Court: Car Insurance Doesn’t Cover Van Fire that Burned Down House

A federal appeals court has ruled  the damages from a van fire that burned down a house under construction should not be covered by a Virginia auto insurance policy covering the van because the van was not being used “as a vehicle” when the fire erupted.

According to court documents, the case originally began in 2008, when John Robins was performing construction work on Steven and Cathy Ivey’s house in Virginia.

Robins had been working on the house for several weeks and was using his Ford Econoline van basically as a storage shed for tools and equipment, powering his equipment with a battery charger and electric splitter that he kept in the van.

He had his van parked there for about a month, driving to and from the house in a separate vehicle.

Robins left the work site for the weekend on Friday, August 15. On Sunday, a fire started in the van that spread to the house and caused nearly $293,000 in damages.

A handful of fire investigators all concluded that the fire had started as the result of “malfunction of equipment kept in the rear of the van, most likely an electrical problem with an extension cord or battery charger,” according to court documents.

After the fire, the company insuring the house paid the Iveys for the fire damage and sought reimbursement from Robins, saying that the incident was a result of his negligence.

Robins then sought coverage from State Farm, the provider of his Virginia car insurance policy, and Nationwide, the provider of his commercial general liability policy.

Each of the companies said the other should cover the damages.

Nationwide said that it should not have to pay the claim because it excluded coverage that was the result of Robins’s use of a vehicle. And State Farm said that it should not have to pay the claim because Robins was not technically using the vehicle at the time of the accident.

The 4th U.S. Court of Appeals found in favor of State Farm. The court noted that Virginia law says for a car insurer to cover the damages caused by a vehicle in an accident, it must be used “as a vehicle.”

The court wrote in its opinion that Robins was using the vehicle as a storage shed, not as a vehicle, and therefore fell out of the jurisdiction of an auto insurance policy.

The court reversed the district court’s ruling that State Farm pay for the damages, and the case was sent back to the district court for further proceedings.

Oklahoma Bills Aim to Crack Down on Uninsured Drivers

Oklahoma police could get new tools to combat the state’s uninsured motorist problem if state lawmakers approve two new bills.

One of the bills would broaden the situations in which police could tow a resident’s car for being uninsured, while the second would make it so that police could stop motorists if a state database indicates that they’re driving an uninsured auto.

The Sooner state has one of the worst uninsured motorist problems in the nation. According to Insurance Research Council reports that used data from 2007 and 2009, about 24 percent of drivers in the state were on the road without any Oklahoma car insurance coverage.

That’s double the nationwide average of about 14 percent.

In an effort to better identify uninsured cars, the state established a database that matches vehicle registrations up with policy information supplied by car insurance companies issuing policies in the state. When a car in the database is registered but has no matching policy, it’s likely to be uninsured.

But police currently cannot pull a driver over simply because that driver appears in the database to be driving an uninsured vehicle.

Rather, Oklahoma law dictates that driving without a policy is a secondary offense, meaning that you can only be cited if you’re already stopped for another type of infraction.

House Bill 2525 would change that.

If the bill passes, police would be legally allowed to run the license plate numbers of a vehicle on the road to see if it come up as a no-match on the database. And if it did, they’d be able to pull over the offending motorist and cite them for that reason alone.

Last year, lawmakers passed a bill that barred certain recovery rights for drivers who were uninsured at the time of an accident.

Under the so-called “no pay, no play” law, which took effect in November 2011, uninsured drivers injured in a crash cannot collect for pain and suffering damages that were the result of the accident, regardless of who was at fault.

Supporters of the law said it would discourage motorists from getting behind the wheel without a policy.

A first-time offense for driving uninsured in the Sooner State brings with it a $250 fine, and offenders can have their licenses suspended until they pay the fine and can prove that coverage are in place. Police were also authorized by the Legislature in 2010 to seize and tow any uninsured vehicles.

Court: Penn. Insurer’s Fine Print Negated Coverage Rejection

The Pennsylvania Superior Court ruled on Monday that some additional language included in a form that Unitrin policyholders sign to reject underinsured motorist coverage actually invalidated the rejection form, meaning that many of Unitrin’s Pennsylvania automobile insurance policyholders could be entitled to compensation under a type of coverage they chose to reject.

All Pennsylvania car insurance policies by default include uninsured/underinsured motorist (UM/UIM) coverage, which provides coverage when the policyholder is injured in a car accident caused by an uninsured, underinsured, or hit-and-run driver.

But drivers can reject this coverage by signing a form contained in the pages of their auto policies. The language of that form is dictated by law so that this section of all Pennsylvania policies reads the same way.

Unitrin, however, added an extra 20 words to the statement policyholders sign to reject the coverage.

The extra sentence seemed innocuous enough to Unitrin and the trial court that ruled in the insurer’s favor: “By rejecting this coverage, I am also signing the waiver on P. 13 rejecting stacked limits of underinsured motorist coverage.”

The opinion of both Unitrin and the lower court was that the additional sentence was “clarifying” language that did not affect the terms of the rejection.

But a majority of state Superior Court judges who reviewed one Unitrin policyholder’s appeal said the fact that the language deviated from what had been prescribed in the state’s financial responsibility law is enough to make the Unitrin UM/UIM rejection void.

The lower court’s decision was reversed.

Decision Could Be Significant for Unitrin Policyholders Who Have Made UIM Claims

The case originated in July 2009 when Unitrin policyholder Lee Jones was injured in an accident while riding as a passenger.

After being treated for injuries, it turned out that Jones’s damages exceeded the limits of the at-fault driver’s bodily injury liability policy–a scenario in which underinsured motorist coverage would kick in and cover the remaining damages.

But Jones had signed the UIM rejection form, meaning she would likely have to pay for the remaining damages out of pocket.

After Unitrin denied her claim, the two parties went to court over whether the rejection form Jones had signed complied with state statutes and, in effect, whether she was covered under the policy. The trial court said the language did not negate the policy and sided with Unitrin in the end, but the Superior Court ruling reversed that decision.

This may not be the end of the Unitrin case. But if the Superior Court’s decision is upheld, it could mean drivers who were denied UIM benefits because they had rejected the coverage may still be able to collect for their damages.

Washington Auto Insurance Bills Approach Deadline for Vote

Washington State lawmakers have until February 14 to pass a pair of bills that would pave the way for vehicle-sharing programs in the state and make insurance regulations more hospitable to insurers who want to offer usage-based options to Washingtonians, according to the Office of the Insurance Commissioner.

Insurance-Friendly Car Sharing

Following similar legislative moves in California and Oregon, lawmakers in Washington are pushing to eliminate the negative coverage implications of participating in car-sharing programs.

Currently, auto owners in the Evergreen State would likely see their personal Washington car insurance policies invalidated if they lent their cars out in exchange for money, since the vehicle is being used commercially.

House Bill 2384 fixes that by transferring liability from the car owner to the car-sharing service when the automobile is being used by people other than the owner. So any damages that occur while the car is being rented would be covered by the service’s policy, not the owner’s.

Policies provided by the sharing service would have to provide at least $180,000 worth of total liability coverage–three times the minimum required by the state–as well as comprehensive and collision coverage.

Paving the Way for Usage-Based Programs

There has been rapid growth over the past few years in demand and supply of usage-based insurance options.

Usage-based options often involve an insurer providing a small electronic device that plugs into a diagnostic port on a car. That device then sends policyholder driving data back to the insurer, showing how many miles are put in behind the wheel, how often drivers of the insured car brake hard, and where and at what times of day the car’s driven, among other factors.

These programs in theory reward drivers who put in fewer miles behind the wheel and display safer driving habits.

House Bill 2361 would allow insurers to keep from public inspection the rating methodology used when incorporating usage-based information in pricing formulas. It also states that location data recorded by the devices cannot be collected without the user’s consent and that “individually indentifiable usage information” that’s collected may not be used in any way other than in premium calculations.

Public testimony summarized in a report from the House Business and Financial Services Committee indicate that the legislation would help only one company: Progressive Insurance.

Progressive championed usage-based coverage options with its Snapshot Discount, which is available in nearly every state in the country. But Washington remains one of the few where Snapshot is still not available.

According to a summary of public testimony include in the committee report, a supporter said, “The concerns raised about this bill appear to be based on an inability to compete with a product that is available in most of the country. That product will not be sold in this state without some type of confidentiality protections.”

Progressive owns a handful of patents regarding usage-based coverage, but supporters of the bill noted that the rate filings would be open to public inspections, which would expose the company’s information and possibly lead to the company’s having to defend its patent in court.

The summary of the testimony from individuals “with concerns” said that Progressive–although the company is not named outright in the testimony–is suing other insurers who have tried to develop similar products, and it “should not be given even more protection than their existing patents.”

Progressive Using Image-Capture Technology for Insurance Quotes

Progressive Insurance recently announced that it’s making it easier for consumers to get quotes and buy car insurance online through their mobile phones.

The direct-to-consumer car insurer will make available to 15 states in February and more throughout 2012 a new function on its mobile app that allows users to get quotes just by taking pictures of pertinent documents and supplying a little additional information.

The technology is called Image Capture, and it will be integrated right into the mobile quoting process.

Instead of manually inputting personal data–like address, driver’s license number, and vehicle make, model and year–users can just take a photo of their driver’s license and VIN bar code or current insurance card, and the data fields on the app will autopopulate.

“The number you get through our mobile app is a valid quote, not a ballpark,” said Matt Lehman, Progressive’s mobile business leader. “We think it’s important to give consumers an accurate rate, and this technology helps them get that rate quickly.”

After going through the quoting process, users have the option to buy the policy they’ve been quoted for.

The new Image Capture function adds to Progressive’s mobile app capabilities, which already included its cost-to-insure rating function.

That function allows users to punch in up to three vehicles’ make, model and year–or to automatically input that information by taking a photo of their VINs–and they get back a comparison of the cost to insure those vehicles on a scale of 1 to 10.

Although the function didn’t deliver actual quotes, it provides what could be helpful information to shoppers who are looking for a new car and don’t want to be shocked when they see the cost to insure it after driving off the lot.

Rhode Island Lawmakers Seek to Limit Insurance Pricing Factors

Members of the Rhode Island House of Representatives have submitted a pair of bills this session that would bar insurance companies from taking into account a consumer’s education level, homeowner status and credit history when determining how much to charge for a policy.

House Bill 7411 would enact the credit-history ban, while House Bill 7193 would take care of education level and homeowner status.

All of the representatives who introduced and co-introduced the bills are Democrats.

Rhode Island is only one of many states where legislators have pushed to ban insurers’ use of credit scoring in recent years, but practically every one of those pushes has failed. The only state that successfully got a credit-scoring ban into law in recent memory was Massachusetts, and that state already had a regulatory ban on the practice in place.

Many consumer groups say that partly basing the price of coverage on a policyholder’s credit history unfairly hurts lower- and middle-income motorists. But members of the insurance industry–backed by a number of government studies–say that a driver’s credit history has proved to be a relatively accurate predictor of the frequency at which a driver will file claims, as well as the size of those claims.

Rhode Island auto insurance providers are currently free to use information about a person’s credit history to help gauge the risk that he or she poses, but they have a couple restrictions:

Insurers must demonstrate for regulators that their credit-scoring practices do in fact correlate with the actual risk posed by policyholders. They cannot use scores incorporating variables such as whether a consumer has had any credit inquiries, coverage inquiries or collection accounts that have a medical industry code. And a negative credit trend that’s the result of an “extraordinary life event” cannot be taken into account.

The only current regulatory restriction on use of education level and homeowner status is that insurance providers must be able to statistically show that those factors correlate with a driver’s likelihood of filing a claim.

Both bills have been referred to the House Corporations Committee for review.

Recent Recovery Reports Highlight Usefulness of Insurance Reviews

Recent reports showing that regulators in California, Michigan, Georgia, Montana, Ohio and North Carolina together recovered nearly $150 million last year on behalf of consumers who had been wronged by coverage providers highlights the valuable insight shoppers can get by researching auto insurance reviews and complaint data online.

A large portion of the $150 million recovered for policyholders was the result of coverage disputes, overcharges and unfair denials of claims.

State regulators returned the sum while acting as an objective mediator between insurers and policyholders.

When consumers and coverage providers cannot settle their differences themselves, policyholders can bring their complaints to state regulators for some resolution.

For the past three years, consumers have consistently filed the most grievances because they were dissatisfied with the way their insurers handled their claims, according to data compiled and made available by the National Association of Insurance Commissioners.

More specifically, consumers most frequently complain about delays and denials of claims, as well as dissatisfaction with a claim settlement. Complaints of this type accounted for more than half of the total complaints resolved between 2009 and 2011.

Once a complaint is resolved, the regulatory office enters it into a database and eventually publishes a report showing how many complaints each company had for a given year. Many consumers are encouraged to consult these reports when looking for a new provider so they can get one that has a good track record.

But the fact is that consumers can only gain so much insight into a company’s performance by looking at complaint statistics.

Another, more personal way of getting past and present policyholders’ opinions about a specific policy provider is to research user-submitted car insurance reviews on the Internet.

One place to read and post comments about a company is the car insurance reviews section of OnlineAutoInsurance.com.

The site, which was originally launched in the summer of 2011, has already accumulated hundreds of reviews for 14 of the country’s largest coverage providers.

In a press release issued when the site launched, the company said using both regulator-provided complaint statistics and the user-submitted reviews should give consumers a full picture of a company’s history for customer satisfaction.

Survey: Car Insurers, Body Shops Handled Claims Increase Well

Car insurance companies managed to keep customers satisfied with the claims process during the last three months of 2011 despite a surge in the number of claims being filed, according to J.D. Power and Associates.

The announcement from the marketing information services company is based on auto insurance reviews from more than 3,500 people who had filed a physical damage claim within the past six months.

Respondents indicated that repair times took about 9 percent longer than in the third quarter of 2011–going from 7.8 days to 8.5 days–yet average customer satisfaction fell by only 1 point on a 1,000-point scale.

The increase in repair times has been attributed to a higher volume of repairs needed in the last months of 2011.
That damage dealt by a handful of bad weather events that hit both coasts and some states in the Midwest.

An official from J.D. Power said in the company’s announcement that insurers succeeded in keeping customers informed during the claims process, which helped manage their expectations and ultimately kept them satisfied with the results.

“Customers tend to be significantly more satisfied when their insurers let them know when they can expect their vehicle to be fixed and then provide updates along the way than are customers whose insurance company provides less communication,” said Jeremy Bowler, J.D. Power’s senior director of insurance practice.

Overall Satisfaction Higher among Those Who Filed Claims with Agents

The survey responses indicated that, even though many companies are directing policyholders to file claims through call centers rather than with agents, policyholders who went through agents tended to have higher customer satisfaction.

Claimants who filed through agents gave satisfaction ratings that were on average 2.7 percent higher than those who filed through the company directly.

“There still is a significant share of customers who prefer the personal interaction they get with an agent because they value working directly with a person they know,” said Bowler.

Still, the gap between satisfaction among those who used call centers and those who used agents is shrinking. In the second quarter of 2011, average ratings of those who used agents were 3.5 percent higher.

Car Insurance Community Rejects Consumer Group’s Conclusions

A new report released this week by the Consumer Federation of America (CFA) says that premiums have become an undue economic burden on low- and moderate-income (LMI) Americans and that state regulators should do all they can to reduce costs for this group.

“What is undeniable is that high auto insurance costs for LMI households either impose a substantial financial burden or greatly limit economic opportunity, especially access to jobs,” said the report’s authors, who are a former Texas regulator and the executive director of insurance at the CFA.

The CFA report makes three major recommendations to help right the situation: move to slice state-mandated minimum liability limits, create special programs for low-income Americans to get cheaper coverage and eliminate elements of the pricing process that hurt LMI households.

But members of the auto insurance community have been lashing out in response to the report, saying that placing more regulation on insurers would decrease competition in the marketplace, which could in turn actually end driving costs up for consumers.

“The most effective way to lower the price of auto insurance is reduce the costs of underlying factors” like the cost of health care and abuse of the system, said Robert Hartwig, president of the Insurance Information Institute (III). “Changing rating factors that have been shown to accurately project future losses will only distort prices and result in good drivers subsidizing riskier ones.”

The Property Casualty Insurers Association of America (PCI) responded in an official statement with equal tenacity.

“The CFA has the flawed impression that overregulation will keep insurance rates down,” said Paul Blume, the senior vice president of state government relations for the PCI. “Ultimately, overly restrictive laws and regulations have been shown time and again to reduce consumer choice and inhibit market innovations.”

Reducing State Liability Minimums

Support of efforts to cut state liability minimums–the minimum amount of coverage that policies issued in a particular state must provide–is about the only thing that the CFA and PCI seem to have in common.

The CFA believes that keeping liability minimums at 25/50/25–which would provide $75,000 in total liability coverage–or below might help lower costs slightly and make them more affordable to LMI households.

The authors also posit that these lower limits might entice uninsured drivers to get coverage and end up bringing costs down for all drivers.

Industry groups like the III, however, have noted that many state-mandated minimums may be too low to protect all of a person’s assets in a serious accident. And those with low minimums who do cause a serious accident could have to pay for the remaining damages out of pocket and be driven into debt.

Expanding Low-Income Programs

The report’s authors laud states like California and New Jersey for coming up with programs to help residents get coverage for cheap if they meet certain eligibility requirements related to income levels and driving history.

“When such plans exist,” the authors argue, “it is easier to morally justify rigorous enforcement of mandatory liability laws.”

But they go on to say that access to these programs are limited and need to be expanded.

“California’s program provides only liability protection and has even fewer [than 20,000] participants even though millions of drivers are uninsured,” they write.

The III’s Hartwig responded to the issue by noting the low enrollment in the California program and saying it indicates that the private market is already meeting consumers’ needs.

Tightening Regulation

While the CFA report acknowledges the fact that state regulatory departments do not allow insurers to take income level into account when setting rates, the authors say that factors like occupation, geographic location, education level and credit history are serving as proxies for income.

But industry groups say that these factors help indicate a policyholder’s level of risk, not income, and that they simply help insurers price risks more accurately.

The CFA also says regulators need to investigate whether rating factors discriminate against certain groups–even though a handful of state regulatory departments and the Federal Trade Commission have already done this for credit scoring–investigate claim settlements to see if they favor higher-income drivers and look into insurers’ charging more money for less coverage.

“Only state regulators can take the lead in mitigating these problems,” the authors conclude.

Number of Michigan Auto Thefts Down 50 Percent since 2000

Car thefts in Michigan declined by more than 9 percent between 2009 and 2010, according to data recently released by the Michigan Auto Theft Prevention Authority (ATPA).

The total number of cars stolen in the state dropped from about 29,650 to 26,875 during that period.

While the 9 percent year-to-year drop is impressive, the data also show that thefts actually dropped a whopping 50 percent between 2000 and 2010.

The state saw double or near double-digit decreases every year since 2007.

The ATPA attributed the decline to the 110 workers in the state who are funded with anti-theft grants from the ATPA, which was first established in 1986. At that time, Michigan was the state with the highest volume of car thefts in the country, with more than 72,000 vehicles stolen that year.

In 2010, the state had the 6th-highest volume and the 10th-highest theft rate.

Since then, there have been huge advances in antitheft technology–like automatic disabling devices and GPS tracking–that have significantly reduced the theft rate.

According to the ATPA, 6 of the 10 most-stolen vehicles in Michigan in 2010 were Dodge Ram pickups that were manufactured between 1997 and 2003.

The other vehicles on the top-10 list were Ford and Chevrolet pickups.

The largest share of thefts took place in Detroit, which accounted for 47 percent of the statewide total.

The ATPA is funded by a $1-per-vehicle assessment that’s paid by insurance companies and the returns on investments of those funds. Those funds then go to produce grants that help law enforcement agencies combat the theft problem. The Authority reported that it issued more than $6 million in grants between October 2010 and September 2011.

The ATPA says those grants resulted in $27.5 million worth of vehicles and equipment being recovered and more than 2,280 arrests being made.

In addition to law enforcement agencies, grants are issued to county prosecutors as well as nonprofits that provide VIN-etching services to residents. According to the ATPA’s latest report, etched vehicles are 29 percent less likely to be stolen when compared with non-etched cars.

Possible Insurance Implications of Lower Theft Rates

While Michiganders aren’t likely to see an immediate price cut while searching for the cheapest auto insurance in Michigan following the latest ATPA report, significant long-term drops in theft could help drivers get cheaper comprehensive coverage, which is the only type that provides protection after a car’s stolen.

When insurers have to pay fewer claims on a certain type of coverage, they generally lower the price.

However, insurers usually look at the local level, not statewide, and at the types of cars that are being stolen.

If there are drops in thefts in a policyholder’s area, or if they get a new car that has a better history with thefts or is equipped with effective antitheft devices, they could expect a drop in rates. But theft reductions at the statewide level likely won’t have any immediate effect on prices.

Court: Car Insurance Doesn’t Cover Van Fire that Burned Down House

A federal appeals court has ruled  the damages from a van fire that burned down a house under construction should not be covered by a Virginia auto insurance policy covering the van because the van was not being used “as a vehicle” when the fire erupted.

According to court documents, the case originally began in 2008, when John Robins was performing construction work on Steven and Cathy Ivey’s house in Virginia.

Robins had been working on the house for several weeks and was using his Ford Econoline van basically as a storage shed for tools and equipment, powering his equipment with a battery charger and electric splitter that he kept in the van.

He had his van parked there for about a month, driving to and from the house in a separate vehicle.

Robins left the work site for the weekend on Friday, August 15. On Sunday, a fire started in the van that spread to the house and caused nearly $293,000 in damages.

A handful of fire investigators all concluded that the fire had started as the result of “malfunction of equipment kept in the rear of the van, most likely an electrical problem with an extension cord or battery charger,” according to court documents.

After the fire, the company insuring the house paid the Iveys for the fire damage and sought reimbursement from Robins, saying that the incident was a result of his negligence.

Robins then sought coverage from State Farm, the provider of his Virginia car insurance policy, and Nationwide, the provider of his commercial general liability policy.

Each of the companies said the other should cover the damages.

Nationwide said that it should not have to pay the claim because it excluded coverage that was the result of Robins’s use of a vehicle. And State Farm said that it should not have to pay the claim because Robins was not technically using the vehicle at the time of the accident.

The 4th U.S. Court of Appeals found in favor of State Farm. The court noted that Virginia law says for a car insurer to cover the damages caused by a vehicle in an accident, it must be used “as a vehicle.”

The court wrote in its opinion that Robins was using the vehicle as a storage shed, not as a vehicle, and therefore fell out of the jurisdiction of an auto insurance policy.

The court reversed the district court’s ruling that State Farm pay for the damages, and the case was sent back to the district court for further proceedings.

Mercury Insurance Back in the Black for Fourth Quarter 2011

Mercury Insurance’s profits surged in the fourth quarter of 2011 after losing $3.78 million in the previous quarter, according to financial statements released by the company.

The company’s fourth-quarter profits came in at about $79.5 million.

Yearly profits rose for Mercury between 2010 and 2011. Profits for 2010 came in at $152.2 million, while last year saw the company making $191.2 million. That represents a year-to-year increase of more than 25 percent.

The company fared well in the fourth quarter despite a small dip in investment income–which saw a 3.3 percent drop–and the presence of a handful of events that inflicted significant losses.

Windstorms and severe rainstorms in California led to an estimated $25 million in pre-tax losses, and homeowners sinkhole claims in Florida cost the company $19 million pre-tax.

Mercury saw a 0.8 percent increase in net premiums written between 2010 and 2011.

Mercury stock was down 4.5 percent for the day at approximately 2 p.m. EST.

With the latest financial report, Mercury becomes one of a growing group of homeowners and car insurance companies recovering from huge losses caused by summer weather events that destroyed tens of billions of dollars’ worth of property and gouged insurers’ bottom lines.

Allstate reported at the beginning of the month that its quarterly profits rose 340 percent between the third and fourth quarters of last year. And Progressive reported that it made $76.3 million in December 2011–which was down from the month before but still up 73 percent from August, when the insurer saw the lowest profits in two years.

An Insurance Information Institute survey indicated that the majority of executives at the major property-casualty insurers believe that the industry is on the road to recovery.

Mercury currently has the 13th largest share of the American private passenger coverage market, according to the latest data from the National Association of Insurance Commissioners. The company had $2.07 billion in premiums written at that time.

About a third of the company’s auto premiums were collected from California drivers.

Insurance Roundtable: Agents Need to Capitalize on Online Traffic

Auto insurance agents need to drop the Yellow Pages and go online to keep pace with the growing number of consumers checking out quotes or purchasing their policies over the Internet, a new report based on a recent roundtable discussion involving West Coast industry professionals states.

According to the report, released this week by the WIAA Education & Research Foundation—a nonprofit group formed by the Western Insurance Agents Association—growing numbers of consumers are choosing to check out quotes and buy their auto insurance coverage online as opposed to dealing with an agent in a brick-and-mortar setting.

The availability of online methods for taking care of vehicle coverage needs has created a “growing distance between the consumer and (independent agents),” Michael Jans—president of Oregon-based Agency Revolution—told those in attendance.

Jans said there has been a major shift in the ways in which consumers shop for vehicle coverage, starting with an initial move toward online commerce that began in the mid-1990s and was made abundantly clear in a 2011 J.D. Power and Associates study that found that 54 percent of consumers buying vehicle coverage for the first time began by applying for online rate quotes.

Three companies that have led the way in direct-to-consumer, online policy sales—GEICO, Progressive and Esurance—supplied more than 70 percent of online quotes in 2010, according to Jans.

The report bolsters a growing body of research that shows that consumers are increasingly opting to bypass agents and shop for vehicle coverage on the Web.

Federal officials say that 70 percent of U.S. households now have access to high-speed Internet service. And a survey released earlier this year by marketing research company comScore found that about 20 percent of respondents had purchased a vehicle policy online—an increase of 5 percent compared to two years ago.

Meanwhile, the number of people who had used the services of an agent had slipped to just over 6 in 10, a 6 percent decrease from 2009.

According to the WIAA Foundation report, much of the switch to online sales is happening because of changes to the high-tech communications devices that consumers use. People who are shopping for vehicle coverage on their mobile devices get search results that are more focused on their geographic location and include fewer advertisement-driven results, Jans said.

They also tend to be more focused than those using the Internet from their personal computers on searching for something specific, rather than just surfing the Web, Jans said.

“Surfing is not something people do on their smart phones,” he told the other participants in the roundtable discussion. “They want it to be easy to use and they want results.”

Report: Insurers Could Get Hurt by Late Adoption of Telematics Tech

Auto insurers are increasingly offering programs that use electronic devices installed in policyholder vehicles to track driver behavior and mileage—a growing trend that coverage providers cannot afford to miss out on, according to a new report.

At least half the top 20 property and casualty insurers in both the United States and United Kingdom either have a program or are developing one that uses telematics devices, according to the report from Celent, an information technology consulting firm.

The trend continues to be driven by ongoing reductions in the cost of manufacturing the devices, more favorable governmental regulations and a reduction in the privacy concerns of consumers, who some sources say are increasingly recognizing the benefits of taking part in such programs, the report states.

“The threat to late adopters is real: Better drivers will enroll in telematics programs, leaving behind a shrinking pool of poorer risks to the traditional insurers,” writes report author Catherine Stagg-Macey, a London-based Celent official.

The report is the latest to document an increase in the number of vehicle insurance providers offering voluntary programs through which policyholders can outfit their cars with high-tech gadgets that capture data on speed, distance, hard braking, and other information. That data is relayed directly to the insurer and can lead to discounts for drivers—if they’re shown to be safe behind the wheel.

Insurers have long set rates based on traditional criteria including factors including age, gender, vehicle type, driving history and location. And usage-based programs that predate telematics factored in the number of miles driven, with insurers relying largely on either driver estimates or odometer readings.

Usage-based programs that make use of the electronic feedback from telematics devices, however, automatically provide data that say much more about how motorists actually drive, giving insurers a clearer picture about the level of risk posed by a particular motorist.

That allows for greater accuracy in pricing by insurance companies, who are then able—at least in theory—to reward safe drivers who don’t go too far from home too often with potentially some of the lowest cost car insurance the companies have to offer.

But Stagg-Macey says some of the risks and benefits of programs that electronically track driver behavior are still emerging.

As greater numbers of drivers who are safe—and whose driving habits prove it—enroll in programs that feature the electronic gizmos, companies that have not taken that road “will find themselves insuring shrinking pools of poorer drivers, who will appear to be normal drivers if traditional rating factors are used,” according to the report.

Meanwhile, the mere knowledge that electronic devices are present in vehicles has been shown to result in some motorists’ reducing their speeds and braking more carefully, Stagg-Macy says, making them safer and providing a potential financial boost to policyholders and insurers alike.

In addition to any savings customers may earn for safety, the devices also can give them details about how their car is being driven by other family members, make it more clear to consumers how their premiums are priced and provide feedback on fuel consumption and carbon dioxide emissions.

The report notes the success enjoyed by Progressive Insurance, which led the way in usage-based discount offerings with its Snapshot program. A long list of other coverage providers has come out with telematics-based programs in recent years, including major companies such as Allstate and State Farm, and—more recently—smaller vehicle insurers like the Hartford and Travelers.

Celent points out a significant difference in the marketing of telematics programs between the U.K. and the U.S., where insurers have pitched the offerings as a chance to save by logging few miles and driving cautiously.

In the U.K., meanwhile, companies have focused mainly on marketing to teens and other groups who are considered above-average risks on the road. One British company, Aviva, launched a pilot telematics program in 2004, later pulling it off the market in part because of a lack of interest and problems handling the sheer volume of data delivered.

But interest is expected to increase in both nations in the coming years, due to a number of factors, including skyrocketing coverage costs in the U.K., where premiums increased by 38 percent in 2010, according to the report.

Stagg-Macey writes that insurers in the near future will probably pursue a “scaled-down approach” toward their telematics offerings in order to keep costs low. That can be done by installing the types of devices currently being used or by opting to employ the technology of smart phones—which share many features with telematics devices.

State Farm already offers a smart phone application—Driver Feedback—that monitors vehicle operation through the device’s accelerometer and GPS location to provide consumers with driving scores. One of the problems insurers could face by taking this approach is the need to make sure the smart phone has been switched on, the report points out.

There is also the possibility of greater use of equipment that is built into the vehicle, which is already employed as part of Ford’s Sync program and General Motors’ OnStar.

The report claims that BMW has announced plans to pre-install telematics software in cars for the European market starting in 2015.

Several issues will have to be carefully considered by insurers planning to introduce telematics programs, Stagg-Macy says. They include which client segments to target with the program, how to keep policyholders’ data safe—and assure them it is—adhering to legal and regulatory restrictions and integrating the use of data into existing claims-handling process.

PCI Plans to Support No-Fault Reform, Oppose Body-Shop Bills

Officials with the Property Casualty Insurers Association of America (PCI) announced this week they intend to push for the overhaul of no-fault auto insurance systems in several states this year and to fight in others against proposed increases in labor rates for auto body repair.

The association, which includes more than 1,000 member companies nationwide, released a list of issues this week on which it plans to lobby state lawmakers, including no-fault changes, proposals that would allow the state to set hourly rates for auto body repair and mechanical work on insured vehicles, and restrictions on the use of consumer credit histories in determining premiums.

“PCI is committed to advancing a pro-consumer agenda that supports healthy, competitive insurance markets across the nation,” Paul Blume, senior vice president of state government relations for PCI, said in a news release.

No-Fault Reforms Backed by PCI

PCI is one of many insurer organizations pushing for legislators to make changes to no-fault systems in a handful of states. According to a report released last month by the Insurance Research Council (IRC), increases in the number of injury claims filed by policyholders in New York, New Jersey and Michigan alone are driving up insurer costs nationwide.

Those states are three of a dozen nationwide with no-fault vehicle coverage systems that were designed to make it easy for accident victims to file claims and to cut down on the number of lawsuits filed as a result of vehicle crashes.

But PCI and other insurers and industry groups say dishonest claimants, lawyers, medical providers and others are taking advantage of loopholes in no-fault systems in Florida, Michigan, New Jersey and New York to file bogus claims.

Industry experts say staged accidents, overbilling, unnecessary medical procedures and other expenses have driven up costs for insurers and forced them to increase the price they charge consumers for auto insurance in New Jersey and other no-fault states.

According to IRC, personal injury protection (PIP) claim costs per insured vehicle nationwide rose by more than 18 percent from 2008 to 2010, driven partly by average per-vehicle PIP claim cost increases of 62 percent in Florida over that time period and a hike of 120 percent in Michigan over the last decade.

An Insurance Information Institute (III) study released last month noted that Florida and New York are the fourth- and fifth-most-expensive states, respectively, for private vehicle coverage, and the III estimated that motorists there would pay a combined $800 million extra on premiums in 2011 as a result of bogus claims and other scams.

New Jersey legislators have spent months discussing revamping that state’s system for insuring vehicles after repeated insurer complaints about criminals gaming the system by filing dubious claims.

And some lawmakers and insurers are also calling for an overhaul of Michigan’s no-fault system, the only one in the U.S. that requires insurers to pay for up to a lifetime of medical and rehabilitative costs for victims of serious vehicle crashes.

Michigan drivers must pay into a state fund that helps finance PIP claims that total more than $500,000. That fee, which was $145 in 2011, is added onto each motor vehicle policy.

Coverage providers say the system leaves them with prohibitively high health care costs and has caused policy rates in Michigan to become among the highest nationwide. PIP claim costs in Michigan have risen by 20 percent in the last five years because of the state’s lifetime benefits requirement, a recent study by the American Insurance Association found.

PCI Opposes Body Shop Regulations

PCI officials also plan to oppose some state legislation that would establish hourly rates for auto body work and impact the ability of insurers to steer business toward companies they prefer, among other measures.

A bill currently being considered by a legislative committee in Massachusetts calls for establishment of a “fair and reasonable process” for determining the hourly rates auto body shops can charge for fixing insured vehicles.

Wages for auto body workers in the state have stagnated in recent years, according to industry representatives. Coverage providers oppose any move for state involvement in the setting of hourly wages on the grounds that rates should be determined by the market and that establishing minimums would artificially drive up their costs.

Cost-Controlling Legislative Initiatives Could Help Insurers’ Bottom Lines Recover

PCI officials noted that 2011 was an extremely active year for tropical storms and other natural disasters that cost insurers plenty.

According to a recent report from PCI and ISO, domestic property and casualty insurers saw their profits dip last year to a combined $8 billion, a 70 percent drop from the previous year. The organizations put much of the blame for those subpar results on underwriting losses that resulted from catastrophic weather events.

But most insurers think 2012 will be a better year for the industry, with 75 percent of respondents to a recent III survey predicting increased profits this year.

More than two-thirds of coverage providers said they expect increased profitability in private vehicle coverage and 67 percent predicted the same for homeowner policies.

III: Insurance Industry Members Foresee “Road to Recovery”

Seventy-five percent of U.S. property and casualty insurers expect the industry to see increased profits in 2012, despite nearly one-third predicting that premium growth will remain flat and less than 20 percent foreseeing a rise in interest rates, according to a new survey from the Insurance Information Institute (III) of about 100 insurance company representatives.

Sixty-three percent of respondents said they expect increased profitability in private vehicle insurance, and 67 percent predicted the same for homeowner coverage. Seventy-two percent expected an improvement in commercial lines.

The poll, conducted at a recent III industry forum in New York, found that 72 percent of industry executives surveyed believe the industry is “on the road to recovery,” after natural disasters and other setbacks inflicted deep losses in 2010.

The institute’s senior vice president and economist, Steven Weisbart, noted that the U.S. economy is expected to grow at an annual rate of just over 2 percent this year, according to a majority of economic forecasters.

“In that scenario, the demand for property/casualty insurance will increase modestly, both in terms of personal and commercial coverages,” Weisbart said in a news release. “The industry is well capitalized to provide this additional coverage and to pay claims under it without difficulty.”

2011 Left Much Room for Improvement

The apparent optimism follows dismal reports on last year’s performance, which saw a long list of top insurers reporting net losses.

According to a report released in late December by ISO and the Property Casualty Insurers Association of America (PCI), U.S. insurers saw net, after-tax income dip to a combined $8 billion during the first nine months of 2011, a 70 percent reduction compared to the same period the previous year.

The report blamed the poor results mainly on large net losses and loss adjustment expenses (LLAE) due to tropical storms, tornadoes and other catastrophes that obligated insurers to settle claims on everything from homeowner coverage in Texas to Connecticut auto insurance policies. Analysts said severe weather events caused more than $33.2 billion in LLAE from January through September, more than triple the toll suffered in the same time frame in 2010.

Reps Expect Increases in Premium Growth, Stagnation in Investment Rates

More than two-thirds of those who took part in the poll believe premium growth will increase, with 31 percent predicting it will stay flat and 2 percent expecting it to decrease.

More than half said they think policyholder surplus—the funds insurers have on hand, above and beyond what is required to pay benefits and meet other obligations—will increase ,while 35 percent expected no change and 9 percent saw a decrease coming.

The forecasts were brighter for investments, with three-quarters of industry leaders predicting that equity markets will have an up year. III officials noted that those investments make up only 15 to 20 percent of invested assets, however, with 70 percent of assets in bonds.

According to a report released last month by a nationwide coalition of consumer advocacy groups, insurance companies make most of their profits by investing customer payments, rather than on the premiums themselves, which are often outweighed by losses.

Seventy-eight percent of respondents to the III survey said they believe investment rates would remain unchanged this year, with another 19 percent expecting a rise and 4 percent foreseeing a fall.

The prices for policies “will be determined, as they should be, by state- and local-level market conditions, recognizing the impact of inflation on claims and the effect of lower investment income than the industry has earned in prior years,” Weisbart said.

Mercury Insurance Back in the Black for Fourth Quarter 2011

Mercury Insurance’s profits surged in the fourth quarter of 2011 after losing $3.78 million in the previous quarter, according to financial statements released by the company.

The company’s fourth-quarter profits came in at about $79.5 million.

Yearly profits rose for Mercury between 2010 and 2011. Profits for 2010 came in at $152.2 million, while last year saw the company making $191.2 million. That represents a year-to-year increase of more than 25 percent.

The company fared well in the fourth quarter despite a small dip in investment income–which saw a 3.3 percent drop–and the presence of a handful of events that inflicted significant losses.

Windstorms and severe rainstorms in California led to an estimated $25 million in pre-tax losses, and homeowners sinkhole claims in Florida cost the company $19 million pre-tax.

Mercury saw a 0.8 percent increase in net premiums written between 2010 and 2011.

Mercury stock was down 4.5 percent for the day at approximately 2 p.m. EST.

With the latest financial report, Mercury becomes one of a growing group of homeowners and car insurance companies recovering from huge losses caused by summer weather events that destroyed tens of billions of dollars’ worth of property and gouged insurers’ bottom lines.

Allstate reported at the beginning of the month that its quarterly profits rose 340 percent between the third and fourth quarters of last year. And Progressive reported that it made $76.3 million in December 2011–which was down from the month before but still up 73 percent from August, when the insurer saw the lowest profits in two years.

An Insurance Information Institute survey indicated that the majority of executives at the major property-casualty insurers believe that the industry is on the road to recovery.

Mercury currently has the 13th largest share of the American private passenger coverage market, according to the latest data from the National Association of Insurance Commissioners. The company had $2.07 billion in premiums written at that time.

About a third of the company’s auto premiums were collected from California drivers.

Car Insurance Community Rejects Consumer Group’s Conclusions

A new report released this week by the Consumer Federation of America (CFA) says that premiums have become an undue economic burden on low- and moderate-income (LMI) Americans and that state regulators should do all they can to reduce costs for this group.

“What is undeniable is that high auto insurance costs for LMI households either impose a substantial financial burden or greatly limit economic opportunity, especially access to jobs,” said the report’s authors, who are a former Texas regulator and the executive director of insurance at the CFA.

The CFA report makes three major recommendations to help right the situation: move to slice state-mandated minimum liability limits, create special programs for low-income Americans to get cheaper coverage and eliminate elements of the pricing process that hurt LMI households.

But members of the auto insurance community have been lashing out in response to the report, saying that placing more regulation on insurers would decrease competition in the marketplace, which could in turn actually end driving costs up for consumers.

“The most effective way to lower the price of auto insurance is reduce the costs of underlying factors” like the cost of health care and abuse of the system, said Robert Hartwig, president of the Insurance Information Institute (III). “Changing rating factors that have been shown to accurately project future losses will only distort prices and result in good drivers subsidizing riskier ones.”

The Property Casualty Insurers Association of America (PCI) responded in an official statement with equal tenacity.

“The CFA has the flawed impression that overregulation will keep insurance rates down,” said Paul Blume, the senior vice president of state government relations for the PCI. “Ultimately, overly restrictive laws and regulations have been shown time and again to reduce consumer choice and inhibit market innovations.”

Reducing State Liability Minimums

Support of efforts to cut state liability minimums–the minimum amount of coverage that policies issued in a particular state must provide–is about the only thing that the CFA and PCI seem to have in common.

The CFA believes that keeping liability minimums at 25/50/25–which would provide $75,000 in total liability coverage–or below might help lower costs slightly and make them more affordable to LMI households.

The authors also posit that these lower limits might entice uninsured drivers to get coverage and end up bringing costs down for all drivers.

Industry groups like the III, however, have noted that many state-mandated minimums may be too low to protect all of a person’s assets in a serious accident. And those with low minimums who do cause a serious accident could have to pay for the remaining damages out of pocket and be driven into debt.

Expanding Low-Income Programs

The report’s authors laud states like California and New Jersey for coming up with programs to help residents get coverage for cheap if they meet certain eligibility requirements related to income levels and driving history.

“When such plans exist,” the authors argue, “it is easier to morally justify rigorous enforcement of mandatory liability laws.”

But they go on to say that access to these programs are limited and need to be expanded.

“California’s program provides only liability protection and has even fewer [than 20,000] participants even though millions of drivers are uninsured,” they write.

The III’s Hartwig responded to the issue by noting the low enrollment in the California program and saying it indicates that the private market is already meeting consumers’ needs.

Tightening Regulation

While the CFA report acknowledges the fact that state regulatory departments do not allow insurers to take income level into account when setting rates, the authors say that factors like occupation, geographic location, education level and credit history are serving as proxies for income.

But industry groups say that these factors help indicate a policyholder’s level of risk, not income, and that they simply help insurers price risks more accurately.

The CFA also says regulators need to investigate whether rating factors discriminate against certain groups–even though a handful of state regulatory departments and the Federal Trade Commission have already done this for credit scoring–investigate claim settlements to see if they favor higher-income drivers and look into insurers’ charging more money for less coverage.

“Only state regulators can take the lead in mitigating these problems,” the authors conclude.

Progressive Insurance Announces 1,100 New Job Openings

Car insurance provider Progressive is widely publicizing the fact that it plans to hire more than 1,100 people in five states over the coming months. The direct-to-consumer coverage provider says it’s looking for candidates that have experience with customer service.

New hires will be helping customers from the company’s offices in the following cities:

• Colorado Springs, Colo.
• Cleveland, Ohio
• Phoenix, Ariz.
• Tampa, Fla.
• Austin, Texas

According to news releases from the company, 129 people will be hired in Colorado Springs, 337 in Cleveland, 65 in Phoenix, 390 in Tampa, and 185 will be hired in Austin to assist customers with buying policies and getting insurance quotes in Texas.

Progressive has prided itself on becoming one of the largest direct-to-consumer car insurance companies in the nation. That means a large portion of its customer base buys policies through the Web and over the phone directly from the insurer, instead of going through agents.


The portion of Progressive’s policies that are sold directly to policyholders is just under 50 percent.

In 2010, Progressive was the fourth-largest private passenger auto insurer and the ninth-largest property-casualty insurer in terms of market share.

The company wrote a total of nearly $14.7 billion in insurance premiums in 2010, leaving it with a 3 percent market share.

Progressive has been struggling in recent months due to a high volume of unexpected catastrophic weather events. The company recently announced that its fourth-quarter profits dropped 14 percent between 2010 and 2011.

But, all together, Progressive’s yearly profits dropped just 5 percent between 2010 and 2011.

Allstate Insurance Gets Fourth-Quarter Boost in Profits

Car insurance provider Allstate saw profits jump 340 percent between the third and fourth quarters of 2011, a development that’s being largely attributed to the absence of the types of natural disasters in the fourth quarter that wreaked havoc in the third.

The amount of catastrophic losses suffered by the company plummeted 94 percent between the third and fourth quarters, dropping from $1.08 billion down to $66 million. Insurance companies generally consider catastrophic losses to be events that cause $25 million or more in insured losses.

Allstate’s fourth quarter profits were $724 million, which is up considerably from the $165 million in third-quarter profits and the $296 million in profits the company reaped in the fourth quarter of 2010.

But the catastrophic weather events still took their toll on the year-end numbers.

Between 2010 and 2011, yearly profits for the insurer dropped 15 percent, to $788 million.

That reverses the trend seen between 2009 and 2010, when the company saw an increase in yearly profits of 8.7 percent.

Allstate remains one of the top rated auto insurance companies in the country. As of March 2011, it had the second-largest share of the private passenger coverage market with nearly $17 billion in premiums written–a 10.2 percent market share.

State Farm is the only car insurer with a larger share of the market.

While the industry saw gargantuan losses from tornadoes in the Midwest, storms on the East Coast and wind storms on the West Coast last year, many experts say the industry is on the road to recovery.

Progressive Insurance Gets Fourth Pay-As-You-Drive Patent

Progressive announced Monday it has been issued a fourth patent for its usage-based car insurance program, Snapshot, which electronically tracks driving behavior and offers policyholders an opportunity to earn discounts by showing safe habits and low mileage.

The insurer said in a news release that the latest patent “relates, in part, to producing a driver safety score based on monitored driving data.”

The voluntary Snapshot program, which officials say is used by 250,000 Progressive customers in 39 states and the District of Columbia—making it far larger than similar programs offered by other coverage providers—relies on data that is collected by a device inserted into the diagnostic port of an insured vehicle and relayed to the company.

Policyholders can earn savings of as much as 30 percent if the feedback shows they log relatively few miles and operate the vehicle safely when it comes to factors such as acceleration and braking.

“For more than 15 years we have invested a great deal into the research, development, testing and piloting of usage-based insurance programs and will continue to do so,” Glenn Renwick, Progressive’s president and chief executive officer, said in a news release. “It’s gratifying to know that the U.S. Patent (and Trademark, or USPTO) office recognizes the uniqueness of our system technologies.”

The USPTO confirmed on its website that the patent had been issued on Jan. 3.

Industry insiders credit the Ohio-based insurer with leading the way on usage-based vehicle coverage programs that electronically monitor how insured vehicles are driven. The programs provide insurers with data that is more reliable than information such as a driver’s mileage estimates or publicly available data on policyholders.

Experts call the programs a win-win for both insurers and their customers. The data allows coverage providers to calculate risk and price coverage more accurately, and discount car insurance is awarded to drivers who are shown to be safe behind the wheel.

“Progressive has been an industry pioneer,” a recent report by information technology consulting firm Celent states.

Progressive Holds Important ‘Pay as You Drive’ Patents

According to a report from the Brookings Institution, Progressive has “aggressively sought” telematics-related patents since the late 1990s. The title “pay as you drive” is itself registered to Progressive.

The authors of the Brookings Institution report–which was published in 2008, before many of the country’s major insurers began launching their own usage-based programs–wrote that Progressive’s patent collection could end up being a barrier to implementation of similar programs by smaller insurers, who may be concerned about sparking infringement suits.

They went on to say, though, that Progressive has expressed a willingness to license pay as you drive and that “there is legitimate question about the extent to which Progressive’s patents would be upheld in a patent-infringement suit.”

Celent Predicts Further Growth of Telematics Programs

The Celent report predicts that programs such as Snapshot will grow significantly in the future, drawing both forward-thinking insurers and motorists seeking more affordable rates.

According to Celent, 55 percent of the top 20 property and casualty insurers in the United States now offer such programs, along with 50 percent of those in the United Kingdom. The report’s author says lower manufacturing costs and other factors are making the programs more cost-effective for companies.

Snapshot allows participants to track their progress and eligibility for discounts by visiting Progressive’s website. A policyholder’s eligibility for savings is determined after the first month of his or her participation in the program, and the electronic device remains installed in the vehicle until the end of the six-month policy term in order to determine a renewal discount.

III: Insurance Industry Members Foresee “Road to Recovery”

Seventy-five percent of U.S. property and casualty insurers expect the industry to see increased profits in 2012, despite nearly one-third predicting that premium growth will remain flat and less than 20 percent foreseeing a rise in interest rates, according to a new survey from the Insurance Information Institute (III) of about 100 insurance company representatives.

Sixty-three percent of respondents said they expect increased profitability in private vehicle insurance, and 67 percent predicted the same for homeowner coverage. Seventy-two percent expected an improvement in commercial lines.

The poll, conducted at a recent III industry forum in New York, found that 72 percent of industry executives surveyed believe the industry is “on the road to recovery,” after natural disasters and other setbacks inflicted deep losses in 2010.

The institute’s senior vice president and economist, Steven Weisbart, noted that the U.S. economy is expected to grow at an annual rate of just over 2 percent this year, according to a majority of economic forecasters.

“In that scenario, the demand for property/casualty insurance will increase modestly, both in terms of personal and commercial coverages,” Weisbart said in a news release. “The industry is well capitalized to provide this additional coverage and to pay claims under it without difficulty.”

2011 Left Much Room for Improvement

The apparent optimism follows dismal reports on last year’s performance, which saw a long list of top insurers reporting net losses.

According to a report released in late December by ISO and the Property Casualty Insurers Association of America (PCI), U.S. insurers saw net, after-tax income dip to a combined $8 billion during the first nine months of 2011, a 70 percent reduction compared to the same period the previous year.

The report blamed the poor results mainly on large net losses and loss adjustment expenses (LLAE) due to tropical storms, tornadoes and other catastrophes that obligated insurers to settle claims on everything from homeowner coverage in Texas to Connecticut auto insurance policies. Analysts said severe weather events caused more than $33.2 billion in LLAE from January through September, more than triple the toll suffered in the same time frame in 2010.

Reps Expect Increases in Premium Growth, Stagnation in Investment Rates
More than two-thirds of those who took part in the poll believe premium growth will increase, with 31 percent predicting it will stay flat and 2 percent expecting it to decrease.

More than half said they think policyholder surplus—the funds insurers have on hand, above and beyond what is required to pay benefits and meet other obligations—will increase ,while 35 percent expected no change and 9 percent saw a decrease coming.

The forecasts were brighter for investments, with three-quarters of industry leaders predicting that equity markets will have an up year. III officials noted that those investments make up only 15 to 20 percent of invested assets, however, with 70 percent of assets in bonds.

According to a report released last month by a nationwide coalition of consumer advocacy groups, insurance companies make most of their profits by investing customer payments, rather than on the premiums themselves, which are often outweighed by losses.

Seventy-eight percent of respondents to the III survey said they believe investment rates would remain unchanged this year, with another 19 percent expecting a rise and 4 percent foreseeing a fall.

The prices for policies “will be determined, as they should be, by state- and local-level market conditions, recognizing the impact of inflation on claims and the effect of lower investment income than the industry has earned in prior years,” Weisbart said.

PCI Plans to Support No-Fault Reform, Oppose Body-Shop Bills

Officials with the Property Casualty Insurers Association of America (PCI) announced this week they intend to push for the overhaul of no-fault auto insurance systems in several states this year and to fight in others against proposed increases in labor rates for auto body repair.
The association, which includes more than 1,000 member companies nationwide, released a list of issues this week on which it plans to lobby state lawmakers, including no-fault changes, proposals that would allow the state to set hourly rates for auto body repair and mechanical work on insured vehicles, and restrictions on the use of consumer credit histories in determining premiums.
“PCI is committed to advancing a pro-consumer agenda that supports healthy, competitive insurance markets across the nation,” Paul Blume, senior vice president of state government relations for PCI, said in a news release.
No-Fault Reforms Backed by PCI
PCI is one of many insurer organizations pushing for legislators to make changes to no-fault systems in a handful of states. According to a report released last month by the Insurance Research Council (IRC), increases in the number of injury claims filed by policyholders in New York, New Jersey and Michigan alone are driving up insurer costs nationwide.
Those states are three of a dozen nationwide with no-fault vehicle coverage systems that were designed to make it easy for accident victims to file claims and to cut down on the number of lawsuits filed as a result of vehicle crashes.
But PCI and other insurers and industry groups say dishonest claimants, lawyers, medical providers and others are taking advantage of loopholes in no-fault systems in Florida, Michigan, New Jersey and New York to file bogus claims.
Industry experts say staged accidents, overbilling, unnecessary medical procedures and other expenses have driven up costs for insurers and forced them to increase the price they charge consumers for auto insurance in New Jersey and other no-fault states.

According to IRC, personal injury protection (PIP) claim costs per insured vehicle nationwide rose by more than 18 percent from 2008 to 2010, driven partly by average per-vehicle PIP claim cost increases of 62 percent in Florida over that time period and a hike of 120 percent in Michigan over the last decade.

An Insurance Information Institute (III) study released last month noted that Florida and New York are the fourth- and fifth-most-expensive states, respectively, for private vehicle coverage, and the III estimated that motorists there would pay a combined $800 million extra on premiums in 2011 as a result of bogus claims and other scams.

New Jersey legislators have spent months discussing revamping that state’s system for insuring vehicles after repeated insurer complaints about criminals gaming the system by filing dubious claims.

And some lawmakers and insurers are also calling for an overhaul of Michigan’s no-fault system, the only one in the U.S. that requires insurers to pay for up to a lifetime of medical and rehabilitative costs for victims of serious vehicle crashes.

Michigan drivers must pay into a state fund that helps finance PIP claims that total more than $500,000. That fee, which was $145 in 2011, is added onto each motor vehicle policy.

Coverage providers say the system leaves them with prohibitively high health care costs and has caused policy rates in Michigan to become among the highest nationwide. PIP claim costs in Michigan have risen by 20 percent in the last five years because of the state’s lifetime benefits requirement, a recent study by the American Insurance Association found.

PCI Opposes Body Shop Regulations

PCI officials also plan to oppose some state legislation that would establish hourly rates for auto body work and impact the ability of insurers to steer business toward companies they prefer, among other measures.

A bill currently being considered by a legislative committee in Massachusetts calls for establishment of a “fair and reasonable process” for determining the hourly rates auto body shops can charge for fixing insured vehicles.

Wages for auto body workers in the state have stagnated in recent years, according to industry representatives. Coverage providers oppose any move for state involvement in the setting of hourly wages on the grounds that rates should be determined by the market and that establishing minimums would artificially drive up their costs.

Cost-Controlling Legislative Initiatives Could Help Insurers’ Bottom Lines Recover

PCI officials noted that 2011 was an extremely active year for tropical storms and other natural disasters that cost insurers plenty.

According to a recent report from PCI and ISO, domestic property and casualty insurers saw their profits dip last year to a combined $8 billion, a 70 percent drop from the previous year. The organizations put much of the blame for those subpar results on underwriting losses that resulted from catastrophic weather events.

But most insurers think 2012 will be a better year for the industry, with 75 percent of respondents to a recent III survey predicting increased profits this year.

More than two-thirds of coverage providers said they expect increased profitability in private vehicle coverage and 67 percent predicted the same for homeowner policies.

Progressive Insurance’s December Profits Down 32 Percent

Progressive Insurance announced Thursday that December 2011 profits were down nearly one-third from the year before, dropping from $112.8 million in December 2010 to $76.3 million a month ago.

The results for the fourth quarter of 2011 are a little bit rosier. The year-over-year change in profits for that period was a decline of 14 percent, from $299 million to $256.7 million.

Much of the fourth-quarter drop can be attributed to a decline in investment gains. Fourth quarter 2011 gains were down 62 percent when compared with 2010.

But the results are still a marked improvement from the insurer’s performance in the third quarter, when the company posted a year-over-year decline in profits of 42 percent.

Progressive has seen year-over-year drops in profits in five of the last six months.

When comparing 2011 with 2010, profits for the insurer, which relies heavily on the business of consumers who want to get auto insurance quotes online and buy without having to interact with agents, fell by a total of 5 percent.

Progressive Just One of Many Insurers with Sinking Profits

According to a report released last month by the Insurance Information Institute (III), coverage providers could end up spending $35 billion to settle claims for damages suffered by claimants as a result of natural disasters in 2011.

The ISO and the Property Casualty Insurers Association of America (PCI) reported last month that insurer profits dipped to a combined $8 billion January through September, a 70 percent decrease from the same period in 2010.

Insurers said the decline was largely the result of natural disasters, including Hurricane Irene, which caused an estimated $7.3 billion in insured losses when it swept along the East Coast in late August.

But industry insiders expect things to look up in the coming year. The Insurance Information Institute (III) points out that 75 percent of U.S. property and casualty insurers expect the industry to see increased profits in 2012.

A recent III survey found that 72 percent of industry executives believe the industry is recovering after natural disasters and other setbacks inflicted deep losses in 2010.

Progressive Insurance Announces 1,100 New Job Openings

Car insurance provider Progressive is widely publicizing the fact that it plans to hire more than 1,100 people in five states over the coming months. The direct-to-consumer coverage provider says it’s looking for candidates that have experience with customer service.

New hires will be helping customers from the company’s offices in the following cities:

• Colorado Springs, Colo.
• Cleveland, Ohio
• Phoenix, Ariz.
• Tampa, Fla.
• Austin, Texas

According to news releases from the company, 129 people will be hired in Colorado Springs, 337 in Cleveland, 65 in Phoenix, 390 in Tampa, and 185 will be hired in Austin to assist customers with buying policies and getting insurance quotes in Texas.

Progressive has prided itself on becoming one of the largest direct-to-consumer car insurance companies in the nation. That means a large portion of its customer base buys policies through the Web and over the phone directly from the insurer, instead of going through agents.

The portion of Progressive’s policies that are sold directly to policyholders is just under 50 percent.

In 2010, Progressive was the fourth-largest private passenger auto insurer and the ninth-largest property-casualty insurer in terms of market share.

The company wrote a total of nearly $14.7 billion in insurance premiums in 2010, leaving it with a 3 percent market share.

Progressive has been struggling in recent months due to a high volume of unexpected catastrophic weather events. The company recently announced that its fourth-quarter profits dropped 14 percent between 2010 and 2011.

But, all together, Progressive’s yearly profits dropped just 5 percent between 2010 and 2011.

Allstate Insurance Gets Fourth-Quarter Boost in Profits

Car insurance provider Allstate saw profits jump 340 percent between the third and fourth quarters of 2011, a development that’s being largely attributed to the absence of the types of natural disasters in the fourth quarter that wreaked havoc in the third.

The amount of catastrophic losses suffered by the company plummeted 94 percent between the third and fourth quarters, dropping from $1.08 billion down to $66 million. Insurance companies generally consider catastrophic losses to be events that cause $25 million or more in insured losses.

Allstate’s fourth quarter profits were $724 million, which is up considerably from the $165 million in third-quarter profits and the $296 million in profits the company reaped in the fourth quarter of 2010.

But the catastrophic weather events still took their toll on the year-end numbers.

Between 2010 and 2011, yearly profits for the insurer dropped 15 percent, to $788 million.

That reverses the trend seen between 2009 and 2010, when the company saw an increase in yearly profits of 8.7 percent.

Allstate remains one of the top rated auto insurance companies in the country. As of March 2011, it had the second-largest share of the private passenger coverage market with nearly $17 billion in premiums written–a 10.2 percent market share.

State Farm is the only car insurer with a larger share of the market.

While the industry saw gargantuan losses from tornadoes in the Midwest, storms on the East Coast and wind storms on the West Coast last year, many experts say the industry is on the road to recovery.

Tramadol Oral Overdose

If overdose is suspected, contact a poison control center or emergency room immediately. US residents can call the US National Poison Hotline at 1-800-222-1222. Canada residents can call a provincial poison control center. Symptoms of overdose may include: slow breathing, slow/irregular heartbeat, loss of consciousness, seizure.

NOTES:
Do not share this medication with others.
This medication has been prescribed for your current condition only. Do not use it later for another condition unless told to do so by your doctor. A different medication may be necessary in that case.

MISSED DOSE:
Not applicable.

STORAGE:
Store at room temperature away from light and moisture. Keep all medications away from children and pets.
Do not flush medications down the toilet or pour them into a drain unless instructed to do so. Properly discard this product when it is expired or no longer needed. Consult your pharmacist or local waste disposal company.

Privacy Policy

The privacy of our visitors to dabestautoinsurance.blogspot.com is important to us.

At dabestautoinsurance.blogspot.com, we recognize that privacy of your personal information is important. Below is information on what types of personal information we receive and collect when you use and visit dabestautoinsurance.blogspot.com, and how we safeguard your information. We will never sell your personal information to third parties.

Log Files

As with most other websites, we collect and use the data contained in log files. The information in the log files include your IP (internet protocol) address, your ISP (internet service provider, such as AOL), the browser you used to visit our site (such as Internet Explorer or Firefox), the time you visited our site and which pages you visited throughout our site.

Cookies and Web Beacons

We do use cookies to store information, such as your personal preferences when you visit our site. This could include only showing you a popup once in your visit, or the ability to login to some of our features, such as forums.

We also use third party advertisements on dabestautoinsurance.blogspot.com to support our site. Some of these advertisers may use technology such as cookies and web beacons when they advertise on our site, which will also send these advertisers (such as Google through the Google AdSense program) information including your IP address, your ISP , the browser you used to visit our site, and in some cases, whether you have Flash installed. This is generally used for geotargeting purposes (showing New York real estate ads to someone in New York, for example) or showing certain ads based on specific sites visited (such as showing cooking ads to someone who frequents cooking sites).

DoubleClick DART Cookies

We also may use DART cookies for ad serving through Google’s DoubleClick, which places a cookie on your computer when you are browsing the web and visit a site using DoubleClick advertising (including some Google AdSense advertisements). This cookie is used to serve ads specific to you and your interests (”interest based targeting”). The ads served will be targeted based on your previous browsing history (For example, if you have been viewing sites about visiting Las Vegas, you may see Las Vegas hotel advertisements when viewing a non-related site, such as on a site about hockey). DART uses “non personally identifiable information”. It does NOT track personal information about you, such as your name, email address, physical address, telephone number, social security numbers, bank account numbers or credit card numbers. You can opt-out of this ad serving on all sites using this advertising by visiting http://www.doubleclick.com/privacy/dart_adserving.aspx

You can choose to disable or selectively turn off our cookies or third-party cookies in your browser settings, or by managing preferences in programs such as Norton Internet Security. However, this can affect how you are able to interact with our site as well as other websites. This could include the inability to login to services or programs, such as logging into forums or accounts.

Deleting cookies does not mean you are permanently opted out of any advertising program. Unless you have settings that disallow cookies, the next time you visit a site running the advertisements, a new cookie will be added.