Posted by Benji Riggins on March 2, 2012 under Insurance News | 
Is it more important to keep overall car insurance premiums low, or to make sure everyone’s paying what they deserve?
North Carolina legislators once again examining the unique rate-setting system for the state’s roughly 7 million insured personal vehicles will be hard pressed in 2012 to agree whether changes are needed to address the balance between insurance risks and costs. Insurers are divided on the issue.
Proposals floated in 2011 at the General Assembly to alter the system could have lowered rates for bad drivers considered too risky for conventional insurance. But supporters of the current system say the bills would have raised rates on many others who have neither caused accidents nor been convicted of speeding recently, yet still sit in the state’s large high-risk pool.
“I don’t think you have a clear consensus among the industry that they want change,” said David Marlett, a professor and insurance expert at Appalachian State University.
The proposals are about better matching premium rates with the level of risk each driver presents, according to a group of insurers led by national industry leader State Farm, along with Geico, Progressive and trade associations seeking a system overhaul. They say they’re hamstrung in what they can charge customers because all auto insurers file one combined annual plan to raise or lower rates together through what’s called the North Carolina Rate Bureau. The state insurance commissioner can approve or change those rates.
The coalition supported legislation filed this year that would have eliminated the Rate Bureau for auto insurance and given insurance companies more authority to raise or decrease rates by up to 15 percent overall annually without the commissioner’s consent.
“It’s an antiquated system that was used way long ago and no longer has a purpose in today’s marketplace,” said Liz Reynolds with the National Association of Mutual Insurance Companies, a member of the Fair Automobile Rates for North Carolina coalition.
Nationwide Insurance, which has the No. 1 automobile market share in the state, along with North Carolina Farm Bureau Insurance at No. 3, and others, aren’t in the coalition. Nationwide says the rate-filing mechanism promotes stability and hasn’t discouraged insurers from writing policies in North Carolina.
Depending on who’s calculating, North Carolina’s average premium rates rank 7th or 8th lowest in the country.
“North Carolina has a system that is fair and competitive. There is no reason to dismantle it,” Nationwide spokesman Eric Hardgrove said.
Commissioner Wayne Goodwin, who strongly opposed the 2011 bills, said the changes would have harmed the public.
“You’d have more people who have no convictions and no points getting higher rates,” Goodwin said in an interview. “That’s unfair, and I don’t think that’s the way North Carolina wants our drivers treated.”
The Republican-led Legislature agreed to study the auto insurance system over the next few months, only three years after a similar panel created under Democratic rule covered the same ground. A key GOP leader said he’s unsure whether changes are needed.
“Whatever we do, we really don’t want to increase our premiums on consumers,” said Sen. Tom Apodaca, R-Henderson, co-chairman of the new study commission that will report to the full Legislature in time for the May work session.
Arguments have focused again upon North Carolina Reinsurance Facility, the pool for drivers that insurers aren’t willing to insure at the rates worked out through the Rate Bureau and Goodwin. North Carolina state law requires liability insurance for drivers.
About one in every five insured automobiles in the state are placed in the facility. The pool includes drivers considered bad risks because of their driving history. They pay rates about 30 percent higher than the rates in the conventional market.
But more than 70 percent of the pool’s population involves experienced motorists who haven’t been cited for violations in at least three years. These “clean risk” motorists don’t pay the additional 30 percent, but their premiums fall $151 million short of what it takes to cover their losses and expenses, according to a presentation at the committee’s first meeting this month.
To make up the difference, the facility issues a surcharge on liability policies statewide that’s currently $17 a year on average, bureau general manager Ray Evans said.
Goodwin, a Democrat seeking re-election in 2012, pointed to a 2006 department review of criteria insurance companies said they used when deciding whether to surrender these policies to the facility to suggest who could face higher rates. The review found insurers sometimes looked at credit scores, occupations, types of car driven, education levels and even if the person is in the military.
Marlett suggested lawmakers could consider granting flexible rates to encourage insurers to take on more bad risks currently in the pool. The change would lower the facility size, and the surcharge for everyone could fall.
That, however, doesn’t resolve the huge number of clean risks in the pool. Some argue allowing insurers to charge higher rates for clean risk could raise the percentage of drivers who avoid insurance altogether.
There are good things about North Carolina’s market, Marlett said. It’s competitive, average premiums are low and auto insurers make profits. But the size of the facility should raise flags, Marlett said.
“We have the largest one in the nation by far, and that’s the sign of an unhealthy market,” he said.
By Gary D. Robertson |
Posted by Benji Riggins on February 28, 2012 under Insurance News |
North Carolina’s third largest homeowners insurer is looking to reduce its exposure in the state by increasing rates and rolling back its policyholder numbers, citing steep increases in reinsurance costs.
The North Carolina Farm Bureau Insurance Co. announced it will implement a statewide average 6 percent increase in premiums on the 380,000 homeowners it insures around the state.
Although homeowners’ rates are capped by the state, the insurer said the increases will come in the form of eliminated policyholder discounts and credits. The insurer is seeking to implement similar changes on its mobile home and farm properties policies.
In January, the insurer imposed new underwriting guidelines that require homeowners to purchase an auto policy in order to maintain their coverage. It also decided to non-renew homeowners who had filed a claim on their property in the last five years.
Farm Bureau Executive Vice President Steve Carroll said the moves reflect a steep rise in its reinsurance premiums following last year storms, which resulted in over $50 million in claims. As a result of those losses and changes in the reinsurance market, he said the insurer’s reinsurance costs jumped from $75 billion in 2011 to $150 million this year.
The Raleigh, N.C.-based Farm Bureau is the state’s third largest homeowner insurer, representing 13.9 percent of the market.
One segment of the market Farm Bureau is looking to substantially withdraw from is its dwelling policies. Dwelling policies are generally limited to insuring physical damage on rental and investment properties that not occupied by an owner.
In 2011, the North Carolina Rate Bureau filed for a 30.6 percent rate increase for these policies, which was denied by Insurance Commissioner Wayne Goodwin. Goodwin ordered a 7.3 percent rate deduction. Goodwin’s decision is currently under appeal.
As a result, the insurer will exclude wind coverage on 15,000 dwelling and property policyholders in coastal areas, effective June 1. It also plans to eliminate 43,000 properties in the western region of the state unless the owner has an auto policy. The company will also stop offering any new dwelling policies in non-coastal regions, effect April 1.
By Michael Adams
Posted by Benji Riggins on February 24, 2012 under Insurance News |
A man from British Columbia has been ordered to pay $18,000 in restitution and $2,000 in fines after bragging on Facebook about a fraudulent claim he filed after totaling his truck on New Year’s Eve. While driving under the influence, Canadian Corbin Joseph rolled his truck. There were three other passengers in the vehicle, but no serious injuries were sustained. Unfortunately, Joseph was prohibited from driving at the time of the accident, and never should have been behind the wheel.
In order to receive an insurance payout, Joseph convinced one of the other passengers to say she had been driving at the time of the accident. Insurance Corporation of British Columbia (ICBC) paid out $18,350 as a result of the false claim before ICBC’s special investigation unit found Joseph had been bragging on Facebook about drunkenly rolling his truck on New Year’s Eve.
Joseph’s friends were interviewed and ultimately conceded that he had in fact been driving at the time of the accident. On top of having to repay the settlement amount and additional penalties, Joseph also received a three month conditional sentence and six months probation.
When it comes to insurance fraud, filing a false claim is pretty stupid, but publicly bragging about it after the fact is about as dumb as it gets.
Posted by Benji Riggins on February 20, 2012 under Insurance News |
Lost Earnings, Medical Costs Add Up
The economic impact of traffic crashes on the nation is both overwhelming and far-reaching.
The annual societal cost of traffic crashes is $299.5 billion, more than three times the $97.7 billion cost of congestion, according AAA’s recent “Crashes vs. Congestion–What’s the Cost to Society?” report.
The overall cost of crashes equals to $1,522 per person annually, compared to an annual cost of $590 per person for congestion.
The costs of crashes are based on the Federal Highway Administration’s comprehensive costs for traffic fatalities and injuries that assign a dollar value to a variety of components. These components include medical and emergency services, lost earnings and household production, property damage, and diminished quality of life, among other things.
The report also calculates the costs of crashes for the same metropolitan areas covered by the annual Urban Mobility Report conducted by the Texas Transportation Institute. The results indicate that crash costs exceed congestion in every metropolitan area studied, from very large to small.
For example, crash costs are nearly doubled than those of congestion in very large urban areas with populations more than three million. Those costs rise to nearly six times congestion costs in small urban areas where populations are less than 500,000 and motorists face less congested conditions.
The study, conducted for AAA by Cambridge Systematics, further underscores the importance of a long-term, multi-year federal transportation bill that will provide the necessary and sustained investments that lead to better and safer roads.
“Almost 33,000 people–635 per week–die on U.S. roadways each year and that’s unacceptable,” says AAA President and CEO Robert L. Darbelnet. “While the decline in traffic fatalities in recent years signifies a positive trend, our work is far from over. Continued progress will require active and focused leadership, improved communication and collaboration, and an investment in data collection and evaluation to make sure we’re addressing the nation’s most serious safety challenges.”
Source: www.aaa.com.
By Melissa Stewart
Posted by Benji Riggins on February 9, 2012 under Insurance News |
The total cost of motor vehicle crashes in the U.S. totals $299.5 billion, according to a study done for the auto club AAA.
According to the study conducted for AAA by Cambridge Systematics, the overall cost of crashes equates to an annual per person cost of $1,522.
The study examined the relationship between congestion and crashes to determine the relative economic impact by using figures provided by the Texas Transportation Institute 2010 mobility report data.
The cost of crashes is three times higher than the costs associated with traffic congestion, which is $97.7 billion. The annual cost of of congestion is $590 per person a year.
“The burdens associated with congestion are top of mind for many Americans as they travel to and from work each day,” said AAA President and CEO Robert L. Darbelnet. “However, at $300 billion annually, crashes cost our society more than three times the amount of congestion. This report further underscores the importance of a long-term, multi-year federal transportation bill that will provide the necessary and sustained investments that lead to better and safer roads for all Americans.”
The cost of crashes is based on the Federal Highway Administration’s comprehensive costs data for traffic fatalities and injuries that assign a dollar value to a variety of components, including medical and emergency services, lost earnings and household production, property damage, and lost quality of life, among other things.
Results from the study show large cities incur the largest total crash costs because the number of fatalities and injuries is larger than in smaller cities. However, if the total cost of crashes is calculated on a per person basis, smaller cities tend to have greater per person costs.
In very large metro areas, the average crash cost per person is $1,406, while for small cities, it is $1,778.
The Miami-Ft. Lauderdale-Miami Beach, Fla., area had a total cost per person of $2,016 versus a medium-sized city of Baton Rouge, La., where the average cost was $3,747 and a small city (Beaumont-Port Arthur, Tex.), at $2787.
Posted by Benji Riggins on February 3, 2012 under Insurance News |
Rates won’t rise, but some could pay more if they’re below maximum allowed.
Drivers are getting a little good news: Auto insurance rates are not going up this year.
This is the second year in a row that the state’s auto insurers have not sought a rate increase.
The claims data just didn’t support an increase, said Ray Evans, general manager of the N.C. Rate Bureau, which represents 142 insurance companies that write auto policies in North Carolina
Evans said the frequency and severity of accidents has been stable over the past few years. He credited people driving less frequently, improved car safety and more active law enforcement – particularly the ticketing of people who text while driving.
“Those things have an impact, and we’re seeing the graduated driver license training continue to have an effect. … The fatality rate has dropped dramatically,” he said. “The end result is that with things stable there does not appear to be any need for an increase.”
That doesn’t mean some people won’t see an increase. Some companies may not be charging the maximum allowed and will be able to raise rates.
The average annual premium in North Carolina was $595 in 2008, the most recent data available from the Insurance Information Institute.
The Rate Bureau does not get the last word. That belongs to Insurance Commissioner Wayne Goodwin. And no state insurance commissioner has approved an auto insurance rate increase in 15 years, according to the Department of Insurance.
The DOI staff will review the Rate Bureau’s filing and could conclude that a rate decrease is needed. If that happens, the two sides will negotiate to reach a settlement.
That happened in 2009. Insurers had requested a 1.4 percent increase. But Goodwin ordered a rate decrease of one-half percent. Insurers appealed that decision, and in the meantime, as they are allowed to do, implemented a rate increase. After the settlement, insurers had to refund more than $50 million.
By Mary Cornatzer
mcornatzer@newsobserver.com
Read more here: http://www.charlotteobserver.com/2012/02/03/2980841/auto-insurers-seek-no-increase.html#storylink=cpy
Posted by Benji Riggins on January 20, 2012 under Flood |
If you don’t think your home is at risk for flooding, think again.
People outside of high-risk flood areas receive one-third of disaster assistance for flooding and file more than 20 percent of flood insurance claims, the National Flood Insurance Program says. Floods happen in all 50 states — not just hurricane-prone coastal areas — and are the most common natural disaster in the United States.
“Maybe if you lived on top of a mountain along the Continental Divide, maybe then you wouldn’t need flood insurance, but that’s about the only place you don’t need it,” says J. Fletcher Willey Jr., president of The Willey Agency in Nags Head, N.C.
Yet flood insurance is one of the most misunderstood types of insurance coverage. Here are eight facts to clear up some of the most common misconceptions about coverage through the National Flood Insurance Program:
1. No flood coverage under home insurance
Many people still assume standard renters and home insurance covers floods, says Larry Case, executive vice president of the Missouri Association of Insurance Agents. But you must purchase a separate flood insurance policy to protect your home and belongings from flood damage.
Most flood insurance is provided through the National Flood Insurance Program, administered by the Federal Emergency Management Agency. You can buy federal flood insurance from companies and agents certified to sell it if your community participates in the National Flood Insurance Program.
2. Flood insurance has caps
The amount of coverage you can buy through the NFIP is capped at $250,000 for a home’s structure and $100,000 for contents.
If you want more coverage, you have to buy excess flood insurance, which is sold by private insurance companies. The excess policy covers the cost of flood damage over and above the $250,000/$100,000 caps.
3. Coverage limited in basements
The distinctions can be tricky, so read the policy for details. Some structural elements in the basement are covered, such as central air conditioners, foundation walls, electrical outlets, furnaces and hot water heaters. However, carpeting and floor tile are not covered.
Some appliances in the basement are covered, such as washers and dryers, portable air conditioners and freezers. But refrigerators are not covered. Most personal belongings–including furniture, clothing and electronic equipment–are not covered when they’re in the basement.
4. Building and contents insurance required
A standard home insurance policy automatically covers personal belongings up to a certain percentage of the home’s insured value. With flood insurance, you must purchase contents coverage as well as building coverage to get both.
5. No additional living expenses provided
If your home is destroyed by fire, homeowner insurance pays for the cost to rent comparable living quarters until the house is rebuilt. But flood insurance does not include coverage for additional living expenses. You foot the bill to rent a place to live while your home is being repaired after a flood.
6. No replacement cost coverage for personal belongings
Unlike standard home insurance, which lets you purchase replacement cost coverage for personal belongings, flood insurance features only actual cash value coverage for possessions.
Replacement cost coverage reimburses you for the cost to buy a new item to replace a destroyed belonging. Actual cash value coverage takes depreciation into account and reimburses you for the value of the item at the time it was destroyed. So if a flood destroys your 3-year-old television, flood insurance reimburses you for the value of a used TV–not for the cost to buy a new one.
To qualify for replacement cost coverage to rebuild part of a destroyed building, the home must be your principal residence, and you must have insured it for at least 80 percent of the cost to rebuild or up to the $250,000 cap. Otherwise, reimbursement for rebuilding is based on the actual cash value.
7. Limited coverage on valuables
The coverage for valuables, such as furs and fine art, is limited to $2,500. Currency, precious metals and valuable papers, such as stock certificates, are not covered at all.
8. No flood coverage for hot tubs and swimming pools
Flood insurance doesn’t cover property and belongings outside the home. That includes hot tubs, swimming pools, decks, patios, fences, landscaping, walks, wells and septic systems.
Likewise, flood insurance pays for removal of debris in or on the home’s structure, but not in the yard, Willey says.
Finally, don’t wait until water is lapping at the front door to purchase a policy. Flood insurance has a 30-day waiting period from the date of purchase until the time it goes into effect. The only exceptions are if you’re buying additional insurance when renewing a policy or as a result of a map revision, or if a lender requires flood insurance for a home loan.
Read more: http://www.foxbusiness.com/personal-finance/2011/11/01/flood-insurance-misconceptions-8-facts-should-know/#ixzz1ckCWMw4n
By Barbara Marquand
Posted by Benji Riggins on January 12, 2012 under Insurance News |
One of North Carolina’s largest homeowners’ insurers says it is considering canceling the coverage of up to 70,000 homeowners unless the state Legislature makes changes allowing it to charge higher rates.
North Carolina Farm Bureau Executive Vice President Steve Carroll recently told state lawmakers that the insurer may have to cancel the policies in order to reduce its exposure and make its homeowners’ book of business profitable.
He said that the insurer needs more leeway to enact higher rates, especially given the rising cost of reinsurance, which he said is expected to double as a result of the losses incurred from Hurricane Irene and the spate of tornadoes that touched down in the state last spring.
Carroll estimated that 40 percent of the insurer’s premiums will go towards purchasing reinsurance next year.
“To continue to write property insurance the way we have in North Carolina, we have to have higher rates,” said Carroll.
The North Carolina Rating Bureau negotiates rates on behalf of the 621 property insurers in the state. The proposed rates are then approved, disapproved or modified by the insurance commissioner.
Speaking before a joint legislative Committee on Property Insurance Rate Making, Farm Bureau’s Carroll said the current regulatory structure is workable. However, he said, more emphasis needs to be placed on reinsurance costs and the use of computer models when developing loss estimates.
The Raleigh, North Carolina based-insurer is already making other underwriting changes that could leave an additional 28,000 homeowners scrambling for coverage elsewhere.
Effective January 1, the insurer is following the trend of other carriers to cancel homeowners if they insure their automobiles through another company. The insurer is also canceling homeowners who filed a claim within the last five years.
If the insurer follows through and drops the 70,000 homeowners in addition to the 28,000 policies it is already non-renewing, it would lose about 20 percent of its homeowners’ book of business.
According to the department of insurance, the North Carolina Farm Bureau is the third largest homeowners’ insurer in the state with a 13.9 percent market share.
By Michael Adams | December 29, 2011
Posted by Benji Riggins on January 9, 2012 under Insurance News |
Residents in North Carolina will see a rate decrease when it comes to their dwelling fire coverage while at the same time seeing no change in the cost of their dwelling extended coverage.
North Carolina Insurance Commissioner Wayne Goodwin has ordered a statewide average 7.3 percent reduction in the state’s dwelling and fire policies, which are offered to non-owner occupied residences including rental properties, investment properties, and places not occupied full-time by the property owner. A dwelling fire policy typically does not include liability coverage.
Goodwin also denied a request from the state North Carolina Rate Bureau, which sought a statewide average 36.1 percent increase in extended coverage. The extended coverage policies generally cover physical damage due to wind, hail, fire, smoke, riot, civil commotion, aircraft, and vehicle damage.
After holding several public hearings, Goodwin said he was comfortable with his decisions.
“I found that that the requested increase in extended coverage rates for properties is not warranted and I disapproved the request because it would have led to excessive and unfairly discriminatory rates,” Goodwin said. “Additionally, dwelling policyholders will have the benefit of decreased fire rates.”
By Michael Adams |
