Insurance Articles

Insurance Articles

• Number of Auto Insurance Shoppers Drops

  • According to an article by Insurance Networking News the number of consumers shopping for car insurance has declined to the lowest point in five years.  This comes from a study by J.D. Power and Associates “2012 U.S. Insurance Shopping Survey.”

    The numbers are enlightening.  According to the study 25% of insurance customers shopped for new insurance this year which represents an 8% decline from the previous year.  But, 43% of those switched carriers.  This is a 3% increase from 2010.

    The study points out that the average savings from switching, fell to $359 in this year from $412 in 2010.

    Other findings from the study are important to insurance marketers to consider.  As customer retention rates rise, the spending on marketing efforts is increasing.  Advertising expenditures were up 12% in 2011 industry wide.

    The number of customers who want to do it themselves is also increasing.  A full 1/3 of insurance shoppers want to conclude the transaction online.  They want to shop and bind online; the entire process under their control.  Current laws require a licensed agent and most insurance companies take that to mean personal contact via a phone conversation. 
    52% of customers start their insurance shopping online and 73% of those visit at least one insurer’s website.  The number of insurance shoppers only using online processes for estimates is now 32%; this is double from three years ago.

    The challenge for agents is that most online insurance shopping takes place at night, when offices are closed.  The big insurance companies are of course set up to handle this and to take advantage of it.  Shoppers are going as far as they can on a given insurance site, but more and more want to bind online also.  They keep moving from site to site till they get one who will do that.

    In the same study, insurance companies were ranked for three factors:  distribution, channel and policy offerings and price.

    The top 5 (from the top) were The Hartford, Liberty Mutual, American Family, Nationwide and Amica Mutual.  The bottom five (from the bottom) were: Mercury, GMAC, Progressive, AAA NCNU Ins, Exch 816 and Allstate.

    The study represents the findings from over 16,000 consumers who requested online auto insurance in the last year.  The study was conducted January – February 2012. 

• California Gains Bi-Partisan Support for 2012 Automobile Insurance Discount Act

  • Backers of an initiative to bring portability to auto insurance discounts have gained important bi-partisan support.  Days after the California Republican Party endorsed the initiative, former Democratic Senate President pro tempore offered his endorsement and current Democratic State Senator, Juan Vargas endorsed it as well.

    The initiative has been backed by Mercury Insurance President who has personally put up $8million to aid in its placement on the ballot.

    According to the official website, under current law, a California consumer can receive a discount for having continuous auto insurance, but cannot take this discount to competing insurance carriers.  They claim that when passed, the initiative will create competition among insurance carriers and will ultimately lower prices.

    The initiative qualified for the November ballot in January by receiving the necessary 505,000 signatures.

• The Hartford is Dropping Individual Life & Retirement Business

  • The Hartford Financial Services Group, Inc. announced its decision to divest itself of individual life insurance and retirement services in order to focus on P&C (property & casualty), group benefits and mutual funds.

    The announcement comes just weeks after hedge fund manager, John Paulson, The Hartford’s largest shareholder (8.5%), recommended that the company split its assets.

    In response to the announcement, the S&P ratings service said it was downgrading the subsidiaries of Hartford Life and assigning individual ratings to each of the entities.

    Moody’s affirmed the credit ratings of The Hartford Financial Services Group, Inc., but changed the outlook of their Life & Annuity insurance company to negative from stable.

    Thomas Gallagher of Credit Suisse estimated that Hartford will see between $2 and $3 billion by selling the business.

    The Hartford’s stock price went up slightly following the announcement.

• Prudential to Drop Individual Long Term Care Insurance

  • Prudential, Inc. has joined MetLife and Berkshire Life Insurance Company (BLICA) of America in dropping Long Term Care (LTC) for individuals.  But they will continue to offer group LTC.
    In a statement released on March 8, 2012, Prudential said they honor the individual policies sold so far as long as the premiums are made on time and that benefits do not exceed policy limits. 
    A Prudential  spokesperson, Sheila Bridgeforth, gave low interest rates and uncertainty about future interest rates as the prevailing reasons for eliminating the product.

    Other companies to eliminate the insurance line include MetLife in November 2010, BLICA in February 2011, Allianz in November 2009 and Unum discontinued new sales last month.
    “People are holding on to their policies longer than companies expected and companies did not anticipate interest rates would be this low when they priced their older products," said Carl Austin, assistant vice president at A.M. Best Co., noting LTC is a lapse-supported business. Business written in recent years can't have rate increases put in, due to the National Association of Insurance Commissioners' Rate Stabilization Act of 2000, which "makes it tougher to recover from a pricing error," Austin said, noting rates are "much higher" today than 10 years ago.

    The executive director of the American Association for Long Term Care Insurance, Jesse Slome  echoed the sentiments.  “About 40% to 60% of the premium dollars an insurance company expects to accumulate to pay future claims comes from investment returns,” Slome said.

    “The average yearly premium on an individual LTC policy is about $1,800 a year for a single, and about $2,400 a year for a couple, Slome said.  About 8 million Americans have some form of private LTC insurance.”

• Californians to pay up to 14% more for Health Insurance

  • The cost of medical care has risen just 3.6% but insurers in California are raising rates on individual policy holders 8 to 14%. 
    Anthem, California's largest for-profit health insurer,  is proposing premium increases ranging from 9.6% to 13.8% on average, effective May 1 or July 1, for about 700,000 individual policyholders and their families. The rate increases are under review by state officials.

    Kaiser Permanente, a non-profit insurer increased premiums 9% on average for nearly 300,000 customers in January.  Another non-profit, Blue Shield of California is raising rates by between 7.9% and 8.9% March 1st. 
    Insurers say the hikes reflect their knowledge of their client base, not the cost of medical care.

    Consumer groups are not buying it.  These increases come directly after last years’ increases which ranged from 20 to 30%, and ignited a battle between the industry and consumer groups which may lead to a ballot measure seeking increased rate regulation.

    In California, regulators do not have the power to turn down a rate request, but insurers do have to meet certain mathematical equations in order to have them approved.  The state was successful in persuading Blue Shield to reduce their increase from 14.8% to 8.9%.  They also recently got Aetna to reduce an increase from 13.7% to 9.3%.

    There is no word as to whether the Feds will hold up these rates to take a closer look as they have in other states.  The CFPB has reviewed some rate increases nationwide, but certainly not in large numbers.   And certainly not all the ones that they were entitled to review.

    As 2012 passes, more and more of the national healthcare reform bill goes into effect.  How it will effect these rate increases and future ones is difficult to know at this point.  Later in the year, the federal provision limiting insurers’ expenses on non-medical costs goes into effect.  It is possible that in 2013 that some of these rate increases could be rebated, if the firms do not spend the required amount on direct medical costs, as required by the law.

    These rate increases are for Californians who have individual polices, not those who are part of group plans.  According to the Kaiser Family Foundation, those rates rose 9% last year nationwide.

    The proposed ballot measure would give the state the same right to reject rate increases that they have for auto and property policies.  Advocates need 505,000 signatures by May 1st to qualify for the November election.

• Online Privacy Changes Will Affect Insurers

  • We recently wrote on the topic of how insurance companies were using social media in underwriting. 
    https://www.t3leads.com/en/affiliate-articles/insurance.html#insurance-companies-use-social-media---and-not-just-for-marketing
    Then came Google lawsuits, privacy issues, the government and more.  In short, there are plenty of changes coming; some brought about by consumer awareness of privacy related issues and some will be governmental mandates. 

    Consumers are learning exactly how much information about themselves there really is on the web, specifically on social media sites, and many are opting to make more of that information private.  
    Additionally, as users learn more about social media sites and how they are used, they prune their friends list and delete comments made by themselves and others.  This gives underwriters less raw data to use in developing rates.

    And of course, there is the big unknown in the room, which is privacy related issues and how the government will act on them.  Changes could come in the form of court decisions, legislation or by order of the Federal Trade Commission, or other such agency.

    The bottom line to all of this is that insurance companies are likely to have less data gathered from social media to work with in the future, rather than more.

• “Nonbank Financial Institutions” Defined

  • Some property & casualty insurance companies are concerned with the final ruling regarding how it will determined which nonbank institutions present a systemic risk and are therefore subject to additional federal regulation.  The criteria are as follows:

    1.    Must have over $50 billion in consolidated assets and meet one of three additional criteria: Having $30 in gross notional credit default swaps, having $3.5 billion in derative liabilities and having $20 billion in total outstanding debt.

    2.    The Financial Stability Oversight Council will then use a specific framework to determine which companies fall into that category. 
    3.    Those companies that are ruled to be in that category will then be subject to additional scrutiny by the Federal Reserve Board of Governors.
    
    It is the third step that has some insurers concerned because it is so similar to rules for nonbank financial institutions.  As we all know, the insurance industry is a unique one; it has  its own accounting rules, for instance.  There is concern that the rules are not complete and are not precise enough for the insurance industry.  And of course, overlapping regulation with the states is a concern, as well as the additional expenses to be incurred with compliance.

    In a story from InsuranceHeadlines.com comes the following:  “There's always going to be concerns when you're talking about a federal agency or group having the authority to impose itself on a private company,” said Jim Grande, senior vp in the National Assn. of Mutual Insurance Cos.' Washington office. “We would have preferred that FSOC exclude property/casualty companies from being able to be systemically significant.”
    He also said the Federal Insurance Office's role in the process should be better defined. FIO can recommend to the FSOC that an insurer be designated as systemically significant, he said. “What we don't know is if FIO is bound by all of the same criteria and rules FSOC is.

    There were also concerns about duplication with international rules as well.  Still there was at least some cautious optimism expressed as well:
    “I think it will be a wait-and-see” situation, said J. Stephen Zielezienski, senior vp and general counsel of the American Insurance Assn. in Washington. “There were a couple adjustments to the metrics. We're pretty comfortable—if in Stage 1 you apply those metrics to regulated property/casualty insurers, you're not likely to get any that trigger those plus-one metrics.”

    It’s clear the financial meltdown or near financial meltdown of 2007 will be affecting markets and industries for years to come.

    Source:  http://www.insuranceheadlines.com/Insurance-News/National-Insurance-News/7600.html

• Allstate to use Driving Records when Underwriting Homeowners’ Insurance

  • In the states of Oklahoma and Kansas, Allstate Insurance is considering the driving records and claims histories of people who apply for a new homeowner’s product it wants to introduce in other states through 2014.
    The product called “House and Home” uses auto history "as part of our underwriting because leading industry data points to a strong correlation between a good auto loss history and a lower likelihood of homeowners losses," said Laura Strykowski, a spokeswoman for the Northbrook, Ill.-based Allstate Insurance Co., in email and telephone interviews.

    State Farm started factoring in auto history in the homeowner’s underwriting process recently as well.

    It is also worth noting that in Oklahoma, homeowner’s must have their auto insurance through Allstate as well.

    It is not known how Allstate will roll this out.  Will it just apply to new applicants?  Will it go into effect upon homeowner’s policy renewal?  Will current policy holders be grandfathered in?

    From recent agent contract changes to underwriting procedures, it is obvious Allstate is changing the way it conducts business. What is not immediately clear is how the changes improve the insurance buying experience for consumers.

• Insurance Issues of the Day: Health Insurance Premiums & Commercial Property Insurance

  • It was reported in The New York Times that a study by the Commonwealth Fund shows that family health costs have doubled in seven years.  The Commonwealth Fund is a private foundation that researches health issues.http://www.insuranceheadlines.com/Health-Insurance/7505.html

    Total premiums paid by employees and employers combined, rose 50% between 2003 and 2010;  now averaging nearly $14,000 annually.  The report shows that employees’ share of the expense rose 63% in the same period.  Employee premiums averaged $3,700 compared to $2,300 in 2003.  But the bad news for families doesn’t stop there.  Their deductibles have nearly doubled in that span as well – to almost $2,000 in 2010.

    The study pins its hopes on the Affordable Care Act passed in 2010 to slow the rate of expense growth.  The law limits what an insurance company can spend on administrative costs and also subjects insurance companies to scrutiny if they file for an increase over 10%.  Several insurance companies in several states have already been asked to justify their rate increase requests.

    As a result, “many working families have seen little or no growth in wages as they have, in effect, traded off wage increases just to hold onto their health benefits,” the report found.
    “With rising costs and eroding coverage, much is at stake for the insured and uninsured alike as the nation looks forward,” the report concluded.

    The study used employer data from the federal government as a basis for the study.
    
    Commercial Property Insurance Rates
    Bloomberg.com reported that U.S. businesses are looking at higher premiums for property coverage after a year of record-setting natural disasters and near record low investment income.  This comes in a report from Insurance Broker Marsh & McLennan.

    Half of those surveyed said their rates went up in the last half of 2011, with higher increases for those at higher risk of catastrophes.  Marsh believes the trend will continue.  Travelers and AIG have already increased rates after a rash of storms and earthquakes.  Damage from catastrophes in 2011 reached $105 billion worldwide, with about $25 billion of that from U.S. storms.

    A survey by the Council of Insurance Agents and Brokers confirmed Marsh’ findings.  A survey by them found that U.S. commercial insurance rates rose 2.8 percent in the fourth quarter.  Marsh went on to predict premium increases for general liability, worker’s compensation and directors’ and officers’ coverage as well.

• Report from Federal Insurance Office Delayed

  • The Federal Insurance Office (FIO) announced that their report on the state of the insurance industry, including recommendations for modernization of insurance regulation, which was due on January 21, 2012, will be delayed.  A spokesperson for the Treasury Department, of which this office is a part, said it would be “weeks” until the report is issued.

    The Dodd-Frank Wall Street Reform and Consumer Protection Act established the FIO and the report.  According to the bill, the report was due on January 21, 2012.

    Among the FIO’s responsibilities are identifying issues contributing to systemic risk, studying delivery and pricing systems to underserved markets, advising the Treasury Secretary on insurance issues and developing federal policy on domestic and international regulatory issues.

    Several within the insurance industry have spoken positively about the information that has been submitted to the FIO. 
    Michael Nelson of a Pennsylvania law firm that works in the insurance industry, said that “there were a number of very lengthy, well-thought-out responses to the FIO’s call for information.”
    “I am assuming that the FIO is doing its best to make sure it understands all the different thoughts and put them into a meaningful summary that helps those around these issues understand different viewpoints. I can tell you that there are different viewpoints on how the FIO should be positioned, and obviously there is a viewpoint that the U.S. state-based regulatory scheme works extremely well. But there is an important voice in Washington to work on a national platform to work with members of other countries and with international organizations.”

    At the Insurance Information Institute’s annual industry forum, FIO Director Michael McRaith said that his office has received nearly 150 letters from industry leaders on how to improve the current system.  The FIO also gathered information by organizing meetings with industry leaders.

    This article was based in part on one by Young Ha for insurancejournal.com

• P&C Insurance Rates Going Up?

  • An article posted by BusinessInsurance.com reviewed the Property/Casualty Insurance Joint Industry Forum held in January 2012 found some cautionary tales expounded.  Numerous speakers mentioned that P&C rates are under pressure to be moved upward as a result of worldwide catastrophes, such as historically deadly earthquakes, tsunamis and hurricanes.

    These losses when combined with continued low interest rates resulting in low returns on investments, leave insurers concerned about surpluses needed for claims.  Insurance companies are “seriously rethinking” their exposures, and commercial rate particularly those involving catastrophe risks clearly are rising, said Jay Gelb, managing director of Barclays Capital. Mr. Gelb spoke during the events “Experts Panel: View From the Outside Looking In.”

    In addition, the low-interest-rate environment continues to be a concern for insurers and reinsurers and will have an impact on earnings for at least the next few years, Mr. Gelb said.

    A Swiss Re executive said. “Rates have to move up. There's just not enough income coming in to replenish capital.”

    Meanwhile, the survey of attendees found that 72% believe the industry is in the early stages of a hard market, while 75% of the respondents said they expect an improvement in profitability.

    In addition, 67% of the respondents said they believe premium growth will be higher, 31% believe it will remain flat, and only 2% believe it will decline.

    Seventy-eight percent of the respondents said they believe the industry's combined ratio will be lower in 2012 than it was in 2011.

    The survey was based on the responses of approximately 40% of the nearly 250 industry representatives who attended the forum.

• Insurance Industry Execs Believe Worst is Over for Financial Crisis

  • According to a survey taken by the Insurance Information Institute (I.I.I.) leaders in the industry believe the worst is over for the financial crisis.  Further they believe that the industry is on the edges of a hard market.  75% of the executives surveyed expect the industry to increase profitability in 2012.

    The majority believe that most P&C lines will increase profitability.  63 percent of respondents believe there will be an improvement in personal auto and 67 percent expect an improvement in homeowners. While 72 percent of respondents expect an improvement in commercial lines, 55 percent do not expect an improvement in workers compensation.

• Insurance in 2012: Predictions

  • LOMA is a life and health insurance industry organization that provides training and services to operations management in the insurance and financial services industry.  They recently released a conversation they had with ten insurance leaders to get their opinions on a variety of topics.  One of the most interesting questions was:  “what is the greatest challenge the life industry faces and how can it deal with this challenge?”  In their own words, here’s what they said.

    Neal Baumann, Deloitte:  “Profitable growth.”

    Benjamin Bujia, Huatai Life: “establishing a clearly defined business model to provide a real value proposition to customers and the public.  Only through such a model can the industry build a strong image and grow premium volume at a steady rate without constant ups and downs.”

    Thomas Burns, Allianz Life: [there are]”not enough financial advisors offering insurance as part of their practice.”

    Michael Fanning, Mass Mutual:  “Life insurance ownership remains at a 50-year low [and] will continue to be the biggest challenge in our industry.”  He attributes this to the fact that there are fewer agents.  Fewer people telling the story of life insurance.

    Doug French, Ernst & Young: “managing in the current low interest rate environment, which increases the risk of spread compression for existing products.”

    Peter Golato, Nationwide: “how the current economy is challenging for fixed interest rate products.”  He wants to inform customers that life insurance is a necessity, not a luxury.

    W. Kenny Massey, Modern Woodmen of America:  “Government, regulatory concerns.”

    Daniel Mulheran, ING US Insurance:  “Distribution-the lack of.  We need to create new ways to deliver our services to the customer and find a way to make what we do hip and cool.”

    Tim Stonehocker, Ameritas Life: “Lack of innovation as a result of deep customer (consumer) insights.

    Craig Weber, Celent: “The perpetual challenge of innovating while supporting the long tail of existing business is still important.

• Allstate Changing Agent Commission Structure

  • Andrew Simpson, in an article for Insurance Journal reported that Allstate is lowering captive agent’s commissions, but not as low as they had planned.  Beginning in 2013, the commission will be lowered from 10% to 9% on auto and homeowner’s premiums.  The original plan was to reduce it to 8%, but Allstate drew back from that plan.

    Interestingly, the plan will be in effect through 2014, but no word was given as to what would happen beyond that.

    The new commission structure “seems to” benefit large, growing agents.  There will be ways for agents to earn an additional 6% in bonuses, thus raising the total commission to 15%.  The current maximum commission is 14.2%.

    We say “seems to” because the commissions are not just based on increasing sales.  Allstate is also requiring some education upgrades, office facility upgrades, minimum staff requirements, as well as attaining required sales of Allstate Financial products.

    The revised structure will not affect their independent agents, only the captive ones.  They will continue to pay 15% to independents on both new policies and renewals.

    The threatened move to cut commissions to 8% brought about a move by about 10% of Allstate agents to form a union; the National Association of Professional Allstate Agents (NAPAA.)  These agents are no happier with the 9% level.   Jim Fish, the group’s executive director, said his members have “drawn a line in the sand” at 10 percent. “Any less will send good agents to greener pastures – the price they must pay to satisfy the whims of Allstate just won’t be worth it anymore,” he said.

    The increasing difference in compensation between captives and independents is becoming a stronger issue of contention.  Independents will now be paid 2/3 more than captives. 
    Allstate says they have been working with agents on these changes and think that good agents who grow and manage a strong insurance facility will benefit.

• States Can Control Key Elements of Healthcare Reform

  • 
    The Obama administration unveiled the basics of healthcare coverage that private insurers should meet, but are giving the states the power to decide the specifics.  Private insurance has traditionally been regulated by the states, and many are not happy when the Feds insert themselves into the equation.

    As 2012 is an election year, this move is seen by some as an attempt to diffuse the furor from the right that “Uncle Sam” is forcing laws that the states can and have traditionally, taken care of.  The announcement from Health and Human Services Secretary Kathleen Sebelius gives the states leeway in response to the complaints from many.

    Specifically the new proposal allows the states to choose a benefits package from several federally approved plans.  The plans range from those available to many federal and state employees to the most popular small business plans to an HMO plan.  In the event the state does not choose a plan, the default plan would be the one that’s available through largest small business plan in the state.

    At least one republican, Kansas Insurance Commissioner, Sandy Praeger, was pleased.   "Quite frankly, this was a very smart approach for HHS.  It builds on existing state law."  Praeger also chairs the health care committee of the National Association of Insurance Commissioners.

    The new law mandates certain benefits that must be extended, which include: mental health and substance abuse treatment, maternity and childhood care, preventative screenings, prescription drugs, as well as dental and vision care for children.

    Insurers who opt-in to provide care in the new health insurance exchanges will have to offer at the minimum, the federally approved packages.

• Long-Term Care Insurance - Part 2

  • Long term care insurance is relatively new in the U.S. beginning about 35 years ago.  At its core, long term care insurance covers the cost of assisted living facilities, in-home care and private nursing homes.  Inflation protection is a popular option.

    Genworth Life Insurance Company, the first company to offer the protection, has updated its policies in an effort to attract more customers.  New features include the ability to use the spouses’ portion of the policy for coverage, as well as, a wellness program aimed at the continued good health of policyholders today.

    It is estimated that only 4% of the people who are eligible to purchase the policies have done so.

    There are several factors which make the coverage important to have.  First and foremost, we are living longer, and that has increased the percentage of people who require some form of long term care.  Secondly, the cost of long term care is skyrocketing.  Whit Cornman of the American Council of Life Insurers expects the costs to quadruple by 2040.  He points out that it is virtually impossible to save for both retirement and to save money in the event of long term care need.  The long term care insurance is designed to protect a family’s nest egg.

    Agents should begin to incorporate this into their vertical list of products that should be reviewed with their customers.

• How to Find New Insurance Customers

  • We found an article recently that was directed to business owners and it offered ways to find an insurance agent.  We decided to take the same information and turn it around to see if agents could find new clients by doing the opposite.

    The first suggestion was to ask friends to recommend an agent.  Exactly.  If you’re an agent ask friends and relatives not just for their business, but ask if they know of anyone who is in the market for insurance.  Maybe they know someone who is buying a house, or just purchased a new car.  Ask if you can provide them with a free quote.

    Next, they suggested asking their personal agent to suggest recommendations for their business insurance.  You may have separate agents for your personal and business lines.  Ask one for leads on the other.  But don’t stop there.  Ask other businesses you work with for insurance leads.  Maybe you know of someone you can recommend to them.  Create your own network, without all the hassle of an official one.

    The article then suggested that business owners contact a trade association to see if they have a business insurance seminar or presentation coming up on the topic of insurance.  Great idea.  Contact your local chamber of commerce, or trade group where you have some experience, and tell them you’re looking for more business.  Ask what sponsorship opportunities they have available or ask if they would like a free insurance presentation for their members.

    That’s a good start for the new year, don’t you think? 

• Over 9 Million Adults Lose Health Insurance in Latest Recession

  • A study conducted jointly by Cornell, Indiana and Carnegie Mellon Universities, estimates that 9.3 million people lost health insurance between 2007 and 2009.

    "The Great Recession of 2007-09 is the longest and deepest macroeconomic downturn in the United States since 1933," they write. "This paper documents the impact of higher unemployment rates on one important outcome: health insurance coverage."

    The 9.3 million figure is the difference in the number of adults with insurance coverage at the macroeconomic peak in December 2007 compared to the trough of June 2009. The study also shows in increase in the number of children (under age 18) insured in the same time, which proves that the social safety net works counter-cyclically.  As parents lose jobs and coverage, more children qualify for Medicaid and various state medical plans. 
    Of the adults who lost coverage, men made up 7.1 million and women 2.2 million.

    Just days after writing the above, (on December 14, 2011) the Department of Health and Human Services announced that since the inception of the health care reform bill (Sept. 23, 2010), an additional 2.5 million adults aged 19-25 had gained health insurance.  It was reported that 72.7% of adults that age were now insured compared to 64.4% in 2010.  The increase is attributed to a provision in the bill that requires employers to extend coverage to their employees’ children up to age 26.

• Feds Announce State Health Exchange Rules

  • The final rules for the state-based health insurance marketplaces or exchanges, were announced March 12, 2012.  The exchanges are part of the health care reform law.  The rules allow the states great flexibility with which to design their exchanges. 

    Some states are well along in their process of designing the exchanges, while others are taking a wait and see attitude as elements of the health care reform law go before the Supreme Court in the coming months.

    One of the key rules set forth requires that the exchanges have at least one voting consumer representative.  Consumer advocacy groups wanted more, but this at least guarantees a voice in the process for consumers, if not exactly as loud a voice as the advocacy groups wanted.

    The exchanges are designed to be “one-stop shops” for individuals and small businesses looking to purchase health insurance.  They will also help determine individuals’ eligibility for Medicaid and federal subsidies to help them purchase insurance.  The Congressional Budget Office estimates that over 20 million people will purchase health insurance through the exchanges by 2016.

    Obama administration officials said the new rules differ from the old ones in several key ways.  Previous rules required the exchanges to determine if an applicant was eligible for subsidies.  The new rule allows the states to pass this decision onto the Department of Health and Human Services to determine eligibility.  States can also determine eligibility for Medicaid and the Children’s Health Insurance Plan by choosing their own Medicaid agencies.

    States also cannot allow insurance agencies to determine an applicant’s eligibility for subsidies or Medicare, which are government functions.  But agents can assist applicants in filtering their health plan options.

    Karen Ignagni, president and chief executive of America’s Health Insurance Plans, a trade group, said her organization would be reviewing the rules and offering feedback.
    “Exchanges will work best if they are true marketplaces that maximize choice and competition so that individuals, families, and small businesses can purchase plans that are right for them,” she said in a prepared statement. “Consumers will be best served if a state exchange adopts an efficient, cost-effective approach that leverages existing health-plan resources, utilizes federal resources or guidance where sensible, and relies on the exchange itself to administer key functions.”

    The exchanges are to take effect January 1, 2014 and can start accepting applications on October 1, 2013.  States must have approval from the Department of Health and Human Services for their plans by January 1, 2013.  Because some states will not meet this deadline, conditional approval can be give by the HHS, if it looks like the exchange will be operational by October 2013. 

• Long-Term Care Insurance

  • The average cost of nursing home care is now over $70,000, with some wide variances, according to AARP.  In most cases, the person who needs the care has to pay for it, as neither Medicare nor Medicare supplemental coverages, cover long-term care, unless you are impoverished.  Standard health insurance does not cover the care either.

    To be covered in the event of required nursing home care, you need to have long-term care insurance.  Premiums are based on the age and health of the insured when they take the policy out, so there is a strong possibility that you’ll pay less during the life of the plan, the earlier you get it.

    There are a few variables to keep in mind.  Most long-term care policies are tax deductible and most benefits, up to certain limits, are not taxable as income.  This is the good news, but there is some not necessarily bad news, but cautionary news, if you will.  Compare benefits very carefully.  Do certain illnesses exclude you from care?  Is there a maximum age?  How does the policy pay?  By the day and does it have a maximum payout?  Please check all variables very closely.

    The truth is we are living longer and more of us require nursing home care.  Don’t bury your head in the sand, act aggressively to protect your family and yourself.

• National Flood Insurance Program Extended

  • Having just extended the program for one month, the Senate voted to extend the program through May 31.  The program is in dire need of national stability.  The program is important for many reasons, but one is that it is the only game in town.  Private insurers don’t offer flood insurance, so the Feds do.

    Additionally, the two parties used it as a political football in 2010, allowing the program to expire for a total of 53 days.  This causes a real disruption in real estate sales, where loans are dependent upon coverage. 
    Sen. Mary Landrieu, D-La., a co-sponsor of the measure said, "Expiration of the National Flood Insurance Program would have caused harmful and unnecessary delays in home sales throughout the Gulf Coast -- that is why this extension is critical."

    During lapses in its congressional authorization, current flood insurance programs remain in effect, but new policies can't be issued.

    The program is administered by the Federal Emergency Management Agency.

• Massachusetts bans credit score use in underwriting

  • Massachusetts Governor Deval Patrick signed a law banning the use of credit scores in the underwriting of private passenger motor vehicles in his state. 

    A previous T3Leads article told of the removal of a ballot question aimed at this very issue.  https://www.t3leads.com/en/affiliate-articles/insurance.html#the-drive-to-ban-use-of-credit-scoring--education-and-occupation-in-massachusetts-is-tabled

    As reported in the previous article using credit scoring as a factor in underwriting was already banned by a regulation.  It was therefore subject to change if a new administration wanted to do away with the law. 

    The use of other socioeconomic factors such as education and income levels will remain banned in the state, by administrative regulation, not law, as they have been in the past.

    A recent poll by the Massachusetts Association of Insurance Agents showed that almost 70% of Massachusetts voters approved of the ban. 

• Americans Pay More for Health Care

  • The Organization for Economic Cooperation and Development, (OECD) has published “Health at a Glance 2011,” a look at health care in OECD member nations, most of which are the richest in the world.  The US lead all nations by spending 17.4% of its GDP on health care, compared to a 9.6% average for the others.

    Total health expenditure (2009):  USA - 17.4%; OECD average - 9.6%; The Netherlands - 12% (the second highest); France - 11.8%; Germany - 11.6%; UK - 9.6%%.  The UK provides free universal healthcare.
    The US is near the bottom in hospital beds per 1,000 population.  Japan leads, followed by the Russian Federation and Korea lead with 13.7, 9.7 and 8.3 respectively.  The US ranks 26th out of 35 nations with 3.1 beds per 1,000 people.

    The report is a gold mine of data and extremely important to review as countries around the world, including the US, struggle with their finances.

    The US is a leader in cancer diagnosis and treatment, but is not in the field of diabetes for instance.  The US has the second highest diabetes rank in the survey, behind only Mexico.

    The US also easily led the pack in administrative costs.  In fact, it was the study’s conclusion that that is one of the reasons why US healthcare is so expensive.

    It is important to note that US roads are a dangerous place.  The three countries with the lowest traffic accident mortality rates are Iceland, the Netherlands and the UK.  The three most dangerous are the Russian Federation, Mexico and the US.

    The report concludes, "Hence overall the picture about whether the US spends more than other countries because its system does more than other countries is mixed. It does more of some activities, but less of others. Overall, it seems that high prices are probably a more important cause of high spending than high provision of services."

• Progressive CEO Likes “Snapshot” Results

  • Chief Executive Officer Glenn Renwick told analysts in a conference call that despite the small amount of available data on the “snapshot” product, he finds it “very appealing.”  He said the “take-up” rate for the product is “very good” and the “overall retention is up meaningfully.”

    Snapshot is a small device that drivers plug into their diagnostic system which tracks mileage, time of day and hard braking practices.  The driver returns the device to Progressive after 6 months to see if the driver is eligible for any discounts.  Renwick reported that many people are receiving discounts.

    The insurer distributes its insurance products directly and through agents, who are competing with each other to come up with the best pitch for Snapshot, Renwick said.
    He added that the advertising is getting people’s attention and generating interest.  He thinks it is just a matter of time for the Progressive agents and consumers to get in sync with the product.

    Numbers released during the conference call:   Agency business grew 2 percent during the third quarter this year compared to last year. Direct business grew 5 percent.
    Third-quarter net income fell more than 40 percent to $150.7 million compared to $261.1 million a year ago during the same quarter.

• Commercial Insurance Industry Wants Mobile

  • A study conducted by “FirstBest Systems, Inc. “ at the Market Scout insurance symposium in Dallas in September 2011 shows that there is need for greater mobile access in the commercial insurance sector.  The data is split between carriers/MGU’s and agencies/brokers.  The following numbers reflect the carriers/MGU’s.
    49% use a tablet, with the majority using an Apple iPad or iPad2. 
    Close to all use a smartphone with 45% favouring a blackberry, 46% and iPhone and 20% use an Android.  17% also reported using more than one device.
    85% say they would benefit from mobile access; 75% feel they would help provide faster responses to customers and 67% would like to use them to be more efficient when out of the office.

    The top answers to “What kinds of tasks would you like to do with a mobile device?” were:  83% to access customer information anywhere;  62%% to check an application status; to show a client information 58%; and 46% said they would like to bind coverage over the phone.
    52% use a tablet device.  42% said they would prefer their tablet as their one mobile device.  24% said a smartphone and 18% a laptop.
    80% say they would benefit from mobile access.  95% feel that they would provide faster responses; 81% say they could provide better service and 65% said they would get faster responses from the company and/or carrier.

    As to what they would like to do with the devices, access to customer information and sharing information with clients were popular, but 66% said they would like the ability to start a new application.

• Feds ask insurance company to justify rate increase

  • The Department of Health and Human Services (HHS) has asked Everence Insurance Co. to explain its 12% rate increase in Pennsylvania.  The increase affects about 5,000 people who work for small business.  This is the first time the law has been put to use since its passing.

    In this case, the new healthcare law works like this.  The Feds cannot deny a rate increase by any insurer, but they can compel the company to publicly justify its proposed rate increase.   The goal of the law is prevent “excessive” rate hikes by making companies publicly justify them.  Everence has 10 days to post an explanation on its website.  The company has indicated that they are now backing down form the filed rates.
    "We have no plans to make any changes," said spokeswoman Judy Martin Godshalk, adding that the company would welcome a discussion with federal regulators.

    HHS respectfully disagrees.  “That rate is not justified by what the insurer was expected to pay out in medical claims in the state,” said Health and Human Services Secretary Kathleen Sebelius.  She also went on to say that the review would be "the first of many."

    Insurance premiums have been the jurisdiction of the states, with regulation varying widely from state to state.  There is a group of insurance professionals who are actively pushing for federal oversight of the insurance in order for the industry to operate under one set of guidelines, rather than 50.

    HHS is focusing their efforts on states that do not have the capacity to study the rate increases themselves.  It said that it is reviewing 35 such cases.

• Group Health Care Costs Rise 6.1% in 2011

  • According to a survey of more than 2,800 employers conducted by Mercer L.L.C. of New York, group health care plans increased 6.1% in 2011.  The cost per employee is now over $10,000 per year.  Costs in 2010 were $9,562.  This increase is in line with increases since 2005.Employers continue to look for ways to hold costs down.  According to the survey, 32% of large employers offer a consumer-driven health plan (CDHP) linked to health savings accounts or a reimbursement arrangement of some kind.  In 2010 only 23% of employers said they did so.  

    Employers are also adding incentives and/or penalties to boost employee participation in health management systems.  47% of the respondents said they were increasing employee contributions or plan to raise deductibles.

    The survey also revealed that increases were larger for smaller corporations (10-499 employees) than larger ones.  9.9% vs. 3.6% for those over 500 employees.

• American Medical Association (AMA) Backs Open Marketplace

  • The AMA backed an “open marketplace” structure for health insurance coverage and encouraged the states to move in that direction.  The open marketplace is a key component of the federal healthcare overhaul passed in 2010.

    The marketplaces are intended to be competitive marketplaces of insurance plans that would allow uninsured and small business to join together and thereby negotiate better rates.

    The option that the AMA dismissed is called “active purchasers” and in this model the state negotiates on behalf of those who participate. 
    It is reported that U.S. health regulators have given much flexibility in establishing the exchanges, which are due to be functional by 2014.  Few states have moved in this direction though, as the healthcare law remains in the courts.  The Supreme Court will hear testimony on the case in March 2012.

    For states that do not have a marketplace operation in place, the law requires that the federal government step in with its own plan, but they have not as yet completed their model.

    The AMA supported the open marketplace model over “active purchasers”, "with strong patient and physician protections in place, to increase competition and maximize patient choice of health plans.  "The AMA is concerned that an “active purchasers” system would lead to a highly concentrated market that would restrict the doctor’s ability to negotiate with the insurers.

    Some consumer groups have advocated the the ‘active purchaser” model saying that yes, there will be fewer choices, but they will be of higher quality.

• Financial Advisors Miss Opportunity to Discuss Life Insurance

  • According to a recent study by Saybrus Brothers, Inc. only about half of adults who have a financial advisor and a plan have ever discussed adding life insurance to the plan.  Of that half who have spoken to their advisors, 15% said that the conversation took place over 10 years ago.  40% said that they had discussed life insurance in the last year.

    With the volatility of today’s markets, Kevin Kimbrough, National Sales Manager for Saybrus Brothers , “they are missing an opportunity to fill a critical gap in some existing financial plans while at the same time differentiating themselves and expanding their practices. Additionally, there are benefits to including assets such as life insurance that are not tied to the financial markets and therefore not subject to the same volatility we are currently seeing."

    The most fundamental role of life insurance is to protect families/heirs with a death benefit, and 81% of U.S. adults who have a financial advisor and have life insurance said the a primary reason they carried such policies was to protect their family and/or heirs. Only 17% cited wealth transfer as a primary reason they had life insurance and 15% cited the potential for cash accumulation, which is a key feature of many permanent life insurance policies.

    "These statistics demonstrate that typical life insurance policyholders may not be aware of the many other uses for life insurance beyond family and heir protection," Kimbrough said. "They may be relying on IRAs or annuities for wealth transfer, which are designed for asset accumulation and retirement income but not for wealth transfer, especially from a tax perspective. Life insurance offers potential for tax-efficient cash accumulation, which can be accessed for a variety of reasons including supplemental retirement income or health care costs, as well as a tax-efficient vehicle to provide for heirs."

    Maybe it’s time for the insurance person and the financial advisor to sit next to each other at the next networking event.

• The Road to the California Health/Auto Ballot Initiative

  • An initiative that would impact the health/auto/home insurance lines by making them more transparent is gathering signatures to place on the 2012 California ballot.  The consumer group “Consumer Watchdog,” must gather 505,000 signatures by May 1, 2012 to place “The Insurance Rate Public Justification And Accountability Act” on the ballot.

    The initiative would achieve three main things according to 900 word document:  : “(1) requiring health insurance companies to publicly disclose and justify their rates, under penalty of perjury, before the rates can take effect; (2) prohibiting unfair pricing for health, auto and home insurance based on prior coverage and credit history; and (3) requiring health insurance companies to pay a fee to cover the costs of administering these new laws so that this initiative will cost taxpayers nothing.”

    Consumer Watchdog says the initiative is written to “ensure fair and transparent rates for health, home and auto insurance.”

    There is another initiative gathering signatures at this time and it’s called “The 2012 Auto Insurance Discount Act” and one of its major financial supporters is George Joseph of Mercury General, parent of Mercury Insurance.  He backs the “pro-consumer” bill because it allows “portable persistency,” the ability to carry your good driving discounts from one carrier to another.

    The ballot initiative’s official sponsor, the American Agents Alliance says the new law “will allow consumers to receive a discount for their years of continuous automobile coverage regardless of the company where they seek insurance.”

    Stay tuned to see if both initiatives get on the ballot and what happens if they pass or fail, or any other combination.

• Would Federal Regulation of Insurance Industry be Better?

  • A financial roundtable held recently thinks so.  The roundtable issued a report that backs federal regulation, in most part because it would bring uniformity to the regulations.  Under the current state by state system, insurance companies have non-uniform, overlapping and often conflicting rules, regulations and coverage differences to contend with.

    The roundtable is comprised of 100 of the largest integrated financial services companies and has generally supported larger federal oversight.  The report was released in advance of a Federal Insurance Office report on the state of insurance regulation in the United States, which is due in January.

    The regulatory uniformity that exists nationally is generally the result of the efforts of the National Association of Insurance commissioners (NAIC), but they lack any real power to enforce or to compel insurance companies to act.

    Mark the end of January 2012 on your calendar, as this due date for the release of the of the Federal Insurance Office report on insurance oversight.

• Federal Insurance Office is looking for Our Opinions on Insurance

  • By now, we are familiar with the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Although, we are certainly still learning its many parts and their effect on us.  The law requires the new office (FIO) to conduct a study on modernizing and improving the system of US insurance regulation.
    Specific areas of interest include:  The degree of national uniformity of state insurance regulation, systemic risk regulation with respect to insurance, the costs and benefits of potential regulation of insurance across lines of insurance, international coordination of insurance regulations, among others.
    Undoubtedly new rules will result...may they be helpful.

• More Cats Covered Than Kids

  • We just had to share this.  In a study conducted by England-based insurer Ageas Ltd., in the U.K. more pets are covered than children when it comes to health coverage for serious injuries.  The study showed that 9% of British consumers or 4.5 million have critical illness insurance that covers their children.  12% or nearly 6 million have coverage for their pets.

    About 9.5 million parents have no financial protection or even sick leave available if the need to care for a sick child occurred.

    For this writer, the following numbers are even more disturbing.

    The results said that less than half (42%) of those surveyed would be willing to buy critical illness insurance if the premium was £20 ($31) or less per month.
    But the head of marketing for the Ageas Project had this to say:  “It’s clear that parents are willing to pay to protect themselves and their children for a reasonable monthly amount.”

    I’m sorry, but are we reading the same numbers?   This article appeared on businessinsurance.com.

• MICHIGAN EYES CAPPED MEDICAL COVERAGE

  • Republicans in the Michigan House of Representatives are looking to cap medical benefit coverage to those hurt in automobile accidents.  Michigan in currently the only state in the union that has an uncapped system.  
    Drivers would choose from $500,000/$1-mil/$5-mil limits of coverage.  This would put Michigan more in line with the rest of the country.

    
    Republicans say it would reduce rates.  Democrats say it will hurt the seriously injured.

• Cigna Announces Purchase of HealthSpring

  • Cigna Announces Purchase of HealthSpring
    Managed care company Cigna said it would buy HealthSpring in a 3.8 billion dollar deal in an effort to bolster Cigna’s Medicare Advantage business.  Cigna is paying $55 a share, a 37% premium over the October 21, 2011 selling price of $40.16. 
    Cigna is known for selling health insurance plans to businesses.  This purchase allows them to get into the business of selling medicare plans to elderly. 
    “We view it as both a growth opportunity as well as a great marketplace to further differentiate," Cigna Chief Executive Officer David Cordani told reporters on a conference call.

• Insurance Companies Use Social Media…and Not Just for Marketing

  •  

    Be advised - insurance companies are watching what clients post on social media.  It has been reported that claims departments are checking claimant’s postings for evidence of possible fraud.  Many would say that is an invasion of privacy.  Many others would say that if fraud can be uncovered from a public forum, ultimately that results in lower insurance premiums for all.
    But social media’s use by insurance companies’ may not end there.  Insurance Companies are looking for ways to use social media for underwriting purposes.  It is expected that within the next five years that methodology will have been developed that will identify certain risk factors and data that can be used in underwriting.  
    They are not just looking at this information for personal lines, but for business as well.  They are looking at business postings for potential increased risks.  
    Insurance companies are already using social media for marketing and claims.  Underwriting is the next natural progression.  
    

• The Drive to Ban Use of Credit Scoring, Education and Occupation in Massachusetts is Tabled

  • The Massachusetts Association of Insurance Agents (MAIA) has stopped its efforts to place a question on the next ballot to ban the use of credit scoring, education level and occupation in determining rates for auto insurance. 
    The MAIA responded to a request from state lawmakers to table to effort saying that effort would have been too costly and likely long and drawn out.  They admitted that their efforts were better used working with the legislature on a current bill in committee which would effectively ban credit scoring in determining car insurance rates. 
    Massachusetts is one of a few states that already has strong barriers against the use of credit scoring and other socio-economic factors.  It does not approve rate filings that use these factors in determining car or homeowners insurance rates.  But this is not Massachusetts law, just regulation, which could be changed by a different administration.  The agents and lawmakers are working together to change convert the regulations into law.
    

• Wal-Mart Joins the List of Businesses Slashing Employee Healthcare

  • Wal-Mart joins Wells Fargo and General Electric as companies who are cutting employee health care benefits.  Wal-Mart will no longer offer health benefits to new workers who work less than 24 hours a week and are cutting the amount they contribute to worker’s healthcare accounts by 50%.

    Beginning in January, preventive care such as check-ups will still be covered, but Wal-Mart will now cut to $250 from $500 a contribution they make to help with costs that are not covered; and now $500 from $1,000 for those with families.

    In 2012, Wells Fargo is asking employees to fund their own healthcare accounts or to pay much higher premiums and General Electric is also moving to an employee funded, account based healthcare system.

• Insurance Industry Encouraged by FIO Leader’s Comments

  • Michael McRaith, Director of the FIO (Federal Insurance Office), appeared before the House Financial Services Committee to discuss the role of the new office that was created by the Dodd-Frank bill.  He made it clear that the FIO is not a new Federal regulation board.  He cited parts of the Dodd-Frank bill that are explicit in wording that restrict its power.  Insurance regulation will still be in the hands of the states.
    He further went on to explain that any information desired by the FIO must first be requested of the state regulators first.  This is important because if the FIO were to go directly to the insurance companies it would cause an additional layer of bureaucracy and create the need for additional personnel to address the FIO’s needs.

    The National Association of Mutual Insurance Companies was pleased with the testimony.  “Director McRaith's testimony shows that he has an understanding of the role the Federal Insurance Office was created to fill — that of an 'objective, reliable resource for information' on the insurance industry while the state insurance departments remain the functional regulators over the business of insurance," Jimi Grande , NAMIC's senior vice president of federal and political affairs, said in a statement.

    McRaith reiterated that he plans to have the report on the recommendations for improving the regulatory processes of the insurance industry completed by the January deadline.

• Insurance “Super Store” Opens In New York

  • United Healthcare has opened a 16,000 square foot “super store” in Flushing, Queens.  It has specially trained staff to aid residents in applying for over 15 types of state and federal social service programs, including Elderly Pharmaceutical Insurance Coverage, New York State Food Stamps program, as well as heat and electrical subsidies.

    Current enrolees can get assistance in explanation of health care benefits and help resolving claims.   The employees are multi-lingual as well.  This store is geared especially to the many Flushing Asian-American residents.

    Billed as the nation's first comprehensive health benefits store, the store has computers and iPads available for visitors' use to obtain and print health-related information, and a “health screening kiosk” that measures blood pressure, pulse and body mass index. The insurer also will host a free series of education seminars on such topics as nutrition and exercise, disease management and financial planning.

• Insurance Premiums Predicted as Stable in 2012

  • According to a report released by Willis Group Holdings P.L.C., non-catastrophic  exposed-property insurance premiums in 2012 are expected to remain flat or even decrease by up to 5%.  Umbrella policies and workman’s comp may rise up to 5%.

    In his introduction to the 2011 edition of Marketplace Realities and Risk Management Solutions, Willis Chairman and CEO Joe Plumeri suggests that buyers enhance coverage as much as possible while the market is still soft. “Think about terms and conditions you may want to improve,” he writes. “Think about coverages for emerging risks that may not be protected by conventional property and casualty programs including cyber, environmental, and political risk insurance. Think about your carriers as trading partners, and take a moment to consider their financial stability and longer-term prospects.”

    For online insurance marketers, does this mean even more consumer rate comparisons on auto and homeowner’s?

• Baja, CA Passes New Auto Ins. Law

  • Baja California lawmakers have turned “thumbs up” on a law mandating that drivers entering Baja must have car insurance valid in Mexico.
    
    The new law could lead to a spike in new business for Baja car insurance agencies.
    
    Henry Esquer of MexUS Insurance Services Inc. in Calexico said he was pleasantly surprised by the passage of the new law: “There should be some boost because there’s a lot of people that take it on their own and go across without it,” he said.
    
    “I never thought Mexico would even consider that because there’s a tremendous population in Mexico that can’t even afford it.”
    
    Mexican car insurance can usually be purchased on a 24-hour basis to a full year and costs around $15 a day for basic coverage.

    Each county in Baja California can decide how strictly it wants to enforce the new law. First-time offenders driving without car insurance will be given a verbal warning, and citations will be written for ensuing violations.

• Zurich Ins. Sues Sony Over Playstation Hacking

  • Talk about an interesting lawsuit!
    
    Zurich American Insurance Co. has filed suit against a Sony Corp. division, claiming they do not have the duty to cover the cost of lawsuits and related expenses associated with the hacking of Sony's PlayStation Network.
    
    The lawsuit was filed July 20 in New York State Supreme Court in Manhattan. The suit states Zurich is not mandated to “defend and potentially indemnify” Sony from class action suits, other related claims and costs associated with legal investigations concerning the April hacking incidents.
    
    The court documents state Zurich officials believe the insurer is not required to defend or indemnify Sony. Zurich says Sony’s primary commercial general liability and excess policies do not qualify for such coverage against these types of losses.
    
    Zurich also claims Sony's other insurers should be liable for providing primary coverage for these losses. Those carriers include: Mitsui Sumitomo Insurance Co. of America; National Union Fire Insurance Co.; and ACE American Insurance Co.
    
    Sony’s PlayStation Network was hacked in April, 2011, exposing over 100 million customer accounts and their private information. The incident, which was reportedly the second-largest Internet breach in U.S. history with losses up to $2 billion, has resulted in a flurry of claims against Sony.

• Hybrid Cars are Safer too

  • According to research released by the Highway Loss Data Institute (HLDI), the additional weight of a hybrid engine is like an extra layer of safety, not found in lighter, no-hybrid cars.  This has resulted in passengers in hybrids being 25% less likely to be injured in an accident.

    Candysse Miller, Executive Director of the “Insurance Information Network of California said, “choosing a car that saves gas, doesn’t necessarily mean compromising on safety.”

    The research compared 25 hybrid cars and the gasoline-powered versions of those same vehicles.  The testing included the Toyota Camry, Ford Fusion and Honda Accord.

    But there is some bad safety news regarding hybrids.  In a separate report the HLDI found that hybrids may be 20% more likely to be involved in pedestrian accidents, than their gasoline powered alternatives.  The quiet engines of a hybrid are suspected are the reason.  The National Highway Traffic safety Administration is looking into how manufacturers could equip their cars with sounds to alert pedestrians.

• A Hot New Insurance Product Offered by Retailers

  • Technology is advancing at the speed of light. Seems like every day there's a newer, cooler tech gadget. What was "in" a year ago may already be obsolete.
    
    That's why several retail stores, including Best Buy, WalMart, RadioShack, Dell and Office Depot are offering "buyback insurance."
    
    Consumers may purchase a buyback insurance plan. In return, the store will buy back an old device for as much as half of the original costs -- as long as the gadget is returned within a few years.
    
    Los Angeles-based TechForward began selling buyback insurance plans in 2008. TechForward is the buyback insurance provider for many of the retailer listed above. Best Buy launched its own buyback insurance program in 2010, although they are involved in litigation with TechFoward over a trademark secrets dispute.
    
    The concept is simple. A consumer may purchase a buyback plan on an HDTV, for example, for about $180. If the buyer brings back their TV in good shape witin two-four years (depending on the item), the store will provide the consumer with a percentage of the original price. The payout will vary depending on how long the consumer had the item.
    
    How does the program benefit retailers? First off, the product is a good value-added service for customers. It is also a very profitable product. For example, Best Buy's buyback insurance and warranty products accounted for 6 percent of the company's approximate $11 billion in sales in the last quarter -- and 11 percent of the company's overall $2.8 billion profit.

• Appeals Court Upholds Constitutionality of Health Care Law

  • The Court of Appeals for Washington D.C. upheld the controversial health care law, AKA “ObamaCare” as being constitutionally sound on November 8th.  It found that Congress did overstep its authority by requiring that citizens have health insurance of pay a fine, beginning in 2014.

    This is the second court to uphold the law.  The Supreme Court could decide very soon whether to hear appeals of its own.

    Obama adviser Stephanie Cutter said that opponents who say the individual mandate provision exceeded Congress' power "are simply wrong."  "People who make a decision to forego health insurance do not opt out of the health care market," she wrote. "Their action is not felt by themselves alone. Instead, when they become ill or injured and cannot pay their bills, their costs are shifted to others. Those costs - $43 billion in 2008 alone - are borne by doctors, hospitals, insured individuals, taxpayers and small businesses throughout the nation."

    Over 48 million Americans do not have health insurance; in other terms more than 18%. 

• Top Brands not Optimizing Their Facebook Pages Properly

  • The top 200 brands in the world are not doing an effective job optimizing their Facebook or Twitter pages for search engine rankings.
    
    The SEO platform BrightEdge has analyzed the leading consumer brands. The firm has determined that these brands do have a social media presence, but they are not performing adequate SEO practices to optimize their social network pages on the major search engines.
    
    BrightEdge has reported that nearly all of the top consumer brands are ranked at or near the top of the organic searches. And, 68 percent of these companies' Facebook or Twitter pages are in the top 20 search results. But the objective for online marketers is to be within the top 10 results in order to generate the best website traffic results.
    
    BrightEdge found there is no direct connection between a company's social network friends list and its search engine ranking.
    
    According to the study, the industries that are the weakest in effectively optimizing social media are the finance and insurance industries. Of the top 43 financial and insurance companies, only three firms have Facebook fan pages rank near the top.

• It's Hurricane Season -- Are You Covered in Case of Flood Damage?

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    As hurricane season approaches, the vast majority of homeowners do not have adequate insurance protection in the event of a flood, according to the Insurance Information Institute (I.I.I.).

    “People tend to underestimate the risk of flooding,” Jeanne M. Salvatore, senior vice president for the I.I.I. commented. “But, in fact, 90 percent of all natural disasters in this country involve flooding.”
    
    The I.I.I. reported that less than 20 percent of U.S. homeowners have a flood insurance policy, and flood losses occur in over 80 percent of the natural disasters that stike the country.
    
    Protection against flood damage caused by natural disasters such as hurricanes is typically excluded from a standard home insurance policy. Flood coverage can be obtained by homeowners through the National Flood Insurance Program to offer protection against such events.
    
    There is a 30-day waiting period for a flood insurance policy to take effect after the policy is purchased. Therefore, it is important for homeowners to seek flood coverage far in advance of when hurricane or severe storm warnings hit.
    
    Salvatore added that all homeowners should consider purchasing flood coverage, even if they do not live in a high risk flood zone. Salvatore noted that "low risk" does not equal "no risk."
    
    Statistics show up to 30 percent of the National Flood Insurance Program’s paid losses were a result of damage caused in regions not noted as a high hazard area.

• California State Compensation Fund Files Massive Lawsuit Against Employment Agency

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    California's State Compensation Insurance Fund (SCIF), the state's largest workers' compensation insurers, has filed a lawsuit against a staffing company for a staggering $50 million.

    The suit was lodged against Select Staffing Co. Inc. after a jury found the firm guilty of fraud. Santa Barbara-based Select Staffing was charged with avoiding workers' comp premiums through a "piggy-backing" scam where Select Staffing illegal used another (and now defunct) staffing firm's workers' comp policy. By doing so the temporary staffing agency was able to reduce its experience modification and pay much lower premiums.
    
    Experience modifications are used to determine a business’s premium calculation. The lower the experience-modification, the lower the premiums. Select Staffing's ex mod was 300; and the other firm, Onvoi, had an ex mod of 70. The lower the experience modification figure, the lower the business' premiums.

• Credit Scores and Insurance: The Impact on Your Premiums

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    In most U.S. states a major factor in determining one's auto insurance rate is their credit score. This rating factor is often a cause for argument from consumers and advocates who claim there should not be a connection between a consumer's credit score and their insurance risk level. However, there is a significant amount of actuarial evidence that shows a connection between one's credit history and their potential for insurance risk. In other words, if you are not responsible with your credit, you may not be a responsible driver, either.

    Credit is not permitted as an insurance rating factor for at least one line of insurance in California, Massachusetts, Hawaii and Maryland.
    
    So -- how does the credit scoring game work for insurance carriers? The major vendors providing insurers with credit score information include TransUnion, LexisNexus and FICO. The vast majority of property and casualty insurers -- upwards of around 90 percent -- utilize credit scoring as part of their auto and homeowners insurance rating factors. In fact, according to LexisNexis, over 300 insurers take advantage of their credit scoring product.
    
    Credit is clearly not the only rating factor insurers consider. Insurance companies will look closely at driving record, miles driven, make and model of the vehicle, the address of the policyholder and a number of other criteria when determining one's insurance rate.
    
    Needless to say, it is important for a consumer to maintain a good credit score in order to qualify for lower interest rates. But, it is often equally important (depending on the state in which you reside) when it comes to insurance purchases, as well.

• State Insurance Regulator Websites Get Their Report Card

  • The state insurance department websites in California, Georgia, Kansas, Ohio, Texas and Utah do the best job of giving consumers access to critical insurance information, according to a review of state-run insurance websites across the country conducted by a subsidiary of Bankrate Insurance, which owns several online insurance lead generation vendors.
    
    Each of these websites is easy to navigate and provides a way for consumers to perform such tasks such as comparing auto insurance premiums, filing a complaint against an insurance company or reporting insurance fraud.
    
    On the other hand, dozens of state insurance department websites provide minimal or outdated information regarding complaints against insurers, make it difficult to file an online complaint or send consumers to a third-party website to report fraud. Furthermore, some of the worst websites don't let consumers do comparison shopping for auto, home or renter's insurance.
    
    Robert Hunter, the Consumer Federation of America's director of insurance and a former Texas insurance commissioner, says his consumer advocacy group has been studying state insurance websites for 15 years. Hunter says the states' insurance sites are getting better, but overall they're still a work in progress.

• Allstate Agent Group Votes to Affiliate with OPEIU

  • Members of the National Association of Professional Allstate Agents (NAPAA) voted overwhelmingly to affiliate with the Office and Professional Employees International Union (OPEIU), AFL-CIO.
    
    Secret ballots were mailed to all 1,200 members of NAPAA and when the ballots were tallied, more than 94 percent had voted in favor of affiliating with OPEIU.  The vote was administered by the American Arbitration Association (AAA) and was counted today at the AAA's New York office. 
    
    "Our members have sent a message and we hear them loud and clear," said Jim Fish, NAPAA executive director. "Now we will work closely with OPEIU to finalize an affiliation agreement that establishes NAPAA as a guild."
    
    The NAPAA Board of Directors is expected to meet in the near future to formally approve the affiliation. Once the agreement is approved, NAPAA members will be granted membership in OPEIU, the national AFL-CIO and all State Federations of Labor.
    
    "Affiliating with OPEIU is the first step toward ensuring that Allstate agents are treated as true independent contractors instead of employees," said Fish. "Currently, agents are subjected to unachievable quotas, the specter of reduced compensation and an ever-present threat of contract termination. Many companies today are circumventing IRS precepts regarding employee status and are now classifying these same people as independent contractors.  This practice has to stop."
    
    "This is a matter of defending the interests of ill-treated small business owners, and NAPAA members have recognized that OPEIU is the right organization to help them achieve the benefits and protections they deserve," said OPEIU International President Michael Goodwin.  "With the insurance industry being highly regulated at the state level, NAPAA will soon be able to offer legislative access and legal support to questionable compliance issues, faced by both agents and customers alike."
    
    Professional employees in the areas of health care, education, aviation and sports umpiring have been attracted to OPEIU and sought representation in recent years.

• Recession's Impact on Nation's Workers' Comp System

  • The nation's economic woes of the past couple years is leading to a major drop in people covered by workers' compensation insurance.
    
    According to the National Academy of Social Insurance, the recession has resulted in a reduction of 124.9 million Americans covered by workers' comp insurance in 2009. That's a 4.4 percent decrease.
    
    In addition, the organization has found:
    
    * The most recent drop in those covered by workers' comp insurance is the largest decline in two decades, according to the group's report, “Workers’ Compensation: Benefits, Coverage and Costs, 2009.”
    
    * Due to the drop-off in employed workers, employers’ total workers comp benefit costs fell by $73.9 billion -- a 7.6 percent decline. That's the biggest drop since 1987.
    
    * Despite the major reduction in the number of workers covered by comp insurance, benefit pay-outs actually increased by 0.4 percent in 2009.

• Sleep Apnea Could Cause Dementia

  • Scientists have found a link between sleep apnea and dementia.
    
    The study was conducted by researchers at the University of California San Francisco and California Pacific Medical Center have discovered sleep apnea may cause cognitive impairment, which may even lead to dementia.
    
    Researchers looked at senior women who suffered from sleep apnea and other nighttime disorders. Those with sleep/breathing issues were found to have a much higher potential for developing cognitive impariment within a five year span than those without the sleep problems.
    
    The findings were published in the Journal of the American Medical Association.
    
    "The extent of information has been limited before, because the studies were based on people with advanced dementia, who, surprise, surprise, had sleep problems," Dr. Kristine Yaffe, professor of psychiatry, neurology and epidemiology at UCSF commented. "It's been hard to tell what's the chicken and what's the egg. This study isn't proof-positive, but it's much stronger than earlier studies. What we're seeing is a nearly twofold increase of having cognitive problems five years later."

• Car Insurance Shopping Made Easy

  • Shopping for auto insurance?
    
    We thought it may be useful to provide a list of auto insurance shopping tips. Check 'em out:
    
    1. Use our website to locate a competitively priced policy that fits the needs of you and your family.
    
    2. When obtaining quotes, make sure you are completely honest about all the information you provide: driving record, annual miles driven, number of years consecutively insured, etc. Some drivers may try to fudge a bit on their responses in order to find a lower rate. The problem with that tactic is the insurance company has resources to double-check the accuracy of the information. And, if the information is incorrect, it could lead to a higher rate or even an short-term cancellation.
    
    3. One of the simplest ways to reduce your premium is to increase your decuctible. There may be a significant difference between a $500 and a $1,000 deductible, depending on the carrier. If you can afford to pay a little more out of pocket in the case of a loss, raising your deductible may be a good option.
    
    4. Look for a company that offers numerous discounts: multi-policy, good driver, good student, mature driver, group and professional discounts, etc.
    
    5. Utilize the services of independent agents. They can shop from among several insurance companies and find a policy that works best for our needs. Some carriers such as Geico, State Farm and Farmers only allow their agents to sell policies for their company.

• ING Could be Nailed With Huge Fines

  • The international insurance firm ING Group may be in some serious hot water. ING is under investigation in the U.S. for violating United States sanctions against nations that support terrorism.
    
    The U.S. has been imposing economic sanctions and strict exporting restrictions with Cuba, Iran, Sudan and Syria. The U.S. sanctions limit the amount of business American companies may conduct with the nations that are perceived to be too friendly with terrorist operations.
    
    The fines would be far from chump change. Sources have reported that depending on the results of the U.S. investigations, ING could face penalties for hundreds of millions of dollars.
    
    ING noted in its 2010 annual report that talks with the U.S. Office of Foreign Asset Control, Department of Justice and the New York County District Attorney's Office could amount to a mega-million-dollar fine.
    
    In 2010 the British bank Barclays P.L.C. was slapped with a $298 million fine over violations relating to the U.S. trade sanctions with  Cuba, Iran, Libya, Sudan and Myanmar.
    
    In addition, Credit Suisse Group A.G. , Lloyds Banking Group P.L.C. and ABN AMRO have forked out massive U.S. settlements ranging from $350 million and $538 million as a result of similar violations.
    
    Based in the Netherlands, ING provides financial services products including annuities, employee benefits, life insurance, mutual funds, retirement plans, rollovers & transfers and trusts.

• Prevent Car Theft

  • Although data is showing that auto theft is on the decline nationwide, it is still a major problem.
    
    We've compiled the following list of ways to help keep your vehicle from being stolen:
    
    1. Never leave your keys in the car. Sounds obvious, but about 20 percent of all stolen vehicles had the keys inside.
    
    2. Lock the car. Abot half of stolen vehicles were unlocked.
    
    3. The "hide-a-key" is often an invite to steal your car. Theifs can usually find a "hidden" key in a few seconds.
    
    4. If you have to park somewhere at night, make sure it is a well-lighted area or an attended lot. And if you park in a lot, make sure you leave only the ignition key. You do not want to give anyone access to important items in your glove compartment or trunk.
    
    5. Many people leave their windows open when parked, especially when it is hot. But this gives theives easier access to your car.
    
    6. Do not leave important items inside the car, within the view of anyone passing by.
    
    7. When you park on the street, turn the wheels toward the curb. This makes it more difficult to tow your vehicle.
    
    8. Apply your emergency brake when parking. This also makes the vehicle more difficult to tow away.
    
    9. If you have a garage, use it. It does not make sense to keep you car in an open area at night when you can protect it by parking inside the garage.
    
    10. Carry your vehicle registration and insurance card in your wallet or purse. Do not leave it in the car. Thieves can not only steal your car, but then they will have important personal information.
    
    11. Look into an anti-theft device that includes a kill switch that freeezes the car without a pass key or code.
    
    12. Use a sturdy, visible steering wheel lock. This is a deterrent for criminals.
    
    13. When purchasing a vehicle from a private party, pay close attention to the title and registration. They should match the name and address of the seller. You do not want to buy a stolen vehicle.
    
    14. Also, when buying from a private seller, make sure the VIN plate is clear and securely fastened to the car. Make sure the VIN plate matches the ID sticker that is usually located in the glove compartment.
    
    15. There are special locking screws that can be used on the license plate. This makes it very difficult for a thief to remove the plate.
    
    If you are the victim of a car theft, make sure your report it immediately to the police and to your insurance agent or company.

• Spanning the States for Auto Insurance News

  • There has been a bunch of interesting developments taking place throughout the U.S. in the world of auto insurance. Check out some highlights:
    
    * The gecko wants more Golden State business. Geico has sliced auto insurance rates in California by 10.7 percent. The rate reduction takes effect Aug. 15 for the carrier's 700,000-plus policyholders in the state.
    
    * Driving uninsured in Nevada is now a much bigger gamble. The Silver State has added teeth to its mandatory auto insurance law. Now if Nevada drivers are caught without insurance coverage they could face a 30-day license suspension and a $1,750 fine.
    
    * Flo wants to know ... Progressive Insurance now allows consumers shopping through their mobile device to rate vehicle insurance expenses from 1 to 10. "VIN Capture" can be downloaded from Android and iPhone devices.
    
    * MetLife has announced it is offering free insurance for a year on new GM vehicle sales in Oregon and Washington. The move sparked controversy and an outcry from MetLife's producers, who would have to forego their commission on the free policies.
    
    * Volvo has always had a reputation for producing ultra-safe vehicles. Now a survey has revealed drivers with Volvo's "City Safe" system are involved in fewer rear-end collisions than drivers in cars without that function.

• Farmers Insurance Partners With L.A. Galaxy Soccer Team

  • Farmers Insurance, the largest auto insurance company in California and the third-largest personal lines insurer in the nation, has announced the carrier has entered into a partnership agreement with the LA Galaxy MLS soccer team, and The Home Depot Center, the largest soccer-exclusive stadium in the MLS. As part of the two-year agreement, both the LA Galaxy and The Home Depot Center will collaborate with Farmers Insurance to promote the Farmers brand both inside and around the stadium.
    
    "We are extremely excited to have partnered with the LA Galaxy and The Home Depot Center, two well-known entities in the world of U.S. soccer," said Luisa Acosta-Franco, Vice President of Multicultural Marketing for Farmers Insurance. "This partnership allows for us to build on our commitment of teaching life lessons on and off the field through the sport of soccer."
    
    To kick off their partnership with the LA Galaxy and The Home Depot Center, Farmers is hosting 4,000 fans from throughout Los Angeles tonight to enjoy a summer evening of soccer fun at The Home Depot Center. In addition, prior to the game on the field Farmers will present a $10,000 check to the Los Angeles Galaxy Foundation and The Home Depot Center Charitable Foundation for the "Camps for Kids" program.
    
    This two-year partnership further validates Farmers' commitment to soccer, a sport that goes beyond a pastime; it can also serve to inspire and educate children both on and off the field. This year Farmers launched Juega y Aprende (Play & Learn), two-hour skill-building soccer clinics that teach kids the skills to succeed in soccer and in life. The campaign was created to serve as an educational tool for kids through their passion for soccer.
    
    The LA Galaxy partnership includes the right to use "Official Partner of the LA Galaxy," as well as the status of "Official Insurance Partner of the LA Galaxy."
    
    "We are very pleased to announce our partnership with Farmers Insurance, bringing together two of the leading brands in insurance and Major League Soccer respectively," said Tom Payne, President of the LA Galaxy. "We look forward to working closely with Farmers on their initiatives based around soccer and to their being a key member of the Galaxy family."
    
    The Home Depot Center partnership gives Farmers the right to be named as "Official Founding Partner" of The Home Depot Center; and to be named as "Official Insurance Company" of The Home Depot Center.
    
    "We are thrilled to welcome Farmers Insurance as a new founding partner of The Home Depot Center," said Katie Pandolfo, General Manager of The Home Depot Center. "We look forward to working with Farmers to provide them with exposure at our various national and international events as well as throughout our state-of-the art stadiums and facilities."
    
    Over the course of the agreement, the companies will also collaborate together on soccer promotions and events during the LA Galaxy's regular season games at The Home Depot Center.

• Highest Paid Insurance Broker Execs

  • Maybe this bit of information will help to attract more employees to the insurance industry ...
    
    Business Insurance Magazine has unveiled its list of the five highest-paid U.S. executives from insurance brokerage firms. Check out the whopping compensation packages from the top five broker execs:
    
    5. J. Powell Brown, president and CEO, Brown & Brown Inc.: Total compensation -- $1,780,264
    Salary -- $565,000; Non-equity incentive plan compensation -- $1,179,744; All other compensation -- $35,520
    
    4. J. Patrick Gallagher, chairman and CEO, Arthur J. Gallagher & Co.: Total compensation -- $3,813,372
    Salary -- $1,000,000; Stock & option awards -- $1,013,566; Non-equity incentive plan compensation -- $1,000,000; Change in pension & nonqualified deferred comp -- $36,544; All other compensation -- $763,262
    
    3. Joseph Plumeri, chairman and CEO, Willis Group Holdings P.L.C.: Total compensation -- $12,121,770
    Salary -- $1,000,000; Share awards -- $8,106,213; Non-equity incentive plan compensation -- $2,031,250; Change in pension & nonqualified deferred comp -- -$21,461; All other compensation -- $974,584
    
    2. Brian Duperrault, president & CEO, Marsh & McLennan Cos., Inc.: $13,900,000
    Salary -- $1,000,000; Bonus awards -- $4,650,000; Long-term incentive awards -- $8,250,000
    
    1. Gregory C. Case, president & CEO, Aon Corp.: $20,783,301
    Salary -- $1,500,000; Stock awards -- $17,280,702; Non-equity incentive plan compensation -- $1,950,000; All other compensation -- $52,599

• Ward's 50 Unveiled

  • The Ward Group has released its 2011 list of top 50 property and casualty and life and health insurers. Every year Ward analyzes the financial performance of over 3,000 property-casualty insurance companies and nearly 800 life-health insurance companies domiciled in the United States and identifies the top performers in each segment.
    
    Each of the top 50 companies is awarded the Ward's 50® Seal. Their names are listed as the Ward's 50® Top Performers for the year. Each Ward's 50® company has passed all safety and consistency screens and achieved superior performance over the five years analyzed.
    
    Companies are listed alphabetically. An important objective is to compare their performance as a group with the rest of the insurance industry. Comparisons based on benchmarks set by Ward's 50® companies are available in Ward's Results®, an insurance industry financial reference series. You can also order customized reports of select Ward's 50 Benchmark Group comparisons for individual companies. Learn more.
    
    Ward Group has conducted the Ward's 50 analysis since 1991. It is a financial analysis of the insurance industry based on publicly available data and conducted independently of the Ward Group annual benchmarking programs.
    
    For details on how Ward determines its rankings, visit: http://www.wardinc.com/wards50/methodology.php

• Fidelity National Sells Flood Insurance Business to WRM America for $210 Million

  • Specialty lines property/casualty insurance and risk-management holding company WRM America Holdings LLC said it will acquire the flood insurance business of title insurer Fidelity National Financial Inc. for $210 million.
    
    WRM America Chief Executive Officer and Chairman William Fishlinger told BestWire the acquisition is the next step in its growth as a specialty lines property/casualty insurance and risk management holding company. The deal "will significantly add to our fee-for-service offering and continue to grow our platform," he said.
    
    Fidelity National Financial's flood and excess flood business -- Fidelity National Indemnity Insurance Co. -- will operate as a wholly owned subsidiary of WRM America. Patty Templeton-Jones and G. Michael Sloane will continue to lead the company and become members of the senior management team at WRM America.
    
    Fidelity National Indemnity said its flood business is the largest U.S. provider of federal flood insurance through the National Flood Insurance Program, capturing more than 17% of the total "Write Your Own" program market in 2010. Its flood business offers NFIP and excess flood insurance through its national network of independent agents and brokers, and has consistently achieved an industry-leading renewal rate through its customer-focused approach, the company said in a statement.
    
    On July 12, the U.S. House of Representatives approved a five-year reauthorization of the federal flood insurance program. NFIP is scheduled to expire Sept. 30 and is nearly $18 billion in debt. The House bill, which passed 406-22, would set actuarially sound premiums, reduce current rate subsidies, improve flood area mapping, call for the Federal Emergency Management Agency to study incorporating private insurance and increase coverage for homes and commercial buildings. FEMA administers the program (BestWire, July 13, 2011).
    
    The "Write Your Own" program, which operates as part of the NFIP, is a cooperative undertaking of the insurance industry and FEMA. It allows participating property/casualty insurers to write and service the Standard Flood Insurance Policy in their own names.
    
    WRM America will acquire Fidelity National Indemnity and Fidelity National Insurance Services for $210 million, consisting of about $122.5 million in cash, $75 million in a seller note and approximately $12.5 million in an expected cash dividend. The company expects the transaction to close during the fourth quarter, subject to regulatory approval and customary closing conditions.
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    Central operations of the Fidelity National Indemnity flood business will continue to be based in St. Petersburg, Fla. The company said it plans to retain its 220 employees.
    
    WRM America said it worked closely with its lead shareholder, global financial services private equity firm Aquiline Capital Partners, to consummate the agreement.
    
    Risk financing and insurance-management company Wright Risk Management, along with Aquiline Capital Partners, formed WRM America Holdings, based in Uniondale, N.Y., in 2008 to initially serve the specialized insurance needs of the education market and grow into the not-for-profit and municipal markets nationally.
    
    In 2003, the Fidelity National Group acquired the flood business of Mutual of Omaha's subsidiary, Omaha Property and Casualty Insurance Co., and the Bankers Group of St. Petersburg, Fla., and purchased Bankers' subsidiary, First Community Insurance Co. The acquisitions expanded the group's penetration in the flood market, making it the single largest writer of "Write Your Own" flood insurance policies under the NFIP, according to BestLink, which provides online access to A.M. Best's database of insurance information. Fidelity National Property and Casualty, licensed in all 50 states and the District of Columbia, principally writes flood business through participation in the NFIP "Write Your Own" program. It does not retain insurance risk on the program, as it cedes 100 percent to the NFIP.

• Half-Way Through 2011, Already the Most Costly Year for Natural Disasters

  • Did someone mess with Mother Nature?
    
    According to data released by Munich Re, 2011 has already set the mark for the most costly year on record for natural disaster losses throughout the planet.
    
    Over the first half of 2011, catastrophes such as the Japan tsunami, New Zealand earthquake and tornadoes in the U.S. have caused a staggering $265 billion in economic losses. The prior record was set in 2005, when Hurricane Katrina hit and helped to generate some $220 billion in losses (that figure was adjusted for inflation).
    
    Munich Re is an international re-insurance company that tracks these types of loss results.
    
    The Japan earthquake and tsunami that devastated that nation in March resulted in some $210 billion in economic loss alone. New Zealand's earthquake in February cause $20 billion in losses; the outbreak of twisters in the U.S. caused $7.5 billion in losses; and Australia's floods this past winter caused $7.3 billion in losses.

• Allstate Agents May Unionize

  • Huge news from one of the nation's largest P&C insurance companies!
    
    It has been reported that Allstate agents are in the process of unionizing. The National Association of Professional Allstate Agents Inc. (NAPAA) wants the giant insurer's agents to vote on whether they wish to form a guild. The group claims it needs to consolidate its forces to combat what it calls unfair business practices on the part of Allstate.
    
    NAPAA wants Allstate agents to join the Office and Professional Employees International Union (OPEIU) as a guild. OPEIU is an AFL-CIO affiliate.
    
    The primary agent beef against Allstate is the company's decision to reduce commissions by some 20 percent.
    
    Ballots will soon be mailed to Allstate agents. The results will be tabulated on August 17, 2011. The plan must be approved by more than half of the NAPAA membership in order to gain approval of the plan.
    
    By becoming a union the group will gain collective clout that could have a greater impact on future carrier decisions.

• Insurance Carriers Settle on Wage Disputes

  • A state judge in Los Angeles has approved a $10.5 million class action settlement in a wage-and-hour lawsuit involving Aon Corp. units in California that were accused of misclassifying more than 500 employees.
    
    The litigation was filed in 2007 by Aon employee Francisco Hoyng, who was replaced as the lead plaintiff about a year later by Robert Zajac.
    The class action accused the Aon units of misclassifying as exempt from overtime and meal and rest break requirements employees who held one of several titles: account specialist, senior account specialist, relationship specialist, account manager, client specialist, client services representative and/or customer service representative.
    
    A Los Angeles Superior Court judge approved the $10.5 million settlement of the suit involving the Chicago-based brokerage on Tuesday. The class action was certified last year, according to the settlement agreement.
    
    The settlement applies to 534 class members, according to Agoura Hills-based law firm Martin & Saltzman L.L.P., which represented them.
    As part of the settlement agreement, Aon denied any liability or wrongdoing, according to the settlement agreement. An Aon spokeswoman had no comment.
    
    Wage-and-hour suits have become a significant problem for employers in recent years, resulting in numerous costly settlements every year. Los Angeles-based Farmers Insurance also announced on July 7 a settlement with customer service reps over back wages.
    
    Farmers Insurance will pay more than $1.5 million in overtime back wages to 3,459 employees for unpaid pre-shift work they performed.
    The U.S. Department of Labor (DOL) reported Farmers has agreed to pay the back wages after its investigation uncovered “significant and systemic violations of the federal Fair Labor Standards Act’s (FLSA) overtime and record-keeping provisions.”
    
    The violations reportedly took place at 11 customer-service call centers in Florida, Kansas, Michigan, Oklahoma, Oregon and Texas.
    DOL investigators found the carrier did not account for time employees spent performing pre-shift work. Employees routinely performed an average of 30 minutes of unrecorded and uncompensated work, according to the DOL.
    
    Pre-shift work included turning on work stations, logging into the company phone system and initiating certain software applications necessary to begin their call-center duties.
    
    The employees are owed time and one-half of their regular rates exceeding 40 hours.
    
    The DOL reported that Farmers has agreed to pay back wages and maintain future compliance with the FLSA by properly recording and compensating all hours worked by employees.
    
    “Failing to properly compensate employees for pre- or post-shift work is a violation of federal law,” Secretary of Labor Hilda L. Solis said in a statement. “The Labor Department is committed to ensuring that employers abide by the law so that workers are protected against exploitation and law-abiding employers are not placed at a competitive disadvantage.”
    
    Under FLSA, covered employees are paid for pre-shift and post-shift job duties and for attending meetings. Employers must pay the federal minimum wage of $7.25 an hour and maintain accurate time and payroll records.

• Why Shop Online for Your Auto Insurance?

  • Consumers are getting smart when it comes to shopping for a variety of insurance products: auto, home, life, health, commercial lines, and much more.
    
    Why are more and more consumers doing their insurance shopping online?
    
    * Convenience: A good reason is the convenience factor is just not there and you may be conducting your business the old fashioned way by calling and talking to a service representative to make changes and mailing in your payments. One of the biggest reason is people are looking for lower rates. If you currently have insurance and have never taken the time to compare, you can get absolutely free auto insurance quotes online in a matter of seconds.
    
    That is one of the best developments in internet technology today. Many insurance websites are sophisticated enough to take the questions you provide and match you with the best policies and lowest rates based on your automobile, your age, driving history, and a number of other factors. The beauty of this is the quotes are near instant, appearing on your computer screen in a matter of seconds.
    
    Some insurance companies will not only instantly deliver free auto insurance quotes for their company, they will also supply you with one or two quotes from competitors making it much easier for your to compare prices and evaluate what is being offered. There is not better or faster way to get information and the coverage that you need using a method as fast as this.
    
    The quotes that you receive are reliable. Unless you take a significant amount of time, like weeks to make up your mind, the rate typically will not change. When you have evaluated all of your quotes and have made a decision to buy in many cases you can make your purchase right on the insurance company website using convenient payment methods.
    
    It is also fairly easy to set up an online account that will allow you to manage your policies and levels of coverage. For example, if you move to another state, once you put your new address in your online account and push the quote button, you have another quote based on the geographical area you are moving to.
    
    The rate is electronically adjusted and you continue with your coverage without any interruption. You can also easily download any new identification cards with the changes as you need them instantly.
    
    By using a matching service who can match you with insurance companies, you can get multiple free auto insurance quotes at one time to compare. Otherwise, you can visit individual websites to get all of the education and pricing that you need to get quick coverage.

• Former KY Commissioner Nominated to Serve on FSOC

  • President Obama has nominated former Kentucky Insurance Commissioner Roy Woodall to serve as the insurance rep on the Financial Stability Oversight Council (FSOC).
    
    Insurance industry leaders have been pusing the President to fill the post. Several insurance insiders have commended the President's nominee..
    
    Property Casualty Insurers Association of America (PCI) President/CEO David Sampson said, “We are pleased that the Department of Treasury has listened to the calls from the insurance sector and congressional leaders from both sides of the aisle to fill this critically important position. [Woodall] brings extensive experience in the insurance sector and an understanding of the state insurance regulatory system.”
    
    Leigh Ann Pusey, president/CEO of the American Insurance Association, said, “Woodall also has an intimate working knowledge of our industry and will be a strong voice in helping inform the other FSOC members on the distinctions between the property and casualty business model and other, bank-centric financial services. This will be especially critical as the FSOC deliberates on which non-bank financial firms it will designate as systemically important."
    
    Woodall was Kentucky insurance commissioner from 1966 to 1967. He recently retired as senior insurance policy analyst at the Treasury Department. Woodall served as president of the National Association of Life Companies (NALC), and he was also insurance consultant for the Congressional Research Service from 2001 to 2002.
    
    National Association of Mutual Insurance Companies Senior VP of Federal and POlitical Affairs Jimi Grande commented, “As a former Treasury official and state insurance regulator, [Woodall] understands the role of insurance in the economy and is well aware that mutual [P&C] insurance companies did not contribute to the economic crisis or pose an ongoing risk to economic stability. With this knowledge, [Woodall] will help focus the designation process for systemically important financial institutions [SIFI] on those companies who, through their participation in high-risk activities, pose a true risk to the American economy.”
    
    Woodall must be confirm by the Senate before taking the FSOC position.

• Used Cars to Avoid

  • Forbes has compiled a list of used cars they believe consumers should avoid.
    
    The list was determined by reviewing data from the most recent J.D. Power & Associates U.S. Vehicle Dependability Study, reliability surveys, resale values, safety ratings, as well as Forbes' road tests.
    
    In addition, some 43,700 original owners of 2008 model-year vehicles responded to a Forbes study on problems experienced during the prior 12 months. The vehicles on the list below were rated “below average” in overall reliability, specifically powertrain performance; issues with the body and interior treatments; and failures with features and accessories.
    
    The vehicles on the Forbes list include:
    
    * Mitsubishi Eclipse: According to Forbes, the Eclipse's appeal "has suffered a steep decline in recent years ... the Eclipse not only gets poor marks from J.D. Power & Associates for reliability, Automotive Lease Guide says the Eclipse will retain as little as just 25% of its original value after five years of ownership..."
    
    * Chevrolet Colorado and GMC Canyon: The J.D. Power study says these vehicles "lack power, particularly when compared to the V-6 and V8-equipped competition."
    
    * Land Rover Range Rover Sport: According to Forbes, "as a three-year-old model, gets slammed for its poor fuel economy, low resale value and dubious reliability ratings."
    
    * Chevrolet Aveo: J.D. Power & Associates U.S. Vehicle Dependability Study of three-year-old models report that the "subcompact Chevrolet Aveo would still make our list for its utter lack of style and substance."
    
    * Dodge Charger/Dodge Magnum: Forbes notes, "Though enthusiasts may prefer the cars' rear-wheel-drive configuration for its inherently crisper handling qualities, they tend to slip and slide on wet pavement and become stuck in the snow; those fitted with the optional all-wheel-drive system fare better in that regard."
    
    * Land Rover Range Rover Sport: Forbes writes: "Expensive and reportedly repair-prone, with fuel economy at a thirsty 12 mpg in city driving, suffering high maintenance and repair costs and facing a steep and costly drop in resale value between the third and fifth years of ownership ... "
    
    * Suzuki XL7: This 'crossover SUV" is available in five- and seven-passenger versions. Forbes notes that the seven-passenger model has "a cramped third-row seat that's virtually unusable. Despite its car-based underpinnings the XL7 drives more like a small truck with imprecise steering and intrusive road noise at highway speeds."

• Tornado Strikes Famed Churchill Downs

  • One of the world's most famous horse racing venues was in the path of a twister on June 22.
    
    The tornado damaged at least nine of the 48 structures throughout the facility.
    
    Some 200 horses raced from their barns as the twister hit their barns; and race track employees were forced to brave the storm and round up the scrambling horses. Officials are not yet certain when races may resume.
    
    There were not reported injuries to any horses or workers at Churchill Downs.
    
    In addition, some 100 people who were residing on the grounds have been forced to move to temporary shelter due to the tornado damage.
    
    The track and the iconic twin spires that rise above the Churchill Downs clubhouse appeared to sustain little or no damage.

• Huge Workers' Comp Fraud Arrest in CA

  • The Orange County District Attorney's Office and the California Department of Insurance (CDI) have revealed the facts surrounding the indictment of a radiologist, a neurologist and two co-defendants in connection with a massive $17 million workers' compensation insurance overbilling scheme. The indictments against the four defendants were issued May 11, 2011, and the grand jury transcripts were unsealed today, June 13, 2011.
    
    "We need to end these types of medical fraud mills - STAT. Let's end unethical doctors, unscrupulous dealings, and patients being treated like walking ATMs," District Attorney Tony Rackauckas commented. "We hope before people engage in these types of schemes, they ask themselves if this is worth 800 years in prison?"
    
    "The magnitude of the fraud committed by these co-conspirators is reprehensible," Insurance Commissioner Dave Jones said. "When medical providers conspire to defraud the California workers' compensation insurance system, everybody loses, including the injured workers and the businesses that employ them."
    
    This case was investigated by CDI and the OCDA. Deputy District Attorney Shaddi Kamiabipour of the Workers' Compensation Fraud Unit is prosecuting this case.
    
    The defendants are:
    
    Dr. Sim Carlisle Hoffman, 59, Newport Beach, is a radiologist and owner of Advanced Professional Imaging (API), Advanced Management Services (AMS), and Better Sleeping Medical Center (BSMC) in Buena Park. He is charged with 592 felony counts of insurance fraud for BSMC, 291 felony counts of insurance fraud for API, and one felony count of aiding and abetting the unauthorized practice of medicine. If convicted, he faces a sentence ranging from two years up to 892 years and eight months in state prison. Hoffman is out of custody on $1.5 million bail. In 2001, Hoffman was disciplined by the Medical Board of California (Board) for excessive billing and subjecting a patient to radiology procedures that were not medically necessary.
    
    Beverly Jane Mitchell, 60, Westlake Village, is the administrator in charge of insurance billing for all of Hoffman's businesses. She faces the same charges and maximum sentence as Hoffman. Mitchell is out of custody on $250,000 bail.
    
    Dr. Thomas Michael Heric, 74, Malibu, is a neurologist who worked for Hoffman at BSMC. He is charged with 296 counts of insurance fraud and one felony count of aiding and abetting the unauthorized practice of medicine. If convicted, he faces a sentence ranging from two years up to 315 years and eight months in state prison. Heric is out of custody on $500,000 bail. His medical license was suspended by the Board for 60 days as a result of a 2008 felony federal medicare and medi-cal fraud conviction.
    
    Louis Umberto Santillan, 44, Chino Hills, worked for Hoffman in billing collections for API. He is charged with 141 felony counts of insurance fraud and faces a sentence ranging from two years up to 150 years in state prison if convicted. Santillan is out of custody on $250,000 bail. Santillan has no college degree or certification.
    
    Prior to posting bail, all four defendants were required by the court to prove their bail money was from a legal and legitimate source. All four defendants are scheduled for continued arraignment June 22, 2011, at 8:30 a.m. in Department C-5, Central Justice Center, Santa Ana. Hearing on the revocation of Hoffman and Heric's medical licenses as a condition of bail will also be heard at that time.
    
    Background information:
    
    In January 2008, two BSMC employees filed a complaint with the California Department of Health Services regarding unsanitary conditions and lack of proper patient care at the facility. This complaint was forwarded to Don Marshall, vice president of the National Anti-Fraud Program for Zenith Insurance Company.
    
    Based on this complaint, Zenith began a fraud investigation into BSMC and API and contacted CDI in July 2008. Zenith forwarded evidence that BSMC was not conducting an appropriate medical business and was overbilling for procedures that had no medical value or necessity.
    
    The CDI began investigating this case in July 2008 and turned over the case to the OCDA in June 2010. Following an extensive, lengthy joint investigation, the OCDA presented the case to the Orange County Grand Jury in May 2011. All four defendants were indicted May 11, 2011.
    
    California employers are required by law to maintain workers' compensation insurance for employees to provide medical services and lost wage compensation in the event of an injury sustained at work. Unlike other medical industries, doctors and insurance companies are not required by law to communicate with the workers' compensation insurance recipient/injured worker regarding what medical procedures are being claimed for the purpose of billing. Consequently, there is no system in place to verify which services were provided during a medical appointment.
    
    As a result, unscrupulous medical providers are able to exploit the workers' compensation system and injured worker by subjecting the injured worker to unnecessary medical diagnostic tests in order to generate higher insurance bills. These unethical medical providers are also able to bill the insurance companies for services never rendered.
    
    Employees injured on the job are entitled to file workers' compensation claims to have their medical treatment covered by their employer's insurance.
    
    In this case, the injured employees were primarily blue collar workers in industries such as manufacturing, construction, or other fields involving manual labor. The majority are Hispanic and many are Spanish-speaking. All of these workers in this case were referred by chiropractors or attorneys to API or BSMC.
    
    In order to streamline the case, the OCDA chose to limit the charges to 600 patients and select time periods. In all of these cases (below), the injuries to the worker could have been treated and fully resolved for under $5,000. The defendants are accused of instead fraudulently billing over $15,000 per patient.
    
    Hoffman is accused of opening API as a facility to perform Magnetic Resonance Imaging. In order to generate extra billing, he is accused of expanding to perform nerve testing called Electromyography (EMG), in which muscle cells are analyzed for neurological activity. This is a non-invasive, out-patient procedure that should be billed at approximately $35 per test.
    
    Single Fiber EMG is an invasive, painful procedure that often requires hospitalization and can result in bleeding and infections if not performed properly. This test takes an hour to perform and involves sticking a massive needle into a single nerve to detect damage based on electricity conduction. This test is significantly more complex and costly that can be billed at $330 per procedure. Most neurologists are not qualified to perform this test based on the intense specialization and training required. Only two doctors in California are qualified.
    
    Between June 2007 and March 2009, Hoffman is accused of conducting an EMG test on patients and overstating the nature of the test. Instead of billing for the performed EMG, he is accused of fraudulently billing insurance companies for Single Fiber EMGs.
    
    Hoffman is accused of billing for Single Fiber EMGs as many as 20 times per patient, despite this test never being rendered by Hoffman or any physician employed at API on any patient. The defendant is accused of inflating insurance billings from what should legitimately have been under $2,000 to approximately $10,000 per patient.
    
    After receiving payment from the insurance companies on the fraudulent bills, Hoffman is accused of re-submitting the same bill as a lien against the patient's workers' compensation insurance case in order to collect additional payment.
    
    Hoffman is accused of fraudulently billing seven insurance companies including Berkshire Hathaway Homestate Companies, California State Compensation Insurance Fund, Commercial Property and Casualty Insurance, Fireman's Fund Insurance Company, Liberty Mutual, Travelers Insurance and Zenith.
    
    In all, he is accused of billing insurance companies over $9 million in Single Fiber EMGs alone in the API scheme.
    
    Hoffman is accused of opening BSMC in 2007 and failing to hire a certified technician or a qualified physician to supervise the sleep center, as required by law. A "sleep center" is a medical facility that specializes in the diagnosis and treatment of patients suffering from sleep disorders.
    
    Between November 2007 and November 2008, Hoffman is accused of filing insurance claims for 1,247 patients. He is accused of billing for epilepsy and seizure testing for all 1,247 patients without ever conducting these tests on a single patient.
    
    Hoffman is accused of paying Heric $100 per patient to write a report on the patient's condition (see below). Despite all of the 1,247 "reports" indicating that the patient needed medical treatment, none of the patients ever received medical treatment or care from BSMC.
    
    In the course of the investigation it was determined that two of the patients who underwent "testing" suffered severe sleep disorders and were in dire need of medical attention. These disorders were neither diagnosed nor treated at BSMC. During the grand jury proceedings, medical experts opined that the service rendered to patients at BSMC was a "disgrace" and had "no medical value."
    
    Hoffman is accused of operating this facility as a "medical mill" for the sole purpose of insurance billing and without providing any legitimate treatment to any of his patients. For all 1,247 patients, Hoffman is accused of billing exactly $6,728 to the insurance company.
    
    Hoffman is accused of fraudulently billing the City of Los Angeles and 19 insurance companies including Berkshire Hathaway Homestate Companies, California State Compensation Insurance Fund, Chartis division of American International Group, Commercial Property and Casualty Insurance, Crum & Forster Holdings Corporation, Employers Insurance, FirstComp Insurance, Fireman's Fund Insurance Company, The Hartford Financial Services Group, Liberty Mutual, Matrix Direct Insurance Services, Republic Indemnity Company of America, SeaBright Insurance Company, Sentry Insurance, Specialty Risk Services, Travelers Insurance, Southern California Risk Management Associates (now York Insurance Services Group - California), Zenith, and Zurich Financial Services Group.
    
    By November 2008, he is accused of billing insurance companies over $8.4 million in the BSMC scheme.
    
    As a result of Hoffman's 2001 Board discipline, he is accused of hiring Mitchell to manage all billing and administration for his businesses through AMS as part of his rehabilitation. Mitchell is accused of knowing that Hoffman had been disciplined by the Board and helping him to continue his fraudulent scheme. She is accused of directly supervising all fraudulent billing from API and BSMC to the insurance companies knowing that the procedures were overstated or never performed. Mitchell is also accused of "unbundling," or breaking up procedures and billing them separately instead of together with the intention of fraudulently collecting higher payments.
    
    Heric is a neurologist and is associated with Hoffman from several years ago. He was convicted in 2008 of felony federal fraud, for which his medical license was suspended by the Board for 60 days. In exchange for $100 per patient, Heric is accused of writing "reports" on all 1,247 sleep center patients evaluating the data generated during their sleep study. He is accused of finding in his "reports" that all 1,247 patients were "disabled" by using a formula entirely of his own invention not recognized in the medical community to reach his conclusions. None of these patients ever received any treatment for their supposed disability. All of his reports on the 1,247 patients are almost identical. Heric's reports were used to lend legitimacy to the fraudulent insurance bills for each patient.
    
    Santillan is accused of supervising the collections department for Hoffman's businesses and collecting payment on the medical bills knowing they were inflated and fraudulent. He is accused of receiving approximately $800,000 in commission on all of the fraudulent monies collected for Hoffman between 2006 and 2007.

• Several Denver Broncos Sued Over Workers' Comp Claims

  • A group of former Denver Bronco football players have been sued by St. Paul Fire and Marine for allegedly attempting to collect workers' compensation benefits from the insurer.
    
    The players involved in the suit include: Floyd Little, Edwin Smith, John Rowser, Louie Wright, Godwin Turk, Barney Chavous, Mike Schnitker, Billy Van Heusen and Randy Gradishar.
     
    The lawsuit contends the team is incorrectly trying to get St. Paul to pay the nine claims for the players. St. Paul is a subsidiary of Travelers Insurance.
    
    The lawsuit was filed last week in U.S. District Court in Denver.
    
    The bottom line problem is the long-running battle between the NFL Players Association and the league over coverage for post-career injuries. The debate is one reason why the NFL and its players are embattled in a contract dispute that could lead to the elimination of a portion of the 2011 season.

• Insurance Agent Murders Two Fraud Investigators

  • Two Louisiana Department of Insurance fraud investigators have been shot and killed by an insurance agent during the course of their investigation against the agent.
    
    On June 7, Rhett Jeansonne and Kim Sledge were shot and killed by insurance agent John Melvin Lavergne. The agent has a history of fraudulent activity and he had been ordered to cease his business.
    
    Immediately after the murders, Lavergne barricaded himself inside his Ville Platte, La. agency, and he then turned the gun on himself.
    
    In November, 2009, the Department of Insurance issued Lavergne a cease and desist order. The Department suspended his license for six months, and fined him $16,500. The actions came as a result of allegedly providing fraudulent proofs of insurance to the Lafayette Department of Motor Vehicles on several occasions.
    
    Lavergne was issued a casualty, property and vehicle physical damage license for 24 years. Lavergne also had a life, accident and health license from 1973 to 2010.

• Small Cars Score Well in Crash Tests

  • Six of 13 small cars recently evaluated by the Insurance Institute for Highway Safety earn the Top Safety Pick award, and none earns a poor rating in any of 4 tests. This is a turnaround from a few years ago when small cars struggled to earn top safety ratings. The new tests include hybrids and gasoline-only models that are among the most fuel-efficient vehicles available in the U.S. market.
    
    The ratings are based on performance in front, side, rollover, and rear impact evaluations. Cars that earn the top rating of "good" in each test and have available electronic stability control (ESC) qualify for Top Safety Pick.
    
    The IIHS winners are the 2012 Ford Focus and Honda Civic, along with the 2011 Hyundai Elantra, Lexus CT 200h hybrid, Nissan Juke and Toyota Prius hybrid. The Civic, CT 200h, Elantra, Focus and Prius have at least one version with a government fuel economy rating of at least 40 miles per gallon on the highway. The Dodge Caliber, Honda CR-Z and Insight hybrids, Nissan Sentra and Versa, Scion xD, and Suzuki SX4 also were rated but didn't earn Top Safety Pick.
    
    "The list of cars with the best fuel economy now includes those with the highest crash test ratings in their class, too," says David Zuby, the Institute's chief research officer. "At a time of high gasoline prices, consumers have never had a bigger selection of small cars that earn Top Safety Pick."
    
    More safety in smaller packages: The Institute began awarding Top Safety Pick for the 2006 model year with less stringent criteria than today. Then only 3 small cars earned the designation (Honda Civic, Saab 9-2X, and Subaru Impreza). Now 22 small models, including those the Institute tested previously, earn the award with tougher requirements including a roof strength test, an ESC requirement to help drivers avoid crashes, and a higher bar for rear impact protection.
    
    Still, Zuby points out that small, lightweight cars "don't protect their occupants as well as bigger, heavier ones. Even though fuel prices sometimes defy gravity, the laws of physics always are in effect for cars. That's why it's important that the crashworthiness designs of smaller cars be as good as possible. The new ratings demonstrate that small cars are much safer than they used to be."
    
    In the latest group, the Toyota Prius hybrid is a Top Safety Pick and also one of the most fuel-efficient cars on the market, with estimates of 51 miles per gallon in the city and 48 mpg on the highway. Altogether, 10 small and minicar models with government fuel economy ratings of at least 40 mpg on the highway also earn Top Safety Pick.
    
    Are new cars safer than older models? Small cars used to have the least safety equipment. Now all have standard side airbags, and in this group all but the Caliber, SX4 and Versa have standard ESC for preventing many kinds of crashes. Auto manufacturers moved quickly to put ESC on cars and SUVs after research by the Institute and the National Highway Traffic Safety Administration demonstrated the effectiveness of this feature. An Institute study found that ESC reduces fatal single-vehicle crashes by up to 50 percent. The government will require standard ESC on all new vehicles, starting with 2012 models.
    
    Small cars also are more crashworthy. In 1997, when the Institute first put small cars through its then-new 40 mph frontal offset test, none of the 11 small cars earned the top rating of good, and 3 were poor. The first results for small cars in the Institute's side test in 2005 were no more encouraging — none was good, and 14 of the 16 models evaluated earned the lowest rating of poor.
    
    "Each time we've introduced a new test, automakers have stepped up and improved designs," Zuby says. "Now it's rare for any vehicle to earn less than a good rating in front, side, or rear tests, and automakers are working on rollover protection."
    
    The Hyundai Elantra's results show how vehicle designs have improved. The 2001-03 Elantra was rated poor for frontal crash protection. A late-deploying airbag contributed to high forces on the driver dummy's head and neck. Forces on both lower legs indicated that fractured bones and a foot injury would be possible in a real-world crash of similar severity.
    
    The 2001-06 Elantra also earned a poor side rating, even with standard side airbags. The structure of the older Elantra allowed a lot of intrusion into the occupant compartment, and driver dummy injury measures indicated that rib fractures, internal organ injuries, and a broken left leg would be possible in a real-world crash. ESC wasn't available on this version of the Elantra, even as an option.
    
    "The Elantra has gone from one of our lowest rated small cars to a Top Safety Pick, and ESC is now a standard feature," says Zuby. "The big things the automakers have done to improve crashworthiness are designing better front crush zones to manage crash energy, stronger occupant compartments to limit intrusion, and stronger roofs to better protect people in rollovers."
    
    Acceptable ratings in one or more evaluations kept 5 of the 13 small cars off the Top Safety Pick list. That was the case for the Honda CR-Z and Insight, Nissan Versa and Sentra, and Scion xD. The Suzuki SX4 is rated marginal for rollover and rear protection. The Dodge Caliber is rated marginal for side protection, while it is acceptable in the rollover test. None of the cars recently tested earn a poor rating in any evaluation.
    
    How vehicles are evaluated: The Institute's frontal crashworthiness evaluation is based on results of a 40 mph frontal offset crash test. Each vehicle's overall evaluation is based on measurements of intrusion into the occupant compartment, injury measures recorded on a 50th percentile male Hybrid III dummy in the driver seat, and analysis of slow-motion film to assess how well the restraint system controlled dummy movement during the test.
    
    The side evaluation is based on performance in a crash test in which the side of a vehicle is struck by a barrier moving at 31 mph. The barrier represents the front end of a pickup or SUV. Ratings reflect injury measures recorded on 2 instrumented SID-IIs dummies representing a 5th percentile woman, assessment of head protection countermeasures, and the vehicle's structural performance during the impact.
    
    In the roof strength test, a metal plate is pushed against one side of a roof at a displacement rate of 0.2 inch per second. To earn a good rating for rollover protection, the roof must withstand a force of 4 times the vehicle's weight before reaching 5 inches of crush. This is called a strength-to-weight ratio.
    
    Rear crash protection is rated according to a 2-step procedure. Starting points for the ratings are measurements of head restraint geometry — the height of a restraint and its horizontal distance behind the back of the head of an average-size man.
    
    Seat/head restraints with good or acceptable geometry are tested dynamically using a dummy that measures forces on the neck. This test simulates a collision in which a stationary vehicle is struck in the rear at 20 mph. Seats without good or acceptable geometry are rated poor overall because they can't be positioned to protect many people.

• Allstate to Buy Esurance and Answer Financial

  • Allstate Corp., has announced it is purchasing Esurance and Answer Financial for approximately $1 billion. Esurance and Answer were owned by White Mountains Insurance Group Ltd., which is part of Warren Buffett's Bershire Hathaway group. The move gives Allstate an entry into the direct sales/Internet marketing channels.
    
    Allstate has been losing market share over the past several years to competitors with direct sales channels, such as Progressive and GEICO.
    
    The company plans to fund the deal with available cash. The sale should be completed by the end of 2011.
    
    Esurance and Answer Financial will reportedly keep their brand names.
    
    Allstate’s auto insurance policy count fell by 0.7 percent from March, 2010, to March, 2011. By comparison, Progressive’s auto insurance policies grew by 5.8 percent during the same time span.
    
    Allstate is expected to use its claims expertise to help Esurance control claim costs.

• Unusual Insurance Claims

  • You've probably heard of the "Darwin Awards" -- the Internet list of the silliest human acts that led to a person's demise. This list is not related to the death of those involved, but it could be considered a sort of Darwin Awards for insurance claims.
    
    Check out the list of some of the most unusual insurance claims:
    
    * The flying Christmas tree
    
    A man was driving home from Christmas shopping when, coming around a curve, approached a vehicle driving towards him that had a large Christmas tree tied loosely to the roof. The claim report noted, "He was driving too fast and I saw the tree lift off and it flew straight at me. The trunk made a great dent in my bonnet (car hood) and caused me to run off the road and into a hedge." The flying tree was left in the road, so the other driver made off with a free Christmas tree.
    
    * Cigar-essted
    
    An attorney insured his expensive collection of 24 rare cigars. He filed a claim, alleging the cigars were torched in a series of small fires. It turns out the small fires were just the attorney enjoying the cigars. The insurer paid the claim, but the company had the last laugh: they had the lawyer arrested on 24 counts of arson.
    
    * The flying Chihuahua
    
    George Kalomiris was taking his three-year-old Chihuahua, Chico, for a walk, when a Great Horned Owl swooped down and snatched the little dog in its talons.
    
    Chico was still attached to his leash, so it became a tug-o-war between George and the powerful bird. The man fignally scared the owl enough and it flew off, but not before one of its talons became lodged in the dog's side. Fortuntely for Chico, he was wearing a winter jacket that acted as protection. The pooch only suffered minor wounds in the skirmish.
    
    * They never rub you the wrong way?
    
    A massage customer received an hour-long, full-body massage from an experience massage therapist. The customer thanked the masseuse and even complimented her skills. Two days later, the customer visited the emergency room, and was diagnosed with a detached supraspinatus muscle -- a small muscle in the upper arm.
    
    A claim was filed against the masseuse for $150,000. Turns out it was determined to be a legitimate claim and the insurer made the payment.

• Keeping Your Teen Driver Insurance Rates Down

  • What's more scary: knowing your teenager is now driving; or receiving your auto insurance rate increase after you add your teen to the policy?
    
    Like it or not, teen drivers are higher risks for accidents and violations. And that always equates to higher premiums. But there are some ways to limit the rate increase.
    
    Do some research: Insurance companies charge a wide variety of rates for youthful operators. Some insurers will add the teen to your policy when they get their learner's permit. Others will give you a break and wait until they are licensed. Before you make the purchase, contact your agent to compare insurance premiums on your potential purchase.
    
    Good student discounts: Many insurers offer significant discounts if the young driver maintains a B average. The difference can be several hundred dollars a year, so encourage your teen drivers to hit the books and study hard.
    
    Avoid the cool cars: Your teen may be urging you to look at high performance vehicles. Do not be tempted to cave into their demands. High performance cars will be much more costly to insure than safe, "boring" cars. Plus, the teens will be less eager to speed or show off for their friends. Your children may scoff initially, but if you are going to buy them a car, they will eventually be grateful for that durable, boring vehicle.
    
    Say no to gas-guzzlers: While a gas-guzzler may not necessarily increase the insurance rates, they will certainly put a major dent in your wallet. 
    
    Raise your deductible: One of the easiest ways to reduce your auto insurance premium (with or without a teen on the policy) is to increase your deductible.

• Most and Least Affordable States for Auto Insurance

  • Believe it or not, Massacuhusetts drivers have the most affordable auto insurance premiums in the nation for 2011, according to Internet insurance vendor InsWeb.  "Affordability" means the median auto insurance premiums, compared with the median household income. Therefore, the lowest average premium is not necessarily the most affordable.
    
    This is the second straight year Massachusetts has topped the lost. The least affordable state is Louisiana. InsWeb rated the 50 U.S. states and Washington, D.C.
    
    2011 Auto Insurance Affordability Rankings

    1. Massachusetts    
    2. Hawaii
    3. Minnesota
    4. North Carolina    
    5. Utah    
    6. Wisconsin    
    7. Iowa    
    8. Idaho    
    9. Ohio    
    10. Vermont
    11. Virginia
    12. Maine    
    13. New Hampshire    
    14. Indiana    
    15. Washington    
    16. Alaska    
    17. New Jersey    
    18. Oregon    
    19. Pennsylvania    
    20. Illinois    
    21. North Dakota    
    22. Nebraska    
    23. Michigan    
    24. South Dakota    
    25. Kansas    
    26. Tennessee    
    27. Colorado    
    28. Delaware    
    29. California    
    30. Connecticut    
    31. Texas    
    32. South Carolina    
    33. Georgia    
    34. Alabama    
    35. Maryland    
    36. Montana    
    37. Missouri    
    38. Wyoming    
    39. Arkansas    
    40. New Mexico    
    41. Nevada    
    42. Florida    
    43. New York    
    44. Arizona    
    45. Rhode Island    
    46. Kentucky    
    47. Mississippi    
    48. Oklahoma    
    49. West Virginia    
    50. Washington D.C.
    51. Louisiana
        

• Insured Loss in Japan Tops $2 Billion

  • Japanese insurers have already shelled out a staggering $2.27 billion on some 125,000 dwelling claims as a result of last month's earthquake and tsunami, according to the General Insurance Association (GIA) of Japan.
    
    The GIA reported that it expects the number of claims to grow as the restoration of the country progresses.
    
    The loss adjusting process has been helped by technology. Insurers are using aerial and satellite photographs to scan“total loss areas.” These regions will not require loss adjusters to personally assess damage to dwellings.

• Do You Need Twitter Insurance?

  • Everyone is Tweeting. Some of us are over-Tweeting (just ask Gilbert Gottfried and Courtney Love). There may soon be a way to help protect yourself from legal problems that may arise as a result of Twitter posts that may get you in hot water.
    
    Once the Tweet is sent, there is no turning back. You may regret it later, but as soon as you click the button the entire world can see your witty remarks -- even those who may be offended.
    
    The insurance industry to the rescue.
    
    Canadian insurance brokers are apparently the first to recognize the need for added protection from Tweets that may cross the line and lead to defamation lawsuits.
    
    The problem is not related solely to celebrities. Employees who post off-color comments about their boss or co-workers could potentially be a target of lawsuits or sanctions by their employer.

• P&C Insurer Income on the Rise

  • U.S. property & casualty insurers’ aftertax net income rose dramatically in 2010.
    
    P&C insurers' income jumped almost 21 percent in 2010 over 2009 figures, to $34.7 billion. In 2009, the industry posted $28.7 billion in aftertax net income, according to a report by the Insurance Services Office Inc. (ISO) and the Property Casualty Insurers Association of America. The report is titled, “Investment Gains Propelled Improvement in P/C Insurers’ Overall Financial Results for 2010 as Underwriting Results Deteriorated."
    
    P&C insurer net written premiums also rose in 2010, by 0.9 percent.
    
    Not all news was positive. Combined loss ratio was 102.4 percent for the year, versus 101 percent in 2009.
    
    Overall, earned investment income jumped to $47.2 billion in 2010; and P&C insurers are expected to report a 35.2 percent spike in net investments, or $52.9 billion.
    
    An ISO spokesman commented that the strong showing in 2010 may be a reflection of growing investor expectations that the economy is improving.