Archive for February, 2010

« Older Entries

State Farm Excels at Consumer Satisfaction

February 27th, 2010 by admin | Comments Off | Filed in auto insurance, homeowners insurance, insurance news

It should be no surprise that our current unstable economy has affected everything from the amount of merchandise on store shelves to the number of people taking vacations, but what may be surprising is that the adverse effects are extended to the quality of service we receive from providers in many different industries. Such quality decreases are generally connected to job layoffs and spending cutbacks, as well as the low morale both of those things tend to instill. The end result: a vicious cycle in which consumers move their business elsewhere, or stop purchasing given services entirely.

One industry where the economy is having such an effect is property and casualty (P&C) insurance. The good news is that there are some companies still treating their customers well. According to a recent report from The American Customer Satisfaction Index, or ACSI, the customer service quality leader in this industry is State Farm.

The ACSI was developed by the University of Michigan, and uses a 100-point rating scale. In the most recent rating of finance and insurance companies, State Farm earned a customer satisfaction score of 82, with GEICO and Progressive following closely at 81 and 80 points, respectively. Notes in the latest index release state that larger property and casualty insurance companies have scored better than smaller ones with regard to consumer perception.

Overall, the finance and insurance sector showed slight improvement in customer satisfaction from the third to fourth quarter of 2009, with the property and casualty insurance sector averaging a customer satisfaction score of 80 in comparison to the average 77.1 in the finance sector as a whole.

Tags: , ,

Public Support Badly Compromised by Health Care Debate

February 25th, 2010 by admin | Comments Off | Filed in health insurance

Michael McAuliff, writing for the New York Daily News hit the nail squarely on the head with the article “President Obama’s Health Care Summit Will Be Political Theater of Highest Order.” One cannot help but get the feeling of Christians and lions in the arena (with no implied suggestion about which side is which) in the current national debate over health care reform.

Actually, if you take that analogy a little farther, both sides are being gobbled up by the same hungry carnivorous beast — partisanship. From the moment Obama announced his health care summit in the spirit of compromise and indicated it would be televised, the Republicans started looking for an ambush that may or may not have been there.

On Monday, February 22, Obama announced his own health care plan largely in line with the legislation currently sitting on the table in the Senate — with a $950 billion price tag attached to it.

Americans can read what the White House has to say about the current state of health care and reform efforts on its official website. The opening statement on that page reads:

Over the past year the House and the Senate have been working on an effort to provide health insurance reform that lowers costs, guarantees choices, and enhances quality health care for all Americans.

The only problem with that is that in the process, the members of Congress from both parties have done so with a nasty spirit, routinely mischaracterizing the other’s position, and allowing rumors to run rampant in the American public.

They’ve sacrificed one of the most important elements of health care reform in the United States — public support.

Regardless of what they do manage to get passed, reclaiming that support and clearly articulating to the American people any set of new rules, regulations, and “benefits” will be a major hurdle for our warring, partisan “leaders.”

Tags:

Health Care Summit Faces a Bigger Challenge than Just Health Care

February 23rd, 2010 by admin | Comments Off | Filed in health insurance

On the eve of a “bipartisan” summit on health care legislation scheduled for Thursday, February 25, the web is alive with talk about how the current stalemate can or can’t be resolved. The New York Times weighed in Sunday with an interesting piece on, “How the G.O.P. Can Fix Health Care.”

Provocatively, the article opens by leveling blame at President Obama, Nancy Pelosi, and Harry Reid for failing to achieve reform “because they fundamentally don’t believe in markets, incentives and the power of hundreds of millions of people to make smart choices about their health. It’s just not in the Democratic leaders’ DNA.”

The health care summit will be televised via C-SPAN and few people who plan to watch expect to see bi-partisanship at its best. The op-ed contributors for the Times piece single out the practice of “volume-based” reimbursement as a major factor in escalating health care costs.

The article goes on to discuss “value-based” reimbursement to “align the incentives of doctors, hospitals, pharmaceutical makers, and other health care providers.” The authors are making a case for high performance based on measurable outcomes and proven standard of practice paired with the intelligent use of information technology.

It all sounds great, but the profit motives involved for each of these industries — and health care in this country is comprised of separate industries with clearly identifiable self-interests — are so large and so buoyed by the efforts and monies of lobbyists, even this approach seems to be so much pie in the sky.

The health care debate has highlighted the broken nature of Washington, where party alignments clearly outweigh the public good. Health care isn’t going to be an affordable option for recession-plagued Americans until the costs of drugs are brought in line with reality and insurance companies are prevented from arbitrarily raising rates and denying necessary procedures — or coverage itself — based on risk management rather than human need.

The challenge President Obama and Congressional leaders face is not just unraveling a badly flawed health care system, but of getting their political colleagues to quit thinking about their re-election campaigns long enough to get something done. Everyone can agree the problem exists, but no one is ready to walk the political plank and make big changes.

Tags: , ,

Obama to Make Specific Health Care Proposals

February 19th, 2010 by admin | Comments Off | Filed in health insurance, insurance news

Although President Obama has attempted to avoid issuing his own version of a health care reform plan, the deadlock in Congress has compelled the president to formulate his own specific set of proposals, scheduled to be unveiled Monday, February 22.

According to a piece for the Chicago Tribune by Noam N Levey, the presidential suggestions will come three days before a planned summit with congressional leaders from both sides of the aisle. Obama’s hope is to jump-start the stalled process and to appeal for bipartisan cooperation.

Most likely, Obama will offer solutions for key differences in the House and Senate versions of the reform bill, but it is not clear what concessions the President is willing to make to the conservative Republican position. Part of the renewed push to resurrect the bill considered dead after the election of a Republican to fill Ted Kennedy’s Senate seat stems from large requests from rate increases by insurance companies nationwie in recent weeks.

In particular, WellPoint’s call for a 39 percent hike in rates for Anthem Blue Cross in California has indicated the pressing need for health care reform to control the spiraling price of insurance. Even more Americans, hard-hit by the recession, will likely go without health coverage in coming months if such massive rate increases are allowed to go unchecked.

The impending summit and Obama’s more direct participation may not be enough to save health care reform, with many pundits fearful that lawmakers will have to go back to square one, delaying passage of badly needed legislation. If the current health care legislation does die, it’s a sure indication that partisan debate in Congress has stalled forward progress on most, if not all, of the Democrat’s major wish list items — a bad sign for the Obama administration and a bad sign for Americans struggling to survive the worst economic recession since 1929.

Tags: , ,

Texas Snowfall Means Insurance Claims

February 16th, 2010 by admin | 1 Comment | Filed in homeowners insurance, renters insurance

Last week’s record snowfall in North Texas – 12.5 inches in 24 hours, as measured at the Dallas/Fort Worth airport – has already resulted in insured losses of $25 million, according to information reported by the Insurance Council of Texas.

The heavy accumulation of snow in an area that rarely sees more than a few flurries caused widespread power outages, in addition to significant damage from falling trees and crashing roofs. As well, the area’s transportation system was paralyzed, and many schools and businesses were forced to close.

So far, there have been an estimated 4,200 claims filed from commercial and residential property owners, and motorists, with the average claim totaling about $6,000.

The snow began falling in the wee hours of last Thursday, February 11th, and didn’t completely taper off until almost 24 hours later. Power outages across the DFW metroplex left thousands of residents without heat or lights for several days.

Representatives of several homeowners and renters insurance companies are urging their customers to make physical inspections of their homes immediately, and call their insurers if anything seems amiss. “Inspections are free,” a State Farm ad reminds television viewers in the Dallas area.

Snow in DFW neighborhood
Click image to enlarge

Tags: , ,

Get Some Rest, Don’t Get Arrested

February 11th, 2010 by admin | Comments Off | Filed in auto insurance

It’s no secret that maintaining healthy habits can save us money on health and life insurance, but in New Jersey doing so can also keep you out of jail, and it’s been that way since 2003.

What am I talking about?

There’s a law on the books in the Garden State that makes it illegal to sleep and drive. More specifically, the law prohibits motorists from knowingly operating their vehicles when impaired by lack of sleep.

How does this work?

Well, according to the Insurance Information Institute, New Jersey law equates sleepy driving with reckless driving. If you’re behind the wheel, and you cause an accident that results in a death, you can be charged with vehicular homicide, and be sentenced to fines plus up to ten years in jail.

That may sound like a stiff penalty for missing a little shut-eye, but the National Highway Traffic Safety Administration has statistics pointing to falling asleep at the wheel as the cause of at least 1,500 deaths and 100,000 crashes every year. As well, the National Sleep Foundation has polling data showing that roughly half of all American adult drivers “drive while drowsy,” and about twenty percent have admitted to actually fallen asleep while driving.

Currently, New Jersey is the only state with a “Don’t Doze and Drive” law on the books.

Tags: , ,

Kansas Senate wants to Penalize Adults for Helmetless Teens

February 10th, 2010 by admin | 1 Comment | Filed in motorcycle insurance

Motorcycle insurance may pay medical bills if you get into an accident on your bike, but it can’t protect you from a new bill being considered by the Kansas State Senate. It’s already illegal for teen drivers to drive or ride upon on a motocylce sans helmet in the “Sunflower State,” but the bill under consideration wants parents to face the law as well, if they allow their teens to go unhelmeted.

As reported in the Insurance Journal, the bill was introduced roughly a month ago, on January 14, and it would make it illegal for owners of a motorized bicycle or motorcyle to permit any person under 18 years old to drive or ride on their vehile without wearing a helmet.

According to Hutchinson Police Sergeant Brian Hurt, if the bill passes, “…adults could be ticketed for that now, too.”

According to Sgt. Hirt, teens between the ages of 14 and 17 can already be cited for not wearing helmets, with the average ticket costing $25 in fines, and $75 in court costs.

Hirt suggested to the press, “”Maybe (the bill) is a way to encourage people under 18 to wear a helmet, and for adults to say, ‘If you want to ride my motorcycle, you need to have a helmet.”’

According to numbers provided by the NHTSA (National Highway Transportation Safety Administration), 4,810 people were killed and 88,000 were injured in motorcycle accidents in 2006. In the same year, in Kansas, 64 riders were killed in motorcycle crashes, of which 43 weren’t wearing helmets.

Overall, motorcycle helmet use has been increasing across the country, the NHTSA says, with 67 percent of bikers wearing headgear in 2009, a compared with only 48 percent four years before, in 2005.

Tags: , ,

Whole or Universal Life Insurance – Bullet Points

February 9th, 2010 by admin | 3 Comments | Filed in life insurance

There’s no question that life insurance is one of the trickier types to navigate, especially when you’re faced with terms like “whole life” and “universal life.” Aren’t both terms sort of all-encompassing? And what are the differences anyway?

The folks at Forbes define them as follows:

* Whole life insurance – Caters to long-term goals by offering consumers consistent premiums and guaranteed cash value accumulation.
* Universal life insurance – Gives consumers flexibility in the premium payments, death benefits and the savings element of their policy.

Those definitions are a little basic, but essentially correct, but when choosing between them, you should also understand the following:

Universal Life

  • Also known as “adjustable life insurance,” because it offers a lot of flexibility. You can increase or reduce your death benefit, or the time you pay premiums, once your first premium payment has been made.
  • You can increase the face value of your coverage, if you pass a medical examination, first.
  • You can decrease your coverage to the minimum allowed amount without surrendering your policy, but you may be assessed surrender fees.
  • There are two options for the death benefit: a fixed amount, or an increasing amount equal to the face value of your policy plus your cash value amount.
  • If finances get tight, you can reduce or stop your premiums, and use your cash value to make premium payments. (Never do this without consulting your insurance advisor).
  • At time of policy inception, your insurance company will disclose the entire cost of insurance to you.
  • Because universal life insurance is tied to an interest rate, your policy may not always earn the estimated returns.
  • If you have enough of a balance, you may withdraw funds from your cash value account when there is an urgent need.

Whole Life

  • Whole Life insurance covers you as long as you live.
  • You will pay the same premium for a specific period of time in order to receive the death benefits.
  • There is a savings feature embedded into whole life insurance – for this reason, you are likely to pay higher premiums than you would with term life, at least at the beginning of your policy.
  • Part of your insurance money will be held in a high-interest bank account; every premium payment will help increase your cash value account, on a tax-deferred basisd.
  • You are able to borrow against your cash value or surrender your policy for the full cash value.
  • You may choose to participate in your insurance company’s surplus, and receive annual dividends, either in cash, or by adding them to your cash value account and letting them earn interest.
  • Whole life insurance is best purchased while you are young, so you can afford to pay for it over the long term.

These bullet points offer a mere sketch of the differences between whole and universal life insurance. Be sure to consult your insurance advisor before committing to either type of policy.

Tags: ,

Insurance Rates in Big Cities

February 8th, 2010 by admin | 1 Comment | Filed in auto insurance

It’s often been rumored that insurance rates are higher in big cities, but no one has published a formal study to prove the theory. Nevertheless, it’s a safe bet that if you live in a major metropolitan area, you’re paying more for your insurance than someone driving a similar car, with a similar credit profile, living in a similar neighborhood, and working in a similar job, just in a smaller town. Why is this? The simple answer is risk.

We all know that insurance rates are based on perceived risk. This is why cars with large engines cost more to insure than tiny compacts with equally tiny horsepower keeping them moving: the driver of the car with the larger engine is more likely to move at higher speeds, and engage in “reckless” driving machines.

Similar risks are attached to people who dwell in major cities: there is a greater likelihood of theft, for example, because there is a larger pool of potential thieves. City dwellers are also less likely to have garages, and more likely to be involved in accidents, because more people live in apartments, and traffic is generally denser.

Recently, the III (Insurance Information Institute) published a report about the causes of the rising cost of insurance in the state of New York. What they found was fraud and abuse of the state’s no-fault insurance system cost consumers and insurers almost $230 million last year, with many of those consumers being residents of the New York City area. In addition, they report that one of the largest sources of fraud involves medical payouts to accident victims. Basically, unscrupulous medical providers form alliances with equally unreliable attorneys, who then sue inusurance companies when the insurers question the validity of bogus claims. It’s a vicious cycle. And the end result is raised insurance premiums to offset legal fees.

Is behavior like this limited to the city, or to any city? Honestly, no. The difference is actually in volume. More people = more cases = more opportunities to commit fraud.

What can you do? Be aware of common insurance scams, and learn to avoid them, always compare insurance rates from several companies before you buy a policy, and if you live in a major city…consider using public transit a couple of days a week.

Tags: ,

Insurance Fraud Not Limited to Auto Insurance

February 4th, 2010 by admin | Comments Off | Filed in insurance facts, travel insurance

Stories about auto insurance fraud and how to handle it if you’re a victim abound, as does advice on everything from how to spot the most common staged accident scenarios to how to deal with your insurance company if you’re run off the road, but insurance fraud is on the rise throughout the industry, not just within the realm of auto insurance.

Just as Internet scammers claiming to be collecting money for victims of the earthquake in Haiti, were trawling the internet for unsuspecting donators, there are as many types of fraud as there are insurance.

Recently, A. M. Best ran a story warning consumers about a rash of travel insurance fraud in Florida. In this case, the scam involved an unlicensed “insurance company” selling policies to cruise customers. All of the cruises were eventually cancelled, and over 300 complaints were logged before the company was shut down.

While that event was unfortunate, the more common form of travel insurance is on the consumer’s side, and involves travelers claiming missing bags that never existed, or claiming much higher values for the contents of their lost luggage, than their belongings are actually worth.

Whatever the form, insurance fraud is not likely to disappear. How can you protect yourself?

  1. Always purchase insurance from a reputable firm; if you’re not sure of a company’s track record, read reviews, and check with the BBB.
  2. Whether it’s auto insurance, homeowners insurance, or travel insurance, be sure to read all the fine print of your policy, and ask questions if there’s anything you don’t understand.
  3. Document everything, and take pictures whenever possible. Pictures of your belongings will help you track them later; pictures of accident scenes or damaged goods will help your claim get processed faster.
  4. Always cooperate with insurance investigators.
  5. Know your rights. Check with your state’s department of insurance for important consumer guidelines.

While it’s never a good thing to be a victim of insurance fraud, experiencing travel-related fraud is always a bit more jarring, especially since it often happens when you’re nowhere near the comfort of home. Remember that there are always people willing to help if you need it. Remember also, that your state’s insurance department keeps a list of all the licensed insurers in your state.

Tags: ,

« Older Entries