A consumer group on Monday issued a study that alleges “disparate treatment” of low-to moderate-income families by auto insurers nationwide. The group is asking state insurance commissioners to consider lowering minimum liability coverage requirements and creating low-income purchase programs.

The study from the Consumer Federation of America (CFA) concludes that the auto insurance marketplace “denies important economic opportunities, especially those related to employment, to low- and moderate-income (LMI) households.”

The study’s intent, and message, was immediately attacked by several national insurance associations claiming the CFA report is misguided, infers “malicious intent,” makes incorrect assumptions about underwriting and even gets some of the facts wrong.

The CFA study asks state insurance regulators to ensure that auto insurance is fairly priced and affordable for LMI families so that they have greater access to car ownership and jobs.

“We think these solutions are fair and practical and can be delivered by state insurance commissioners,” said J. Robert Hunter, one of the report’s authors, a former Texas insurance commissioner. CFA’s Executive Director Stephen Brobeck co-authored the report.

According to the group, it worked with Santa Monica, Calif.-based Consumer Watchdog on the study. Consumer Watchdog is working to get signatures to qualify its Insurance Rate Public Justification and Accountability Act for California’s Nov. 6, 2012 ballot. The initiative would “ensure fair and transparent rates for health, home and auto insurance,” prohibiting “unfair pricing” for auto based on prior coverage and credit history, according to its backers.

The CFA study cites several examples that its authors say prove “disparate treatment” of LMI households. It also shows that the bottom rung of families considered to be low-income pay 8 percent of more of their annual income on auto insurance.

One example, taken from a study by Consumer Watchdog, was a 30-year-old man in St. Louis with a Ford Taurus and a perfect driving record who commutes 20 miles per day. He carries comprehensive and collision insurance and a $500 deductible. If he were an executive with an MBA degree living in an upscale suburb, his average annual insurance rate would be around $558, according to the study.

But change his profile a bit, and the numbers rise dramatically, the study shows. Give the St. Louis man a mere high school diploma and the rate goes up $71 per year, and if he’s unemployed, tack on another $84, the study shows. Relocate him to a ZIP code with a lower median income, and the rate goes up $347, according to the study.

Additional considerations the study uses for altering the man’s profiles are: paying in installments, up $60; uninsured for period of time, up $638; possessing no car for a time, up $337.

“This goes to $2,095,” Hunter said. “The rate went up fourfold. Insurers have never provided a thesis on many of these factors on how they measure risk.”

He added, “We think these factors are surrogates on income.”

Additionally, he said, no study has ever been done on aggregate impact of insurance rates on low and moderate income families. The authors are asking insurance commissioners to collect this data, as well as data on how rates are calculated, from insurance companies in their states.

“It’s going to be hard, but the states have the authority to do this,” Hunter said. “States have subpoena power—they should require the data and get it.”

The study’s authors are asking commissioners to consider taking three specific steps:

• Lower minimum liability coverage requirements
• Eliminate “disparate” treatment
• Create low-income purchase programs

Aside from factors that are included in rates, Hunter said miles driven are not adequately factored into pricing, and that state liability requirements do not benefit lower income drivers, as they only get liability for damages done to another’s property or person.

As such, “states should look into the possibility of creating low-income insurance plans,” he said.

As an example, he cited California’s state-sponsored Low Cost Automobile Insurance Program, which is designed to give greater access car insurance to low-income families.

“States should look at this model and develop similar models for their state,” Hunter said. He noted the California plan uses no government subsidies, “but we think a case can be made for subsidy in some circumstances.”

State-sponsored efforts to provide income-eligible persons with liability insurance protection at affordable rates have not gained a significant following, according to the Insurance Information Institute. The program in California had fewer than 12,000 policies in effect as 2011, according to I.I.I.

It’s not clear if the CFA group has worked with any specific state insurance commissioners on its plan. A spokesman for California Insurance Commissioner Dave Jones said neither Jones nor his staff had been contacted by CFA.

Jones’ department is looking into why more people aren’t using California’s low cost auto insurance program, the spokesman said.

Rich Roesler, a spokesman for Washington’s insurance commissioner, said he knows of no one in his department who has been contacted.

“I checked with our staff,” he said. “We’ve been getting their emails, but as far as I can tell after checking with half a dozen people here, I can’t find anyone who’s been directly involved with the study.”

Jilene Whitby, a spokeswoman for the Utah Insurance Department, said no one there had been contacted, and that CFA’s announcement last week that it would release its study was the first news they had heard of the study. “Friday was the first he had heard of it, and today was the first our P&C director had heard of it,” she said.

Nevada Insurance Department spokesman Jake Sunderland, who said the group had not reached out to his department, said the state had a low cost auto insurance program bill introduced in state legislature last year that passed Assembly but died in the Senate.

“The commissioner’s office was neutral in the issue,” he said. “That’s kind of where we stand on that right now.”

Sunderland took exception to the CFA study’s assertion that rates are based on incomes–that’s at least not the case in Nevada, he said. “We don’t see that in Nevada,” Sunderland added. “We’re a prior approval state. We require justifiable data regarding a rate change, and that’s not something we would allow.”

In 2011 the Nevada state legislature did approve a bill that provided credit history exceptions for certain insureds for what is considered “an extraordinary life event.” Certain insureds could have their credit history prevented from being taken into account in ratings calculations if they were laid off, deployed by the U.S. military, or had a medical emergency that negatively impacted their insurance credit score.

To help carry its request to the nation’s insurance commissioners, CFA is asking the National Association of Insurance Commissioners (NAIC) to request that its property/casualty committee examine the suggested changes in the study.

“They should hold a hearing on the matter so all stakeholders can be heard,” Hunter said.

An NAIC spokeswoman, who would not allow her name to be used, stated that NAIC has received the letter and study from CFA, and the matter “will be referred to the appropriate committee(s) to discuss what, if any, recommendations are necessary.”

According to Hunter, CFA asked NAIC CEO Terri Vaughn to distribute the study to commissioners. However, the NAIC spokeswoman would not confirm whether Vaughn has been in contact with CFA.

Jim Whittle, assistant general counsel and chief claims counsel for American Insurance Association, said he believes CFA’s study overlooks some important factors in underwriting, and their study and statements assume “malicious intent.”

“There may be actually real reasons why there’s different outcomes,” he said, referring to the alleged disparity in rates between drivers in low-income neighborhoods versus more upscale communities.

Take ZIP codes, for example, he said. “You may just have more people driving in that lower-income area, maybe more vehicles, maybe it’s an area with higher density,” he said. “In other words, a higher likelihood you will have higher vehicle-to-vehicle accidents.”

Other rate factors include crime rates in different neighborhoods, including vandalism and theft, he said.

“If there’s an area that has a higher crime rate against property, it’s entirely appropriate that that gets factored into underwriting,” he said.

He added a caution against going down a path of “cross-subsidization.”

“The price ought to reflect the risk,” he said.

Based on the information CFA provided, Whittle believes the authors of the study made one too many assumptions about not only the methods the industry uses to establish rates, but also the intentions of those in the industry itself, he said.

“From the information they received, they assume a malicious intent,” he said. “But there are perfectly good, actuarially justifiable reasons why differences may exist.”

I.I.I. put out a statement following the release of the study countering CFA’s basic claims about auto insurance affordability and accessibility, saying both coverage and accessibility have actually grown more affordable in recent years.

“A highly competitive auto insurance marketplace is making coverage more widely available and affordable for all drivers,” I.I.I. stated.

The group stated it “vigorously contested” the CFA study, which asserts that insurance rating practices are driving up auto insurance prices for low- and moderate-income households.

I.I.I noted that the CFA analysis came weeks after an NAIC study showing that the typical U.S. motorist had seen auto insurance expenditures drop every year between 2005 and 2009, paying an average of $785 to insure a private-passenger vehicle in the U.S. in 2009, which is $4 less than in 2008.

The ratio of auto insurance costs to family income, an index developed by Risk Information Inc., dropped from 1.27 percent in 2004 to 1.05 percent in 2009, I.I.I. noted.

The Property Casualty Insurers Association of America (PCI) also hammered the report and its authors.

“The Consumer Federation of America’s misguided public policy prescription to increase affordability of auto insurance would be counterproductive and hurt the low- and moderate-income motorists they claim to represent,” said Paul Blume, senior vice president of state government relations for PCI. “Their approach would result in higher costs and fewer choices for all consumers.”

Blume added that while the low minimum liability coverage requirements CFA is proposing “would produce lower costs for some consumers, the CFA’s other recommendations would make insurance more expensive.”

source:  The Insurance Journal Consumer Group Charges Auto Insurers with ‘Disparate Treatment’ of Low Income Families.

Dr. Robert Hartwig, CPCU | December 15, 2011

In their new report, “Repeat Offenders: How the Insurance Industry Manufactures Crises and Harms America,” co-authors Robert Hunter and Joanne Doroshow claim that that the property/casualty insurance industry “manufactures” crises in order to justify raising rates and that the industry is “anti-competitive” and in need of more regulation. Even to people unfamiliar with insurance markets, the authors and Americans for Insurance Reform (AIR), which issued the report, could not possibly come across as oblivious to the risks associated with devastating natural disasters and global economic volatility.

Insured losses from catastrophes around the globe totaled an estimated $108 billion in 2011, the second highest year in history. More than $30 billion of those losses occurred in the United States, likely the fifth or sixth most expensive year on record. Since 2004, storms like Katrina, Rita, Wilma and Ike, combined with other events have resulted in nearly $200 billion in catastrophe claims paid to millions of home, business and vehicle owners.

Over the same period of time, insurance premiums charged to businesses, actually fell by 40 percent between 2004 and mid-2011. Indeed, the cost of business insurance fell for 30 consecutive quarters before edging up by just 1 to 2 percent in the second half of 2011. In short, while near-record catastrophe losses are a challenge, they have by no means precipitated a “crisis” as AIR alleges. Insurance and reinsurance markets remain competitive, capacity is available and coverage remains affordable.

Strangely, the AIR and its authors, argue in the report that the industry’s strong capital position is evidence of excessive profits. AIR’s claim is both dangerous and factually incorrect. Buyers of insurance are the primary beneficiaries of a financially strong, stable and secure insurance industry. Millions of victims of catastrophes would no doubt agree. The fact that insurers and reinsurers entered 2011 with record capital on hand to pay claims is unambiguously a good thing for all policyholders. Moreover, over the past four years, while the Great Recession and its aftermath forced hundreds of thousands of businesses to fail, including hundreds of banks—not a single traditional property/casualty insurer failed as a result of the financial crisis and not a single valid claim went unpaid.

AIR’s implied argument that insurers should carry less capital in this era of mega-disasters and unprecedented financial market volatility is irresponsible. In addition, the suggestion that the build-up in capital is the result of excessive profits is unsupported by the facts. Indeed, the average return equity for the property/casualty insurance industry from 2000 through 2011 is 6.7 percent, barely half the 13.1 percent for the Fortune 500 group over the same period.

The bottom line is the property/casualty insurance industry is a financially strong, highly competitive, resilient and essential industry in the United States and around the world. Buyers have the ability to choose from a wide range of products offered by a multitude of competing carriers while having the confidence that their insurer will be there for them in their time of greatest need.

via III – I.I.I. Response to Americans for Insurance Reform Report.

Normally when I talk to people about their sports car insurance, we talk about ways of avoiding driving into a lake.  Sometimes, you get the occasional client that kids about driving the car off a cliff or setting it on fire if they can’t afford the payments.   You know how the joke goes!  “He he, lucky I have car insurance, at least I can set it on fire!”

All kidding aside, a Lufkin business found out that when it comes to sports cars and insurance claims, insurance companies take it seriously when they have to pay out; espcially $1.2 million dollars.

According to the Associated Press and the Houston Chronicle, Philadelphia Indemnity Insurance Co. filed a lawsuit against Lufkin auto dealer Andy House. The lawsuit accuses House of intentionally driving his Bugatti Veyron EB into 3 feet of salt water in La Marque, 36 miles southeast of Houston.

House, who sells exotic cars, denies the allegations. He has countersued the insurer, saying the company failed to pay as promised.

The lawsuit also alleges House ran the car engine for 15 minutes after the November 2009 splashdown, furthering damaging the vehicle’s engine.

House told police that car, with its 1,000-horsepower engine capable of reaching 253 mph, ended up in the lagoon when he swerved to avoid a seagull. He also said he delayed turning the engine off because of an attack of mosquitoes, according to the lawsuit, filed in June 2010 in federal court in Galveston.

However, a video of the incident taken by a passing motorist and posted on YouTube showed no seagull and no attempt to brake as the Italian sports car swerved into the water, the insurance company claims.  Other websites report that Mr. House was trying to avoid a low flying pelican while picking up his cell phone.

Furthermore, a confidential informant told company investigators that House had offered to pay the informant to steal and burn the car so House could collect on his policy, according to the lawsuit. The informant told investigators that House business associate Lloyd Gillespie, who is also a defendant in the lawsuit, loaned the money to buy the car and is listed on the policy as payee, the lawsuit said.

Gillespie has denied the allegations in court filings. His attorney declined to comment to the newspaper.

via Insurer accuses owner of drowned Bugatti of fraud – Houston Chronicle.

Related Pages: Dallas Car Insurance

If you have a personal auto insurance policy with The Hartford in Texas, you may be happy to know that your policy comes with an additional benefit; Rescue 1-800.  As a Hartford policy holder, this coverage can help you avoid paying cash if your vehicle is stranded or disabled on the side of the road.

The Hartford’s Rescue 1-800 program is available to all Hartford auto insurance clients regardless of coverage.  Clients that have towing coverage on their policies receive the following additional services at no additional cost:

1. No need to file a claim when calling RESCUE 1-800
2. Sign and Drive service at the site of the claim.

The Hartford’s RESCUE 1-800 rescue service provides around the clock service in the U.S. and Canada.  The dispatching resident will send a towing/ transport service representative for any of the following reasons:

• Out of Gas
• Locked out of your car
• Stranded due to mechanical breakdowns
• Flat Tire

Because of their national footprint, The Hartford provides this service via a national dispatch network of more than 16,000 pre-screened towing and wrecker service providers.  Depending upon the situation and policyholder, on the spot charges may be waived for persons with towing and labor on their auto insurance policies.

On top of providing towing and wrecker service, the Hartford also provides access to licensed locksmiths.  If needed the Hartford Auto representative can dispatch a licensed locksmith to your vehicle.  All the normal stipulations and procedures apply.  To add this protection to your policy, contact a local independent agent or contact us TXINSURANCEPRO.COM at 214-717-4326.

When you’re shopping for auto insurance Dallas, you should be careful to avoid purchasing insurance without the right coverage.  Insurers that only advertise state minimum coverage, could leave you susceptible to financial loss  at the time of an accident.  As a result, we came up with this list of coverages and their discriptions so you can understand the importance of these coverages.    

Rejecting Personal Injury Protection.  Most people that shop for minimum auto insurance in Dallas, reject personal injury protection without understanding how this coverage works.  Personal Injury Protection (PIP) provides medical coverage for you and the your passengers in case of a car accident.  This coverage pays regardless of fault, and is subject to a limit of $2500 or more.  This coverage can also pay up to 80% of your lost income if you miss time from work as a result of an accident.  So make sure you discuss this with your insurance agent prior to rejecting and signing away this valuable coverage.

Medical Payments Coverage.  Dallas residents that reject personal injury protection also have the option of selecting medical payments coverage as well.  This coverage is just as it sounds.  Medical payments will pay medial dental and even death in case of a car accident.  It has no income protection built into the policy like personal injury protection.

Uninsured Motorists Coverage.  In Dallas, removing uninsured motorists coverage from your car insurance is generally a bad idea.  According to the most recent statistics published by TexasSure, approximately 21.65 percent of Texas drivers remain uninsured.  That means if you have an accident, you still have a 1 in 5 chance of having an accident involving an uninsured driver.  If this happens, you want to have the additional bodily injury and property damage coverage for you and your car. 

Towing and Emergency Road Service.  Many companies now offer roadside assistance as an optional addition to the standard auto insurance policy.  If you find yourself in a situation needing a jump start or if you lock your keys in your car, emergency road service will get you out of a jam in a hurry.  As a part of this coverage, many insurance companies offer labor at the site of disablement along with delivery of gas and oil if needed.  In fact, many companies will allow you add this to your policy even if you only carry liability.

Aside from these four coverages, many insurance companies offer additional benefits such as pet medical insurance, death indemnity,  loan or lease payoff and even gap insurance.  In the end, the level of auto insurance coverage you purchase should be based on your needs and your budget.  The best way to make sure these needs are met is to discuss them with a qualified insurance professional

For additional information regarding auto or homeowners insurance, contact David Berry in Dallas, Texas at 214-717-4326 x 101.  You may also contact us at TXINSURANCEPRO.COM.

Thinking about buying a new car?  Well GM is offering one year of free auto insurance with your purchase of a new car.  Before you rush to your local GM dealership, keep in mind that this new approach in only being tested in Washington and Oregon.  The goal of the program is to get new buyers into the showroom.

The G.M. insurance pilot runs until Septermber 6.  The sole intent of the program is to drive traffic to dealerships in a Pacific Northwest region where buyers are more loyal to foreign brands according to a recent CarGurus.com survey.  Unlike areas like Detroit where almost 70% purchase domestic brand vehicles, only 35% of the vehicles sold in Portland and Seattle are domestic; leaving a lot of room for growth.

According to G.M. spokesperson Tom Henderson, the west coast was chosen for the pilot partially G.M. data suggested that 23% of potential buyers lacked the financial means to acquire an insurance policy.

The insurance policies are being written through MetLife for 1 year.  After that year, individual policyholders will have to qualify for and purchase a new policy directly through MetLife.  According GM’s www.chevyinsurancebreak.com , customers may refuse the insurance, but they will not get a discount on the vehicle.

“Eligible customers will be offered replacement policies at the end of one year at a premium to be determined by MetLife but is each customer’s responsibility to obtain replacement coverage at the end of the free year.  Insurance policies written through the G.M. program will not be automatically renewed or replaced.”

This program is only available to individuals that purchase a new car from G.M. in the states of Oregon and Washington before September 9, 2011.  The policy cannot be transferred or cancelled for premium credit.  For competitive rates on your auto and home insurance, always consult with a licensed insurance agent in your state.

Progressive reported a 5 percent dip in net income for the month of December and a 2 percent drop for the fourth quarter, but net income managed a 1 percent gain for all of 2010, the Mayfield Village, Ohio-based insurer reported.

Progressive reported December net income of $113 million, down $5.5 million from $118 million reported in December 2009. That translated into a 1 cent drop per share to 17 cents a share for the month. Net written premiums during the month dropped 20 percent, or $227 million, to $929 million. The combined ratio rose 1.3 points to 92.2.

Fourth-quarter results faired a little better, with net income dropping only 2 percent, or $6 million, to $299 million compared to the same period in 2009. Earnings per share were down a cent to 45 cents a share. Net written premiums dropped 4 percent, or $122 million, to $3.3 billion. The combined ratio was up 1.6 points to 93.1.

For all of 2010, net income rose $11 million to $1.07 billion, translating into a 4 cent increase in earnings per share to $1.61. Total revenues rose 3 percent, or $400 million to $15 billion. The combined ratio rose 0.9 points for the year to 92.5.

Progressive said it will pay an annual dividend of less than 40 cents a share on Feb. 4 to shareholders of record as of Jan. 27.

The company said it will hold a conference call on March 3 after posting its annual 2010 report

If your are reading this, then you are wanting to know more about SR-22 Insurance in Texas.  So I am going to break everything down from the state’s perspective, the insurance agent and company’s perspective, and your perspective.  At the end of this post, you should have a better understanding of the SR-22 process.

First of all, let’s get a clearer definition.  An SR-22 is a form that is added to an insurance policy certifying that you will carry the minimum requirements for liability insurance at all times.  One stipulation in this form is that if your policy cancels, lapses, or expires, the insurance company automatically notifies the Texas Department of Public Safety.

What causes an Texas SR-22 filing

In Texas  SR-22 certificate filings can be caused by 3 accidents in the 3 followin g categories.  The first category is driving or having an accident without carrying insurance or proof of financial responsibility.  It does not matter if you drive someone else’s car, it is responsibility to make sure that you have insurance.

The second category that can cause a certificate filling is a conviction for DWI or a mandatory suspensions for violation of Texas implied consent laws.  It is widely known that getting a DWI can cause problems for your drivers license, but implied consent laws also carry mandatory suspensions for refusing or failing to submit to sobriety tests.

Having too many small moving violations in a short time period can cause your license to get suspended.  As a result, just in the other situations, in order to get your license reinstated you’ll have to purchase a Texas SR-22 insurance policy.  More importantly, driving safely can avoid a lot of these problems.

Texas SR-22 from an insurance agent and insurance company’s perspective.

Insurance companies that underwrite drivers that require certificate filings are considered high risk drivers.  Therefore, a driver with a DWI or multiple convictions can expect to pay surcharges on their policy for a minimum of 2 to 3 years from the latest driving conviction.  As your convictions age beyond 3 years, insurance companies no longer surcharge for those violations.  As far as the SR-22, companies generally charge an additional fee of $25 to $50 per 6 month policy period.

Generally, the best place to find an SR-22 insurance policy is through an independent insurance agent.  Since independent insurance agents represent more than one company, they can help you get all types of insurance without paying too much.

What to expect as a consumer

As a consumer, you still have rights even when you shop for high risk insurance.  You may be frightened at the rates, but calm down and look for agents that will educate you on what to expect along with the fees and expenses associated with getting your license reinstated.  With the access to information today, there are companies that specialize in writing Texas high risk insurance.  So you won’t have to pay an arm and a leg just for liability insurance policy.  You can thank the internet later.

In Texas, if your license is suspended, reinstatement fees range from $100 to $125.  Also, the state may also require that you pay a surcharge for up to 3 years.  Surcharges range from $100 to $2,000 per year depending on the severity and nature of the convctions on your driving record.

In short, if you need to file an SR22 in Texas,  be prepared to review your auto insurance, pay a reinstatement fee, along with a 3 year surcharge to the state of Texas.

The Institute’s crash test results show that in fender-benders with SUVs, cars often end up with excessive damage to hoods, engine cooling systems, fenders, bumper covers, and safety equipment like lights. SUVs don’t always come out unscathed either, often needing extensive work.

Click Here to see Claire Wilkinson’s orginal post at the Insurance Information Institute.

Tip Number 1:  Keep your previous insurance policy active.

Never cancel your auto insurance policy before you get a new one.  Insurance companies prefer drivers that have at 6 months or more previous insurance.  In fact, the longer you carry insurance, the better. Keeping your auto policy current shows your stability and responsibility.  . We never recommend you driving without insurance in Dallas. However, if your policy expires for 2 or 3 days, you can still get a decent rate provided everything else is in order.

Tip Number 2: Minimum limts could hurt cost you more.

The second tip is to carry higher liability limits. Through underwriting hundreds of policies, I learned that carrying higher liability limits will typically get higher levels of discounts and more preferred rates. So the next you pick your limits of liability, take one for the team and carry higher limits. That will save you money in the long run.

Tip Number 3:  Two policies are better than one.

The third tip to saving money on auto insurance is meant for renters. Stay at one address for a year or more. In the past, I’ve noticed that people that move every 6 months or year tend to get into more wrecks and have more tickets. Why? Because if you spend time driving the same routes, you learn about traffic patterns and speed traps to avoid.

Tip Number 4:  Go back to school and become a teacher

The final tip to save money on auto insurance in Dallas is one that will not apply to everyone. Teachers, Lawyers, Doctors, and other white collar professions that carry higher limits for 6 months or longer will also get excellent rates on their auto insurance. In fact, some auto insurance companies have specific discounts affinity discounts for Dallas school teachers. I know that one sounds unfair, but insurance is driven by statistics. Face it, teachers generally have great driving records.

So there you have it. The three secrets that nobody ever told you about auto insurance. Remember, these tips do not apply to all insurance companies. Each company bases their discounts on their individual loss ratios and statistics. In order to get the best quotes, always remember to talk to an independent insurance agent.