightforward risks could accelerate. As companies become more risk-aware through advances in enterprise risk management, they will be better able to choose what risks to retain and which to reinsure, PwC said.

Mr. Chrnelich said the coming changes mean the competitive landscape will be very different in five years from what exists today. “This will jeopardize some insurers' business, but it should also enable those who are better prepared to excel in a new environment.”

Consumers Missing Out on Discounts

2009-11-13T15:07:00.000-05:00

Insurance Networking News, November 12, 2009

Americans are not utilizing all of the discounts that may be available to them in their homeowner and auto insurance, according to a new national survey conducted for Trusted Choice and the Independent Insurance Agents & Brokers of America (IIABA).

The survey queried home and auto owners about whether they are taking full advantage of all the discounts they qualified for on their homeowners and auto insurance policies. The study found 34% of respondents, representing 53 million households, admitting they are probably not taking advantage of all homeowners insurance discounts or indicating that they simply didn’t know. The results were largely similar with auto coverage, with more than 20% of car owners either not knowing or employing all the discounts available to them.

“The latest survey shows what we suspected: many Americans could be foolishly throwing money away because they fail to ask about insurance discounts for which they may qualify,” says Madelyn Flannagan, IIABA VP of agent development, education and research. “Companies often offer some unique, regional, very specific and, at times, quirky discounts. In these economic times, every dollar counts—some consumers may be able to nickel and dime their way to big savings.”

Robert Rusbuldt, IIABA president & CEO, says the results underscore the value proposition of insurance agents.

“One of the biggest advantages to using an independent insurance agent is that they can explore the various companies and find the best possible coverage for each individual family or business,” says. “Finding specific discounts can be time-consuming and confusing, so we advise consumers to consult with their Trusted Choice independent insurance agent and ask questions.”

Patriot Ledger: Keep senior driver discount but make sure it's earned

2009-11-04T13:03:00.000-05:00

QUINCY — .It’s frustrating that a generous insurance discount for the state’s oldest drivers means higher rates for the rest of us, but addressing that injustice now would further weaken the push for tougher testing standards for this accident-prone group.

The Legislature would be wise to leave that plum untouched and stay focused on making sure drivers old enough to qualify for the discount deserve to be on the road at all.

The Automobile Insurers Bureau of Massachusetts recently released accident data that bolsters the push for tougher standards for older drivers. It shows those over 75 – while not the deadly drivers they are sometimes made out to be – get in more accidents and file significantly more property damage claims than all other drivers except inexperienced, youthful ones.

The document suggests that while some “senior discount” may be warranted, the 25 percent break enjoyed for more than 30 years is probably excessive.

“Whoever is getting the discount is going to be subsidized by others,” said Bob Passmore of the Property Casualty Insurers Association of America. Passmore said the Massachusetts senior discount is the largest in the nation and one of only a handful that are based solely on age. In most other states, the discount is contingent on the driver passing a defensive driving course.

“Many seniors expect a discount. They go into Dunkin’ Donuts and get a discount. They go into McDonald’s and get a discount,” said Frank Mancini, president of the Massachusetts Association of Insurance Agents. “But if competition is going to work and it’s going to be fair, then subsidies have to come out.”

While we tend to agree, the politics involved necessitate a different approach.

For the past five years, Sen. Brian Joyce, D-Milton, has been pushing a bill that would require drivers 85 and older to pass cognitive and reflex tests to renew their licenses. The version now being considered – which next goes before the Legislature’s Joint Transportation Committee – would apply to drivers 75 and older.

The bill gained traction earlier this year during a spate of deadly accidents involving drivers in their 70s and 80s but the uproar has died down and efforts to defeat the bill have not eased.

It is opposed by some senior citizen advocates who say it should be based on ability rather than age.

The bill, which is already seen as a threat to the independence of older drivers, would like lose essential support if it became tangled in discussions of taking a bigger chunk out of seniors’ fixed income.

It would be better to simply stick to the goal of making sure, through more aggressive testing, that those on the road in their later years belong there.

Doing so would, by default, reduce the number of older drivers whose declining road skills end up translating into higher insurance rates for the rest of us.

Flu Cases Could Spur Homeowner Claims, Lawyer Says

2009-10-30T12:56:00.000-04:00

Property and casualty insurers can expect to be hit by a swirl of claims arising from swine flu that include actions against homeowners and businesses, a medical malpractice defense attorney is predicting.

Charles Kutner, whose New York-based law firm defends individuals and institutions in the health industry, said he believes that p&c insurers may have to modify coverage to limit liability.

As hypothetical examples of the kind of legal action the illness could create, Mr. Kutner suggested that a suit could arise if a guest contracted flu after attending a cocktail party where the host did not warn that their child had the illness.

Similarly, a homeowner could be at risk of becoming a defendant if they failed to vaccinate their child against flu and the youngster passed on that illness to children invited for a play date--one of whom sickens and dies.

“The exposure is there [and] you’ve got a lawsuit on your hands,” he warned.

Mr. Kutner said he thought malpractice actions could arise because of a lack of availability of flu vaccine, but he doubted they would be found to have merit.

There are also possible actions from medical complications arising from a flu shot, because “invariably there are complications from vaccines and lawsuits.”

Employees, he said, can be encouraged to get flu shots, but, “Can you force employees to get flu shots? Probably not.”

On the other hand, Mr. Kutner said that he believed an employer could be held liable “if you knew an employee was diagnosed with flu and you didn’t tell everyone else on the staff.”

To prevent against that sort of liability, he noted, universities make it a point to announce it to everyone at their institution when a student has contracted a communicable illness such as meningitis.

The key to a defense, he said, is putting third parties on notice when you have information. When a suit is brought, Mr. Kutner explained, the key issues are “What did you know? When did you know? And, what did you do about it.”

In New York, Mr. Kutner noted there is a pending $40 million lawsuit brought by the family of school principal Mitchell Weiner against the city, claiming the Board of Education failed to alert the principal that he had been in contact with children who had tested positive for the virus; that it did not act quickly enough to stop the transmission of the disease; that it did not disseminate adequate information about health conditions that would increase the risks of the virus; and that it did not provide a safe working environment for Mr. Wiener and other school employees, among other allegations.

Mr. Kutner suggested that with so much exposure, insurers “are going to have to start thinking about homeowner policies and these big general liability policies.”

“If there is a pandemic, it’s potentially a major casualty loss,” he said.

NU Online News Service, Oct. 29, 1:20 p.m. EDT
By DANIEL HAYS

Insurance Covers Fantasy Football Nightmares

2009-10-07T12:14:00.000-04:00

It is a common fear of fantasy football players: If my No. 1 pick goes down with an injury in the first game, the whole season—and my $50 entry fee—could be lost.

Not to worry—there’s insurance for that.

Intermarket Insurance recently launched its Fantasy Sports Insurance, allowing fantasy football players to insure up to three top players against the risk of injury. FSI is a player disability coverage that will protect your fantasy league investment, said Anthony Giaccone, president of Huntington, N.Y.-based Intermarket.

In fantasy football, players draft a team of real National Football League players, whose stats determine the success of the fantasy teams.

The insurance policy allows injury-plagued fantasy owners to recoup their league investment and continue with the season, while cushioning the blow of losing the team’s top performer. The idea, Mr. Giaccone said, stemmed from one of his co-workers last football season losing All-Pro New England Patriots quarterback Tom Brady for the year in the first game.

Intermarket offers a policy with an average of $150 coverage limits for a premium of $16, he said. In the event of a season-ending injury, FSI will reimburse the policyholder for the his or her league entry and for products such as draft guides.

This year, Mr. Giaccone said, Tom Brady is the most insured player.

“Coming back from knee surgery, and he tweaked his shoulder in the preseason. You bet a lot of people out there are concerned,” he said.

Copyright 2009 Crain Communications Inc. All Rights Reserved.

September 18, 2009

Friday humor - insurance ads from the Netherlands

2009-09-02T12:23:00.000-04:00

The Dutch insurance company Centraal Beheer is well known in Europe for their humorous TV commercials in which the characters are put in precarious positions - the implied message being "Is your insurance up to date? Call us." You can learn more about the company and the commercials on the Wikipedia page for Centraal Beheer's. Here's a sampling of a few commercials:

For Congress, Massachusetts Serves as Model and Warning

2009-09-02T12:19:00.001-04:00

As Congress jousts over how to reform the nation’s health care system, many experts say that the Massachusetts model, which has reduced the state’s uninsured rate to the lowest in the nation, is a good place to start. Yet those reforms, while doing wonders for coverage, don’t tackle the longer-term issue of cost-containment, which is largely the reason federal policymakers are pushing for reform this year.

With the White House insisting that any national reform proposal address both cost and coverage simultaneously, the lessons from Massachusetts will be limited. Indeed, the funding issue is expected to be the thornier topic. Democratic leaders — who hope to include several key elements of the Massachusetts plan into their own health reform proposal — will also have to come up with more creative ways of paying for it. The Massachusetts’ experiment can offer some guidance, experts say, but it also serves as a warning that coverage expansion and cost reduction don’t often go hand in hand.

James Mongan, president and CEO of Partners Health Care, a Boston-based managed care nonprofit, said the cost issue has thwarted federal stabs at health reform for decades. “This discussion has never been a discussion about health care,” Mongan said Tuesday during a health reform discussion in Washington hosted by the Kaiser Family Foundation. “It’s always been a discussion about financing and who’s going to pay for it. And that’s how we’ve been stuck as a nation for the last 30 years.”

The comments arrive as congressional Democrats are struggling to craft a comprehensive health reform proposal capable of squeaking through the Senate, where 60 votes will likely be required to elude a GOP filibuster. A House proposal, passed by three separate committees before the August recess, adopts a number of the Massachusetts provisions, including an individual insurance mandate, a broad expansion of Medicaid, and the requirement that all insurers offer a minimum menu of benefits. The proposal likely to be taken up in the Senate is still being crafted by select members of the Senate Finance Committee.

Launched in 2006, the Massachusetts reform model requires residents to have insurance while offering generous subsidies for low- and moderate income residents. Larger employers, under the plan, must contribute to their employees health insurance costs or pay the state $295 per employee per year — “fair share” funds the state uses to subsidize the low-income coverage. The legislation also created something called the Commonwealth Health Insurance Connector Authority, which administers the subsidies and oversees the exchange of private insurance plans by individuals and employers alike. For good measure, the model also expanded SCHIP and Medicaid eligibility to reach larger segments of the uninsured population. In the eyes of the officials running the show, the “experiment” has been a smashing success.

“The model in terms of shared responsibility, and insurance reform and exchanges really is based on something that works,” said Jon Kingsdale, executive director of the Commonwealth Health Insurance Connector Authority. “We do not consider this an experiment in Massachusetts any longer.”

The numbers support Kingsdale’s claims — as least as they pertain to coverage. In 2006, before the reform plan took effect, Massachusetts had roughly 600,000 uninsured residents, or 10 percent of the state population. Three years later, an estimated 430,000 of those folks have gained coverage, lowering the uninsured rate to 2.6 percent — the lowest in the country.

Still, Kingsdale conceded that state lawmakers and health officials still have left to tackle “the tough, tough issue of cost containment,” something he deemed “a separate question.”

Congress, charged with addressing the coverage and cost containment issues simultaneously, won’t have the same privilege.

Critics have blasted the Massachusetts reform model from numerous angles, not least of all with the charge that its cost will break the state’s budget. In a June report, the libertarian Cato Institute estimated that the strategy has led to a spike in overall health care spending in Massachusetts. “With the ‘Massachusetts model’ frequently cited as a blueprint for health care reform, it is important to recognize that giving the government greater control over our health care system will have grave consequences for taxpayers, providers, and health care consumers,” the report warns.

Others sharply disagree that the Massachusetts strategy — or the national reforms being debated — are unaffordable. A recent report from the Massachusetts Taxpayers Foundation, a business-funded budget watchdog, found that the additional cost to fund the 2006 reforms will be roughly $700 million through fiscal year 2010, with the federal government picking up half the tab. Those costs, said Michael Widmer, president of the budget group, are “very much in line with the anticipated cost increases around reform.”

Rather, Widmer and other experts say the nationwide trend of skyrocketing health care costs, not the reform efforts, is fueling criticisms like Cato’s.

Still, Widmer also warned that the Massachusetts experience is no indication that the same model would work on a national level. Massachusetts, for one thing, has the advantage of having a high number of people enrolled in employer-sponsored plans — something not every state enjoys. Also, the state can defray subsidy costs with its “fair share” system.

“We can’t conclude at a national level that the additional cost [of health reform] is insignificant,” he said.

And, of course, congressional lawmakers don’t have the same privilege of looking to Washington for help paying for their reforms, as Massachusetts did to jump-start its model. With the Democrats’ bills tickling the $1 trillion mark, much of the opposition has been over the source of the funding — a thorny issue in any environment, but even more so considering the current partisan bickering that practically defines Washington politics these days. Not to mention the difficulty of passing tax hikes in recent years.

Citing “a thorough triumph of the anti-tax forces” in recent decades, Mongan predicted a diluted health reform bill this year, with additional reforms for years to come.

“The best thing to do is to pass what we can pass,” Mongan said. “But this will not be over for a number of legislative cycles.”

Court: Homeowner's Policy Won't Pay Damages for Overdose Death

2009-08-31T16:28:00.000-04:00

A homeowner's policy will not pay damages to the mother of a teenager who died after overdosing on painkillers he stole from the man with whom he and his mother lived, a panel of justices from the Massachusetts Appeals Court has ruled.

The teenager, Stephen McMaster, 18, died of an apparent suicide in April 2001 after overdosing on the painkiller propoxyphene. At the time, McMaster and his mother, Nichole Gallagher, were living in the home of another man, John Scaduto. Scaduto had purchased the painkiller after a doctor prescribed it to him.

The Massachusetts Property Insurance Underwriting Association (MPIUA) insured Scaduto's home. After her son's death, Gallagher sued Scaduto, claiming that he was negligent in her son's death because he had left the drugs in an accessible place despite knowing that her son was in a fragile emotional state.

When Scaduto demanded that MPIUA pay the claim on his behalf, the insurer denied his request, citing common policy language that excludes bodily injury claims arising out of the use of a controlled substance.

A Massachusetts Superior Court has already ruled in favor of the insurer, stating that the death and Scaduto's negligence fell within the exclusion.

Gallagher, however, appealed that decision, arguing to the Appeals Corurt that her son's death arose out of Scaduto's legitimate use of the painkillers and was therefore an exception to that exclusion. It was an argument that Justice Mark Green wrote "was not entirely without persuasive force."

However, Green wrote in rejecting Gallagher's appeal, "the argument is flawed… as it overlooks… McMaster's own use" of the drug. "The excluded use (of the drug by McMaster) stands as the immediate cause of his death; whatever causal contribution Scaduto's use may have furnished was decidedly more remote."

DOI Issues Executive Summary: Results of the Survey of the Auto Insurance Market After One Year of Managed Competition...

2009-07-16T15:15:00.001-04:00

On April 1, 2008, the Massachusetts Division of Insurance inaugurated the change to a more competitive auto insurance market. In doing so, the state transformed from a fixed rate setting by state regulators to “managed competition.” Massachusetts is the last state in the country to move from state-set auto insurance rates to a competitive rating system.

Under managed competition, insurance companies may propose competitive rates, offer new and different products, and provide new services to consumers. Consumers can benefit from shopping for the best price, coverage and service options for themselves. In order to review the impact of the changes on consumers over the first year, the Division of Insurance commissioned a study, measuring such variables as premium levels and consumer attitudes and experiences with the new system of purchasing automobile insurance. The study covers the time period from April 2008 to April 2009.

The changeover to managed competition began in April 2008 after many decades during which state regulators set the insurance rates that all automobile insurance companies in Massachusetts were permitted to charge. Since the early 1990s, Massachusetts witnessed a decline in the number of companies offering private passenger auto insurance here from 35 to 19 in 2008. In the first year of managed competition, nine new companies entered the Massachusetts auto insurance market. Under the new system, consumers can benefit because companies can compete against one another for market share by charging different rates, offering innovative discounts and other incentives, and increasing their efficiency.

The survey included nine focus groups with consumers held around the Commonwealth, a preliminary survey of 1,100 consumers, a comprehensive 30-minute survey of more than 4,500 drivers and one-on-one interviews with over 50 insurance agents and executives. Minorities and drivers in urban areas were over-sampled to ensure that their experiences were accurately reflected and then weighted to represent their overall incidence on the insured driving population. The results, which are statistically valid and reliable with a confidence rate of 95 percent, showed the following:

1. Massachusetts consumers saved over $270 million in insurance premiums in the first year of managed competition. This data wasdetermined from an analysis of survey responses on the premiums drivers paid for their automobile insurance.
2. Average premiums per vehicle dropped 8.2 percent during the first year under managed competition; previously in 2006-07, premiums had declined by 5.2 percent.
3. Consumers with clean driving records were 19 percent more likely to see savings under the new system than those who had accidents or violations during the first year of managed competition.
4. Most consumers maintained their level of coverage when renewing their insurance policies. Those who changed their level of coverage were twice as likely to increase than to decrease their coverage levels. Many insureds opted to reinvest some of their premium savings into additional insurance coverage.
5. African-American, Hispanic and Asian drivers were more likely than the overall population to increase their level of coverage.
6. Since the introduction of competition into the Commonwealth’s automobile insurance market, by April 1, 2009, nine new companies had entered the Massachusetts auto insurance market. New entry into a market is a sign that the market is becoming robust and affording consumers greater price and service options.
7. The number of drivers in the so-called residual or high-risk market is declining, meaning that more drivers are able to find acceptable insurance premium and service options among competing companies in the marketplace.
8. In the first year of managed competition, there was a 13 percent decrease in the number of uninsured vehicles on Massachusetts roads.
9. Sixty-nine percent of consumers continue to purchase coverage through agents, rather than purchase directly. This number is nearly twice the national average.
10. Forty-two percent of the consumers surveyed were more satisfied with the auto insurance market in Massachusetts than a year ago and only 3 percent were less satisfied.
11. Under the new system, 87 percent more agencies are representing four or more companies, whereas under the old system many agencies represented only one or two insurance companies – this makes it easier for consumers to shop for the best policy at the lowest price for their needs.
12. Approximately three out of four consumers indicated that they were aware of the new auto insurance system, and those who were aware were 60 percent more likely to have saved money than those who were not aware.
13. Not all consumers availed themselves of the new system in the first year. Some believed shopping around would be time-consuming; they were skeptical that they would save money; they found it difficult to compare insurance policies from different companies and they believed they could not change insurance carriers before a policy had expired.

Overall, the study showed positive results for most Massachusetts drivers but also highlighted that more outreach and education needs to be done to continue to afford all consumers the benefits of managed competition.

GEICO Enters Market

2009-06-02T09:25:00.002-04:00

GEICO entered the MA private passenger auto insurance market and wrote
its first policy on Monday, May 18, 2009. As soon as we were permitted by the
Division of Insurance to do so, MAIA obtained a copy of the filing — as we do
with every company filing — and began the tedious task of reviewing the forms,
endorsements and rules.

On “launch day,” your editor obtained a quote from the GEICO website. The
good news is that is was NOT cheaper! It was difficult to determine exactly how much MORE expensive the GEICO policy was because the quote included a $100 PIP deductible (??), NO Waiver of Deductible, NO Medical Payments and NO Substitute Transportation.

Our review of their filing revealed some interesting changes. GEICO has
made a number of changes to the Massachusetts Auto Policy (MAP). Most
notable is that the definition of YOUR AUTO does not include a motorcycle. In
addition, the following sentence has been added to the Trailer definition: “The
trailer must be pulled by your auto.”

GEICO has added the following exclusion to Part 4. Damage to Someone
Else’s Property: “In addition to the above exclusion for the business or selling,
servicing, repairing or parking autos, while anyone is using a vehicle in the
course of any business. This exclusion also applies to private passenger autos,
pick-up trucks, vans, and similar vehicles used for the delivery or transportation of goods or materials unless such use is incidental to your business of installing, maintaining, or repairing furnishings or equipment.”

Interestingly, the exception for delivery or transportation of goods which is incidental to your business of installing, maintaining, or repairing furnishing or equipment above seems to conflict with the second part of GEICO’s private passenger automobile definition in Rule PPA-01: B. utility vehicle of the pick-up, panel or van body type with a gross vehicle weight of 15,000 pounds or less, that is not used as a public or livery conveyance for passengers, but rather is used for personal and family pleasure, commuting and/or business purposes. A utility vehicle that is customarily used for wholesale or retail delivery or commercial transportation of property is excluded from the private passenger automobile definition.

GEICO has added the following language to Part 7. Collision, Part 8. Limited
Collision and Part 9. Comprehensive: “The cost to physically repair the auto is
limited to the prevailing competitive price, which is the price we can secure
from a competent repair facility conveniently located to you …”

GEICO has replaced Part 10. Substitute Transportation with Rental
Reimbursement and has defined when reimbursement of rental expenses ends:
“Reimbursement for rental charges and transportation expenses shall end the
earliest of when your auto has been: 1. Returned to you; 2. Repaired;
3. Replaced; or 4. If your auto is deemed by us to be a total loss, then seventy
two (72) hours after we pay the applicable limit of liability under Part 7, Part 8
or Part 9.

GEICO has replaced Towing and Labor with Part 11. Emergency Road Service. We have included the complete text of this new coverage in our online GEICO Executive Summary.

GEICO has made changes in the Cancellation and Renewal section of the policy. The first two reasons for cancellation of the entire policy in the Seventh and Eighth Edition MAP were retained; however, the following reasons were either replaced or added:

3. There is a suspension or revocation during the policy period of the operator’s license or motor vehicle registration of you or any other person residing in the same household as you and who usually operates a motor vehicle insured under the policy.
4. You fail to comply with a request for a motor vehicle safety inspection test for a vehicle that was previously totaled in a prior accident.
5. Your failure to complete and furnish us with a renewal application on a form prescribed by the Commissioner at least 30 days before the expiration of the previous policy period.

GEICO also added the following reasons for cancellation:

􀂲 If the driver’s license or auto registration of anyone residing in your household who usually
operates your auto has been under suspension or revocation during the policy period, we may
suspend coverage for that person under any of the Optional Insurance Parts of the policy. We may also reduce the limits for that person under Bodily Injury Caused By An Uninsured Auto and Damage to Someone Else’s Property (Parts 3 and 4) to the minimum limits we are required to sell.
􀂲 We can cancel Emergency Road Service (Part 11) for reasons other than those listed above if we do so within the first 90 days of the policy period.
􀂲 We can cancel, for reasons other than those listed above if we do so within the first 90 days of the policy period, coverage limits which are higher than the limits we are required by law to sell you and any coverage designed to reduce the deductibles set by law.
􀂲 Under the automatic policy termination clause, GEICO has removed the provision that the policy automatically terminates 30 days after you sell your vehicle and do not register another, leaving only the provision that your policy terminates automatically when you sell your auto and do not register another auto.

We are concerned that the GEICO website and all applications and questionnaires improperly require the applicant to submit the date of birth, sex and marital status of all drivers. We will express our concerns about this and other issues to the Commissioner of Insurance.
Some other random items contained in GEICO’s manual of rules include:

1. All cancellations and changes are pro-rata.
2. All coverages except Comprehensive can be suspended by the insured. Obviously, we are concerned about whether GEICO plans to report this to the RMV.
3. Rounding is to the nearest whole penny.
4. Under Driver Definitions, a “rated driver” is “any licensed driver listed on a policy who is not classified as cancelled, excluded, deceased, deployed, having other insurance, or having a learner’s permit.
5. The operator assignment rule provides:
􀂲 Unless otherwise noted, the driver who primarily operates the automobile will be assigned to that auto.
􀂲 Active military are not considered for assignment unless they customarily drives the auto.
􀂲 Inexperienced drivers more than 100 miles away attending a recognized college or educational institution will not be rated unless they customarily drives the auto.
􀂲 When a vehicle is used by both an experienced and an inexperienced operator, the inexperienced operator will be assigned to that vehicle if that is the vehicle the inexperienced driver primarily operates.
􀂲 When there are more vehicles than drivers, excess vehicles will be assigned Class 15 provided that there is a Class 15 driver listed on the policy and all listed drivers have 6 or more years
experience. If there are no Class 15 drivers, Class 10 will apply to the excess vehicles.
􀂲 A vehicle will be rated with the merit points from the operator assigned to that vehicle. Merit points for unassigned Rated Drivers are assigned to the car they operator the most. These merit points are added to the points from the assigned driver.
􀂲 GEICO obtains merit rating information: the company’s own records, motor vehicle records,
applicant’s statements or insured’s statement on self-reporting forms, C.L.U.E., and current
carrier.
􀂲 The GEICO plan includes a 5-year experience period—6 if earliest year is clean
􀂲 Major and Minor accidents are defined the same as 2006 Plan
􀂲 Major Violations include: Driving to Endanger or Reckless Driving; Leaving Scene of Accident
after Property Damage or Personal Injury and Death; Liquor and Narcotics, Operating Under the Influence; Liquor and Narcotics, Operating Under the Influence of and Reckless Operation Causing Serious Injury; Operating after Revocation of License; Operating after Suspension of Drivers License; Refusing to Stop for Officer; Vehicular Homicide; Manslaughter (only if by Motor Vehicle). Out-of-State Major Incidents: Operating under the influence of Liquor and/or narcotics; Vehicular Homicide. Additional Incidents (on or after 10/28/2005: OUI while License Suspended for OUI; Child endangerment while OUI; Manslaughter while OUI.

Additional Incidents (after 1/1/2006):

Permit Unlicensed Suspended Operator of Motor Vehicle; Permit Operation Without Ignition
Interlock; Operate Without Ignition Interlock; Tamper with Ignition Interlock; Bypass Ignition
Interlock for another. All other traffic convictions are minor violations.
􀂲 GEICO’s merit rating plan also includes the following: “Convictions include those violations for
which the applicant or any Rated Driver of the vehicle has been convicted or paid a fine.
Convictions also include violations for which there have been a forfeiture of bail or collateral, a
plea of nolo contendere, or a prayer for judgment continued.”
􀂲 Merit Point Calculation follows the 2006 Plan.
􀂲 Finally, GEICO uses following characteristics: cancellation notices, convictions, current insurance status, days quoted in advance of current policy expiration, lending losses (accident while operated by unlisted driver), length of current residence, negligent accidents, non-negligent accidents, number of drivers, number of drivers added, number of vehicles, number of vehicles added, prior limits of liability, reissues, suspensions, theft/vandalism claims, years insured with current insurer, years licensed, and years with GEICO.

Feel free to visit massagent.com to review the entire GEICO filing or the filing of any other MA auto carrier. As always, you may contact Donna McKenna or Kathy Cormier by phone at 800.974.9312 or 508.634.3900 or by email at dmckenna@massagent.com or kcormier@massagent.com.

Progressive Agrees to Pay Massachusetts Fine

2009-05-29T14:36:00.002-04:00

Progressive Direct Insurance Co., which has long compared its rates to competitors, agreed to pay the state $120,000 to settle charges that it inflated the rates for rival companies, Massachusetts Attorney General Martha Coakley announced today.

Specifically, Coakley's office accused Ohio-based Progressive, the nation's fourth largest automobile insurer, of inaccurately comparing its six-month rates to the 12-month rates offered by other companies, such as Arbella Mutual, Liberty Mutual, and Commerce Insurance. Progressive inaccurately listed all the rates on its web site as six-month prices.

Progressive, which started offering policies in Massachusetts on May 1, 2008, stopped quoting rivals' rates on its web site and through its call center late last year, and notified Coakley's office about the mistake.

“For competition to truly work in Massachusetts, consumers must be able to easily access accurate information about rates from insurance companies,” Coakley said. “Progressive’s failure to provide correct comparison quotes harmed consumers and harmed Massachusetts’ ability to introduce a competitive system in automobile insurance.”

In addition, Coakley's office said Progressive failed to follow its own official rate practices, filed with the state's Division of Insurance, by charging consumer to list additional drivers on their policies who already carried their own insurance. Progressive agreed to reimburse drivers who were improperly charged.

Coakley's office also complained that Progressive frequently failed to notify customers' former insurer when a customer switched auto insurance companies. That in turn led some insurers to cancel customers' policies for nonpayment - instead of just closing the accounts when customers switched to Progressive - potentially hurting customers' credit scores. Progressive agreed to help any customers who were affected.

Progressive spokeswoman Cristy Cote acknowledged the company mistakenly calculated the rates for some competitors when it began offering insurance in Massachusetts last May.

But the company noted that it shut down the service and notified state regulators and competitors after it discovered the errors. It also said it offered to pay the difference for customers who bought its policy when a competitor actually offered a lower rate, provided the customer wanted to switch to the other firm. The company said it also cooperated with Coakley's probe into the other issues.

"We understand that the attorney general’s role is to protect consumers and we wholeheartedly support that goal," Cote said in a written statement. "We are glad to put this matter behind us."

(By Todd Wallack, Globe staff)

Massachusetts Senate Budget Bans Texting while Driving

2009-05-27T12:25:00.000-04:00

The Massachusetts Senate approved an amendment banning all Internet use while driving as part of its version of the state's upcoming budget.

Drivers would be banned from sending text messages, e-mailing or reading the Internet while behind the wheel under the terms of the budget approved late Thursday night.

Senators stopped short of requiring handsfree devices for talking on a cell phone.

Bus, train, trolley and other public transit drivers would be banned from even holding a cell phone while driving. They could only carry one for emergency purposes.

Drivers would face a $75 fine and an insurance surcharge for violations. Transit drivers would face a $500 fine.

"We have a whole generation of drivers who think it's OK to text while driving. This is designed to send a message that it's not,'' said Sen. Steven Baddour, D-Methuen, co-chairman of the Joint Committee on Transportation and a co-sponsor of the amendment.

The amendment passed a day after an 18-year-old Central Catholic senior from Methuen was killed in a single-car accident as she drove to her high school for pre-graduation festivities. Police are investigating whether Rebecca Solomon was texting at the time.

The move also follows an MBTA Green Line accident in which a driver crashed his trolley into another, allegedly while sending a text message to his girlfriend.

The $27.35 billion budget now moves to a House-Senate conference committee.

Technology Helps Parents Monitor Teen Drivers

2009-05-08T13:34:00.001-04:00

RALEIGH (WTVD) -- A car that can't go faster than 80 mph may be a good thing for some, especially parents.

The new technology from Ford is called MyKey. The idea is to allow parents to set limits on teenage drivers.

It won't be available to the public until later this year, but ABC11's Tim Nelson was able to test it.

Each vehicle equipped with MyKey comes with two sets of keys. The goal is simple, according to David Bass who drives around the Triangle promoting MyKey.

"[It] allows the parent to have peace of mind as the teenage driver hits the road," Bass said.
The device still allows young drivers some freedom through settings that are controlled by parents.

Parents can use what is called the administrator key to program desired settings.

The main setting is speed. There is a top speed of 80 mph. Ford said it considered a lower max, but "On certain roadways you have to keep up with traffic," Bass explained. "That if you're going a little slower than that, that could also create a safety, hazard, so 80 is the maximum."

But other speeds can cause an alert. A chime can be set to go off when 45, 55 and 65 mph is reached.

And there's more. Another setting can make sure a driver doesn't do certain things behind the wheel. "This setting allows on or off to make sure the teenage driver doesn't spin the wheels, do doughnuts with the car," Bass said.

Once the desired settings are saved, the parent keeps the administrative key and the teen driver gets the MyKey.

ABC11 tested it and as we approached 80, we received a message that we were near top speed and would not be able to go faster.

Another feature of the MyKey technology deals with the radio. If somebody has their seatbelt off, it won't play. But plug the belt back in, and you get your tunes back.

This will allow teen to drive with their friends and listen to music, but with limits.

Ford's research shows 75 percent of parents like the MyKey idea and 67 percent of teens don't like it.

It debuts in the 2010 Ford Focus, which is set to hit car lots later this year. Then the technology will move into other Ford and Lincoln-Mercury cars.

Competition Still Reigns In Healthy Personal Automobile Insurance Market

2009-04-29T08:39:00.001-04:00

The personal auto market remains competitive across the country, even as rates begin to creep upward. Experts in the field said they expect competition to continue throughout the year and into 2010.

As with most other industries, the economy continues to be a factor in the personal auto market. Most observers said this is primarily being seen in the spending habits of consumers, as they forego the purchase of a new car or seek to save on insurance coverage.

In general, though, those in the industry said they have not seen any dramatic change in the marketplace compared to a year ago, and they predict only minor tweaking going forward, rather than any wholesale market shifts.

Insurers are seeing some deterioration in performance in terms of combined ratio, according to Robert Hartwig, president of the Insurance Information Institute, but “not extraordinarily so.” The deterioration, he said, is due to rising claims costs, which in some states has more than offset declining accident frequency.

Accident frequency is down, according to Mr. Hartwig, because people are driving less. Initially, he said this was due to high gas prices. But in the last six-to-nine months, Mr. Hartwig said the economy is the reason.

The economy has also caused consumers to stop buying as many new vehicles. Mr. Hartwig said growth in the personal auto insurance market will slow because the number of new vehicles sold is falling and there are more cars being taken off the road than put on.

Derek Ross, a spokesperson for the Independent Insurance Agents and Brokers of the West and vice president of CM Meirs Co., an independent agency in Woodland Hills, Calif., said he, too, has seen a reduced number of vehicles on the road. At the same time, he said, consumers who are buying are not replacing their old vehicles with vehicles of the same quality. “So we’re seeing a lot of downsizing in the quality” of the types of vehicles on the road.

Speaking to the declining number of vehicles on the road, Mr. Hartwig said, “This has not happened in decades.” He noted there may be a “pent-up demand” for new cars when the economy turns, and he added that insurers will be able to meet that demand when the time comes.

But while experts agree there are fewer new car purchases, not all agree that this necessarily translates to fewer cars on the road. Richard Luedke, spokesperson for State Farm, said people are not buying as many new vehicles, but they are holding onto the cars they have longer, so there is essentially the same number of cars to insure.

Agents have reported some changes in purchasing decisions among consumers because of the economy. James Berliner, vice president of the Professional Insurance Agents of Connecticut and president of Berliner-Gelfand & Co. Inc., a Bridgeport, Conn.-based agency, said consumers are shopping more for insurance and are paying more attention to pricing today.

Paul Monacelli, past president of PIA New Jersey and CEO of Cedar Knolls, N.J.-based ADP/Statewide Insurance Agencies, which writes personal auto in New Jersey, Pennsylvania and New York, said customers are also looking to reduce coverages to save money. They are taking higher deductibles on physical damage, he said.

Mr. Monacelli said he has responded to the shift in consumer buying habits by having longer conversations with customers to ensure they still have enough insurance to protect their assets.
Mr. Ross said he reviews customers who ask questions about reducing costs as if they were new submissions. He said he speaks to these customers about saving money by bundling coverages together and taking advantage of credits for certain levels of education achieved, or certain professions or professional designations.

Insurers are applying these types of credits more liberally than they used to, according to D. Scott Liebert, president of PIA New York and chairman of CLG Insurance, an agency in Nanuet, N.Y. For example, he said he is seeing companies apply credits for renewing coverage early, taking higher limits and owning a home.

Even with consumers shopping more and companies adjusting to compete for business, Mr. Luedke said he has not seen a change in the number of people canceling policies or letting coverage lapse. The lapse and cancellation rate, he said, is about the same it has been for two-to-four years.

Fraud is also a concern for insurers. Mr. Hartwig said there is anecdotal evidence that, because people are struggling financially today, fraud “give up” schemes are on the rise.
Auto theft is also believed to be on the rise, Mr. Hartwig said, particularly in border cities in the United States. He said problems associated with the drug trade in Mexico may be a reason for this rather than the economy.

Despite the economy looming, professionals in this field agreed the personal auto market is still healthy and competitive, with prices remaining relatively stable for the foreseeable future.
Mr. Hartwig characterized the market as “extremely competitive,” and noted a healthy personal auto market is important to the industry’s overall health.

“The number of carriers in some previously difficult-to-operate states is increasing,” such as Massachusetts, Mr. Hartwig said, and residual markets are “virtually depopulated” in many states.

Private passenger auto, he said, currently accounts for 34 percent of all premiums written in United States.

Mr. Monacelli said the market in areas where he writes coverage is “stabilizing.” Up until this year, he said, companies were doing whatever they could to get market share. “They were appointing a lot of agents; sometimes the quality of those agents didn’t meet the profile the companies had in the past,” Mr. Monacelli said.

Companies lived by the mantra that there is a price for every risk, Mr. Monacelli continued, but some of those risks were not necessarily being written at the right prices, casing a deterioration in combined ratios.

The newness of multivariate rating also led to some inappropriate pricing, Mr. Monacelli said. But companies have more experience with this type of rating now, he added, so rates should stabilize some.

Mr. Berliner said insurance company field representatives have warned him that there will be slight rate adjustments upward, but he said this is only being seen in certain regions, not across the board. While other lines are seeing pressure to increase pricing, this has not impacted personal auto, he said.

Rates have been essentially flat according to what Mr. Ross has seen, although he said there has been “some rumblings” about rates beginning to increase. He said he expects some slight increases over the next six months but does not see any landscape-change in the personal auto market.

“Any major changes will happen in baby steps,” he said.

Speaking to State Farm’s experience, Mr. Luedke said rates increased, but only by just under 1 percent.

Mr. Hartwig said the slight adjustment upward in rates is a response to “some underlying increases in costs.” He cited higher medical care costs as an example.

On the regulatory and legislative fronts, Mr. Hartwig said the possibility of some form of federal regulation stands above all other issues. Questions such as whether federal regulation will only be seen as a “systemic risk regulator,” or whether the states or feds will regulate rates, or whether federal regulation will be optional have yet to be answered, he said.

It is also unknown how such changes will affect big insurers versus small insurers, he noted.
Aside from federal regulation, credit scoring remains a “perennial concern,” Mr. Hartwig said. Some states are again talking about bans or restrictions.

Mr. Berliner said a bill has been introduced in his state of Connecticut to ban credit scoring.
Ultimately, Mr. Hartwig said it is incumbent on insurers to make the case for credit scoring and to show that banning the practice will result in an inferior rating system.

The personal auto market remains competitive across the country, even as rates begin to creep upward. Experts in the field said they expect competition to continue throughout the year and into 2010.

As with most other industries, the economy continues to be a factor in the personal auto market. Most observers said this is primarily being seen in the spending habits of consumers, as they forego the purchase of a new car or seek to save on insurance coverage.

In general, though, those in the industry said they have not seen any dramatic change in the marketplace compared to a year ago, and they predict only minor tweaking going forward, rather than any wholesale market shifts.

Insurers are seeing some deterioration in performance in terms of combined ratio, according to Robert Hartwig, president of the Insurance Information Institute, but “not extraordinarily so.” The deterioration, he said, is due to rising claims costs, which in some states has more than offset declining accident frequency.

Accident frequency is down, according to Mr. Hartwig, because people are driving less. Initially, he said this was due to high gas prices. But in the last six-to-nine months, Mr. Hartwig said the economy is the reason.

The economy has also caused consumers to stop buying as many new vehicles. Mr. Hartwig said growth in the personal auto insurance market will slow because the number of new vehicles sold is falling and there are more cars being taken off the road than put on.

Derek Ross, a spokesperson for the Independent Insurance Agents and Brokers of the West and vice president of CM Meirs Co., an independent agency in Woodland Hills, Calif., said he, too, has seen a reduced number of vehicles on the road. At the same time, he said, consumers who are buying are not replacing their old vehicles with vehicles of the same quality. “So we’re seeing a lot of downsizing in the quality” of the types of vehicles on the road.

Speaking to the declining number of vehicles on the road, Mr. Hartwig said, “This has not happened in decades.” He noted there may be a “pent-up demand” for new cars when the economy turns, and he added that insurers will be able to meet that demand when the time comes.

But while experts agree there are fewer new car purchases, not all agree that this necessarily translates to fewer cars on the road. Richard Luedke, spokesperson for State Farm, said people are not buying as many new vehicles, but they are holding onto the cars they have longer, so there is essentially the same number of cars to insure.

Agents have reported some changes in purchasing decisions among consumers because of the economy. James Berliner, vice president of the Professional Insurance Agents of Connecticut and president of Berliner-Gelfand & Co. Inc., a Bridgeport, Conn.-based agency, said consumers are shopping more for insurance and are paying more attention to pricing today.

Paul Monacelli, past president of PIA New Jersey and CEO of Cedar Knolls, N.J.-based ADP/Statewide Insurance Agencies, which writes personal auto in New Jersey, Pennsylvania and New York, said customers are also looking to reduce coverages to save money. They are taking higher deductibles on physical damage, he said.

Mr. Monacelli said he has responded to the shift in consumer buying habits by having longer conversations with customers to ensure they still have enough insurance to protect their assets.
Mr. Ross said he reviews customers who ask questions about reducing costs as if they were new submissions. He said he speaks to these customers about saving money by bundling coverages together and taking advantage of credits for certain levels of education achieved, or certain professions or professional designations.

Insurers are applying these types of credits more liberally than they used to, according to D. Scott Liebert, president of PIA New York and chairman of CLG Insurance, an agency in Nanuet, N.Y. For example, he said he is seeing companies apply credits for renewing coverage early, taking higher limits and owning a home.

Even with consumers shopping more and companies adjusting to compete for business, Mr. Luedke said he has not seen a change in the number of people canceling policies or letting coverage lapse. The lapse and cancellation rate, he said, is about the same it has been for two-to-four years.

Fraud is also a concern for insurers. Mr. Hartwig said there is anecdotal evidence that, because people are struggling financially today, fraud “give up” schemes are on the rise.
Auto theft is also believed to be on the rise, Mr. Hartwig said, particularly in border cities in the United States. He said problems associated with the drug trade in Mexico may be a reason for this rather than the economy.

Despite the economy looming, professionals in this field agreed the personal auto market is still healthy and competitive, with prices remaining relatively stable for the foreseeable future.
Mr. Hartwig characterized the market as “extremely competitive,” and noted a healthy personal auto market is important to the industry’s overall health.

“The number of carriers in some previously difficult-to-operate states is increasing,” such as Massachusetts, Mr. Hartwig said, and residual markets are “virtually depopulated” in many states.

Private passenger auto, he said, currently accounts for 34 percent of all premiums written in United States.

Mr. Monacelli said the market in areas where he writes coverage is “stabilizing.” Up until this year, he said, companies were doing whatever they could to get market share. “They were appointing a lot of agents; sometimes the quality of those agents didn’t meet the profile the companies had in the past,” Mr. Monacelli said.

Companies lived by the mantra that there is a price for every risk, Mr. Monacelli continued, but some of those risks were not necessarily being written at the right prices, casing a deterioration in combined ratios.

The newness of multivariate rating also led to some inappropriate pricing, Mr. Monacelli said. But companies have more experience with this type of rating now, he added, so rates should stabilize some.

Mr. Berliner said insurance company field representatives have warned him that there will be slight rate adjustments upward, but he said this is only being seen in certain regions, not across the board. While other lines are seeing pressure to increase pricing, this has not impacted personal auto, he said.

Rates have been essentially flat according to what Mr. Ross has seen, although he said there has been “some rumblings” about rates beginning to increase. He said he expects some slight increases over the next six months but does not see any landscape-change in the personal auto market.

“Any major changes will happen in baby steps,” he said.

Speaking to State Farm’s experience, Mr. Luedke said rates increased, but only by just under 1 percent.

Mr. Hartwig said the slight adjustment upward in rates is a response to “some underlying increases in costs.” He cited higher medical care costs as an example.

On the regulatory and legislative fronts, Mr. Hartwig said the possibility of some form of federal regulation stands above all other issues. Questions such as whether federal regulation will only be seen as a “systemic risk regulator,” or whether the states or feds will regulate rates, or whether federal regulation will be optional have yet to be answered, he said.

It is also unknown how such changes will affect big insurers versus small insurers, he noted.
Aside from federal regulation, credit scoring remains a “perennial concern,” Mr. Hartwig said. Some states are again talking about bans or restrictions.

Mr. Berliner said a bill has been introduced in his state of Connecticut to ban credit scoring.
Ultimately, Mr. Hartwig said it is incumbent on insurers to make the case for credit scoring and to show that banning the practice will result in an inferior rating system.

Auto Insurance Fraud on the Rise, officials say

2009-04-21T13:28:00.000-04:00

Investigators know the tricks of insurance fraud trade

Insurance officials say they have noticed an increase in fraud as people become desperate in the tough economy.

By Laura A. Bischoff
Staff Writer

Insurance fraud investigators weren’t born yesterday. They know the difference between when an amateur and a professional thief dumps a car.

The professional removes the global positioning system, airbag, high-end stereo and other valuable parts before setting a stolen car ablaze or rolling it into a pond or lake.

The amateur leaves those items inside the car. And sometimes the rookie makes other mistakes, such as torching the vehicle in view of a surveillance camera, or reporting the car stolen with eyebrows singed.

Joel Demory, fraud chief with the Ohio Department of Insurance, said investigators see plenty of “boneheaded” moves by people looking to dump their cars for insurance payouts.

State insurance officials say they have noticed that insurance fraud, through staged thefts, is on the rise as people become desperate in the troubled economy.

The state fire marshal reports that between 2004 and 2007, Ohio saw a 62.3 percent increase in vehicle arsons.

Other states have reported measurable increases in auto give-ups in recent years. New York reported a 25 percent increase between 2007 and 2008, New Jersey saw a 59 percent increase in suspected vehicle arsons between 2004 and 2007, and California reported a 40 percent increase in vehicle give-ups in fiscal year 2008 compared with fiscal year 2007.

“If it looks like a fake car theft, acts like a fake car theft and quacks like a fake car theft, then it’s probably a fake car theft,” said James Quiggle, spokesman for the Coalition Against Insurance Fraud, a consumer and insurance interest group.

Investigators consider whether the owner was behind on the payments, if they claimed high-end equipment was in the car, whether they recently checked on their insurance coverage, whether the owner has all the keys and if there are signs of forced entry on the car.

They also talk to neighbors and review surveillance camera footage from where a car was reported stolen and where it was found.

Sometimes it can take six months to investigate and prosecute an insurance fraud case, according to Demory.

But an insurance fraud conviction for dumping a car worth more than $5,000 carries a maximum penalty of 18 months in prison and a $5,000 fine in Ohio.

Quiggle said a recent survey found that during the last decade, American’s attitudes toward insurance fraud have become more tolerant. People see bilking big insurance companies out of a few thousand dollars as harmless, he said.

“Morally, these people find it easy to rationalize torching their car, because they don’t view insurance fraud as a real, live crime,” Quiggle said.

“They don’t consider the cost of these crimes are being passed on to all the policyholders in the form of higher premiums.”

Mass. Ranks Last Again in US For Use of Seat Belts

2009-04-08T14:01:00.000-04:00

By Michael Levenson, Globe Staff | April 7, 2009

Massachusetts ranked last among the states in its rate of seat belt use last year, extending a dismal trend that has prompted renewed calls for a tougher seat belt law.

The rate, 66.8 percent, was down 1.9 percent from 2007 and well below the national average of 83 percent, according to the National Highway Traffic Safety Administration. Massachusetts' rate, which has been last or near last for years, has improved from a rate of 56 percent in 2001.

Massachusetts is one of 22 states that do not allow police officers to stop motorists for not a wearing seat belt. State law allows police to ticket drivers for the offense, but only if the drivers are stopped for another reason first.

Efforts to pass a "primary enforcement" law have repeatedly failed in the Legislature, defeated by critics who argue the law would give police too much power to stop drivers. Some have also raised concerns that minorities would be unfairly targeted.

A "primary enforcement" bill has been filed in the Legislature again this year, but has not gained traction, legislators said. Proponents say the bill will not only save lives, but bring Massachusetts $13.6 million in federal transportation funds if it passes before June 30.

"It's really the only thing that's proven to bring up the usage rate," said Arthur Kinsman of the American Automobile Association of Southern New England. But opponents, like Senator Robert L. Hedlund, say the bill is "an intrusive, big government move."

Hedlund, a Weymouth Republican, said: "Common sense dictates you should wear your seat belt, whether or not there's primary enforcement."

Mass. House Approves Bill That Would Make Auto Insurance Appeals Board Permanent

2009-04-03T13:44:00.002-04:00

By DAN RING dring@repub.com

BOSTON - The state House of Representatives on Thursday approved a bill that would make permanent a state board that rules on drivers' appeals of motor vehicle insurance surcharges.

The 155-0 vote in the House moved to enshrine the state Division of Insurance's Board of Appeal in state law and strip away the power of an insurance commissioner to unilaterally abolish the board.

The vote comes two weeks after Insurance Commissioner Nonnie S. Burnes dropped her disputed plan to scrap the board and agreed to keep it operating. Burnes had wanted to eliminate the board as part of a new system that allows auto insurers to set their own rates and allows drivers to shop around for the best rates.

Rep. Angelo J. Puppolo, D-Springfield, a cosponsor of the House bill, said it didn't make any sense to eradicate the board.

"The board allows consumers a fair appeal process," Puppolo said. "I'm glad we were able to make it permanent. It's a great win for the consumer."

The House approved the bill after a 90-minute debate.

The Senate last week voted 39-0 to approve the bill.

A spokeswoman for Gov. Deval L. Patrick said the governor supports the preservation of the appeal board, but needs to review the details of the bill before deciding whether he will sign it.

Sen. Stephen J. Buoniconti, sponsor of the bill in the Senate, said he expects lawmakers to send a final bill to the governor's desk in about a week. The West Springfield Democrat said the bill is universally supported and is a high priority.

Buoniconti said he received 50 phone calls from insurance agents and consumers when Burnes planned to abolish the board.

Supporters said the appeal board gives consumers a fair hearing if they are assessed a surcharge. A driver can receive a surcharge if the insurer rules the driver is more than 50 percent at fault in a collision.

Surcharges can costs hundreds of dollars and can remain on an insurance bill for up to six years.

People can pay $50 to lodge an appeal with the board and an appeal often pays off. Last year, the board heard 43,264 appeals around the state and approved 52 percent of the appeals, according to the state Division of Insurance.

About 10 percent of the hearings, or 4,500, were held for Western Massachusetts residents at the Registry of Motor Vehicles on Liberty Street in Springfield.

Burnes had planned to have motorists appeal surcharges directly to their insurer. But critics said insurers were unlikely to grant many appeals of their own decisions considering the money at stake.

In a statement on Thursday, Burnes said, "We heard the concerns voiced by the public and responding to those concerns, we decided to maintain the board of appeal and its accident resolution review process."

Burnes had moved to dismantle the board because she said it didn't fit with managed competition for auto insurance. Under the year-old competitive system, the state no longer fixes rates and insurers have more freedom to offer different policies and compete for customers.

Burnes also met with resistance because elimination of the board would have actually cost the state money. According to Burnes, the state receives about $2 million a year in fee revenues and it costs about $1.7 million a year to operate the board.

"These hearings not only pay for themselves but generate revenue for the commonwealth," said Rep. Walter F. Timilty, D-Milton. "That's a plus in this climate."

New Registry of Motor Vehicle Fees 2009

2009-04-02T11:14:00.002-04:00

This list reflects the transactions that will change in price Friday, April 3, 2009 at 5:00 pm:

Registration Fees
*Amendment $25.00
*Duplicate $25.00

License & ID Fees (5 year)
*Class A $75.00
*Class B $75.00
*Class C $75.00
*Mass ID / Liquor ID $25.00

Out of State License Conversions (5 year)
*Class A $125.00
*Class B $125.00
*Class C $125.00

Title Fees
*Certificate of Title (Clear, Owner Retained, Reconstructed, + Recovered Theft) $75.00
*Salvage Title (Repairable + Parts Only) $50.00

Other Fees
*Instant Issue License/ID $50.00
*Driver History (Paper) $20.00
*Driving Records (Certified + Non-certified) $20.00
*Accident Report $20.00
*Reducible Load Permit Amend $20.00
*Reducible Load Permit (Overweight Permits) $50.00 Minimum
*Returned Check/CC Fees $15.00

A Milder Hurricane Outlook From AccuWeather

2009-03-19T13:40:00.000-04:00

A Milder Hurricane Outlook From AccuWeather

NU Online News Service, March 18, 11:55 a.m. EDT

The 2009 hurricane season will see three hurricanes impacting the U.S. coast, compared with four that arrived last year, and a lower total number of named storms, according to an AccuWeather.com early forecast.

Joe Bastardi, AccuWeather chief long-range and hurricane forecaster, also predicted storms may be more likely to form in the Atlantic basin closer to the coast. The possibility of a major hurricane making a U.S. landfall cannot be ruled out, he warned.

“This year’s forecast shows only half as many impacts on the United States as there were last year,” Mr. Bastardi said. “But keep in mind, it only takes one major hurricane hitting a highly populated area to have devastating impact.”

“Early indications show a reduction in the overall number of named storms and of major hurricanes in the Atlantic basin compared to last year, but the number of storms should still be near or a little above normal.”

The meteorologist pointed to several factors influencing the forecast, including:

• Dissipation of the weak La Niña in the Pacific Ocean. A reverse to a weak El Niño, which is associated with decreased hurricane activity in the Atlantic, is most likely in the middle to latter part of the hurricane season.

• The expected orientation of high pressure in the eastern Atlantic will produce stronger easterly trade winds across northern Africa than last year. This will result in increased dust and dry air being pushed westward into the Atlantic where many tropical storms originate.

• Cooler water temperatures in the deep tropical Atlantic, a typical breeding ground for hurricanes, which can reduce hurricane activity and intensity. This may create a season in which storms are reaching a greater intensity further north and east than last year, leading to less impact in the Caribbean areas hit hard last year.

• A continuing multidecadal pattern of higher-than-average water temperatures in the Atlantic, raising the chance of major storms near the East Coast until about 2020.

Mr. Bastardi forecasted that while there will be 13 storms this year, compared with 16 in 2008, the number of hurricanes will remain the same at eight. He predicted two major hurricanes compared with five last year and one major hurricane hitting the coast compared with none last year.

Are You Covered?

2009-02-23T08:36:00.003-05:00

Will your home insurance really protect you in case disaster strikes? Find out if your policy fits your needs -- plus how to reduce its cost.

By Elizabeth Gehrman February 22, 2009

Like many people, Nancy Dalrymple and Michael Flannery never thought much about their homeowner's insurance. Every so often they put a check in the mail for their agent and figured coverage would be there if, God forbid, they ever needed it.

Until their Winthrop single family went up in flames in November 2005, that is. "I thought everything was fine," Dalrymple says. "But they said we were way underinsured. We only had something like $193,000 on the structure, and we had damage of about $360,000. Then of course you have other coverage for contents, but it was a total loss. We lost far more contents than we had coverage for."

In addition, Dalrymple says she felt rushed, during a time of trauma and devastation, into getting the extensive repair work done quickly, which led to hiring a contractor who went way over budget and disappeared in the middle of the job, and a second whose shoddy work landed the couple in informal mediation talks. The couple, who had paid off their mortgage two months before the fire, had to take out a new mortgage to finish the work. They still have not moved back into the house. "Once you have a claim, it becomes an adversarial relationship between you and the insurance company," Dalrymple says, "whereas you thought they were part of your team. They're not."

Dalrymple might feel differently, insurers insist, if she had been more informed about her homeowner's policy and what it entailed. "Most people never read their policy," says Mike Barry, vice president of media relations at the Insurance Information Institute, an insurance trade organization based in New York. "I understand it's not the most scintillating reading, but it's well worth their while to do it. The greatest mistake people make is not understanding their policies."

Many in the insurance industry maintain that it is the job of agents to keep their clients informed, but there is no question that being a proactive consumer -- knowing what to ask your agent about in terms of both coverage and cost-saving measures -- will put you in a better position in the event disaster does strike. "Every year, get a checkup on your insurance," says Kathy Silvia, a licensed broker and cofounder of the Fair Insurance Agency in Centerville. "Just like you would get an annual physical exam. Schedule it for when your policy renews, which is usually the month you bought your home. The worst time to find out what you're covered for is after a loss." Getting an insurance checkup is especially important if you've done renovations that have increased the value of your home.

The state's switch to a competitive auto insurance system last year means there are now more opportunities to shop around for all your insurance needs -- and if you bundle the policy for your car with one for your home, using the same carrier, you could save up to 20 percent. Here's how to get the coverage you need and maybe save some cash, too.

Choose the Best Coverage: The first thing consumers need to understand, insurance insiders say, is the replacement cost for both the dwelling and contents. The replacement value of the dwelling will be lower than what your house would be worth on the open market and lower than the tax assessor's evaluation, because both of those values are affected by location, lot size, and other factors, whereas replacement value only takes into account how much it would cost to rebuild the house in what insurers call "like kind and quality." That is, if you had gingerbread and intricate moldings in the original structure, the new house should have those, too, at no extra cost to you.

When you apply for a policy, your agent should ask lots of questions about the construction of your home. If you feel you don't know enough to judge your home's replacement cost, it might be a good idea to hire a contractor to help you get an accurate appraisal.

Standard policies require you carry at least 80 percent of your home's replacement cost, says Silvia. So if you purchased a policy with $100,000 in replacement cost a few years ago, but building materials have gone up since then, as long as that $100,000 still represents at least 80 percent of the current cost of rebuilding your home, the insurer will pay the full amount.

You can add endorsements that modify your insurance coverage; two are particularly recommended: Guaranteed replacement cost coverage pays the full cost of replacing or repairing a home, even if it is above the policy limit. This endorsement can protect you from inflated building costs in the event of a disaster that affects a whole neighborhood, such as a hurricane, a wildfire, or something unexpected like the 2006 chemical-plant explosion in Danvers. Another is a building ordinance endorsement, which protects you if building codes change in a way that might increase your replacement cost. On the Cape, for instance, the code was recently amended so that windows are now required to withstand 110-mile-per-hour winds rather than 90-mile-per-hour winds. "Twenty miles an hour means absolutely nothing to me," Silvia says, "but in the pocketbook, it means a lot when you have to replace those windows."

Putting your personal property on a replacement-cost basis may also be worthwhile, since standard policies - which generally assume contents to be worth 50 percent of the replacement cost of the dwelling -- figure in the depreciation of electronics and other goods. "If you get 50 percent for content value and add a replacement cost endorsement onto the policy," says Silvia, "most companies will increase the content value to 70 percent of the building's value." For example, say your television is stolen. A standard policy will take into account the age of the TV; if the average life of a TV is 10 years and yours was five years old, you'll get only half of its replacement value toward buying a comparable new one -- unless you have this extra coverage.

In certain circumstances -- such as if your home has a swimming pool or trampoline or you own a breed of dog deemed dangerous -- standard insurance companies will often refuse to cover you. In that case, you'll have to go with the Fair Access to Insurance Requirements (FAIR) plan, a state-sponsored program paid for with money pooled by all the carriers that operate in the Commonwealth. The FAIR plan covers all owners as long as their houses meet certain minimal safety requirements (such as there are no live wires dangling from the ceiling), and it does not necessarily cost more for comparable coverage.

As Dalrymple and Flannery found, even a single large claim can also force you into the FAIR plan. "Sometimes it makes me embarrassed to be in insurance," says Irene Morrill, vice president of technical affairs for the Massachusetts Association of Insurance Agents. "You've been a client for multiple years, paid your bills, never had a loss, have a loss, and we nonrenew you. It makes no sense to me." On the upside, you can challenge nonrenewal, and after three years claim-free, most companies will again consider you an acceptable risk for the voluntary market.

Consider These Extras

In addition to basic replacement costs and liability, many other types of coverage can be tacked onto a standard home insurance policy. Whether you want them depends on how you live and your tolerance for risk. Among the extras you might want to consider:

Many people don't realize that if they have a home-based business, a standard homeowner's policy covers the contents of their office for only $2,500; an endorsement can raise that substantially. It's also wise to cover your business for additional liability. Morrill tells of the time a FedEx delivery person fell down and sued the homeowner. "It was a business delivery," she says, "so they didn't have coverage."

According to Silvia, fewer than 10 percent of Massachusetts residents have flood insurance, which most agents think is a big mistake. Even if you don't live in a flood-prone area, an unusually heavy rain can bring water into your basement and storm drains can back up, and these are not covered on a standard homeowner's policy. Depending on where you live, you may need to purchase this coverage through the National Flood Insurance Program, which is managed by the Federal Emergency Management Agency (fema.gov/business/nfip). You can challenge your flood zone -- say, if you live near the water but on top of a high hill -- and possibly lower your rate. To learn your flood risk, go to floodsmart.gov and type in your address.

Earthquake damage is also not covered on a standard policy and, depending on your location and the type of house you have, it can run as little as $35 per $100,000 of coverage. Julie Bisconti, marketing director at Claremont Insurance in East Boston, says her mother has affordable earthquake coverage on her frame house in Revere, but her mother's next-door neighbor can't afford it on his more crack-prone stucco house.

Whether you think it's worth the extra cash depends on your own personal comfort level. "There is a fault in Eastern Massachusetts," says Frank Mancini, president and CEO of the trade organization Massachusetts Association of Insurance Agents. "I think the last time there was a quake was probably 250 years ago. Are we due for one? I'm not a seismologist."

If you have valuable art, antiques, jewelry, or the like, you may want to add a rider for them. "You need separate appraisals for each thing," says Bisconti, "and if you start listing each of these individual things, you'll really start paying for them." Therefore, that $500 Hummel figurine your grandmother gave you probably isn't worth an amendment; your $15,000 Renoir sketch, however, is a different story. "You can't insure sentimentality," adds Morrill.

Most policies won't cover all similar valuables -- that is, all the books in your collection or all of your jewelry - but require separate appraisals for each piece; there are, however, some companies that offer blanket endorsements, so be sure to ask your agent.

A few of the more obscure but possibly worthwhile types of extra coverage include identity-fraud expenses, additional personal liability for things like slander and defamation of character, and even a refrigerated products rider -- which has a low deductible and might have come in handy during the recent ice storm in the north-central part of the state. Often, such types of coverage can be packaged together for an additional cost of as little as $50 a year.

Lower Your Costs: The cost of your insurance policy is based on many things, including the neighborhood you live in and the age, condition, and style of your house -- a flat roof, for example, is considered a greater risk than a pitched roof, since snow buildup can cause a collapse. While you can't change certain aspects of your house, there are many factors under your control:

Your credit score: Those who maintain decent credit, goes the reasoning, probably work harder to keep their houses in good shape, too. A score in the high 700s will put you in the highest-tier -- and lowest-cost -- insurance schedule.

Your C.L.U.E. score: Your Comprehensive Loss Underwriting Exchange number is similar to a credit score, but rather than tracking whether you pay your Macy's bill on time, it keeps tabs on how many insurance claims or even inquiries you make. A low C.L.U.E. score will increase your policy's cost, so it's a good idea to check yours periodically to make sure no mistakes have crept in. You are entitled to a free C.L.U.E. report annually and can order it at choicetrust.com. If there are errors in your report, learn how to appeal them at consumerdisclosure.com.

Your lifestyle: Many companies offer discounts for nonsmokers and, perhaps surprisingly, even for those who work at home. "Some companies will give a credit if nobody works outside the home for more than a certain number of hours a week," says Silvia. "Because it's more likely they'll be there if something happens." If you're the type who always has a little something in the bank, that can help, too: Insurers frequently offer "paid in full" discounts to those who save them monthly paperwork by clearing up their entire bill yearly instead.

Your home's extras: Additional security in the form of deadbolts or burglar and fire alarms can decrease your premium, as can storm shutters if you live in an area with high-wind risk.

A higher deductible" "Insurance is for 'Oh, my gosh, my house is leveled to the ground,' " says Silvia. "It's not for 'They just stole my $200 bicycle.' " She recommends increasing your deductible from a typical $500 to $1,000 or even $2,5000. "Whatever you can afford. It can save you 20 to 25 percent of your premium." You may also be able to save money by increasing only a portion of your deductible; for instance, agree that you'll pay more if hit by a wind- or hailstorm.

Shopping around: Some insurers offer a discount for longtime customers; others lower your premium when you switch carriers. Every couple of years, it's a good idea to get some competing quotes to make sure you're getting the best rate; a good place to start is at insweb.com, which allows you to include the specifics of your house and lifestyle before providing you with the name of an insurer in your area that meets your needs.

Taking a class: Some insurers offer a discount of up to 15 percent to clients who take three workshops with the Massachusetts Affordable Housing Alliance's HomeSafe program. Learn more at mahahome.org/class/hs_about.html.

File a Big Claim Wisely

If you find yourself in a situation similar to Dalrymple and Flannery's -- where you've experienced a significant loss -- often your best first step is to hire a public adjuster. Though no statistics are available, public adjusters maintain that for a 10 percent cut, they can increase the payout you will receive from your insurer. "An insurance claim is a business transaction between two parties with opposing interests," says Timothy Ball of Ball and Boyd Public Adjusters Inc. in Marstons Mills. "One side knows what they're doing, and the other side doesn't. We're helping the side that doesn't." You'll get better results, Ball says, if you call a public adjuster immediately after the problem strikes, rather than getting one involved after your insurance company has already made a decision. "It's much easier to negotiate when they haven't taken a position yet."

Even if the amount you're reimbursed doesn't end up being substantially higher, many say it's worth hiring your own adjuster simply because of the energy required to settle a claim. "A major benefit of our service," Ball says, "is that you don't have to deal with the insurance company. It saves you time, aggravation, and, ultimately, money."

Nancy Dalrymple, who hired her adjuster right away, agrees. "You have to pay," she says, "but you're so traumatized by the event that it's hard to get your foot going. Our adjuster took care of a lot for us so we didn't have to deal with it."

What Every Homeowner Must Do:

Buying a good insurance policy is just the start. The following measures will ensure that if you ever have to file a claim, you can prove what you've lost. "The more documentation you have," says John Cantalupa, supervising underwriter for the Massachusetts Fair Access to Insurance Requirements plan, "the easier the process will be."

Take photos of your house that clearly show the materials used in construction; keep a copy both on and off the premises, either in a safe-deposit box or with a friend or relative. Document any special features, such as marble tile or a custom kitchen.

Keep a list of valuable contents, with photos and any appraisals, both on and off the premises. Knowyourstuff.org, a site administered by the Insurance Information Institute, allows you to download free software to create an inventory of your home.

Elizabeth Gehrman lives in East Boston and writes the On the Block column for the Globe Magazine. Send comments to magazine@globe.com.

Massachusetts Agents Want Regulator to Rein in Progressive

2008-12-31T13:27:00.000-05:00

December 23, 2008

A trade group for Massachusetts insurance agents has asked the state's top regulator to force Progressive Insurance to take down its Web site, which agents say routinely gives inaccurate quotes -- particularly when comparing Progressive's prices to its competitors.

The complaint comes in a letter to Insurance Commissioner Nonnie Burnes from the Massachusetts Association of Insurance Commissioners. The letter follows an admission by Progressive that its Web site was mistakenly doubling the rates of several competitors -- Commerce Insurance and Liberty Mutual.

It's the second time in the seven months Progressive has been selling personal auto insurance online that the company has become a target of agents' ire. In August, the company admitted that its Web site was mistake-prone in some circumstances, and vowed to correct any problems.

"It is safe to say that an independent insurance agent found to be providing inaccurate quotes, particularly for competing companies, would face a regulatory hearing and fine by the Division of Insurance," wrote Frank Mancini, president of the Massachusetts Associaton of Insurance Agents. "We are not aware of any action taken by the DOI for the inaccurate quotes provided to Massachusetts consumers earlier this year by Progressive."

Mancini is requesting that Progressive be forced to take down its Web site until the accuracy of its quoting system can be verified. Mancini has also said the company should be fined for every inaccurate quote

It's not the only problem the agents' group has with Progressive. Agents say Progressive is selling six-months-only policies, which are supposedly against regulations in the Bay State, as well as altering deductibles and PIP coverage without informing purchasers of the ramifications of the changes.

In a statement, Progressive spokeswoman Cristy Cote said the mistakes were caused by human error in the design of the site. Cote also said that Progressive has sent apologies to the 21,000 consumers who saw incorrect quotes.

"To help remedy this situation, we notified both companies as well as the Massachusetts Division of Insurance and the Attorney General's office, and we removed the comparison rating service from our Web site," she said. "We will not re-install this service until we're completely confident that it is delivering fair and accurate pricing information to Massachusetts consumers."

Most Holiday Travelers Unaware Of Insurance Coverages

2008-12-05T13:01:00.001-05:00

A majority of travelers don’t fully understand what insurance covers during their trips according to a national survey by an agents group.

The telephone poll was sponsored by Trusted Choice and the Independent Insurance Agents & Brokers of America based in Alexandria, Va.

Conducted by International Communications Research, an independent research firm based in Media, Pa., the survey contacted 1021 households during the month of November.

People were asked if they thought their personal auto insurance would cover a car rental for damages or other related expenses; if their insurance would cover them for loss of luggage containing gifts; or if health insurance covered them if they became ill or were injured while traveling.

Thirty to 75 percent of the respondents either did not think they were covered or did not know if they were.

“With so many people traveling for the holidays, it is imperative that they understand their insurance needs and rights before leaving home,” said IIABA President and Chief Executive Officer Robert A. Rusbuldt.

He said IIABA advises that travelers “consult with their Trusted Choice independent insurance agent to discuss their current policies and what do to in the event that they need to file a claim while on vacation.”

Madelyn Flannagan, IIABA vice president for education and research, said, “Many consumers do not know when they may already be covered or where they might have gaps while on vacation.”

The survey found that about 75 percent of homeowners did not think or did not know if they would be covered in the event the airline lost their luggage containing holiday gifts.

Actually, most homeowners or renters insurance policies do provide worldwide coverage for most belongings, IIABA said. Airlines have reimbursement policies for lost luggage. Lost gifts purchased with a credit card may also have some level of protection from the issuer. Before purchasing baggage insurance, consumers should check their current policies. It may be a waste of money, according to IIABA.

Nearly one third of consumers do not think or do not know if their current policies cover them in a rental vehicle. In fact, driving a rental car is considered to be the same as driving your own vehicle for liability purposes, IIABA advised.

The purchase of liability damage waiver and collision damage waivers are often not necessary, but IIABA said that consumers should consult their independent insurance agent to find out what’s best for their travel needs, especially when traveling outside of the United States.

The survey found that more than 35 percent of respondents did not think or did not know if they were covered in the event they became ill or injured no matter where they were located.

Most individual and employer-provided health and medical insurance policies cover you when you are injured or become sick no matter where your injury or illness occurs for short recreational trips, said the IIABA

The group said that in general, major medical health insurance plans sold in the U.S. will provide coverage for emergency medical services you require while traveling. Still, insurance companies cannot guarantee the quality of care that is available wherever you travel and some policies have territorial restrictions.

Status of AIG

2008-09-22T08:12:00.001-04:00

AIG, Inc. continues to work with regulators during this difficult time for financial markets. As has been stated many times publicly, AIG Property Casualty Insurance is not a solvency risk; the value of its assets exceeds its liabilities.

AIG Private Client Group is continuing to write new business.

In addition, here are a few more important facts to note:
*AIG Private Client Group, which operates as part of AIG Property Casualty Insurance, faces no such liquidity concerns.
*AIG Property Casualty Insurance has $26.7 billion in policyholder surplus, as well as invested assets of $65 billion. These assets are protected by law and cannot be taken from policyholders!

As a point of reference, a leading AIG Private Client Group competitor has policyholder surpluses of $14 billion.

As you likely know, yesterday AIG reached an agreement in principle with the New York State regulators to exchange illiquid assets from the parent company with more liquid assets in operating insurance companies. These assets are of like kind and quality to one another; the only difference is duration.

AIG Property Casualty Insurance has the resources to pay policyholder claims and will continue to do so. On average, we are paying $73 million in claims each day.

AIG Property Casualty Insurance was downgraded by A.M. Best yesterday. Even with this downgrade, our insurance companies carry a rating of “A” or “Excellent.” This rating compares favorably with most major companies.

AIG Property Casualty Insurance results:
*AIG Commercial Insurance continues to exhibit strong financial performance with 2008 second quarter operating income of nearly $1 billion, net written premiums of $5.99 billion and a profitable combined ratio of 93.7%.
*AIG Private Client Group’s year-to-date results: $87.3 million in operating income; $520 million in net written premium; combined ratio of 81.4%.

We remain committed to, and capable of, serving the needs of our policyholders. If you have any questions, please contact your local representative. Thank you for your continued support of AIG Private Client Group.

Copyright © 2008 American International Group, Inc. All rights reserved.
AIG Private Client Group, 70 Pine Street, 21st Floor, New York, NY 10270

Fed takes over AIG

2008-09-17T12:01:00.001-04:00

Fed in AIG rescue - $85B loan

Government response reaches dramatic new level: U.S. will take 80% stake in nation's largest insurer to prevent global financial chaos.

NEW YORK (CNNMoney.com) -- In an unprecedented move, the Federal Reserve Board is lending as much as $85 billion to rescue crumbling insurer American International Group, officials announced Tuesday evening.

The Fed authorized the Federal Reserve Bank of New York to lend AIG (AIG, Fortune 500) the funds. In return, the federal government will receive a 79.9% stake in the company.

Officials decided they had to act lest the nation's largest insurer file bankruptcy. Such a move would roil world markets since AIG (AIG, Fortune 500) has $1.1 trillion in assets and 74 million clients in 130 countries.

An eventual liquidation of the company is most likely, senior Fed officials said. But with the government loan, the company won't have to go through a tumultuous fire sale.

"[A] disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance," the Fed said in a statement.

The bailout marks the most dramatic turn yet in an expanding crisis that started more than a year ago with the mortgage meltdown. The resulting credit crunch is now toppling not only mainstay Wall Street players, but others in the wider financial industry.

The line of credit to AIG, which is available for two years, is designed to help the company meet its obligations, the Fed said. Interest will accrue at a steep rate of 3-month Libor plus 8.5%, which totals 11.31% at today's rates.

AIG will sell certain of its businesses with "the least possible disruption to the overall economy." The government will have veto power over the asset sales and the payment of dividends to shareholders.

The company's management will be replaced, though Fed staffers did not name the new executives. Edward Liddy, the former head of insurer Allstate Corp (ALL, Fortune 500)., will lead the company, the Wall Street Journal reported.

The board will remain. For customers, it will be business as usual, officials said.

Taxpayers will be protected, the Fed said, because the loan is backed by the assets of AIG and its subsidiaries. The loan is expected to be repaid from the proceeds of the asset sales.

The government had resisted throwing a lifeline to AIG, hoping to entice investment firms to set up a $75 billion rescue fund. Officials opted not to bail out Lehman Brothers, which filed for bankruptcy on Monday. But by Tuesday night, it became clearer that the private sector would not step in to help AIG, which has a greater reach into other financial companies and markets than Lehman does.

"We are working closely with the Federal Reserve, the SEC and other regulators to enhance the stability and orderliness of our financial markets and minimize the disruption to our economy," said Treasury Secretary Henry Paulson. "I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect the taxpayers."

Dramatic end, high stakes

The firm's options grew more limited as the day wore on. Its already-battered share price fell another 21% with more than 1 billion shares trading hands, and plummeted another 46% in after-hours trading.

At one point Tuesday morning, shares fell more than 70% - a day after losing 61% of their value.

In a statement late Tuesday night the company said, "AIG is a solid company with over $1 trillion in assets and substantial equity, but it has been recently experiencing serious liquidity issues. We believe the loan, which is backed by profitable, well-capitalized operating subsidiaries with substantial value, will protect all AIG policyholders, address rating agency concerns and give AIG the time necessary to conduct asset sales on an orderly basis."

The company also commended the Federal Reserve and the Treasury Department for "taking action to address AIG's liquidity needs and broader financial market concerns."

Furthermore, the firm expressed its gratitude to New York Governor Paterson, and other NY State as well as Federal officials.

New York State officials, who regulate the insurance titan, had urged the federal government to rescue AIG. The state attempted to help AIG on Monday by allowing it to tap into $20 billion in assets from its subsidiaries if the company could comes up with a comprehensive plan to get the much-needed capital, said a state Insurance Department spokesman.

Pleased with the federal government's response, New York Gov. David Paterson said Tuesday night: "Policy holders will be protected. Jobs will be saved. Business will continue."

The funding became ever more crucial as the insurer was hit Monday night by a series of credit rating downgrades. The cuts meant AIG (AIG, Fortune 500) could be forced to post more than $13 billion in additional collateral.

Late Monday night, Moody's Investors Service and Standard & Poor's Ratings Services each said they had lowered their ratings. A few hours earlier, Fitch Rating had also downgraded AIG, saying the company's ability to raise cash is "extremely limited" because of its plummeting stock price, widening yields on its debt, and difficult capital market conditions.

The downgrade could force AIG to post $13.3 billion of collateral, Fitch said in a statement. Also, the moves would make it more expensive for AIG to issue debt and harder for it to regain the confidence of investors.

All the while, analysts urged the company to unveil its restructuring plan.

"Management needs to address investor concerns now before the market sell-off becomes a self-fulfilling prophecy," Rob Haines, analyst at CreditSights, said Tuesday.

Global ripples

The failure of AIG could have caused unprecedented global ripple effects, said Robert Bolton, managing director at Mendon Capital Advisors Corp. AIG is a major player in the market for credit default swaps, which are insurance-like contracts that guarantee against a company defaulting on its debt. Also, it is a huge provider of life insurance, property and casualty insurance and annuities.

"If AIG fails and can't make good on its obligations, forget it," Bolton said. "It's as big a wave as you're going to see."

AIG has had a very tough year.

Rocked by the subprime crisis, the company has lost more than $18 billion in the past nine months and has seen its stock price fall more than 91% so far this year. It already raised $20 billion in fresh capital earlier this year.

Its troubles stem from its sales of credit default swaps and from its subprime mortgage-backed securities holdings.

AIG has written down the value of the credit default swaps by $14.7 billion, pretax, in the first two quarters of this year, and has had to write down the value of its mortgage-backed securities as the housing market soured.

The insurer could be forced to immediately come up with $18 billion to support its credit swap business if its ratings fall by as little as one notch, wrote John Hall, an analyst at Wachovia, on Monday.

This year's results have also included $12.2 billion in pretax writedowns, primarily because of "severe, rapid declines" in certain mortgage-backed securities and other investments.

The company brought in new management to try to turn the company around. In June, the company tossed out its chief executive, Martin Sullivan, and named AIG chairman Robert Willumstad, who joined AIG in 2006 after serving as president and chief operating officer of Citigroup (C, Fortune 500), in his place.

Master Policy Deductibles

2008-06-17T10:14:00.000-04:00

June 2008

A few years ago I did a Tech Talk on this subject. Based on the emails I have received in the last few months … perhaps it bears repeating and updating …

Condominium Master Policy deductibles … can they be deadly for personal lines clients who live in condominium units? Yes!
First … in a condominium arrangement who insures what??????
That can be an EXCELLENT question! We all know that when one buys into a condominium situation – shared ownership – one receives two different ownership interests. First, the individual unit for living is individually owned. If I buy a condominium unit, it belongs to me. Everything in that unit that I can touch, I own!

I also receive “common” ownership in the non-individual or common areas such as land, roof of building, common walls, common beams, swimming pools, etc. In Massachusetts, as in most other states, the Association is required to purchase insurance on common areas.

How does the individual unit get insured?
That depends. It depends on the bylaws or insuring agreement in the condominium documents. Sometimes the bylaws only require the Association to insure commonly owned area and the individual unit owner must insure ALL of his/her individual unit. The individual unit owner accomplishes this through the purchase of large amounts of Coverage A – Dwelling value under the HO-6 Unit-owner policy. This can be expensive for the unit owner, but insurance coverage can be easily obtained.

In other situations the Association agrees to “take on” the responsibility of insuring individually owned unitbuilding items through a discussion in the bylaws. The Association may insure ALL building items in the individual units or just some of the individually owned unit-building items. One must read the bylaws carefully to determine what, if any, insurance responsibility is left for the unit-owner. Does the Association OWN the items in the individual unit. NO, NO, NO!!! But, through the bylaws, a contract, an insurable interest is granted to the Association allowing the Association’s commercial policy to apply to individual unit-owner items.

There are TWO ways where the Master Policy deductible could be a problem for unitowners

Way one … Let’s suppose … The Association, through it’s bylaws, has chosen to accept responsibility for insuring the individually owned items …
The Association buys a Condominium master policy to cover the building items whether common or individually owned … hopefully on a Special Form basis. Suppose the Association purchases a $250 deductible for the Master policy and there is a loss fully contained in one unit, who pays the deductible?

This is a point that the unit-owner should address when purchasing his/her unit. Or, you should have them look into this issue when you sell them their Unit-Owner Policy covering their contents and liability exposures. If the Association chooses to pay the deductible, great! If the Association makes the unit-owner responsible for the deductible …$250 out of pocket for the unit-owner shouldn’t be too much of a hardship!

What if the Association has a $5,000 deductible for all losses …
The bylaws required the association to cover the individually owned units as well as common areas and the loss happens entirely in your client’s unit … a kitchen fire … who pays the deductible amount here?

Again, your client should check into this issue with the Association. Quite often, the Association bylaws state the Association will provide insurance for unit-owner building items, but will NOT cover the deductible. Generally, a loss that is contained in a specific unit is NOT assessed to other fellow unit-owners. The individual unit-owner suffering the loss is expected to pay for the deductible.

How do we cover the deductible in this situation????
I have NO idea!!! I used to think that I knew. Years ago I had read and had been taught that one buys coverage for one’s unit through Coverage A and it would respond to a loss not covered by the Master Policy.

After all … the definition of “Coverage A – Dwelling” in the HO-6 certainly LEADS ME TO BELIEVE that I can insure my “stuff”!

COVERAGE A – Dwelling

We cover:

1. The alterations, appliances, fixtures and improvements which are part of the building contained within the "residence premises";

2. Items of real property which pertain exclusively to the "residence premises";

3. Property which is your insurance responsibility under a corporation or association of property owners agreement; or

4. Structures owned solely by you, other than the "residence premises," at the location of the "residence premises."

Reading the whole policy can be a drag …
However, it appears that the Other Insurance Provision of the HO-6 is being used to NEGATE the individual’s right to insure his/her own property. It’s almost “un-American”!

The Other Insurance Provision has always stated that if the Association and the unit-owner insure the same property, then the Association Master Policy will be primary and the HO-6 will be excess. How can the Master policy cover the same stuff as the HO-6? Well …through the bylaws/condominium documents. If the bylaws told the association to cover the condominium building ..both common areas and individually owned areas then this “contract” provided an insurable interest to the association IN the individually owned unit property. The Unit Deed gave the unit-owner an insurable interest in the individual unit.

Normally when two entities can insure the same thing … the parties themselves determine WHO should do it … and act accordingly.

The following is the ISO 2000 Other Insurance Language. The only difference between the HO-2000 language and the HO-91 language are those words that I crossed out.

F. Other Insurance And Service Agreement
…
2. If, at the time of loss, there is other insurance or a service agreement in the name of a corporation or association of property owners covering the same property covered by this policy, this insurance will be excess over the amount recoverable under such other insurance or service agreement.

The Other insurance clause states that when both the Master Policy and the HO-6 cover the SAME property then the Master Policy is primary and the HO-6 is excess. Now ... just WHAT does that mean? For years many insurance “pundits” explained this to mean that the loss first goes to the Master Policy and then back to the HO-6 for the amount of the loss not paid by the Master Policy … i.e. the Master Policy deductible.

Unfortunately, ISO has chosen not to interpret their policy in this way and stated in the HO-2000 Homeowner filing:

“The unit owner is only covered for the amount of loss that exceeds the amount recovered by the association under its policy. If the association doesn’t recover because of a high deductible or other reasons, the unit-owner does not recover.”

With this interpretation then Coverage A can ONLY be available at the “high-end”… that Coverage A will NOT pick up any master policy deductible. If the bylaws told the association to cover your client’s unit then the client’s Coverage A will ONLY respond when every last dime of the Master policy has paid out.

If the master policy bylaws do NOT insure certain items for the unit-owner, then Coverage A will be the PRIMARY and the ONLY coverage responding to the loss. If the bylaws tell the Association to cover some or all of the unitowner building items, then Coverage A will NOT pick up any Master Policy deductible for damage to these items.

This interpretation is ESPECIALLY dangerous in the light of increasing Master Policy deductibles!!!!!!

What should you do????
If I were you, I would ASK my HO-6 carriers HOW they interpret the Other Insurance Provision. If your carriers agree with the ISO interpretation of the mechanics of the Other Insurance Provision, then Coverage A will NOT respond to a Master policy deductible situation when damage to the individual unit occurs.

How can this loss under the Master Policy deductible be covered?
Under the HO-2000 ISO “addressed” this situation by creating an endorsement to “fix” the Other Insurance Provision. The endorsement that ISO created to fix this situation is HO 17 34 Unit Owner Modified Other Insurance condition. The endorsement merely recites the Other Insurance Clause and adds “whether they can collect on it or not”. I’m not sure what this wording really does … but the filing states that it fixes the problem. Will your carriers sell it? Who knows?

Under the HO-91 this endorsement does not “officially” exist and therefore there is NO WAY to fix this if your carriers take a non-user friendly interpretation. HOWEVER, I was just told by an agent last week that one of his HO-91 carriers had filed the HO 17 34 for use on its HO-6 policies. So …evidentially ..more personal condominium insurance carriers are agreeing with ISO’s interpretation and opting for a “premium generating” endorsement to provide coverage for this situation.

Just what IS the premium for this endorsement?
The ISO premium for the HO 17 34 Unit-Owners Modified Other Insurance condition is 25% of the base premium -- Rule 529 tells you to multiply the HO-6 base premium by 1.25!!! Isn’t that INTERESTING … The “base premium” for an HO-6 is the premium for the Coverage C limit … How ridiculous is this…we are buying an endorsement that applies to BUILDING coverage and rating it based on the amount of CONTENTS the client has.

So ... the MORE contents you have the MORE this endorsement costs … the premium has NOTHING to do with the SIZE of the Master Policy deductible and the amount of Coverage A purchased!!!

WAY TWO …that the Master policy deductible can be a problem…
How is the Master Policy deductible paid when the loss happens to COMMON property?
Suppose a fire burns the commonly owned clubhouse and there is a $10,000 deductible on the Master Policy, how does the Association get this first $10,000 to rebuild? Well, hopefully, there is a “slush fund” to cover deductibles, but I suspect in many associations that is NOT the case. What does the Association management do? They assess the unit-owners since each unit owner owns a share of the clubhouse and other common areas.

Can the unit-owner insure his/her assessment responsibility?
Yes … and no. The unit-owner can insure his/her share of assessments due to “insurance related situations.” Loss Assessment is an additional coverage provided under the HO-6.

7. Loss Assessment

a. We will pay up to $1,000 for your share of loss assessment charged during the policy period against you, as owner or tenant of the "residence premises", by a corporation or association of property owners. The assessment must be made as a result of direct loss to property, owned by all members collectively, of the type that would be covered by this policy if owned by you, caused by a Peril Insured Against under Coverage A, other than:

(1) Earthquake; or
(2) Land shock waves or tremors before, during or after a volcanic eruption.
The limit of $1,000 is the most we will pay with respect to any one loss, regardless of the number of assessments. We will only apply one deductible, per unit, to the total amount of any one loss to the property described above, regardless of the number of assessments.

b. We do not cover assessments charged against you or a corporation or association of property owners by any governmental body.

c. Paragraph P. Policy Period under Section I – Conditions does not apply to this coverage.

This coverage is additional insurance

If a loss that would be a covered peril under the unit-owners HO-6 damages COMMON PROPERTY, then the loss assessment additional coverage will pay the unit-owners assessment responsibility up to $1,000. The unit-owner can increase this assessment coverage up to $50,000 with HO 04 35 Increased Loss Assessment Endorsement for only $25 or so.

What if the Association has a Percentage Windstorm deductible and there is MAJOR windstorm damage to common property??????
Suppose your client purchased HO 04 35 Increased Loss Assessment coverage in the amount of $50,000 and his/ her assessment share of this Master Policy windstorm deductible is $10,000, will the HO 04 35 respond for the whole $10,000? NO, NO, NO per the following clause in the HO 04 35 Increased Loss Assessment Endorsement:

SPECIAL LIMIT – We will not pay more than $1,000 of your assessment that results from a deductible in the policy of insurance purchased by a corporation or association of property owners.

The HO 04 35 under both the HO-91 as well as the HO-2000 program has a restriction for assessments that are due SOLEY to master policy deductibles.

This endorsement should always be sold for it can be very helpful in other property assessment situations as well as many liability assessment situations but it is NOT helpful in “deductible” assessment situations. The insured will ONLY receive the “free” $1,000 loss assessment coverage that is found under his/her HO-6 unit-owner policy towards an assessment that is due SOLELY to a Master Policy deductible. The rest of the assessment will come “out of pocket.”

Make sure that you address this restriction with your client when selling this endorsement.

I have to admit that I do agree this restriction is NECESSARY in the HO 04 35 Increased Loss Assessment endorsement. Otherwise, the Association would buy commercial property EXCESS policies assuming that each loss will be assessed BACK to the individual unit-owner who has been TOLD to carry HIGH Loss Assessment coverage.

So, back to the original issue… Who pays the Master Policy deductible????
As usual ... the answer is …”it depends.”

Buying a one family house has FEWER insurance headaches than buying into a condominium situation!

* * * * *

MAIA Cautions Consumers About Progressive Quotes

2008-05-06T16:10:00.002-04:00

MAIA Cautions Consumers About Progressive Quotes;
Files Formal Complaint With DOI

Today, MAIA issued a press release to every daily newspaper in the state cautioning consumers about serious issues with quotes received from the Progressive Direct website. After initial reports of "dirt cheap" rates, MAIA took a long, hard look at the quotes produced by the site.

According to MAIA President and CEO Frank Mancini, "Our review of the quotes provided by Progressive reminds us of the old saying, 'it it looks too good to be true, it probably is.' Consumers should use extreme caution when requesting online quotes because a computer doesn't ask the questions a live person would ask to be sure you are adequately protected."

Since many of MAIA's issues with the website are believed to be serious violations of the managed competition regulation, MAIA has also filed a formal complaint with Commissioner Nonnie Burnes and notified Attorney General Martha Coakley and Undersecretary of the Office of Consumer Affairs & Business Regulation Daniel Crane of the violations.

The most flagrant violations include:

Progressive requires anyone requesting a quote to provide their social security number, gender, recent military service and marital status. The quote process also informs applicants that Progressive obtains credit reports and credit scoring information, which is prohibited in Massachusetts for both rating and underwriting purposes.

Progressive acknowledges that Massachusetts law requires that every insurer offer twelve-month term private passenger motor vehicle insurance policies at the consumer's option, yet there is nowhere on the Progressive site where a consumer may exercise that option. When questioned on the phone about a twelve-month policy, a Progressive representative admitted that twelve-month policies are not available.

Comparative quotes of Progressive rates with the rates of other companies writing autoinsurance in Massachusetts are inaccurate and use a policy term of six months which is notavailable from any other insurance company in Massachusetts. While other insurance company quotes include an indication of the impact of your driving record in terms of surcharges for at-fault accidents and conviction of traffic violations and credits for good driving, the Progressive quote does not appear to include merit rating information.

We have posted the complete text of the MAIA press release on our website, and you may access it by clicking here.

It is imperative that the information in this press release be seen by as many consumers as possible, and we need your help with this. If you have contacts with your local daily and weekly newspapers, please walk the press release into your contact as soon as possible. Offer to answer any questions your contact or consumer reporters have, or refer them to us if you're not comfortable in that role.

We have also posted a copy of our complaint letter to the Commissioner on massagent.com. You may access this document by clicking here.

Please feel free to contact Frank Mancini or Donna McKenna or by phone at 800.972.9312 or 508.628.5452 if you have questions or need additional information.

Auto Insurers Rip Rules on High-Risk Drivers

2008-04-17T13:53:00.002-04:00

3-year break for newcomers writing polices called unfair

By Jeffrey Krasner, Globe Staff April 17, 2008

Many of the state's auto insurers say competition rules that took effect April 1 give an unfair advantage to companies just entering the Massachusetts market.

Under the state's revamped auto insurance system, insurance companies new to Massachusetts do not have to take on its riskiest and least desirable drivers for about three years. That could give them a financial boost compared with insurers already established in Massachusetts, which will automatically be assigned high-risk drivers based on their market share.

"Those that are in the market are seeking equity and fairness and those that are just entering the market are seeking any advantage they can get," said James T. Harrington, executive director of the Massachusetts Insurance Federation, an industry group that supported the new system, called managed competition.

Progressive Corp. of Ohio, the only insurance company that so far has firm plans to enter the Massachusetts auto market, said it supports the rules exempting it from having to insure high-risk drivers.

"The plan as written is fair, equitable, and consistent with plans in other states," said Emily A. Vlasich, corporate counsel for Progressive, in written testimony to the Division of Insurance.

The Patrick administration last year undertook an ambitious overhaul of the Massachusetts auto insurance market, which was the last one in the country where rates were set by regulators.

Under the new system, companies set their own rates and have greater flexibility to introduce innovative product features and discounts for different drivers. The overhaul was also intended to address problems with how high-risk drivers were assigned to companies. Some insurers claimed their competitors were able to manipulate the old sys tem to avoid paying their fair share for undesirable drivers, who typically generate more claims, causing losses for insurers.

Since auto policies only started renewing this month, relatively few motorists have signed up for policies under the new rates, which are expected to be lower for most drivers.

At the center of the current dispute are rules enacted this year by Insurance Commissioner Nonnie S. Burnes that control the so-called residual market for bad drivers, such as those with numerous moving violations. A public comment period on the rules ends tomorrow, and they must eventually be finalized by Burnes. Under the new system, insurance companies will be assigned high-risk drivers randomly, and are expected to cover such drivers commensurate with their share of the market.

But companies just entering Massachusetts will receive an exemption for almost three years.

"This result is patently unfair to existing companies, especially when one considers how quickly a large company with significant resources can gain market share when entering a new state," wrote Paula W. Gold, vice president and chief regulatory counsel for Plymouth Rock Assurance Corp. of Boston, in testimony to the Division of Insurance. "There should be no free ride for any carrier."

John F. Kittel, executive vice president of Arbella Insurance Group, said in written testimony that with the three-year wait in place, "the rest of the market is subsidizing the new entrant."

He said insurers should be able to provide timely market share data to the state, so there's no practical reason why new entrants could not take on their share of undesirable drivers quickly.

Chubb Group of Insurance Companies, which is based in New Jersey and does not sell auto policies in Massachusetts, disagreed. Michael W. O'Malley, senior vice president of state government affairs for the company, wrote in testimony that an insurer needs to be selling for at least a year before accurate market share numbers can be compiled. He said the rules giving new entrants in Massachusetts three years without high-risk driver assignments are similar to the "tried and true" methods used in about 40 other states.

Progressive, which will begin Internet-only sales May 1, acknowledged in its testimony that it is viewed by some as getting a "free ride" under the new system. But the insurer disagreed with the characterization and said it would voluntarily write policies for high-risk drivers, and thereby avoid random assignment of such customers.

Mass Auto Insurance Has Bumpy Past

2008-03-25T08:31:00.002-04:00

Sunday, March 23, 2008

By Dan Ring

The Republican

Insurance Commissioner Nonnie S. Burnes said she picked up some important lessons from history before her bold move to start competitive car insurance for the state on April 1.

Thirty years ago, Massachusetts dropped its highly regulated form of auto insurance and introduced competition. It turned out to be a brief, failed experiment that drove up rates too high for urban motorists and left the state gun-shy for decades about making any similar changes.

Burnes, who was appointed commissioner in early 2007, said she was keenly aware of the turmoil that erupted after a sweeping law for competitive auto insurance took effect in 1977.

"That was terrible for the consumer, awful for the companies," said Burnes, a former 10-year superior court judge appointed commissioner by Gov. Deval L. Patrick.

Massachusetts has a long tumultuous history with auto insurance. The state approved the country's first compulsory car insurance and first regulated rates in 1926.

A public outcry over mandatory insurance and rising rates caused a crisis on Beacon Hill and prompted the resignation of the state's insurance commissioner in 1928.

Fifty years later, another major dispute erupted when the state made its initial attempt at competition in auto insurance.

Back then, companies were given little time to prepare. Actual rates were unavailable on Jan. 1, but policies were renewed anyway for consumers, taking away choice.

"You can imagine how consumers felt about that," Burnes said.

According to a history provided by the state Division of Insurance, rates skyrocketed in Boston and nearby urban areas.

Patrick B. Bresnahan, who started Bresnahan Insurance Agency in Holyoke in 1957, said urban youth were hit especially hard by the first effort at competition in auto insurance.

"It was chaos," Bresnahan said. "Kids were paying more for insurance than they were for their cars."

Legislators responded by passing a law to cap increases at 25 percent over 1976 levels and ordering insurers to send rebates to some auto owners.

Insurers filed lawsuits and the state's insurance commissioner abandoned the new competitive system and returned to setting rates for 1978.

In succeeding years, auto insurance companies fled the state.

Bresnahan, 73, said he watched companies desert the state during the 1980s and 1990s. "They just could not make a profit here," he said.

In 1977, there were 111 auto insurers doing business in the state. By 1990, that number dwindled to 53 and it stands at 20 today, although that number is expected to grow as other companies come back to the state.

Several insurers paid the state huge exit fees to be released early from their legal obligations. It made more financial sense to pay the fees instead of remaining in the state and continuing to lose money.

Peter T. Robertson, lawyer in Massachusetts for the Property Casualty Insurers Association of America, said insurers were discouraged by the state's method for covering high-risk drivers.

Insurers are allowed to place those drivers in a pool where their accident costs are shared by all insurers and then passed on to all drivers annually.

Burnes is gradually moving to a system of randomly assigning those drivers to an insurer. The amount of assignments to any company would hinge on a company's market share.

Under "assigned risk," insurers will be more responsible for the accident costs of its riskier drivers, giving insurers an incentive to more closely examine claims and reduce fraud.

Robertson said assigned risk is also a fairer way to allocate such drivers.

When Burnes announced her intentions to start managed competition in July of last year, she said the state should no longer be held hostage by the 1977 experience.

She used a state law to administratively phase in managed competition.

She opted to begin the new system on April 1 when 314,000 policies renew.

A total of 540,000 policies renewed on Jan. 1, but are based on last year's rates.

In order to avoid mistakes of the state's past attempt at competitive rating, Burnes capped rate increases at 10 percent for the state's worst drivers. Insurers can set their own rates but only with strict state oversight.

Burnes also retained vestiges of the old system where regulators set all auto insurance rates.

For example, she kept a system of "rating territories" that allows for suburban communities to subsidize rates of urban centers to slightly cut insurance costs in cities where accident rates are higher. Experienced drivers are also paying somewhat higher premiums to keep down the insurance costs of younger motorists.

Burnes is also continuing to ban the use of credit scores and certain socioeconomic factors in determining auto insurance rates.

"I'm going to retain a lot of control to make sure it is rolled out in a smooth way and is beneficial to the consumer," Burnes said.

Insurance costs will still hinge on a person's driving record, type of car and coverage selections.

Other aspects of the state's auto insurance system are sealed in state law and can't be changed administratively, Burnes said.

Under state law, for example, motorists must have only $2,000 in medical bills before they can sue the driver who caused the crash.

Former Gov. W. Mitt Romney sought unsuccessfully to raise that threshold to $4,000 to limit personal injury lawsuits and wring costs out of the system.

Romney also wanted to save money by limiting windshield replacements. He sought to create a $100 deductible that would have been waived for a more economical repair of a windshield. Right now, there is no deductible on windshield replacements.

Future historians may tell us the fate of those and other proposed reforms.

Goal: More Insurance Choices

2008-03-12T14:59:00.002-04:00

By Jerry Kronenberg

Wednesday, March 12, 2008

Boston Herald

Market watchers hope Massachusetts’ new “managed-competition” car-insurance system puts Nationwide on our side - along with Geico, AIG and other firms that have avoided the Bay State for virtually decades.

“If consumers get more choices, that’s a good thing,” state Insurance Commissioner Nonnie Burnes said, saying more firms might enter Massachusetts once the new system starts on April 1.

Burnes said more than 80 percent of insurers quit the Massachusetts car-insurance business during the 30 years that the state heavily regulated rates. Other underwriters never set up shop at all.

All told, only half of the nation’s 10 largest car-insurance firms currently operate here.

However, No. 3 insurer Progressive recently announced plans to begin writing policies under the new system. So has smaller underwriter Peerless, a subsidiary of Boston’s Liberty Mutual.

“The new system hasn’t even started yet and we already have two new (insurers),” Burnes said. “I don’t think that’s a bad start.”

Massachusetts had 111 insurers in place when the state began setting car-insurance rates in 1977.

But 92 have left since then, with no one coming in to replace them.

“Under the old system, it was very difficult for most companies to make money here,” said Frank O’Brien of the Property Casualty Insurers Association of America. “But assuming managed competition sticks, I think we should see more companies coming here.”

Still, Stephen D’Amato of the Center for Insurance Research said adding new insurers “is only a good thing if it produces lower, fairer rates for consumers.”

D’Amato claims the new system gives insurers too much power to base rates not just on driving records, but also on things such as homeownership - factors he said favor the rich.

“Competition can be good,” D’Amato said, “but not the way it’s being implemented.”

Plymouth Rock Billing System Changes - Letter to Agents

2008-02-11T13:42:00.000-05:00

Dear Greg:

We have recently implemented several enhancements to our direct billing system that apply to all policies, regardless of effective date.

In response to your requests, we have instituted a grace period of five calendar days from the payment due date. This grace period becomes effective today and applies to invoices only. A Notice of Intent to Cancel for Non-Payment of Premium will not be issued unless the minimum premium due is not received within the grace period. If a cancellation notice is issued, the effective date of the cancellation will not be extended by any grace period. While this will accommodate occasional delays in mailing time, we would recommend customers who make a payment on or near the actual due date use your agency web payment option to ensure their installment is credited and the policy does not fall into arrears. Next month, we will unveil the first phase of our consumer interface on PlymouthRock.com that will allow customers to access their bills and make payments online without going to the agency.

Also, the return coupon on the billing invoice now lists the payment mailing address on only one side, and has a new optical scan line to improve processing time. Our testing has shown this should reduce the amount of manual handling of payments that can delay proper posting of a payment.

We hope these new billing features will make it easier for you and your customers to do business with us. It’s one more way we can offer “More Than Just Insurance. AssuranceSM.”

Please contact your Marketing Representative with any questions. As always, we thank you for your business.

Bob Warren
Marketing Director - Massachusetts

Development, erosion keep coast at risk

2008-02-08T13:59:00.000-05:00

By Rich Fahey
Globe Correspondent / February 7, 2008

Thirty years ago today the Blizzard of '78 was ravaging the South Shore. Wind gusts of more than 100 miles per hour combined with heavy snowfall to destroy thousands of homes and boats. Before it was over, more than two dozen people would be dead statewide.

What would happen if the same storm hit the South Shore today? Would the flooding, destruction of property, and beach erosion be as severe? Or would changes in building codes and in the way we respond to storms result in less property damage and fewer lives lost?

The answer: We might be better prepared, but the damage could be just as great - or greater.
Specialists say the almost continuous beach erosion from storms in the ensuing 30 years has created a new set of problems, should a storm like the Blizzard of '78 hit the South Shore again.

"The erosion shifts from previous storms have moved the flood plain, putting more homeowners in jeopardy," said Rebecca Haney, a coastal geologist for the state Office of Coastal Zone Management. "In addition, there has been a significant amount of construction in those flood plain areas."

Many of the summer cottages that were unoccupied in coastal towns during the storm 30 years ago have been converted to year-round residences, putting more families squarely in the bull's-eye of a sequel to '78.

"Those cottages are now year-round residences, many of them still vulnerable to a storm," said state Senator Robert L. Hedlund of Weymouth, who represents many of the coastal communities that were devastated in the Blizzard of '78.

Partly offsetting that vulnerability is the fact that homes along the coast, while more exposed, are better built than they were 30 years ago.

Neil Duggan, Scituate's building commissioner for the past 14 years, saw his home - a converted cottage on Lighthouse Road - heavily damaged during the blizzard. Duggan, like others, wanted to rebuild. By 1979, revisions to the state building code required that any rebuilt home in a danger area had to be elevated on 11-foot-high pilings or columns, said Duggan. In 1982, he said, improved federal maps were developed for Scituate, requiring higher elevations in some hazard areas.

Portions of the state building code are routinely refined; the most recent change is a requirement for high-impact windows in debris-borne areas and more stringent hurricane-resistant construction requirements.

Still, erosion is eating away at the buffer between the ocean and coastal communities. Communities such as Scituate and Duxbury have been losing on average a half-foot of beach each year.

While some emphasis has been on building sea walls, the beaches and dunes - not the walls - are the first line of defense against coastal flooding. Hedlund said he was able secure federal money for beach renourishment at Nantasket Beach in Hull, but not for sea wall construction, because "the federal government considered the beach more important when it comes to flood control."
Haney, the state coastal geologist, said the Massachusetts Wetlands Protection Act and subsequent regulations designed to protect beaches and dunes have helped, but storms have still wreaked havoc with the shoreline.

Towns and cities have taken it upon themselves to prepare for the worst. In Hull, which was devastated by floods in '78, an emergency operations center was built as part of renovations to Memorial Middle School.

Acting fire chief Robert Hollingshead, who is also in charge of Hull's emergency preparedness, meets with the heads of town agencies several times a year and whenever a major storm is forecast.

Hollingshead, who joined the Fire Department just after the 1978 storm, said that advancements in technology have improved communication with the public in emergencies. "We have cable TV and the Internet, and we can reach many people quickly."

The state has recognized the issues. In February 2006, Governor Mitt Romney created the Massachusetts Coastal Hazards Commission to review practices and policies, identify information gaps, and draft recommendations for improvements.

In May 2007, the commission released its final report, including a series of recommendations to help safeguard coastal areas. They included updating coastal maps to pinpoint risk and measure rising sea levels due to climate change; modeling potential damage from future storms to alert communities; and providing incentives, such as insurance discounts, for homeowners along the coast to retrofit their homes against storms.

Peter Judge, public information officer for the Massachusetts Emergency Management Agency, the successor to the Massachusetts Civil Defense Agency, said that after the '78 storm, Governor Michael Dukakis issued an executive order creating an emergency management team. It includes federal, state, and local officials, including liaisons from a dozen state agencies, and meets regularly.

"I think if there's two areas we've improved in since 1978, it would be in communication and coordination," said Judge.

In 1978, some people didn't believe the forecast or disregarded it, and thousands were trapped on roads or in makeshift shelters such as car dealerships and restaurants.
"We can't stop people from going out into the storm, but we can let them know what they're in for," said Judge.

Rich Fahey can be reached at faheywrite@yahoo.com

April 2008 MA Auto Insurance FAQ's

2008-02-05T15:40:00.000-05:00

Do you have questions about the upcoming auto insurance changes effective in Massachusetts on April 1, 2008? Get the facts here, and contact us for more information.

Drivers should consider rental car insurance

2008-01-31T17:13:00.000-05:00

Local repair centers juggle an influx of winter customers
By DEBBIE KELLEY
THE GAZETTE
January 31, 2008 - 12:48AM

Slick roads from a regular cycle of wintry storms have caused pileups at local auto body shops.

Red Noland Collision Center is booked until mid-February to repair wrecked cars that are drivable, said Dale Francis, body shop manager. It’s one of the city’s largest dealership-owned collision centers, with a 25,000-squarefoot shop, 30 employees and $6 million in revenues last year.

Vehicles that have to be towed to the shop are accepted immediately but can take a month to six weeks to get fixed, Francis said. “It’s unusual for us to be backed up this far, but we can only schedule so many cars — we can do 230 a month,” Francis said.

“You can just see customers’ eyes twitch — it’s already a negative situation — when we tell them we’re looking at six weeks. They just can’t believe it.”

That’s why motorists should have rental-car insurance to defray the cost, State Farm Insurance agent Mark Campbell said. About 75 percent of customers at Wilson’s Auto Collision Inc. have rental-car insurance, said Ray Wilson, owner of the shop founded 22 years ago Friday.

“We tell them to call their agent to see if they qualify, because out-of-pocket rental is expensive and rental-car coverage isn’t,” Wilson said.

Various roadblocks can delay restoring a vehicle to its pre-crash condition, whether it was involved in a minor fender bender or a rollover. For example, Campbell said the insurance claim process can stall if the insurance company has to order an accident report from the police to verify fault.

Securing an appointment at a local body shop and getting parts to make the repairs also can add time. Severely damaged vehicles sometimes need parts that can’t be found in local parts stores, Francis said.

Wilson said his 14 employees are working as fast as they can, but they also are running several weeks deep in appointments. It’s the same at Black & White Auto Body & Paint, said Rick Lujan, owner and general manager of one of the city’s largest independents.

“You don’t need a lot of snow — just a couple of inches on the ground make a huge difference for body shops,” he said.

This winter has been more treacherous for local drivers than last winter, which brought several major blizzards, because motorists tend to stay off the roads during blizzards but feel more confident to venture out when snowfall is lighter, Lujan said.

To handle his shop’s load, Lujan has added four technicians for a total of 20 employees. “People don’t like to wait too long,” he said.

But it’s hard for auto body shops to gauge business volume, Wilson said.

“Everybody seems to get in a wreck that morning of a storm. Customers don’t just trickle in — they come all at once, and all of a sudden you’ve got an overflow,” he said.

Along with having to endure longer wait times, many motorists needing body work have high deductibles that must be paid out-of-pocket. Higher deductibles lower auto insurance premium costs, and Francis said he’s seen deductibles as high as $3,000.

It doesn’t take much of an impact, said State Farm’s Campbell, for the repair bill to top $1,000.

Lujan said it’s not unheard of for his body shop to fix a vehicle with $12,000 to $15,000 in damage.

And though winter brings a flurry of business, it’s not necessarily the busiest season for collision centers. About 11,000 cars in the area were damaged in a hailstorm last summer, Francis said.

As Wilson said: “It’s the snow and ice now. It’ll be the wind and sand damage in the spring, hail in the summer, then back to snow. Being weather-related is just the nature of our business.”

Mass. Allows Rates and Commissions of 2 Largest Auto Insurers

2008-01-30T08:01:00.000-05:00

By Andrew G. Simpson
Insurance Journal

The two largest auto insurance writers in Massachusetts have been given the green light to use the rates they filed for 2008 in rulings that characterize the state attorney general's objections as "irrelevant" in the state's new competitive marketplace.

The rulings also preserve contingent commissions for agents.

Massachusetts Insurance Commissioner Nonnie Burnes has ruled in favor of Commerce Insurance and Safety Insurance over the protests of Massachusetts Attorney General Martha Coakley, whose lawyers had tried to persuade Burnes that items contained in the two insurers' rate filings led to rates that were excessive even though they both filed for overall decreases.

The rulings mean the two insurers may proceed to market using their filings, which called for an average rate decrease of 8.1 percent by Commerce and an average 6.9 percent cut by Safety.
Commerce is the largest auto insurer with 31.6 percent market share, while Safety ranks second with 11.2 percent.

In declining to disapprove the insurers' rate filings, Burnes also handed independent agents' a victory by upholding the inclusion of contingent commissions as part of the rate filings. Coakley's team had argued that contingent commissions should not have been part of the rates.

Until this year, auto insurers had their rates fixed and established by the insurance commissioner. But beginning in April, 2008, insurers are being allowed to compete using their own rates under a new managed competition system. Insurers file individual rates which become effective unless the commissioner disapproves them.

The attorney general has the right to trigger rate hearings on individual insurer rate filings she deems excessive, which Coakley did in the cases of Commerce and Safety, but the final decisions rest with the commissioner.

Coakley objected to provisions for profit, expenses including contingent commissions, and loss trends used by the two insurers in their rates.

But Burnes dismissed the AG's entire analysis, ruling in favor of the insurers on each provision. Burnes suggested that while the AG's approach might have worked under the previous fix-and-establish system, it was irrelevant under the new managed competition system and that the AG "fails to recognize" that the rules have changed.

Burnes said that while the attorney general wants to challenge individual provisions of rates, as was done under the previous system, a competitive system requires a broader view.

"I do not set the rates under c. 175E [the rate statute]. My authority is limited strictly to disapproving a rate or, under very limited circumstances set forth in the statute, approving it. I look at the proposed overall rates generated by the rate filing viewed as a whole in determining whether a company's proposed rates are excessive for the insurance provided," Burnes wrote.
She further explained how her approach under managed competition differs from that taken in the past in her discussion of the Commerce profit provision:.

"It is not my task to look at aggregate industrywide data for the purpose of developing an underwriting profits provision that reasonably reflects the average financial needs of a mythical 'Every Company,' but is specific to none."

Her analyses of the expense and loss trends provision used similar language.

The attorney general had attacked the inclusion of contingent commissions for agents as "creating serious potential conflicts of interest and leading to anticompetitive effects such as the steering of business away from more cost effective carriers." Coakley's lawyers had also argued that because decisions fixing and establishing rates did not allow them to be included, contingent commissions should continue to be rejected in a competitive environment.

But Burnes said that such past decisions are immaterial to the current situation and since such commissions are legal, if insurers decide they want to pay them in a competitive market, they can.

"Contingent commissions now are one basis for legitimate competition in the industry. Indeed, that is why the Division's rate filing instructions explicitly provide for the possibility of such an expense. It is neither my role, nor the role of the Attorney General, to decide what expenses a company should incur in a competitive insurance market provided no such expenses violate the law. Companies that unwisely spend money will enjoy less success in the market, and this experience alone will alter future conduct," Burnes wrote.

Note: Plans submitted by all admitted carriers have now been approved. Contact us for more information.

LETTER: Industry could be winner on auto insurance

2008-01-22T13:47:00.000-05:00

Industry could be winner on auto insurance

More on SouthCoastToday.com re: Rep. Koczera's concerns from the Legislative Director of MASSPIRG

"Rep. Koczera has good reason for concern about how the new deregulated auto insurance system will impact consumers.

While not completely final, here is what we know already:

First, average rates will be higher under the new plan vs. the current plan. Despite its flaws, our existing auto insurance system produced a 21 percent decrease in rates over the last three years and would have cut rates by at least 11 percent next year, according to both our analyses of rates over the last 10 years and the attorney general's office.

Under the new system, the average rate decrease is about 7 percent based on the insurers' estimates of the effect of their filings. Gov. Patrick's commissioner of insurance denied the attorney general access to information that could have determined whether these estimates are inflated, so even the 7 percent figure is suspect. In any case, the net result on the average premium under the new system compared to our regulated one, is an average increase in rates of at least 4 percent.

Second, while the commissioner did prohibit insurers from using unfair and socioeconomic factors like credit scores and education to set premiums, she did not prevent them from using proxies for those banned factors. And just last week the commissioner prohibited the attorney general from presenting evidence showing that certain rating factors proposed by the state's largest auto insurer were unfair to consumers.

Unfortunately, it does not come as a surprise that the real winners of the deregulated auto insurance industry are the insurers — not the consumers. When was the last time you saw an industry push for changes that would benefit the consumer over the industry? "

Deirdre Cummings
Legislative Director
MASSPIRG
Boston

Driving Safely When the Snow Sticks

2008-01-22T13:26:00.000-05:00

By Dan Zak

Washington Post Staff Writer

I learned to drive in wintry weather by growing up in Buffalo, which is the same thing as saying, "I learned to surf by growing up on the North Shore of Oahu." Freezing rain, fresh powder, whiteouts, downed branches coated with ice -- I've piloted a vehicle through almost every winter climatological situation.

Many Washington residents who are transplants from more temperate regions have not. Most of the area's snow falls during January and February, so get ready by considering the following advice from AAA's mid-Atlantic office and Car Guys in Rockville, which offers a semiannual course on hazardous driving geared toward teenagers ( http://www.decisivedriving.com).
Driving in winter is about physics and finesse, says John Townsend, manager of public and government affairs at AAA Mid-Atlantic.

"It's like a ballet," says Townsend, who lives in Prince George's County. "In other words, you almost have to become like an athlete: You don't want to be very tense, and you don't want to be overly confident. But you need to be in a zone. You need to be one with the vehicle. It has to be an extension of your limbs."

So read on. Keep it together. You'll be fine. But first and foremost: If you don't have to drive in wicked weather, stay the heck off the roads.

Before Hitting the Road

Have a snowbrush (with an ice scraper) in your trunk. I mean, obviously, right? But I've seen plenty of people trying to de-ice windshields with credit cards. Not effective.

Check your owner's manual, which may contain tips for driving your vehicle in snow and ice. "You will be surprised at the number of car owners who never look at those pages," Townsend says. "It is the last thing on their minds."

Pack an emergency kit and keep it in your vehicle throughout the winter: blankets, a sleeping bag, gloves, hats, wrapped nonperishable food (such as granola bars), bottled water, any medication you might need, a charged cellphone and the number for your insurance company's towing service or AAA. A sudden snowstorm can strand you, so be prepared for cold, hunger and the need to call for help.

Make certain your tires are properly inflated. Heck, do this regardless of the time of year.
Try to keep your gas tank at least half full to avoid running out of gas if you're snarled in traffic or stranded. (You need gas to keep the heat on, after all.) Also, this helps prevent a frozen gas line.

Practice. When it snows, find a nearby empty parking lot and get a feel for how your vehicle handles. Take note of how the brakes react on ice, how you need to alter or steady your steering on slick turns, and so on. "You have to learn it and feel it," says Aryan Azarsa, owner of Car Guys. "You can't sit behind a laptop and become a great driver. You actually have to do it."

Behind the Wheel

Slow down. Traction control, anti-lock brakes and ot her winter features are great, but they are no substitute for containing your speed. "People think anti-lock brakes are good for as fast as you go, but really it's only good up to 40 miles an hour," Azarsa says. "You may have traction control, but if you add too much speed, it's still rubber against asphalt."

Accelerate and decelerate slowly. Applying the gas gingerly is the best method for retaining traction and avoiding skids. Don't feel rushed to get going. Giving yourself more room to stop will allow you to brake more gently (and thereby avoid sliding).

Increase the distance between you and the car ahead. It should take at least eight seconds for you to pass the same spot on the road. That means no tailgating.

Use the threshold braking method, whether or not you have anti-lock brakes: Keep your heel on the floor and use the ball of your foot to apply firm, steady pressure on the brake.

Don't stop if you can avoid it. If you can slow enough to keep rolling until a stoplight changes, do it. There's a big difference in the amount of inertia it takes to accelerate from a full stop and the amount it takes to accelerate while rolling. It could be the difference between spinning your wheels and effortlessly resuming normal speed.

If you skid, always look and steer where you want to go. Don't try to rock the steering wheel or overcorrect.

Don't go all Chuck Norris on a hill. You'll spin your wheels if you apply extra gas on snowy roads. Try to get a little momentum before you reach the hill and let it carry you up. As you reach the top, reduce your speed and go down the hill as slowly as possible.

That said, don't be a nervous Nellie on a hill. If you get nervous, just keep moving. Don't brake on a hill unless you come to a stop sign or a light. If you must stop, tread tentatively. "The worst thing to do is step on the gas and break traction," says Lon Anderson, director of public and government affairs at AAA Mid-Atlantic. "You don't want to start by spinning. The best hope for getting going is a very, very slow and gentle beginning." If your wheels keep spinning, sometimes the only option is to reverse (if possible) back downhill, gain traction on level ground, then make another run at the hill. Or simply find another route.

Be doubly cautious in an SUV. Since they can weigh up to two to three times as much as a typical car, SUVs need more time to stop and have a higher center of gravity (meaning they're likelier than a sedan to tip over when negotiating a curve or a lane change on an ice-covered road). If you drive an SUV, brake earlier but gently and avoid jerky steering motions that can send the vehicle sliding.

If you drive a pickup truck or any other rear-wheel-drive car, place 60-pound bags of sand in the truck bed over the rear axles or the spot above the rear wheels to distribute the weight and prevent the back wheels from spinning.

Don't cut corners on insurance for your company

2008-01-18T13:01:00.000-05:00

Scripps Howard News Service
BY STEPHEN WINDHAUS

Over the years, many of my clients have purposely excluded insurance expense in the business planning process. Most were seeking outside capital investment, and they wanted to keep startup costs as low as possible. They soon learned no banker or venture capitalist is going to invest in your business, regardless of how attractive it may be, unless insurance is included. Even if the company doesn't need capital, there are certain conditions you do not want to face without insurance. Property loss, business interruption and liability are three good reasons to consider coverage.

PROTECT YOUR PROPERTY

The first form of coverage that comes to mind is property insurance for your building, inventory, equipment, machinery and vehicles. However, you want to pay close attention to the coverage offered. Do not assume that simply because the company owns no building, machinery or product inventory, that this form of coverage is not necessary. Other forms of property include vehicles, office equipment, furniture and cash (in the case of robbery). There are two types of property insurance coverage — standard and special, or all-risk. Standard insurance will cover each particular class of property. In other words, you would have to secure a policy for each category of property. Special, or all-risk coverage is a comprehensive policy that addresses all categories of property in a broader range of loss conditions.

Property insurance begins with you creating a list of all tangible assets, the present, appraised value and salvage value of each item. Submit this list to the insurance agent for review to insure the best of coverage at the lowest possible premium.

And here's a "heads up" for home-based business, including sole proprietors. The cost of home insurance is rising in many parts of the country. Make sure your agent examines that policy to avoid over-insurance. The home policy just may cover part of your business property.

WHAT HAPPENS WHEN THE LIGHTS GO OUT — BUSINESS INTERRUPTION

I have written about preparing the business for natural and manmade disasters. There are many things you can do to protect property and company data, but what happens when the business is interrupted for days, weeks or months because of a wildfire, hurricane, tornado or some other form of disaster. Just ask the business owners in New Orleans how long it has taken to open the doors and generate sales after Hurricane Katrina. A solution to this cash-flow nightmare is business interruption insurance. You can be certain the flood (forgive the pun) of natural disasters in recent years, combined with some recent predictions, that lenders and entrepreneurs alike are taking a closer look at this form of insurance.

LIABILITY

Generally, it is a common decision at startup to incorporate the business to protect assets from liability loss. But what is one to do when faced with legal responsibility from harm caused to others. This can result from actions or inactions by you or your employees that result in bodily injury or property damage It could be due to defective products, bad service or installation actions. With all due respect to the legal system, there are times when one lawyer conducts a better job than another. Innocence is no guarantee of winning the case. And how many times has a lawyer decided to settle out of court to avoid excess legal expenses? Regardless of guilt or innocence, you want to consider liability coverage.

SHOP AND COMPARE

My insurance needs have been serviced by only one agent in the last 18 years. Fortunately, he has taken good care of me, but don't think I haven't gone out to compare prices and coverage. Loyalty is a wonderful character trait, but business is business. You need to insure getting the best bang for the buck. Shop around and compare the premium costs to the coverage provided. And please stay within your budget.

And talk with an insurance broker who carries commercial liability policies, to see if there are some tailored to your industry or profession.

Stephen Windhaus is a small business consultant based in Port St. Lucie. You can contact him at steve@windhaus.com or (772) 871-0585.

LETTER: Koczera wrong on auto insurance

2008-01-16T12:08:00.000-05:00

Courtesy of SouthCoastToday.com
January 15, 2008 8:40 PM

It is unfortunate that responsible state policymakers continue to rely upon scare tactics and misinformation to oppose the efforts of the Patrick administration to reform the antiquated and anti-consumer Massachusetts auto insurance system. Rep. Robert Koczera's recent op-ed piece ("Auto insurance reform discriminates," Jan. 11) disappointingly relies upon such arguments.

Rep. Koczera is simply wrong that good drivers with spotless records, who are assigned to a company by the Massachusetts assigned risk plan, will not receive the benefits of lower rates. It is illegal for a company to charge such an assigned good driver any more than their policy premium would be were they insured by that company voluntarily.

Rep. Koczera ignores the fact that good drivers in Acushnet, for example, have been subsidizing bad drivers in New Bedford, and vice versa, under the present system, but has not previously found this objectionable.

Driving record is, in fact, a significant factor in the decision all companies make in offering rates, but even staunch opponents of competition in the Legislature acknowledge the impracticality of an auto insurance system based upon a single factor. That said, all the objectionable socioeconomic factors listed by Rep. Koczera have, in fact, been banned for use in determining rates and in underwriting policies.

Real competition, with more companies, more products and more consumer choices, necessitates a regulatory playing field that resembles at least modestly the playing field in the other 49 states of the nation. It is no accident that other big states, like New Jersey and Texas, scrapped their state-set systems in favor of competition and saw more companies compete and better rate offerings across the board.

Consumers can anticipate the same results here in Massachusetts, so long as well-intended but wrong policymakers do not stand in the way of the meaningful reform that the Patrick administration is bringing to the commonwealth's auto insurance system.

James T. Harrington
Executive Director
Massachusetts Insurance Federation
The writer lives in Dartmouth.

Replacement costs shock homeowners

2008-01-15T12:08:00.000-05:00

Read all about the MA Fair Plan and their calculations of home rebuild costs on Cape Cod.

By Sarah Shemkus
STAFF WRITER
January 15, 2008

Is your home properly covered? Contact us to find out.

Mass. Insurance Chief, AG Differ Over How to Regulate Auto Rates

2008-01-13T13:07:00.000-05:00

Massachusetts Insurance Commissioner Nonnie Burnes and Attorney General Martha Coakley are at odds over how best to regulate the state's new competitive auto rates.

Coakley thinks some insurers are being stingy with their rate cuts and wants to dig deeply into individual insurance company rate filings by obtaining background documents from the carriers.
Burnes say she's got everything under control and Coakley's tactics would only delay the day when consumers enjoy the fruits of a competitive system.

Burnes appears intent on keeping the rate approval process moving forward so carriers can begin marketing their new rates in time for the April 1 start date for competitive rating.

The rates for 14 of the 19 insurers writing private passenger auto have been approved after some review and revisions. But the rates for a few other insurers, including some of the larger writers, remain under scrutiny.

Hearings began this week into the rates of Commerce, the state's largest auto insurer. Hearings into the filings of Arbella Mutual Insurance Co., Safety Insurance Co., Premier Insurance Co. of Massachusetts, and Hanover Insurance Group are scheduled for later this month.

The insurance department has already approved the filings for Arbella and Safety but they are being further reviewed at Coakley's insistence.

Commerce has filed for an average decrease of 6 percent. Coakley claims the company could lower rates more than that.

The different approaches of the two public officials have been on display in recent legal moves and at a hearing on Commerce's rates this week in Boston.

At the hearing, Burnes oversaw questioning of Commerce officials by Assistant Attorney General Peter Leight. She appeared impatient with his lengthy questioning, at one point remarking that motorists are "never going to get decent rates" if the state prolongs the process.

The differences between the two also played out in legal maneuvering by Burnes, a former judge, and Coakley, a former prosecutor.

Coakley's office had wanted more ammunition to question officials of Commerce and the other insurers about their ratemaking. The attorney general had first sought to obtain background materials from Commerce by asserting the legal right of discovery. After Burnes, rejected that assertion, Coakley issued subpoenas to Commerce for certain documents. Burnes also blocked that move.

Coakley and consumer advocates say Burnes' moves could restrict her agency's ability to represent consumers in rate hearings.

"Our goal in calling for hearings on Commerce's and other insurers' rate filings was to bring transparency to the rate-setting process under the new managed competition system," Coakley said. "We are very concerned that our office's inability to acquire appropriate information is likely to render the hearings ineffective and does a disservice to consumers."

This is not Coakley's only attempt to expand her office's consumer advocacy reach. Legislation that included a provision to give the attorney general the power of discovery died in the Legislature last session, although it could be revived.

The Massachusetts Association of Insurance Agents, opposed that legislation. Frank Mancini, president and chief executive officer of the trade group, said the denial of discovery was a "victory for consumers and agents" for several reasons.

First, he said, the resulting delays brought about by discovery could have meant that the insurers with rates subject to hearings would not have been able to compete for business with their lower 2008 rates come April but would have had to use their higher 2007 rates. Given that the carriers under review represent almost 40 percent of the marketplace, that could have denied consumers the benefits of competition and put those carriers at a competitive disadvantage, he said.

Also, Mancini said, had Coakley been granted the right of discovery, he believes she would have gone hunting after agent commission data. "I have been telling our members that if that discovery had passed, every one of their commission agreements would have been on Coakley's desk," he told Insurance Journal.

Before the Commerce hearing began, the insurance department officially cleared the filings of four insurers, bringing the total now approved to 14.

"The rates on file have withstood the Division's extensive review process and mark the beginning of a new era of consumer savings and consumer choice in the state's auto insurance market," said Burnes.

The insurance department said it continues to review the proposed rates of the remaining insurers.

See comments on this article in The Insurance Journal

First auto insurance rate-setting hearing opens

2008-01-10T13:11:00.000-05:00

By Jeffrey Krasner
Globe Staff / January 10, 2008

Insurance Commissioner Nonnie S. Burnes yesterday kicked off the first rate-setting hearing under a new auto insurance system that allows insurers to set their own rates, subject to government oversight. Attorney General Martha Coakley had called for the hearing to examine rates filed by Commerce Insurance of Webster, the state's largest auto insurer.....read the full article here.

R.I. firm offers policies on Cape, coastal areas

2008-01-09T15:39:00.000-05:00

By Kimberly Blanton
Globe Staff / January 9, 2008

Click here to read about the Narragansett Bay Insurance Company - an option for homeowners who live in coastal areas.

To obtain a quote from Narragansett Bay Insurance Company, contact The Howes Insurance Agency.

Mass. AG Sues Great American For Bid-Rigging

2008-01-08T14:34:00.000-05:00

BY DANIEL HAYS
NU Online News Service, Jan. 7, 3:41 p.m. EST

The Massachusetts Attorney General’s Office has filed a lawsuit against Cincinnati-based Great American Insurance Group, alleging it rigged an insurance bid with a broker to defraud a Norwood, Mass.-based technology firm.

Reacting to Friday’s action--filed at Suffolk Superior Court in Boston against Great American and its Chicago-based subsidiary, Professional Risk Brokers--the insurer said it denied wrongdoing and would fight the charges.

The announcement of the action by Attorney General Martha Coakley said she was seeking a court order prohibiting the company from engaging further in unfair and deceptive business practices, along with restitution, attorneys’ fees and civil penalties up to $5,000.

The state’s complaint charges that in 2004, at the request of insurance broker Marsh Inc.--part of Marsh & McLennan Companies--Great American submitted a fake and intentionally uncompetitive quote to semi-conductor manufacturer Analog Devices.

According to the attorney general’s statement and complaint, Great American allegedly submitted a fake $450,000 bid to make a $400,000 bid from American International Group for a $25 million layer of insurance look competitive, and Marsh reciprocated by steering another one of Analog Devices’ insurance policies to Great American at a pre-determined price of $60,000.

The lawsuit cited as evidence internal Marsh e-mails, and e-mails between Marsh and Great American’s PRB unit.

Great American is the latest in a long list of insurance carriers accused of rigging bids with Marsh and paying the brokerage off with hefty commissions for business that was sent its way.

In 2005, the New York-based brokerage, following investigation by the New York Attorney General’s Office into Marsh’s commercial insurance business practices, agreed to pay $850 million into a restitution fund to repay injured clients and stop taking contingent commissions, which allegedly served as kickbacks.

Ms. Coakley’s office said insurers such as Great American paid Marsh lucrative contingent commissions based on the volume of business placed with them.

The state’s suit is being handled by attorneys for the attorney general’s Insurance and Financial Services Division and Health Care Division.

Great American representatives said the carrier was “disappointed” a suit was filed over “one quotation for insurance coverage made in the spring of 2004 and contingent commission payments made to the producer for the account.”

“Great American's conduct in issuing that quote was lawful,” the carrier added. "The Company has cooperated with the Attorney General's investigation and has tried for an extended period of time to reach resolution of the issue without litigation.”

The firm said it had “resolved and been released from any potential issue” with Analog Devices. However, the state’s complaint said the monies involved in that settlement “do not represent the full harm suffered by Analog Devices, nor the full ill-gotten-gains of Great American.” The settlement amount was not disclosed.

Great American said it “believes that the demands of the Attorney General's Office have been unreasonable. Thus, the Company intends to vigorously defend itself against the Attorney General's allegations."

Members of the Great American Insurance Group are subsidiaries of American Financial Group Inc., based in Cincinnati.

Social insecurity: Web sites teem with ID numbers

2008-01-07T14:15:00.000-05:00

Many records posted online

By Bill Brubaker
The Washington Post

WASHINGTON -- Colin Powell's Social Security number is out there. So is Troy Aikman's. And that of Maryland Democratic Attorney General Douglas Gansler, among many others.

In an era when government officials from President Bush to local sheriffs warn of the growing dangers of identity theft, the full Social Security numbers of untold numbers of Americans can be found in file rooms and on Web sites run by, well, governments.

"This is very dangerous," Gansler said after learning that his number had been posted on a Maryland government-record site. "You know, a Social Security number is really the fingerprint to somebody's identification."

The Federal Trade Commission has estimated that 8.3 million Americans were victims of identity theft in 2005, the most recent for which data are available. But the crown jewel in identity theft -- the Social Security number -- can be mined easily in the government's own records, creating a measure of social insecurity for millions, according to identity experts.

Social Security numbers are readily available in many courthouses -- in land records and criminal and civil case files -- and also on many government Web sites that serve up public documents with a few clicks of the mouse. From state to state, and even within states, there is little uniformity in how access to the private information in these records is controlled.

A recent spot check found the nine-digit numbers -- introduced in 1936 to track employee earnings and benefits -- on hundreds of land deeds, death certificates, traffic tickets, creditors' filings and other documents related to civil and criminal court cases.

Old records spill secrets

Federal courts have banned the use of Social Security numbers from public documents since 2001. And in recent years, many jurisdictions have enacted laws or made rules barring various types of personal information from being filed with courts or government agencies. Most court Web sites in the Washington region list partial Social Security numbers or none at all.

However, millions of paper records were filed across the United States before the laws and rules took effect. Generally, such records are not covered by the prohibitions. And court clerks said it would be virtually impossible to redact all of the Social Security numbers.

"That's just plain nutty," said Wendy Jones, former acting clerk of Prince William County Circuit Court in Virginia. "I mean, we're talking about hundreds and hundreds of thousands of files in our court alone."

In Virginia's Loudoun County General District Court, Social Security numbers were found on documents filed in 38 of the 48 criminal cases heard by a judge on a recent day. The numbers were typed or written on summonses, arrest warrants, criminal complaints, and jail commitment and release orders, among other documents.

"I don't like it. I don't like it at all," said the court's clerk, Judith Waddell. "Would you like your Social Security number being disclosed to the public? I know I wouldn't."

A one-hour search of Maryland's land-record Web site found the Social Security numbers and signatures of two dozen property owners.

"It's alarming, because the government should be setting the example in really trying to protect people's private information," said state Sen. Jamie Raskin, D-Montgomery. "Look, there's a whole criminal underground now that thrives on stealing people's credit cards and usurping their identity for as long as they can."

4 numbers in 15 minutes

A 15-minute search on the Maryland Department of Assessments and Taxation Web site found Social Security numbers on statements filed by creditors who had financed purchases by four consumers in Waldorf, Cambridge, Bowie and Landover in 2003 and 2004.

A dozen more numbers, including former Secretary of State Powell's, turned up on a Fairfax County, Va., site that requires a $25 monthly subscription fee.

A Texas land-record site had the Social Security number of Aikman, the former Dallas Cowboys quarterback and now a Fox Sports analyst.

Identity fraud has been around for centuries. But widespread use of credit cards and the growth of the Internet have led to a plague that costs businesses and individuals billions of dollars a year. And the problem took a giant leap in the public consciousness after the Sept. 11, 2001, terrorist attacks, when it was revealed that several hijackers had used fraudulently obtained IDs to open bank accounts, rent apartments and board planes.

The federal government responded with a 2004 law that mandated prison sentences for people who use identity theft to commit other crimes and prohibited Social Security numbers from being displayed on newly issued driver's licenses.

Last spring a presidential task force called on federal agencies to "reduce the unnecessary use" of Social Security numbers, which it called "the most valuable commodity for an identity thief."
But with a few keystrokes, anybody can view the deed to Jamie and Sarah Raskin's house in Takoma Park, Md.

Jamie Raskin, a state senator, said that when he refinanced the house in 1994, he gave no thought to the two Social Security numbers printed on his deed. But last March, he got a call from Betty "B.J." Ostergren, an activist from central Virginia who pushes lawmakers and government agencies to take sensitive personal data off state-run Web sites.

"She said, 'Do you know I was able to find your Social Security number and other private information about you and your wife online?' " Raskin said. "I was shocked, and I briefly flipped out, because, you know, these are days when everybody's privacy is under assault."

Helping criminals out

Ostergren's site, thevirginiawatchdog.com, offers dozens of examples of public figures whose Social Security numbers have appeared in public records in recent years. They include former CIA Director Porter Goss.

"The government loves to spoon-feed criminals by putting these dern records on their Web sites," Ostergren said.

Raskin said he plans to call for legislation that would give Maryland residents the right to request redaction of their Social Security numbers from public records.

"The public certainly has the right to know who owns a particular property," he said. "But I don't think the public has the right to know what that person's Social Security number is."

Contact The Howes Insurance Agency for protection against identity theft

2008-01-04T12:51:00.000-05:00

By JACK SHEA, Vineyard Gazette

New home construction costs on the Island could increase more than 10 per cent as a result of new state building codes requiring one and two-story buildings to withstand winds of 110 miles per hour beginning Jan. 1.

For some prospective home owners and builders, the changes have already blown away their plans.

Tisbury building inspector Kenneth Barwick said he already has heard from home builders on a budget.

“People have called me to say they cannot afford to go forward,” Mr. Barwick said. “The new rules will significantly accelerate the cost of construction, materials and professional services. The days of pulling the three-bedroom Cape plan out of the closet are over, unfortunately.”

The new building code rules were issued, with last-minute amendments last week, by the state board of building regulations and standards.

The new seventh edition of the state building codes increased structural wind resistance requirements from 90 to 110 mph. The code also created a wind-debris zone one mile inland from mean tide in which houses must be able to handle winds of 110 mph. The new zone could affect the location of new houses relative to the prevailing wind direction and requires more stringent construction methods than houses constructed more than one mile inland.

The new code, four years in the adopting, also increases the requirements for fastening or “tie down” of foundations, walls and roofs as a single unit to reduce wind shear or vertical lift in houses under heavy winds.

Edgartown building inspector Leonard Jason Jr. also noted changes in plumbing and electrical safety wiring and outlets that he said will add some cost to construction.

He said the state also intends to institute new licensing in July for shingling, siding, window installers, roofing and demolition work. A grandfather clause is likely to be included in the license changes, as Mr. Jason reads the prospective license procedures.

Island building inspectors processed a flurry of building permit applications before the end of the year under the sixth edition of the codes and before the new regulations took effect. Harried building inspectors in Edgartown and West Tisbury in particular processed several dozen applications by builders in the final two weeks of 2007 who were seeking to be regulated under the sixth edition building rules.

To complicate matters, the final codes were e-mailed by the state to building inspectors just before they were to take effect.

A principal cost increase for homeowners and builders will come through the cost of windows, which must now be laminated, similar to the glass used in skylights. In some cases, that could double window costs.

Windows typically account for 10 to 18 per cent of construction costs, according to an informal survey of Island builders this week.

Connie O’Doherty, owner of Butterwood Properties Inc., a high-end Edgartown contractor, reported quotes given him for a mid-range standard window would double the cost. Mr. O’Doherty noted, as did several building inspectors, that the changes in window requirements have window makers scrambling to retool in order to meet the new codes.

Despite state extension of the new code deadline from last April 1to Jan. 1, the state did not complete the code until literally at year-end. “The guys the state usually send to educate us are good. I get the feeling they are embarrassed,” Mr. Jason said.

Indeed, additions, amendments and clarifications, many by e-mail, have been trickling across building inspector desks over the past week, frustrating their efforts to answer queries clearly.

For the past week, more detail in the code has become clear as inspectors dealt with analyzing new regulations while processing permits under the old regulations. The complete building code is about 1,600 pages.

West Tisbury building inspector Ernest P. Mendenhall surmised early last week that the code will likely require more services from engineers and architects and more inspection.

“Under these regulations I’ll be at building sites at least once or twice more because of increased regulations with regard to fastening components,” he said.

Mr. Jason and Mr. Barwick concurred. Mr. Barwick noted that newer regulations for small variances in cantilevering, for example, will require an engineer’s stamp, representing a new cost for home builders.

“The code is going to require more engineering and architects, depending on the size of the house,” he said. “Simple repairs and additions will cost more.”

Mass. High Court Upholds 2006 Home Insurance Hike for FAIR Plan

2008-01-03T16:46:00.000-05:00

The Massachusetts Supreme Judicial Court has upheld the 2006 rate increases for the state's homeowners residual market insurer, the FAIR Plan, against a challenge by the attorney general that the increases violated a state law placing caps on increases.

That rate decision in dispute granted the Massachusetts Property Insurance Underwriting Association (or FAIR plan) by then-Commissioner Julianne Bowler a 12.4 percent statewide hike and 25 percent on the Cape effective October 1, 2006.

Attorney General Martha Coakley's office had pursued an appeal of the rate increase that was begun by her predecessor Tom Reilly.

That rate hike was the first since the Massachusetts Legislature amended the FAIR Plan statute in 2004 to eliminate rate caps for the 13 largest share territories by allowing predicted hurricane losses and the cost of reinsurance to be factored into the rate.

The Attorney General had contended that the rates approved by the commissioner exceed the cap on rate increases set by statute, and disputed the commissioner's interpretation that a 2004 amendment authorized her to approve rates that exceed the cap after weighing predicted hurricane losses and costs of catastrophe reinsurance.

Coakley's office had also claimed the commissioner abused her discretion in approving predicted hurricane losses based on the computer generated models relied on by MPIUA.

Since that filing for 2006, the FAIR Plan has requested another 25 percent homeowners insurance rate increase for Cape Cod residents, part of an overall statewide filing seeking a 13.6 percent average rate increase statewide.

The FAIR Plan, which provides coverage to homeowners unable to secure insurance in the private market, insures more than 130,000 homeowners statewide, including a third of all homeowners on Cape Cod.

Coakley expressed concern regarding the 25 percent rate increase for Cape Cod and has recommended a statewide average premium decrease of 18 percent. This proposal includes a 29 percent decrease for residents in Cape Cod and surrounding islands.

Survey: Teens Want Friends to be Safer on Roads

2008-01-02T09:08:00.000-05:00

With motor vehicle accidents claiming between 5,000 and 6,000 teen lives each year, a new survey commissioned by Allstate Insurance reveals that many teens do not take personal responsibility for safe driving and continue to engage in dangerous driving behaviors.

While nearly 90 percent of teens surveyed said they hope their friends will be safer on the road in 2008, just 11 percent included "driving more safely" among their personal New Year's resolutions. One-third (34 percent) of teens surveyed reported being frightened as a passenger because the driver was being careless, but did not say anything to the driver.

"Our survey found that teens are making New Year's resolutions about getting better grades, exercising more and other good things, but far too few are resolving to be safer drivers," said Victoria Dinges, Allstate assistant vice president of Public Social Responsibility and mother of a teen driver. "Car accidents are the leading cause of death for teens in the U.S., and the holidays are among the most dangerous times of the year for teens on the road. Unfortunately, our survey shows that teens have other things on their mind than driving safely."

According Allstate's survey, approximately 40 percent of teens surveyed plan to exercise more and 40 percent hope to improve their grades, while only 11 percent will resolve to drive safer in 2008, ranking dead last in the survey.

Fifty-seven percent of respondents admitted to driving more than 10 miles per hour over the speed limit, 22 percent have raced another vehicle and 19 percent have received a traffic ticket. Eighteen percent of respondents admit to being a passenger in a car being driven by a teen who was under the influence of alcohol or drugs.

Further supporting the importance of peer influence that exists among teen drivers who are willing to break the law yet want their friends to drive safer, respondents were specifically interested in having their friends eliminate unsafe practices including driving without seatbelts (41 percent) and speeding (40 percent). And, while teens may be excited about the new MP3 player their friend as a holiday gift this year, they don't want them distracted by it while driving. More than two-thirds of teens surveyed said they wanted their friends to avoid technology distractions (i.e. texting, talking on a cell phone, and scrolling through an MP3 player) while driving.

"These are alarming results considering every year for the past decade between 5,000 and 6,000 teenagers were killed in motor vehicle accidents. No other hazard or behavior comes close to claiming as many teen lives," Dinges said. "As we reflect on our lives and see what we can be doing better for the upcoming year, encouraging safe driving is a great conversation for parents to hold with their teens. Parental guidance and involvement in these first and defining years is critical for young drivers."

Allstate said a recent study published by the National Institute of Child Health and Human Development indicates intervention materials, such as a parent-teen driving agreement for newly licensed drivers, reduces high-risk driving behaviors such as texting.

The Allstate survey also shows that many teenagers are familiar with drivers contracts and that nearly one third (30 percent) of teens who have heard of these agreements have signed one. The dialogue that the contract opens – dialogue that needs to be sustained between parents and teens – can be just as important as the signed agreement.

"By opening up a dialogue with teens, parents can influence their child's behavior – and nearly half of teens are having 'good conversations' with their parents about the importance of safe driving," said Dinges. "However, the research shows the dialogue needs to be frequent and meaningful; a parent-teen driving contract is a good starting point for these discussions."

Source: Allstate

Penalties Increase For Residents Without Health Care

2008-01-02T09:03:00.000-05:00

Yearly Fines Could Be High
The Associated Press, January 1, 2008

BOSTON -- The cost of not having health insurance in Massachusetts has gone up.
As the new year began, most residents who remain uninsured will face yearly fines that could total as much as $912 for individuals and $1,824 for couples by the end of 2008.

That's according to penalty guidelines unveiled by the Department of Revenue.

Individuals who failed to sign up for health insurance by the end of 2007 faced only a one-time loss of their $219 personal income tax exemption.

The fines are part of an increasingly aggressive approach written into the health care law designed to pressure Massachusetts residents into getting insurance.

It remains unclear how many Massachusetts residents still don't have insurance, but the number could be in the hundreds of thousands.

Those overseeing the law say the state has added about 300,000 Massachusetts residents to the ranks of the insured this year.

Reports of data breaches reached new heights in 2007

2007-12-31T11:17:00.000-05:00

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

Space Heater Safety

2007-12-29T09:43:00.000-05:00

2 children killed in Dorchester fire
Midnight 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.

Mass. Fines Safety Insurance over Home Policy Non-renewals

2007-12-28T13:55:00.000-05:00

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.

Car insurance tune-up heads for ‘08 collision

2007-12-27T14:32:00.000-05:00

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

Activist vows to fight insurance rate hikes

2007-12-27T14:27:00.000-05:00

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."

AG putting up roadblocks

2007-12-26T12:16:00.000-05:00

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.

Mass. AG seeks to reduce workers comp. insurance rates

2007-12-26T12:12:00.000-05:00

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.

State approves rates for 8 auto insurers

2007-12-20T14:25:00.000-05:00

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.

Protect Your Home Against Damage from Freezing Weather

2007-12-19T14:50:00.000-05:00

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:

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.

This two-step approach decreases the likelihood that ice dams will form or, at least, reduces their size. As an extra precaution against roof leaks in case ice dams do form, install a water-repellent membrane under your roof covering. Talk with your local building official about minimum code requirements for ice dam protection.

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

AG, auto insurers clash over rates

2007-12-18T09:56:00.000-05:00

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.

Life Risks Are at the Top of Americans’ Minds Compared With People of 10 Other Countries.

2007-12-17T12:11:00.000-05:00

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

A Time for Good Cheer – and Safe Practices

2007-12-17T11:54:00.000-05:00

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.

Insurer defends '08 auto rate plan

2007-12-14T13:28:00.000-05:00

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.

ISO Gives Ice Storms Cat Rating

2007-12-14T13:02:00.000-05:00

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.

MassMutual Sponsors Anticipated PBS Documentary on Retirement

2007-12-14T09:24:00.000-05:00

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

Urban drivers facing rate hikes, AG warns

2007-12-13T12:28:00.000-05:00

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.

Mass. Attorney General to Look into Commerce Insurance Sale to Mapfre

2007-12-13T09:19:00.000-05:00

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

Motorists Perplexed When Cruising in the Cold, According to GMAC Insurance and Road Safe America

2007-12-12T09:16:00.000-05:00

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.

Study: Vehicle Crash Tests Predict Car But Not Truck Safety

2007-12-12T09:12:00.000-05:00

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

Several Mass. Auto Insurers under Pressure to Amend Rates for 2008

2007-12-11T12:50:00.000-05:00

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

AG seeks insurance review

2007-12-11T12:41:00.000-05:00

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.

Hanover to Lower Motorcycle Insurance Rates in Mass. Next Spring

2007-12-10T07:36:00.000-05:00

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

Political elbows aimed at auto insurance reform

2007-12-09T10:23:00.001-05:00

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.

Mass. Police Officer Indicted for Insurance Fraud

2007-12-07T10:02:00.000-05:00

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

Commission report offers solutions to home insurance dilemma, pleasing few

2007-12-06T13:48:00.000-05:00

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."

In the Wake of California’s Wildfires

2007-12-06T09:29:00.000-05:00

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

2007-12-06T07:38:00.001-05:00

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.

Mass. Insurance Agents Support Managed Competition But Oppose Credit Scoring

2007-12-05T08:14:00.000-05:00

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.

Lower your wind deductible

2007-12-04T14:37:00.000-05:00

Homeowners who take one or more of the following steps to mitigate the risk of wind damage may be able to have their FAIR Plan wind deductible reduced or eliminated.

Windows: Install impact-resistant glass or shutters that close over window openings to prevent flying debris from breaking window panes.

Entry doors: Install at least three hinges and a dead bolt security lock with a bolt at least 1 inch long.

Garage doors: Install a garage door and track system that is labeled and rated for high wind pressures and debris impact.

Roof and foundation connections: Anchor the roof to the walls with metal clips and straps. The walls must also be properly anchored to the foundation, and, if the house is more than one story, the upper story wall framing must be firmly connected to the lower framing.

Source: MA FAIR Plan

FAIR plan to hike wind deductible for Cape homeowners

2007-12-04T13:49:00.000-05:00

By SARAH SHEMKUS
Cape Cod Times
December 04, 2007 6:00 AM

Thousands of homeowners could soon be on the hook for more of the damages incurred by storms when the FAIR Plan implements a plan to raise wind deductibles on some Cape and Islands policies this month.

The move has drawn the ire of local residents and activists, who claim that increasing deductibles is equivalent to raising premiums.

"I call this a rate hike in disguise," said Paula Aschettino, an Eastham resident and the founder of activist group Citizens for Homeowners Insurance Reform.

A deductible is the amount a policyholder must spend toward repairing damages before the insurance company will cover any costs.

FAIR Plan President John Golembeski defended the deductible increase, which takes effect Dec. 15.

In 2005, he explained, his staff conducted an analysis of the insurance marketplace and determined that the FAIR Plan's wind deductibles on the Cape and Islands were not in line with those of private companies.

"The change was made so that the wind deductibles that we offer are consistent with those that are offered by other insurers," he said. "It is a rule change, not a rate change."
In other regions, including SouthCoast, the FAIR Plan's deductibles were already consistent with the private market, he said.

The FAIR Plan, an association of all the companies that offer homeowners insurance in the state, provides coverage for those who are unable to obtain it on the private market. For the past few years, private insurers have been pulling out of coastal areas, driving more and more homeowners into this insurance of last resort.

As of the end of October, nearly 59,000 FAIR Plan policies were in effect on the Cape and Islands, representing about 44 percent of the region's homeowners.

When the recent changes become effective, FAIR Plan wind deductibles will go from 1 percent of the insured value of the property to 2 percent for two groups of Cape homeowners: those located within a half-mile of the coast and insured for less than $200,000, as well as those located farther from the water and insured for less than $500,000.

Therefore, the wind deductible for a home on the Cape that is insured for $500,000 would go from $5,000 to $10,000.

On Nantucket and Martha's Vineyard, homes insured for between $200,000 and $599,999 will see their deductible go from 2 percent to 5 percent.

At the urging of state Division of Insurance officials, however, the FAIR Plan included provisions that allow policyholders to reduce or eliminate their wind deductible by taking steps to mitigate the risk to their home.

Because implementing some of these measures can be costly, Aschettino questioned whether these mitigation provisions would actually improve homeowners bottom lines.
"I don't know whether citizens really look at that as savings," she said.

Aschettino is also unhappy that Insurance Commissioner Nonnie Burnes approved the change in deductible without a public hearing.

The law does not require such a hearing, but Aschettino said that the public has a right to offer input on a change as significant as this.

"What really concerns us is the Division of Insurance allowing this to happen," she said. "I feel that we are speaking to deaf ears."

Kimberly Haberlin, spokeswoman for Burnes, said that such a charge does not accurately reflect the commissioner's role in the insurance market.

"The commissioner is very concerned about the burdens Cape residents are facing due to the current state of the homeowners insurance market," Haberlin said. "(She) is responsible for helping to create a healthy insurance market so, at the end of the day, companies can meet their obligations and keep their promises to their policyholders. Ensuring that a stable environment exists is in the best interest of all Massachusetts consumers."

Burnes was a member of the legislatively created special commission on homeowners insurance that recently recommended ways to combat the problem of rising insurance costs.

The commissioner's office also recently agreed to a meeting with Aschettino and state Sen. Robert O'Leary, who has been a vocal advocate of homeowners insurance reform.

"We just feel that the market on the Cape, it's just not functioning," said O'Leary. He would like, he said, "to remind (Burnes) of the impact that this is having, and that we see this as a rate increase for all intents and purposes. We'd like her to move more cautiously here."

Insurers wait to see new rules' effect

2007-12-04T07:32:00.000-05:00

Regulatory climate still uncertain, says an industry official

By Bruce Mohl, Globe Staff
November 29, 2007

Holiday Shoppers Misinformed on Insurance Coverage for High-Tech Gifts

2007-12-03T09:28:00.000-05:00

Survey finds 96 million households lack key knowledge on protecting electronics.

Last week, as the holiday shopping season kicked off, Trusted Choice® and the Big “I” released the results of their consumer survey regarding insurance coverage on high-tech electronic gifts. The survey found that approximately 42 million American households plan to give or receive high-tech electronic products this year. However, about seven out of eight households don’t fully understand key aspects of their insurance coverage for these purchases.

“With so many people giving and receiving electronics this holiday season, it is important for consumers to understand how to protect these gifts,” says Big “I” President & CEO Robert Rusbuldt. “In fact, any time people acquire an expensive or unusual item, we advise they consult with their Trusted Choice® independent insurance agent. This new research shows us not enough consumers are doing that.

”The survey presented respondents with five questions about insurance coverage for high-tech home electronics. An overwhelming seven out of eight households (96 million) answered at least one of these questions incorrectly. More than 1/3 or 42 million households said they were likely to purchase or receive high-tech electronic products including iPods, iPhones, high-definition/plasma televisions, video game systems and computers. However, only about one-fifth of respondents said they had contacted their insurance agent with questions on coverage for high-tech electronic products when they purchased them in the past.

“As our research shows, so frequently most consumers don’t fully understand their insurance policies,” says Madelyn Flannagan, Big “I” vice president for education and research. “Making matters worse, with the ever-changing technology of these types of electronics, consumers need to keep in mind that policies may not always reflect the latest features.”

Respondents also were presented with five statements and were asked whether they agreed or disagreed that the situation was usually covered by most homeowner’s or renter’s insurance coverage. Their collective responses are as follows:

• More than half (60%) believe small electronic products stolen from them, either from their home or automobile – even those valued at less than $500 – are usually covered or don’t know whether they are or not.

• Approximately 55% believe electronic equipment that is damaged or destroyed as a result of a power surge is usually covered.• People are better informed about damage resulting from home installation or loading/unloading in transport. Less than half (42%) said that such damage is usually covered.

• Only about one-third of respondents (35%) think digital downloads such as iTunes or podcasts are usually covered.

• Finally, only one-third (34%) believes gift cards, regardless of their value, are usually covered.

Along with the survey results, the Big “I” provided consumers a series of tips to help them with some common and important exceptions that many do not understand.

For more information or for a copy of the tip sheet to share with your clients, contact Patrick Royal at Patrick.Royal@iiaba.net. Patrick Royal (patrick.royal@iiaba.net) is Big “I” director of public affairs.

If you have questions about your coverage, contact The Howes Insurance Agency.

Encompass Adjusts Mass. Auto Rates for 2008

2007-12-01T11:00:00.000-05:00

November 30, 2007

Encompass Insurance has further lowered its 2008 Massachusetts auto insurance rates for preferred risks by 5 percent, resulting in an overall statewide average decrease of 4.5 percent compared to the 3.4 percent in its original filing.

The insurer has also introduced several new coverage options and discounts that will be available effective April of 2008 when the state allows competitive rating. The new options include an accident forgiveness program and a good payer discount for those who pay their premiums on time.

Andrew Carpentier, regional marketing vice president, said Encompass Insurance will also conduct an analysis of market trends and make additional filings during the transition period from now until April if necessary.

Encompass sells through independent agents and is part of the Allstate Group.

Source: Encompass

Mapquest Printout Leads to N.Y. Insurance Fraud Sentencing

2007-11-30T07:31:00.000-05:00

According to the MA Assocation of Independent Agents, for every $10 consumers pay in insurance premiums, $3 goes toward paying fraudulent claims. - The Howes Insurance Agency

A 36-year-old Rochester, N.Y. man, whose Mapquest directions led police to his home, was sentenced to five years probation in Monroe County Court on Nov. 26 for trying to fraudulently obtain a $10,282 insurance settlement.

Craig C. Wilson, of 24 Alfie Dr., was sentenced by Rochester City Court Judge Thomas Rainbow Morse. Wilson pleaded guilty to insurance fraud on Sept. 17, admitting he falsely reported that his sports utility vehicle had been stolen so he could collect on an insurance claim.

Wilson was arrested by Rochester Police after authorities recovered his 2002 Mercury Mountaineer in the parking lot of a Jacksonville, Fla., apartment complex two months after he had reported it stolen. The SUV was discovered when the apartment complex owner complained to local police about the abandoned vehicle.

Investigators said Mapquest directions from Wilson's home to the Jacksonville site printed nine days before the reported theft were found inside the vehicle. They said the vehicle also contained paperwork describing airline transportation from Jacksonville to Rochester. Wilson reportedly has acquaintances in Jacksonville.

Authorities said Wilson confessed to filing the fraudulent insurance claim when he was confronted with the evidence.

The investigation was conducted by Gary S. Sullivan of the Frauds Bureau of the New York State Insurance Department and the Auto Theft Unit of the Rochester Police Department. Geico Insurance Co. assisted in the investigation.

Assistant Monroe County District Attorney Casey Spencer prosecuted the case.

Source: New York State Insurance Department

18 of 19 Insurers Amend Mass. Rates; State Plans Outreach

2007-11-29T10:19:00.000-05:00

November 29, 2007

Eighteen of the state's 19 Massachusetts auto insurers amended rate filings for policies with April 2008 effective dates at the state's Division of Insurance.

The latest filings lowered rates from the origianl filings made on Nov. 19.

The average reduction across 19 companies for policies effective in April 2008 is now -7.8 percent, according to state officials. It was 7.7 percent after the initial filings on Nov. 19.

"Not only are we seeing companies adjust their rates downward even more, we are also seeing them improve their array of policy offerings to stay ahead of their competitors," said Insurance Commissioner Nonnie S. Burnes. "The promise of better rates for good drivers and better products for everyone is coming to fruition in the Massachusetts auto insurance market and consumers will start to experience these benefits firsthand when they begin to shop around this winter."

Burnes said her department will be closely scrutinizing the amended filings to make certain that consumers across the state are being treated fairly. The rate review period can extend to 45 days. She sai the division will be examining each company filing to determine whether insurers are, as required, using driving record and experience for primary rating factors, refraining from drawing on banned socioeconomic factors, including education, homeownership and credit information, for rating and underwriting purposes and that the final rates are actuarially sound.
The next round of rate filings for policies with effective dates on or after May 1, 2008 can occur anytime after February 15, 2008.

"Drivers who have policies with April effective dates can expect to receive their renewal notices in the mail – and, if they are good drivers, news of lower rates – by mid-February," said Burnes.
The department is also planning to launch a website during to help jumpstart comparison shopping among the state's auto insurers. "We want consumers to be able to go to a central, trusted location so that they can make informed choices about the prices and policies that work best for them," Burnes said.

In addition to the new consumer website, Burnes said she and her staff will be conducting regional outreach among consumers, agents, legislators and other interested parties "in an effort to offer information and guidance about managed competition's new rules, inherent benefits and available resources" in the coming weeks and months, timed to coincide with the staggered issuance of renewal notices and policy effective dates.

"We want to get word out to consumers in every corner of the state about the exciting opportunity they now have to take advantage of competitive rates and innovative policies," said Burnes.

Source: Mass. DOI

The Main Street America Group Files for 7.6 Percent Rate Decrease for Private-Passenger Auto Insurance in Massachusetts

2007-11-28T11:24:00.000-05:00

Super Regional Carrier to Also Introduce New Auto Products in Conjunction With Commonwealth's Auto Reform

NGM/Main Street America - Letter to Agents

2007-11-28T10:28:00.000-05:00

November 27, 2007

Dear Valued Massachusetts Customer:

I am please to inform you earlier today we completed our filing with the Commonwealth of Massachusetts Division of Insurance (DOI) for private passenger auto rate and product changes that will be effective April 1, 2008 (pending DOI approval), in conjunction with implementation of the commonwealth's competitive auto market.

While the initial filing date for all carriers was November 19, 2007, we decided to hold our communications until today to ensure all of our customers receive the most accurate information about our important changes that will impact your and your customers.

Highlights of our changes, which will apply to our NGM Insurance Company private passenger auto products for both new and renewal business in The Bay State, include:

7.6% decrease on existing NGM personal auto policies

Approximately 40% of our current policyholders will receive a decrease of 15% or more on their NGM auto policy

Another 30% of our customers will see decreases of up to 15%.

We are also implementing 10 pricing tiers that will provide pricing flexibility and the opportunity to more accurately reflect savings for a wide variety of Massachusetts drivers. Our tiering components will include discounts for:

Multi-policy

Coverage package

Number of drivers

Vehicle age for liability coverage

Student away at school

Farm use

No lapse in coverage

Good student

Safe Driver Insurance Plan (SDIP)

In regards to SDIP changes, Class 10 will be broken into seven groups by range of years driving and Classes 17 & 18 will be broken into individual years of driving.

On April 1, we are also going to introduce our new Auto Elite program that provides many features our customer focus groups indicated they wanted for their private passenger auto customers. This includes accident forgiveness, new car replacement coverage and disappearing deductible.

We will continue to monitor all carriers' filing with the DOI and are committed to put our vast experience in competitive auto markets to work for your and your customers. Within the near future, we will provide you with more information about our existing changes and will plan to also meet with you in 2008 to discuss strategies that you help you take advantage of these opportunities.

As always, thank for your continued business with The Main Street America Group.

Sincerely,

Steven T. Berry, New England Region President

Safety Insurance Revised Auto Insurance Filing

2007-11-28T09:29:00.000-05:00

We received a memo from Safety Insurance itemizing their revised private passenger automobile rate filing - Revised November 27, 2007

Per Safety's memo:

With this revision more than 87% of all drivers will see a rate decrease. Safety's revised rate filing will provide your agency with an extremely competitive private passenger automobile product that includes the following:

Account credit of 10%
Multi-Car Discount of 10%
NEW! Loyalty/Renewal Discount now increased to 8%
NEW! Hybrid Vehicle Discount of 10%
NEW! Good Student Discount of 10%
NEW! Student Away at School Discount of 10%
The "Safety Shield", a broad coverage enhancement endorsement
Auto Loan/Lease Gap coverage endorsement
Merit Rating Plan enhancements include SDIP Step 99 credit increase from 17% to 25%, SDIP Step 98 credit increase from 7% to 15% and (NEW!) reduced surcharge factors for operators with 1, 2 or 3 SDIP steps from 15% to 10% for each step.

Starting April 1 2008, Safety will begin offering a combined billing option for policyholders that wish to have all of their Safety Insurance policies combined onto a single bill.

Auto insurers again cut '08 rates, offer new discounts

2007-11-28T07:49:00.000-05:00

By Bruce Mohl
Globe Staff / November 28, 2007

Click here to read the article in the Boston Globe.

Auto insurance rates cut again

2007-11-28T07:42:00.000-05:00

Wednesday, November 28, 2007
By DAN RING dring@repub.com (The Republican)

BOSTON - Auto insurers yesterday filed a second round of rates that could mean substantial savings for good drivers in Western Massachusetts.

Insurance Commissioner Nonnie S. Burnes said seven insurers offered significant rate cuts from last week's first round of filings. Ten companies made no changes to average rate reductions, while two offered insignificant cuts.

"This is another chapter ... in the story of an improving auto insurance market that will really deliver benefits to consumers," Burnes said last night in a conference call with reporters. "We are seeing substantial reductions for good drivers."

Insurers filed an initial round of rates on Nov. 19 under the state's new competitive system for auto coverage.

Insurers looked at the rates filed by competitors last week and were given until yesterday to respond with new rates.

"What is important in these filings is to see the movement of seven companies to try to be competitive for customers in a new market," Burnes said.

Eighteen of the state's 19 auto insurers yesterday filed amended packages for rates that take effect on April 1.

The average statewide rate reduction is 7.8 percent, a tiny change from last week, Burnes said. That would mean a reduction of about $90.50 for a good driver from Springfield who drives a 2003 Toyota Camry with a $500 deductible on collision coverage.

This year, under the old regulated system, rates fell by an average 11. 7 percent.
Critics are concerned that elderly, teenage and urban drivers will face higher rates in the new system.

Burnes said the state's 4 million drivers must look around for the best rates. She said motorists also need to need to consider discounts and policy enhancements that could further cut premiums. Some companies are offering discounts for customers who have both auto and home insurance policies with them, for example.

Burnes said the Division of Insurance will soon update its Web site with sample policies and tips for consumers.

In yesterday's filings, rates were further dropped by some key companies that write auto insurance in Western Massachusetts. Arbella Mutual Insurance of Quincy, for example, yesterday said the average rate would drop by 7.7 percent, down from last week's 6.2 percent reduction.

Arbella's filing also showed that a third of its customers could see rate cuts of 20 percent or more, and more than half could see a decrease greater than 10 percent.
Safety Insurance in Boston filed an average rate reduction yesterday of 6.3 percent, down from a 6.1 percent decrease filed last week.

Plymouth Rock Assurance Corp. of Boston yesterday filed an average rate cut of 7.3 percent, down from 3.8 percent last week.

OneBeacon Auto Insurance in Canton filed a 7.2 percent average rate cut yesterday, down from just a 2.1 percent decrease last week.

Commerce Insurance of Webster, the state's largest auto insurer, was among those companies that didn't change their average rate reductions from last week. Commerce is offering an average rate reduction of 8.1 percent.

Hanover Insurance of Worcester, which has about 20,000 policyholders in Franklin, Hampden, Hampshire counties, filed an average rate cut of 8.1 percent, down from 8 percent last week.
Burnes is overhauling the way auto insurance rates are set in Massachusetts. Insurers are now setting their own rates, subject to review by the state. Previously, the state established one set of rates that each company charged.

Burnes yesterday declined to respond in detail to criticism by the state's attorney general.
In a bulletin sent to insurance companies, Attorney General Martha M. Coakley urged companies to file lower rates. Coakley said the preliminary filings last week included more than $200 million in extra profits and payments to agents that wouldn't have been permitted when the state set rates.

Coakley said the average statewide cut in premiums was 6 percent for next year, not the 7.7 percent estimated by Burnes last week.

"We've looked at that," the insurance commissioner said yesterday. "We haven't been able to discern why she is saying that."

The 7.7 percent cut included discounts, resulting in a faulty comparison to this year's rates, Coakley said. Discounts were considered additions in the old system and weren't used in calculating statewide average cuts, she said.

According to Amie M. Breton, a spokeswoman for Coakley, the attorney general has until Dec. 9 to complete a review of the filings of auto insurers. Coakley must decide whether to challenge any of the insurers' rates in a trial-like proceeding before Burnes.