Auto Insurance
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FOR YEARS, the debate over how to repair New Jersey’s expensive automobile-insurance system has been depicted as one between insurance companies, which blame high litigation costs, and the trial attorneys, who say insurance company greed is to blame.
FOR YEARS, the debate over how to repair New Jersey’s expensive automobile-insurance system has been depicted as one between insurance companies, which blame high litigation costs, and the trial attorneys, who say insurance company greed is to blame.
Now another voice has been added to the debate, that of the independent insurance agents. They have offered some opinions in the past, but have now issued a detailed proposal that they hope will receive serious study by Governor Kean and the Legislature.
Some lawmakers have become so frustrated by their inability to get any solution passed, because of lobbying by the lawyers and the insurance carriers, that they are considering scrapping the state’s ‘’no-fault'’ insurance system, which was enacted in the early 1970’s, and starting all over.
James R. Klagholz, president of the Independent Insurance Agents of New Jersey, an organization of 12,000 members, said that no-fault, which pays every injured motorist’s medical bills without litigation, should be retained. It is not, he said, the cause of high premiums.
‘’It’s no-fault combined with an inefficient and expensive automobile litigation system,'’ he said.
Although medical bills are paid automatically, the law still allows suits for so-called ‘’pain and suffering'’ under certain circumstances.
More : query.nytimes.com
NEW JERSEY OPINION; Auto Insurance: If Only We’d Known…
NEW JERSEY today can lay claim to what may well be the most effective form of birth control.
NEW JERSEY today can lay claim to what may well be the most effective form of birth control.
The state’s answer to the population explosion: mandatory auto insurance. Yes, if properly applied, it can work. But first some background.
I remember the joy my wife and I felt when each of our three sons was born. But now I ask myself: Would our views about parenting have been different had we known that far too soon we would find the cost of auto insurance second only to Federal income taxes in our budget, and that any semblance of freedom of choice totally evaporated when our third son obtained his driver’s license last year and we found ourselves in virtual bondage to a hostile auto insurance agent and company? (Things were somewhat better some years back when our two older boys celebrated the identical rite of passage. But then again, in New Jersey everything was better some years back, including the tomatoes.) When the state decreed compulsory auto insurance, it created a captive market for the insurance carriers, an industry hardly known for humanitarian and charitable impulses. The state’s unbelievably inept regulation of its own auto registration laws, and of the insurance carriers and the Underwriting Association, would long ago have triggered a series of indictments for malfeasance and worse in any reasonably enlightened society. For even the most liberal of us, it makes a strong case for capital punishment.
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ON POLITICS; Assembly Chiefs’s Auto Plan: Robin Hood or Just Robbing?
Assembly Speaker Jack Collins stood next to a gigantic map of New Jersey that looked like a Republican political consultant’s dream: the map showed that his plan would lead to even lower auto insurance rates in almost all the state’s counties. The five counties likely to see increases are represented mostly by Democrats.
Mr. Collins, the Republican legislative leader from Salem County, said the map illustrated why he wanted to abolish state-imposed ‘’territorial caps'’ on auto insurance premiums for urban drivers.
With the elimination of the caps, he said, 80 percent of New Jersey drivers would save even more than promised in the auto insurance legislation recently approved by the Senate. He argues that suburban and rural drivers are unfairly being asked to subsidize lower rates for 20 percent of the state’s remaining drivers, who live mostly in the cities.
‘’It’s a matter of fairness,'’ Mr. Collins said last week before a room packed with lobbyists, reporters and lawmakers. ‘’We all know it’s wrong.'’
What he did not say is that his map is going to make it difficult for many Assembly members to oppose his plan, particularly his fellow Republicans who represent constituents in the suburban and rural parts of the state. The Assembly is scheduled to take up the auto insurance debate next week. And if a bill passes in the Assembly and goes to the Senate, the map is also going to make it difficult for some Senate Republicans, and possibly even a few Democrats, to oppose the legislation.
How do those lawmakers, representing suburban and rural sections of the state, explain to their constituents that they turned down an opportunity to give them even lower rates?
In addition to the 15 percent lower rates now promised in the Senate bill, Mr. Collins said his plan could save most drivers 10 to 20 percent more. Wouldn’t a 25 to 30 percent reduction in auto insurance rates ring better with voters in next year’s Assembly races?
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AUTO INSURANCE TO RISE IN JERSEY; Increase, First Since 1952, will Be Authorized by the State Later This Month RATE TALKS TO GO ON Howell Insisting Advances Be No More Than a Third of 8 to 17% Requested
The first rise in automobile insurance rates in New Jersey since 1952 will be authorized later this month by the State Department of Banking and Insurance
Source : select.nytimes.com
Citigroup to Shed Part of Travelers Unit in Stock Sale
Nearly four years after creating the world’s largest financial services company by bringing together huge insurance, banking and brokerage businesses, Sanford I. Weill, the chief executive of Citigroup, said yesterday that he was jettisoning most of Travelers Insurance.
For Mr. Weill, who took control of Travelers in 1993 and made it his flagship company, the planned split represents a sharp reversal and a rare admission that one of his many acquisitions had not worked out.
Insurance turned out to have slower growth and lower profits than he had hoped for. There were also fewer opportunities to sell insurance to Citigroup’s mutual fund and banking service customers and vice versa. ‘’There was really a disconnect,'’ Mr. Weill said in an interview.
Mr. Weill plans to sell 20 percent of the commercial, auto and the home insurance business, known as the Travelers Property Casualty Corporation, through a stock offering early next year that analysts expect to raise $4 billion to $6 billion. He intends to give the rest of the Travelers stock to Citigroup shareholders.
Citigroup would keep the bright red umbrella logo, so prized by Mr. Weill and other Citigroup executives that they frequently wear umbrella lapel pins and ties. The parent company would also keep the much smaller life insurance and annuities businesses that Mr. Weill said had more in common with banking and brokerage operations.
Mr. Weill, known for being obsessed with his stock price, has been frustrated that Citigroup shares sell at a lower multiple of their earnings than other financial services companies like the American International Group. He said splitting off a relatively sluggish business like Travelers should help. ‘’Travelers Property Casualty didn’t meet our hurdle rates,'’ Mr. Weill said.
More : query.nytimes.com
And Women Are Paying Insurance Rates to Prove It
Once the butt of sexist jokes, women drivers now pose a genuine hazard: they are acting too much as men do behind the wheel. Having already drawn about equal in their numbers on the road, women are making gains in categories in which they have always lagged far behind: accidents and deaths.
As they compete with men in the working world and otherwise erase differences in roles, women under 25, in particular, are also paying heftier auto insurance premiums.
‘’What we see today is a considerable blurring of differences between American men and women compared to 10 years ago and surely 20 years ago, and this is being reflected in highway accident statistics,'’ said Brian O’Neill, president of the Insurance Institute for Highway Safety, an industry-sponsored research group based in Arlington, Va.
‘’Women used to get in the right- hand lane and stay there,'’ observed Capt. Patrick McQueeny of the Rhode Island State Police. ‘’Now you see them speeding more and weaving in and out of traffic. It’s not unusual to find them bombing up behind you at 80 m.p.h.'’
As a group, men still far outdistance women in the speeding and drinking associated with high-risk driving. But as fatalities among male drivers held steady over the last decade, the death rate for women climbed. Two decades ago, more than five times as many male drivers were killed in traffic crashes as were female drivers. Today, the ratio has narrowed to 3 to 1.
And during a period when public campaigns against drunken-driving cut the number of fatal accidents for both sexes, the death rate for women in alcohol-related accidents has not dropped as sharply as the rate for men.
From an actuarial perspective, the historic advantage women under 25 held on auto insurance rates has been pared almost in half the last 20 years, according to insurance industry figures.
In 1980, for instance, unmarried women ages 17 to 20 paid 47 percent above the adult base rate for insurance, while men in the same age group paid 187 percent more, according to the Insurance Services Office, a New York nonprofit organization that advises the industry on rates. By 1995, comparable rates for women jumped to 115 percent above the base rate; rates for young men, meanwhile, dipped slightly to 185 percent of the base. There was an even greater convergence of premiums for men and women in the 21-24 group.
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THE 1997 ELECTIONS: THE VOTERS; The Deciding Issues: Taxes and Insurance
In her annual speech to the Legislature in January, Gov. Christine Todd Whitman promised to pass legislation that would reduce the state’s high auto insurance rates. And although her proposal to lower premiums was rejected by the State Legislature, it provided the fodder for what would become the most important issue in the Republican governor’s re-election bid.
Her opponent, James E. McGreevey, seized on the Governor’s failure to deliver rate relief to drivers, and used the issue, as well as the state’s increasing property taxes, to set the agenda throughout the race. Although Mr. McGreevey was ultimately forced to concede defeat, he was apparently successful at convincing voters that their next governor should focus on lowering property taxes and auto insurance rates.
Mr. McGreevey, who largely set the agenda in the race, continually told voters that those were the issues. He successfully identified them as weak areas for Mrs. Whitman, and voters leaving polling places yesterday echoed many of the points Mr. McGreevey had emphasized.
More than half of those polled after they voted said that auto insurance was an important factor in their choice for governor. Mr. McGreevey had proposed requiring insurers to reduce rates across the board by 10 percent, while Mrs. Whitman issued a plan that would reduce rates up to 25 percent for varying amounts of coverage.
Of the voters questioned, 3 in 10 said they thought that Mr. McGreevey was more likely than Mrs. Whitman to lower rates, compared to 2 in 10 who said Mrs. Whitman was more likely to lower rates. One in 10 voters polled said that both candidates would lower rates, and 3 in 10 said neither would.
And of the voters who said auto insurance rates were a very important factor in their choice, nearly 6 in 10 chose Mr. McGreevey, the poll showed.
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Auto Insurance Fraud
It is disturbing to learn that New York is now considered the auto insurance fraud capital of the United States (news article, Jan. 10). Scam artists are ripping off the system, and honest citizens are paying for it.
As you pointed out, the main reason auto insurers are raising their rates in New York is rampant fraud in no-fault insurance claims. Assembly Republicans are proposing to bring down the price of auto insurance and protect the long-term interests of consumers by setting deadlines for accident claims, creating standards for treatment of accident injuries and establishing a ‘’whistleblower'’ incentive for fraud reporting; prosecuting fraud by earmarking funds to district attorneys, outlawing ‘’runners'’ and settling medical coverage disputes outside the courtroom; and requiring insurers to pass the savings on to consumers by reducing premiums.
New York needs to take a no-nonsense approach to fighting fraud.
More : query.nytimes.com
Personal Business; Your Alma Mater Wants to Become Your Bank
JUST before Wendy Lambke bought her first house, in August 2001, she shopped around for homeowners’ insurance. After comparing four or five rates, she ended up buying a policy offered through her alma mater, Iowa State University in Ames.
‘’It turned out to be the cheapest insurance policy I could get,'’ Ms. Lambke said of the $300 premium offered by the Liberty Mutual Group of Boston. So good a deal, in fact, that when it came time to renew her auto insurance, she switched to the plan offered to Iowa State alumni by Liberty Mutual. ‘’I'm probably saving a few hundred dollars a year,'’ she said, or about 20 percent, compared with other plans.
Ms. Lambke, 25, who graduated last spring and now works as a public relations coordinator in Des Moines, is one of thousands of people who have turned to their alma maters for a wide range of financial services – from basic checking and savings accounts to mortgages and even health insurance. Alumni officers say the programs let them offer a service while also generating revenue. The programs are offered at schools of all sizes – from small ones like St. Norbert College in De Pere, Wis., to big public universities including some in the University of California system.
‘’Schools already have all of this data on their alumni'’ and can screen the lists for different offers, said Christopher Keenan, marketing director at the De Novo Corporation, a financial services consulting concern in Wilmington, Del. ‘’Now they’re taking that data and beginning to mimic other industries – as much as you hate to call the schools industries.'’
Colleges, he noted, keep records of student loans, making it easier for them to offer loan consolidation programs. Many alumni groups also learn when former students marry, have children or accept new jobs; that information, too, can help in marketing specific products and services.
The idea of generating university revenue by pairing with financial services goes back to at least the early 1980’s, when Georgetown University teamed up with the MBNA Corporation to offer a school-brand credit card. More than 1,000 colleges and universities now offer such affinity cards; MBNA, the largest provider, says three million alumni of 700 schools carry its cards.
Source : query.nytimes.com
FORCED INSURANCE OF AUTOS FAVORED; Virtues of Plan Outweigh Its Faults, Says Report of State Agency to the Legislature INSURERS’ ‘FEARS’ SCORED Study Urges Property as Well as Personal Liability Coverage, No Rate ‘Strait-Jacket’
An exhaustive report that favors compulsory automobile insurance was submitted yesterday to every member of the State Legislature by the State Insurance Department. The document emphasized that in 1952 uninsured, financially irresponsible motorists will be involved in accidents causing losses of about $14,500,000 to residents of the state.
Source : select.nytimes.com