NAIC: 59% Homeowners at Risk of Property Loss

Posted by Benji Riggins on May 29, 2012 under Insurance News | Be the First to Comment

According to a NAIC report, thousands of homeowners are cleaning up and filing insurance claims following an outbreak of devastating tornadoes across the U.S., but are those possessions properly protected to the fullest extent?

According to the February 2012 survey included in the report identified above from the National Association of Insurance Commissioners (NAIC), more than half (59%) of Americans don’t have a home inventory of their possessions, putting them at risk for inadequate home insurance coverage, should severe weather strike.

The recent survey showed that 59 percent of consumers have not made a list or inventory of their possessions. After a tornado or hurricane strikes, water and wind damage can destroy any conventional shoebox system of storing receipts and owner’s manuals.

But even for those individuals with a home possessions inventory some do not have a comprehensive enough system to be reimbursed for storm losses. The survey showed that 48 percent do not have receipts; 27 percent do not have photos of their property; and 28 percent do not have a back-up copy of the inventory outside the home. These are essential to claiming client’s entire losses. Furthermore, 59 percent of people with inventories have not updated their inventories in more than a year, meaning new purchases and gifts may not be covered.

“Violent weather events affected approximately 80 percent of the nation’s population over the past six years. These storms have left widespread destruction in their wake,” says Kevin M. McCarty, NAIC President and Florida Insurance Commissioner. “Creating a detailed inventory of your possessions is one the best ways to ensure you have the right amount of homeowners or renters insurance for you and your family, he continued.”

Coverage for Storm Losses

Before severe weather strikes, consumers can use their inventory to evaluate their coverage and determine if they need to update their policies. It’s important to know that how much is reimbursed varies greatly from policy to policy. On average, home contents are reimbursed only up to 50 percent of the home’s insured value, i.e., $50,000 to replace the contents of a home insured for $100,000. Of course, home inventories also help in the case of home burglaries losses when items are stolen.

Contents coverage includes replacing a home’s furnishings and the insureds clothing and other possessions. The standard homeowners policy would cover the purchase price less depreciation applied to those items. Under a policy with replacement cost coverage insured’s are covered for the cost to replace items.
Contents replacement coverage includes:
•Clothing, furniture, and electronic equipment,
•Portable and window air conditioners,
•Portable microwaves and dishwashers,
•Carpeting that is not already included in property coverage, and
•Clothing washers and dryers.

Home Inventory Process Assistance

So who can your clients turn to in accomplishing this important documentation? They can set up their own database and make a home video recording but for many this process seems time-consuming. Here are a list of entities available for collaboration with agents and brokers to help make this process easy for their clients:
•KC Home Inventory
•Hobson Inventory

These documentation service providers prepare complete and thorough documentation of your personal property to equip clients in the event they need to file an insurance claim. The documentation is designed to maximize claim reimbursement, make the claim process less difficult, and expedite the settlement.

In addition the NAIC has an app available for smart phone users. The NAIC myHOME application makes it easier for consumers to document their valuables, update their inventories and store the information for easy access after a disaster. The app is free and available for both iPhone® and Android® smart phone users.

By Michael Meulemans, Guide

Home Insurance Goes Through the Roof

Posted by Benji Riggins on May 25, 2012 under Insurance News | Be the First to Comment

Faced with falling home prices and climbing maintenance costs, struggling homeowners may soon face another setback: higher insurance premiums.

After rising steadily for the past few years, homeowner insurance premiums are expected to jump another 5% this year to $1,004, according to the Insurance Information Institute. That’s the biggest yearly increase since the market downturn and will mark the first time the national average premium is above $1,000.

Premiums will rise even higher in some states. In Georgia, GuideOne Insurance will raise rates by 12% on average starting this month. Farmers Insurance is increasing rates in Texas by 10% on average. Last month, Allstate started raising rates by 15% in Pennsylvania. And Florida insurer Citizens Property Insurance Corp. and North Carolina Farm Bureau are raising rates on some condo and homeowners by 21% and 6%, respectively.

The higher premiums come at a challenging time for American homeowners, as millions are behind on their mortgage payments and many owe more on their home than it’s worth. Insurers say the higher premiums are partly to cover their rising costs: Insured catastrophe losses in the U.S. totaled $35.9 billion in 2011, compared to a 2000 to 2010 average of $23.8 billion, according to the III. The companies are also paying more in premiums to so-called reinsurers, which provide insurers coverage for widespread catastrophic events, says Steven Weisbart, senior vice president and chief economist at the III.

Meanwhile, insurers’ returns on their investments — roughly 70% of their assets are in bonds – have been low, he says, and they’re looking for other ways to make up that lost revenue. “The only other place insurance companies can get money from is premiums,” he says.

Typically, when policyholders are informed of premium increases they shop around for better prices, but experts say that’s become harder to do. As insurers exit some markets altogether, homeowners are left with fewer companies to choose from. For instance, starting in May, State Farm will not renew roughly 11,000 homeowner policies in five coastal counties in Texas. The company says it’s trying to lessen its exposure to future losses.

To lower premiums, some homeowners increase their deductible, which means they’ll have to pay more out of pocket if disaster strikes before their insurance kicks in. But this strategy might not be as helpful this time around, since some insurers are dropping other types of coverage that were previously part of basic homeowner insurance policies. When coupled with a high deductible, a homeowner’s expenses could soar.

Allstate, for instance, recently introduced a new homeowner’s policy in Kansas and Oklahoma that doesn’t pay out the full cost of replacing all roofs that incur windstorm or hail damage. Kevin Smith, a company spokesman, says Allstate will determine which roofs qualify based in part on their age and condition. If Allstate declines to pay the full cost, it will pay the current value of that roof and the homeowner will be on the hook for the difference. The company says the homeowner’s other option is to purchase so-called replacement cost coverage for roof losses in addition to their basic policy.

Even if homeowners find a lower premium, it might not stay low for long. Experts say many insurers filed requests with states to raise rates this year. (When states approve higher rates, that leads to higher premiums for policyholders.) For instance, last month, Pennsylvania received requests from Erie Insurance and Travelers to increase premiums by roughly 9% by June and July, respectively, according to the state’s insurance department. (The companies didn’t respond to requests for comment.) In Georgia, most of the major companies filed requests to raise rates from 18% to 22%, says Steve Manders, director of insurance product review at the state’s department of insurance. The states say they don’t usually approve requests for increases by the exact amount insurers ask for.

By AnnaMaria Andriotis

Top 10 Claimed Items

Posted by Benji Riggins on May 24, 2012 under Insurance News | Be the First to Comment

Electronics is bumped out of the No. 1 position in value and volume for property insurance claims made in 2011. Find out what takes its place.

Jewelry claims bumped electronics out of the No. 1 ranking position in value and volume for property insurance claims made in 2011, according to new data.

The annual Contents Claims Index (CCI) by property insurance software and service provider Enservio found that the number of jewelry items claimed grew 57 percent compared to 15 percent growth in the electronics category for the same year. The average price per piece of jewelry claimed increased by 11 percent with jewelry claims more prevalent on the West Coast of the United States.

“Jewelry is a high-dollar item, very small and you don’t have to substantiate it when you lose it as long as it’s not scheduled,” said Keith Pequeno, SVP of market place and corporate marking with Enservio. “It’s a high-value, easy-to-claim item depending on an insurance policy. It’s also an item that is the most claimed and the least replaced. So this should lead to more scrutiny of these types of claims and the items they contain.”

Jewelry topped the list at 17 percent of replacement cost value (RCV) followed closely by electronics at 13 percent, according to the 2011 CCI. Apparel and furniture tied for the number three spot at 11 percent, followed by home goods at 9 percent.

“The economy is playing a part here as well,” Pequeno told Insurance Networking News. “People are hesitant about going out and splurging on the big screen TV. Even though we see the sticker prices on these big ticket items actually lowering, it seems that consumer confidence is still a bit stuck in neutral. We could see this shift as we look at next year’s index. Remember it may look like a decrease but it really is a 15-percent increase year over year.”

The full CCI list and each item’s RCV is as follows:

1. Jewelry – 17 percent

2. Electronics – 13 percent

3. Apparel – 11 percent

4. Furniture – 11 percent

5. Home goods – 9 percent

6. Tools – 4 percent

7. Appliances – 4 percent

8. Sporting goods – 3 percent

9. Books and magazines – 3 percent

10. Bed and mattress – 2 percent

Within the electronics category, TV, laptops and desktop computers have maintained their top ranking as the most claimed items year-over-year.

“Going into 2013, we know we will see similarities but we should also start to see newer subcategories rising like tablets, e-readers and smart phones being claimed,” Pequeno said.

Insurance Networking News

Juliette Fairley

North Carolina Employers Face Jail Time Over Uncovered Workers’ Claims

Posted by Benji Riggins on May 15, 2012 under Insurance News | Be the First to Comment

North Carolina officials are requiring insurers to expedite the payment of workers’ compensation patients medical and wage-loss benefits or risk being sentenced to jail.

The North Carolina Industrial Commission has ordered more than a dozen employers to attend a May 22 hearing in an attempt to resolve claims that have been dragged though the legal system for decades. Employers who refuse to pay or settle part of a claim will face contempt charges and be ordered to jail.

“In the interest of better serving the employees and employers of North Carolina and enforcing the provisions of the workers’ compensation law, the North Carolina Industrial Commission is reviewing its contempt procedures,” said Pamela Young, chair of the commission that is charged with enforcing the state’s workers’ compensation law.

The commission’s action came within weeks of a study conducted by the Raleigh, N.C-based News and Observers that found that tens of thousands of employers may be operating without coverage.

At issue are the commission’s lack of resources to monitor the many worksites around the state, a lack of communication among state agencies, and an apparent reluctance to penalize employers.

The commission contracts with the North Carolina Rate Bureau to collect the data over the number of employers in the state with workers’ compensation coverage. The bureau reported that insurers provide coverage to 140,000 business with another 117 companies self-insured. That leaves many business without coverage.

By law, employers are required to inform the bureau on of the commission’s behalf, when they purchase, renew or cancel coverage.

For all practicable purposes, however, the information is a one-way street. Commission officials acknowledge using the database to find the insurer responsible for covering a claim, but do not monitor cancellations. As a result, they only find out an employer is without coverage when an injured worker files a claim.

Also, when it comes to pursuing employers without coverage, it has little leverage to enforce the law. The law states that employers found not in compliance with the law can be fined $100 per day and the cost of any benefits and medical expenses the injured worker should have collected.

The Industrial Commission’s Fraud Unit reported that since January 2011, it has only pursued 225 cases where employers where found not to have proper coverage. The unit reported collecting $30,500 in fines, which equals around $135 per case.

That is why North Carolina has decided to approach having proper workers’ compensation not just a civil matter, but a criminal one as well.

“In response to the issues raised, we now have some concrete plans,” said Young.

By Michael Adams

Fewer Storms Forecast for 2012 Hurricane Season

Posted by Benji Riggins on May 5, 2012 under Insurance News | Be the First to Comment

The 2012 Atlantic hurricane season is projected to be less active than in recent years with 11 tropical storms, six of which will intensify into hurricanes, U.S. private forecaster Weather Services International said on Wednesday.
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Once Again, Flood Insurance Program to Expire Unless Congress Acts

Posted by Benji Riggins on May 3, 2012 under Flood | Be the First to Comment

Federal officials are putting fresh pressure on Congress to take action on the National Flood Insurance Program, whose authorization expires at the end of this month, one day before hurricane season begins.
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Severe Weather Has Home Insurers Rethinking Coverages

Posted by Benji Riggins on April 23, 2012 under Insurance News | Be the First to Comment

As weather disasters strike with more frequency, U.S. homeowners first get hit with the destruction or total loss of property. Many are then hit with the unexpected loss of homeowners insurance policies as insurance companies re-evaluate their financial liabilities.
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North Carolina Auto Insurance Reform Postponed Until Next Year

Posted by Benji Riggins on April 16, 2012 under Insurance News | Be the First to Comment

North Carolina lawmakers have decided to postpone any major effort to reform the state’s automobile insurance market until next year citing the complexity of the subject and a lack of time due to a shorten legislative session.
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Colo. Forecasters Call For 10 Named Storms for 2012

Posted by Benji Riggins on April 9, 2012 under Insurance News | Be the First to Comment

An early hurricane forecast is calling a below-average hurricane season with 10 named storms for the Atlantic basin.
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Graduated Driver Licensing Could Save 2,000 Lives, $13.6 Billion: Study

Posted by Benji Riggins on March 31, 2012 under Insurance News | Be the First to Comment

If all states implemented comprehensive graduated driver licensing (GDL) laws, an estimated 2,000 lives could be saved. Further, if all 50 states were to enact comprehensive GDL laws, it could generate savings of $13.6 billion per year.

That’s according to the Allstate Foundation License to Save Report, developed in conjunction with the National Safety Council. The report found that over the last 20 years, graduated driver licensing laws have already saved an estimated 15,000 lives.

The report findings are timely, as Congress readies to consider reauthorization of highway and infrastructure spending – legislation that historically has included public health and safety measures.

Novice teenage drivers are the most likely drivers on the road to have car accidents. In fact, 16-year-old drivers have crash rates two times greater than 18-to-19-year-old drivers and four times that of older drivers, according to the report.

GDL helps new drivers gain experience under supervised and less risky conditions. The most comprehensive GDL laws include nighttime driving restrictions, passenger limits, cell phone and texting bans, mandatory behind-the-wheel driving time, minimum entry age for learner’s permit (16), and age 18 before full licensure. In some states that have enacted strong GDL laws, the incidence of teenage driving related deaths have dropped by as much as 40 percent.

“Teen driving deaths are a real public health crisis,” said Vicky Dinges, vice president of public social responsibility, Allstate. “What’s worse is that these deaths are avoidable.”

More than 81,000 people were killed in crashes involving drivers ages 15 to 20 in the decade from 2000 to 2009, making teen driving crashes the leading cause of teen deaths nationwide.

In addition to the lives lost, the report estimates that the total cost to the nation of crashes involving teen drivers in 2009 at $38.3 billion. These costs include wage and productivity losses, medical expenses, administrative expenses for public and private insurance, police and legal costs, motor vehicle damage, employers’ uninsured costs and fire losses. These costs were paid by employers, state and local governments and by citizens through taxes, fees and insurance premiums.

“Our elected officials do not have many opportunities during their careers to take action that will save thousands of lives and billions of dollars in one legislative action. This is one of those times,” said Janet Froetscher, president and CEO of the National Safety Council.

The report estimates of lives saved were generated using a 2007 study which analyzed the effect of graduated driver licensing programs to produce percentage reduction estimates compared to the National Highway Traffic Safety Administration’s estimate of the number of young driver-related fatalities in each state.