Auto Insurance Rates

by: Sher Matsen
will vary depending on the insurance agency, your driving record, and the type of insurance you are looking to purchase. I you are looking for affordable car insurance or truck insurance then read on. 

There are ways to reduce your premiums without giving up coverage. One of the easiest things to do is get auto insurance rate quotes online. This will allow you to comparative shop stress free. 

Raising your deductibles is the easiest way to reduce your rates. The higher the deductible, the lower the premium will be. The deductible is the portion you will have to pay in the event of accident, before your insurance coverage steps in. It’s important not to carry a deductible that’s more than what you are able to pay. Your insurance company will not honor its portion of the claim until you’ve paid your deductible. However, the higher your deductible the lower your premium cost will be, so you need to find a 

Always remember to ask your insurance broker for any available discounts. Quite often we forget to ask and they don’t seem to volunteer the information. A clean record on the current policy for a certain period of time, having your homeowner's coverage with the same insurer, taking a defensive driving course, having an accident free driving record, and having an approved anti-theft device will reduce your auto insurance rates. 

The type of car you drive can also reduce your rates. Stay away from cars that have a high class rating. Rates vary among the different makes and models of vehicles. The different rates are based on the risk of accident, cost to repair, higher theft rates for a particular model and replacement costs such as with a new vehicle. So be sure your vehicle isn’t going to be in a category that increases your rates too much. 

A safe driving record consisting of no accidents and no traffic violations will get you the most substantial discount. Most insurance companies are very good at recognizing good driving habits. These are the drivers they want to insure because their risk is much lower. 

If the car is old and not very valuable, comprehensive insurance is probably not worth buying as it can quickly add up to more than you’d ever receive in the event of an accident. You can save up to 20% by eliminating collision insurance. You may want to opt not to carry collision insurance as well which can save you and additional 20%. 

Check around to make sure you are getting the best auto rates you can. Online auto insurance shopping has taken the guess work out of buying insurance and you can very quickly see if you are being hosed. So if your insurance is coming due now is the time to start shopping!. 




About the author:
Sher from The Auto Insurance Center has been serving customers for over 20 years. Please visit us at http://www.all-auto-insurance.com/


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Lehman Debt Auction Gives Clue to Potential Insurance Payouts

Sellers of insurance on bonds issued by bankrupt Lehman Brothers Holdings Inc. are now likely to face demands that they pay out more than 91 cents on the dollar to buyers of those insurance contracts.

That's the upshot of an unusual auction process Friday that established the price for defaulted Lehman debt, and in turn potential claims payouts on insurance protecting that debt, known as credit default swaps.

Certainly, some firms will take a hit because of the pricing, potentially amounting to billions of dollars in combined losses. In the Lehman auction, participants included most major financial firms from around the world. But it's too early to tell which companies will be on the hook or for how much.

"Where this is helpful is this is the first real-world situation where we see how market participants handle settling CDS,'' said Barry Silbert, chief executive of SecondMarket Inc., a marketplace for trading illiquid assets.

In a best-case scenario, Silbert said, financial firms that sold CDS contracts would make their payouts in the coming weeks, have enough capital to cover all the positions, and take their losses and move on. In a worst-case scenario, sellers of the swaps would not have the cash to make the payments and would have to liquidate their assets to cover their positions.

"The next two weeks will be very telling,'' Silbert added.

The auction set the price on $4.92 billion of debt issued by now bankrupt Lehman at 8.625 cents on the dollar. Lehman bonds had been trading near that range in the past few weeks, meaning Friday's auction price further reinforces current market values for the debt and in turn the credit default swaps.

"Since (the auction price) was not that far off from where bonds were trading, the hope is banks and funds with CDS exposure have prepared for the cash payout,'' Silbert said. "There is no longer much of a debate on what the claims are worth.''

Indeed, with the price set for the Lehman debt, uncertainty surrounding losses tied to those swaps should dim, providing banks more comfort with a portion of theirs and others' balance sheets.

Credit default swaps have played a prominent role in the mushrooming credit crisis that in the past month led to Lehman filing for bankruptcy protection, a government rescue plan for insurer American International Group Inc. and Merrill Lynch & Co. selling itself to Bank of America Corp.

The government bailout of AIG was necessitated in part because of the insurer's sales of CDS. Had AIG failed, it could have triggered billions of dollars in losses at many other banks and financial firms who bought swaps from AIG, sending them into failure as well.

The market for swaps, which is unregulated, is huge: estimated at as much as $62 trillion. While little-known to many individual investors, they are commonly used contracts to insure against the default of financial instruments such as bonds and corporate debt.

What is deemed the riskier, and likely larger portion of the swaps market, are swaps bought and sold as bets against bond defaults -- a buyer doesn't necessarily have to own a bond to buy the CDS that insures it. In such cases, investors use swaps to essentially place bets on a company's performance, similar to shorting a stock -- the move is purely speculative, as the investors are betting only on whether a bond or security will be paid off or fail.

Sellers of swaps have to make buyers whole on the price of the underlying debt if a company goes bankrupt or fails to repay the debt. In the case of Lehman, setting a price for the debt at 8.625 cents for every $1 now means any company that sold swaps tied to Lehman debt theoretically must pay out the remaining 91.375 cents for every $1 on the contracts.

Because credit default swaps are two-party contracts, there will be no net loss of wealth. For every company that takes a loss, there will be a corresponding gain elsewhere. The question remains which companies will be on the hook to make payments and take losses, and will they have the funds to cover such losses.

Amid the ever increasing blame CDS markets have taken for spurring the credit crisis, the Federal Reserve Bank of New York on Friday hosted a second meeting with market participants to try and accelerate the process of creating a centralized clearinghouse for trading swaps.

Earlier last week, CME Group Inc., an exchange operator, announced plans to launch an electronic trading platform with Citadel Investment Group LLC for the trade of credit default swaps.

Over the past month, state and federal regulators have increasingly called for oversight of the swaps market. Securities and Exchange Commission Chairman Christopher Cox urged Congress last month to begin regulating the market for CDS contracts.

Cox's testimony calling for the regulation of the swaps market came a day after state regulators in New York said they will begin in January to oversee the portion of the market in which the buyer of a CDS actually owns the bond or debt, considering them akin to a traditional insurance policy like one taken out on a home.

The New York state policy would force financial firms to register with the state, face more oversight and hold adequate reserves to ensure they can cover any payouts.

www.insurancejournal

HSBC Insurance Brokers Receives Qatar Financial Center License

HSBC Insurance Brokers Limited announced that it has established a branch office and received regulatory approval from the Qatar Financial Center (QFC) Authority to provide insurance broking services to corporate customers within The State of Qatar.Steve Bonynge, Managing Director HSBC Insurance Brokers (Middle East), noted: "Qatar is an important and growing Insurance market and we are delighted to be joining the QFC. We look to contribute to the development and growth of the Qatar Insurance Market by bringing over 30 years of experience within the Middle East as well as our International technical capabilities and resources for the benefit of the Qatar business community."

Stuart Pearce, CEO and General Director QFC Authority, added: "The QFC has attracted a wide range of local, regional and international financial institutions, largely because of its world class legal and business environment together with the undeniable opportunities for firms to bring new capacity into Qatar's growing financial services sector, as well as to the region as a whole. We see insurance and reinsurance as key growth areas for Qatar offering high potential to firms such as HSBC Insurance Brokers, who will play an important role in deepening the sector and contributing to the economy."

The bulletin also indicated the newly opened branch in Qatar is the latest in HSBC's expansion plans within the Middle East region. It presently provides insurance broking and consultancy services across the region from offices within The Kingdom of Saudi Arabia and the United Arab Emirates.

Source: HSBC Insurance Brokers - www.hsbc.com/insurance

Is ID Theft Insurance Worth Recommending to Agency Clients?

A client concerned about identity theft might consider moving to the Dakotas.It's best to stay away, however, from Arizona, California, Nevada, Texas, Florida and New York. All of these states reported that more than one out of every 100 persons was the victim of identity fraud last year. In the sparsely populated Dakotas, the rate is less than one-third of 1 percent, according to the Federal Trade Commission.This may be interesting, but not particularly helpful. The question most clients have is how vulnerable they are to identity theft and the likely cost if they become a victim.

When it comes to ID theft insurance, the name is something of a misnomer. Too many people think that if someone steals money from their bank account, the insurance company will repay them. But this is not true for most policies. The typical ID theft insurance policy will not pay for stolen money but only for expenses associated with straightening out the mess. Actual losses require a separate very specific policy.The Costs in Time and Money
Statistics on time and costs are inconsistent.

• Almost 600 hours and $1,400 in out-of-pocket expenses, not including lost wages, according to the Identity Theft Resource Center in San Diego.
• $422 in out of pocket expenses and 25 hours, says Javelin Strategy & Research, a Pleasanton, Calif., research company focused on financial service topics. However, two-thirds of victims have no out-of-pocket costs.
• 81 hours, according Nationwide Mutual.

But Robert Burke, now manager of the online banking testing team for Bank of America, estimates that a former roommate cost him at least $12,000 and thousands of hours over a 10-year period after he stole Burke's identity. This is the sort of story that fuels ID theft insurance sales.

The good news is that both the number of victims and the dollars lost appear to be declining. A Javelin survey showed identity-fraud losses dropping 11.8 percent in 2007, to $45 billion. It tallied 8.4 million victims of identity fraud as of late 2006, down from 8.9 million the year before and 10.1 million in 2003.

Nevertheless, last year identity theft topped the list of consumer complaints filed with the Federal Trade Commission, accounting for 36 percent of the total.

Whatever statistic is correct, the major cost is the hassle factor -- the hours spent talking to creditors, credit reporting bureau and law enforcement agencies that tend to give identity theft a low priority compared to violent crime. There can be the intangible costs of denied loans or higher interest rates because of mistaken identities. Some people say they have been turned down for new jobs.

Why Group Policies Are Popular
The hassle factor is why a small percentage of employers offer identity theft insurance as a benefit, particularly since corporations often pay premiums of less than $3 a year per employee.

It makes sense as an employee benefit. It's hard to imagine resolving an identity theft situation without some telephone calls during working hours. In addition to maintaining productivity, insurance is an inexpensive way to offer a little bit extra to employees.

Overall, about 3 percent of employers nationwide provided ID theft insurance, according to a 2006 survey by Aon Consulting. The number is expected to rise.

Metropolitan Life Insurance Co. said 55 of the Fortune 100 companies included an ID theft option last year. It offers ID theft restoration services at no additional charge to customers who take auto or home insurance products as a voluntary benefit through their employers.

Other frequent purchasers of group policies are banks and credit unions. Citibank, for example, offers customers free ID theft recovery service, and MetLife has extended its coverage to customers of its online MetLife Bank. ID Theft 911, which provides restoration services, signed up 130 credit unions and community banks in 2006. As of this year, the company says it covers more than 11 million households in various programs.

Travelers and AIG are the largest writers of group ID theft expense reimbursement policies.

Sources for Individual Policies
Outside the corporate workplace, endorsements to homeowner's insurance, providing identity theft expense reimbursement, are usually available. These generally are not underwritten in the traditional sense; the policy is issued with little investigation or consideration of exposures. They typically cost $50 to $70 for $15,000 to $25,000 in coverage.

Some companies, such as MetLife and Grange, offer identity theft protection at no extra charge with a homeowner's policy. Others, such as Allstate and Travelers, sell it as a stand-alone policy or as a rider. Chubb Group of Insurance Cos. and others have partnered with Identity Theft 911 to help customers recover or recreate missing personal documentation after a disaster or theft, and cover up to $25,000 in expenses with a $500 deductible.

Critics Say It Isn't Worthwhile
One question, posed by Canadian Underwriter last year, is this: If identity theft is apparently so prevalent, why is the pricing so modest?

The answer, some contend, is that ID theft insurance has little value, due to the scope of coverage provided. Consumer Reports and the Privacy Rights Clearinghouse in the United States, as well as the Public Interest Advocacy Centre in Ottawa, are among the skeptics. Beware, they say, of deductibles that may be higher than likely expenses. Coverage for attorneys' fees may be valuable, as long as purchasers understand that prior approval usually is required.

Another red flag is the fact that if a bank or retailer is proven negligent, any existing cyber liability insurance would likely respond to customers' claims, subject, of course, to policy limits and language. However, recent surveys from the Computer Insurance Institute (www.gocsi.com) show that more than 70 percent have not purchased such insurance.

To further complicate matters, many policies, including individual and group insurance for expense reimbursement, contain "other insurance" language, making the individual's insurance excess over other collectible insurance. That is normal, but delays in claims adjustments just prolong the victim's financial pain.

"Identity theft insurance can be a good thing," said Jay Foley of the nonprofit Identity Theft Resource Center in an article in the Cleveland Plain Dealer. A key element of a good policy, he believes, is coverage for lost income for time off work.

Actual Financial Losses
Identity theft policies generally do not cover such financial losses as fraudulent charges or over-limit or nonsufficient funds fees. Insurers expect banks or credit card companies to erase these expenses. But the consumer still may want protection with a policy covering actual financial losses.

These are distinct from the individual ID theft expense reimbursement insurance, and include specific coverage for the actual financial loss. The best-known example of this product is a joint venture between Travelers and the American Safety Council. This product, which also is not underwritten, is issued immediately after a simple form is completed on the Web. There are several limits available. Although pricing is steeper than for the expense reimbursement coverage policy (and logically so), the cost is still reasonable.

It is available only on the Web at www.identitytheftpolicy.com. So far Travelers apparently has not been willing to allow its retail agency force to market this product. [Writer's Note: I recently purchased a policy limit of $30,000, with no deductible, for an annual premium of $79. Again, the attraction of this particular policy is coverage for incurred financial losses, as well as associated costs and expenses. If someone wants quality insurance from a highly regarded insurer and a realistic premium, this product is one to consider.]

So who really needs ID theft insurance?

People earning more than $150,000 a year are the most likely targets, according to Javelin. Those who earn less than $15,000 are most likely to suffer long-lasting damage, as they usually have fewer resources to use in repairing their credit standing. Young adults between 18 and 29 are the most frequent victims, probably because they are the least likely to take such safeguards as shredding documents and using firewalls on computers. The Identity Theft Resource Center last summer suggested that college students take a crosscut shredder and a lock box large enough to hold a laptop, loaded with current security software.

What Are The Alternatives?
Given this background, the consumer may prefer to focus on prevention services that are designed to make personal information almost unavailable through credit bureaus. Others focus on rectifying an ID theft, should one occur.

Diverse entities are getting involved. The large grocery store chain Kroger endorses a specific service that can be activated by calling a toll-free number or on the Web, and prepaying a fee for ID theft resolution services.

On the other end of the spectrum are prevention services such as LifeLock (www.lifelock.com), currently being promoted by a major national advertising campaign. Lifelock "guarantees" that it will eliminate public access to personal information except with the specific permission of the individual. If an identity theft still occurs, LifeLock promises to pay all costs up to $1 million

Its reputation has been somewhat tarnished by two recent lawsuits and the discovery that a Texas resident managed to get an online payday loan operation to lend him $500 using the LifeLock CEO's Social Security number, which he had listed in ads promoting the effectiveness of his service.

In an Arizona lawsuit plaintiffs claim the $1 million guarantee is misleading because it only covers a defect in LifeLock's service. A California lawsuit by the Experian credit bureau accuses LifeLock of deceiving consumers and abusing the system for attaching fraud alerts to credit reports.

A similar service is IdentityGuard (www.identityguard.com), which monitors Internet "back alley" communication and chat rooms.

Trusted ID (www.trustedID.com) combines prevention and resolution services, with monitoring of credit information, and risk assessment. These services generally cost from about $10 to $15 per month.

At least one of the credit reporting bureaus, Experian, offers a subscription services (www.freecreditreport.com) that provides credit reports and other basic services to consumers. Consumers already can receive free credit reports through the federal government's Web site, www.annualcreditreport.com, but the confusion between services that require a fee and those that are free is understandable.

Other resolution/recover services include Trust (www.mytruston.com) and ECredit Freeze (www.ecreditfreeze.com).

Also worth considering are services such as Pre-Paid Legal Services Inc. (www.prepaidlegal.com), where the focus is not necessarily remedying ID theft but addressing a variety of potential problem areas. Some of these products are sold as group insurance products.

ID Theft Specialists
Finally, ID theft has produced new career opportunities in insurance. The Institute of Fraud Risk Management is offering a new professional designation -- Certified Identity Theft Risk Management Specialist (CITRMS) -- that can be earned through study materials and passing a series of related exams. [See www.tifrm.com for additional information and enrollment forms.] Most holders of the designation work for financial institutions and government agencies, including law enforcement. Approximately 10,000 people have been certified.

It appears that the crime of identity theft is here to stay. The challenge is to be sure that clients truly understand the risks and the coverage. If they become a victim, brokers want to be certain that they have led them to an oasis, not a mirage.
www.insurancejournal.com

Conning Research: Challenges Looming for Homeowners Insurance

The five-year period spanning from 2003-2007 served the homeowners insurance line favorably after the dismal 20-year period that preceded it, and return on surplus for the line averaged an estimated 11 percent for those five years. But while returns relative to risk still do not compare favorably with other major lines, this five-year period did represent a marked improvement in financial performance for the line, says a new report by Conning Research and Consulting.According to Conning Research, underwriting profitability for the homeowners insurance line was driven by improving loss costs and strong premium growth. A steady decrease in claim frequencies during this period combined with very light catastrophe years in 2006 and 2007 to provide a big boost to the line. Yet even in 2004 and 2005, when catastrophic events were a significant factor, improved catastrophe management on the part of homeowners insurers produced better results than history would have predicted. Homeowners insurance premium growth was driven by strong price improvements and equally strong exposure growth.

Yet, in its new study, Conning Research predicts the immediate future for the homeowners insurance line may not be as favorable.

"Looking ahead, the uneasy state of the U.S. economy creates a series of challenges for homeowners insurers over the next several quarters -- and likely the next few years," said Alan Dobbins, analyst at Conning Research & Consulting. "Conditions in the housing market will suppress growth as long as inventories remain at elevated levels and as values decline. Insurance-to-value will be adversely affected, and the threat of inflation could increase the cost of the average homeowners claim in the wake of declining premiums."

The Conning Research study, "The Homeowners Insurance Market: The Eye of the Storm," analyzes the economic and regulatory pressures on the line, as well as issues related to catastrophe management and distribution changes that will have profound effects on homeowners insurance in the coming years.

While homeowners insurance distribution has traditional gone the route of independent and exclusive agency channels, conditions are changing, say Conning Research analysts, possibly paving the way for a change in the way homeowners accounts are acquired.

"Changes in technology and in the relative importance of this line to insurers make such a change more likely. Significant challenges for such a shift remain, but the success of various insurers in reconfiguring the distribution function highlights the possibilities of such a shift from traditional methods," the report said.

"With the increased pressures on the homeowners insurance line associated with both the economy and regulatory issues, it is clear that insurers will need to manage carefully through the next few years," said Stephan Christiansen, director of research at Conning. "Our research indicates that those insurers who have innovated in technology and are willing to innovate in policy simplification and more sophisticated pricing approaches will be at a significant advantage in this challenging environment."

Source: Conning Research & Consulting,
www.conningresearch.com

Best Reports on Europe's Insurers

"Non-life insurance premiums are flat or declining while claims costs are escalating in Western Europe's major markets," said a bulletin from A.M. Best. "Meanwhile, life insurers' growth is threatened by turmoil in the credit and equity markets. In Central and Eastern Europe, where many insurers from the West are seeking growth, some of the same pressures are coming to bear on the life and non-life markets."Best underlined "lackluster premium trends, rising claims costs and increasing damage awards" as having led to "deteriorating non-life underwriting results in Western Europe."

It also singled out an "upward trend in repair costs" that spans both the motor and property sectors, as well as the effects of catastrophes such as windstorms Kyrill in 2007 and Emma in 2008, as contributing to the raising claims costs

"Competition in motor markets has dampened premiums in Central and Eastern Europe, but steady car sales have had a mitigating effect," Best continued. "Growth has driven up expenses for insurers expanding in the CEE region, and some have adopted acquisition strategies as a means to control costs and gain scale."

In addition Best found that the "appetite for unit-linked life products is waning in Western Europe as credit and equity markets struggle, leaving life insurers vulnerable to competition from other savings products."

Pension reforms in France, Germany and Italy offer possible avenues of growth, though in practice, results have been mixed and depend on factors such as government tax policies.

The CEE region has provided steady growth for Western European insurers, though volatility in the investment markets may reduce the appetite for unit-linked products that have driven growth in life business.

Tax changes and pension reforms in CEE countries have boosted the attractiveness of life products, but penetration remains low compared with other European countries.

BestWeek subscribers can download a PDF copy of all full special reports or a combination of the report and all related spreadsheet files of the report data at no charge at: www.bestweek.com.

Nonsubscribers can visit the site for pricing information or call Best's customer service for more information at (908) 439-2200, ext. 5742.

Source: A.M. Best - www.ambest.com

Sullivan Group Forms Sullivan Brokers Wholesale Insurance Solutions

The Los Angeles-based Sullivan Group has announced the formation of Sullivan Brokers, Wholesale Insurance Solutions Inc., a national wholesale brokerage firm with an emphasis on professional, management and health care risks. Sullivan Brokers combined the already established Sullivan Healthcare and the professional liability department of G.J. Sullivan Excess & Surplus Lines Company.Hank Haldeman, CEO of Sullivan Brokers, Wholesale Insurance Solutions Inc., has appointed Terrence Dwyer as president. Dwyer assumed the day-to-day management operations of the new company headquartered in the Sullivan Group offices located in Los Angeles.

"By combining the strengths of our professional brokering practices of Sullivan HealthCare West with the professional brokering staff of G.J. Sullivan Co. in Oakland and San Diego, Sullivan Brokers are can offer a broad range of professional brokering practices including all management liability products for public, private and non-profit organizations, all classes of professional and E&O liability, a broad range of health care liability lines and various other casualty lines. We will maintain and expand our binding authorities and immediately expand our brokering capabilities as opportunities become available," Dwyer said in a statement.

"Sullivan Brokers reflects the broader, wholesale vision of the senior leadership of the Sullivan Group, especially Pete Germain, who made this possible through his leadership of Sullivan HealthCare and will continue as a senior officer of Sullivan Brokers," Haldeman added.

Source: Sullivan Group