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CCarr
Canada
1200 Posts |
 Posted - 03/27/2003 : 10:29:46
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I have read a news release that I couldn't provide a web link to (perhaps Insurance Journal will have something on it tomorrow), that Virginia has become the first state to allow insurers to exclude covering fire, following a terrorist attack.
The Govenor signed HB2606, making changes to the Standard Fire Policy Act to exclude coverage for fire following a terrorism act.
It is obviously something that the Alliance of American Insurers (AAI) support and have been lobbying for.
The changes which take effect July 1, allow insurers to exclude cover for "fire following", if the insured has turned down terror cover under the federal program.
Seven other states have similar legislation in the works, at this time, including CT, MA, MI, MN, NE, OK.
The AAI is also lobbying IL, LA, NJ, PA, WA; to implement similar legislation.
I had always thought that "fire following" was a sacred element of coverage. |
Edited by - CCarr on 03/28/2003 13:05:21 |
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Ghostbuster
476 Posts |
Posted - 03/27/2003 : 15:53:49
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Clayton, t'ain't nuthin sacred no mo' in the wild & wooly world of Insurance.
Case in point, down here where the stars at night are big and bright, if you have had a water loss in the past three years you now have to prove your house is insurable. Let me reiterate, YOU have to PROVE your humble abode is insurable. Or, to turn consumerism on it's ear, you now have to prove you are worthy to be a customer to get a homeowners policy. Your money ain't good enough no more.
The way to prove you are worthy is to get inspected under the Texas Voluntary Inspection Program by a Certified Residential Property Inspector. How 'bout them green apples, CCARR? Talk about yer lack-o-trust, our industry is now turning the tables on the buying public and making them jump thru the flaming hoops.
Yep, ol' pardner, there is a heap of resistance from Joe Lunchbox, but the herd of carriers has already stampeded with Good Hands leading the way. It's a brave new world...and no one in our industry or it's customers likes it even a little bit. |
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CCarr
Canada
1200 Posts |
Posted - 03/27/2003 : 16:03:34
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Wow, the buffet hotplates have been inverted.
Trying to always find some good news in an unfortunate situation, this would seem to bode well for anyone with property inspection experience; if the certification process is reasonable, and if the compensation for that inspection is worthwhile. Obviously seems like it has to be an interior inspection, with a bit of 'looking here and there' involved.
Who pays for the inspection, the carrier applied to, the government, or the homeowner?
It is 'funny' or at least reminiscent, when I think back to the days of quill pens, red pencils and fountain pens; when I used to watch underwriters stew over each homeowners application that had been completed by pen very studiously, for about 10 to 15 minutes each, and truly underwrite the new business and regularly reject applications. Those days, agents had very little underwriting authority.
Now, the chapter before what you have told us about, agents have / had too much line authority, and 'upload' their new HO business and small to medium size commercial packages; for automatic issuance by the processing computer. If the agent's book went sour, the underwriters with great hindsight would do a compliance audit; then slap the wrist or pull and cancel the book.
Remember I talked about "control"? The insurers are grabbing it back. |
Edited by - CCarr on 03/27/2003 16:18:32 |
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Ghostbuster
476 Posts |
Posted - 03/27/2003 : 21:02:29
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To answer your query, and further elucidate, the $50 fee mandated by the GRRRRReat State of TEXAS is coughed up by Joe Lunchbox hisself, (Ca$h or valid check), and is a comprehensive interior, exterior, & premises survey.
From an historical perspective, this process harkens back to when a customer actually applied for coverage. A company underwriter exercised the power of acceptance, rejection , or 'get it fixed and painted and we'll take another look at it'. There was little, if any, binding of a Risk by the agent. Of course, all that changed during the 'go-go-grow-grow' halycon era of post war 1950's thru the late 1990's.
Personally, in spite of the instant gratification desired by the public, there is a great advantage to aspects of traditional methods of obtaining some one else to pay for the covered damage to your 'bricks & sticks'. These comprehensive certified inspections allow the carrier to learn far more about a Risk than the usual 30mph drive by photos that underwriting pays a measly $12.50 for each. The rates then can be set at an equitable level because the unacceptable Risks have been filtered out or repaired to fit into the acceptable group.
As to the psychology of the concept, it is high time that the public realized that this is not Burger King, you cannot have your way. Our industry, thru the efforts of Farmers with their war with Texas last fall, State Farm with their continued growth moratorium and elmination of the slogan about being a Good Neighbor, and the machinations of a myraid of smaller regional Lloyds type carriers has shown that the era of relying on investments, relying on the growth factor of the baby boomers, and relying solely on trust of the Law of Large Numbers without really knowing about each Risk is over. Public relations and percieved public opinion means nothing when the company is not making money.
While the adage that 'You can't go back' has merit, it does not mean you can't make a U-turn to get back on the right road. The concept of making an underwriting profit is a viable goal. It is our core raison-de-etre. That we have forsaken it for so long and became addicted to the company whiz-bangs in the investment department has always been a sick joke. For a potential Insured to prove their house is insurable by paying for their own certified inpection is a powerful step back to the path we, as customers and carriers, should never have stayed from despite the sirens song luring us all to the quagmire of carrier unprofitability and customer resentment. Just because a technique was used back when Hector was a pup doesn't mean it is obsolete today. That applies to sex as well as insurance. |
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CCarr
Canada
1200 Posts |
Posted - 03/27/2003 : 21:32:55
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Well said big fella, amen. I'm all for bring back the fundamentals. Used to hear it echoed up and down the carrier halls every 18 months or so, "back to basics", which was good for a month until they lost a few too many renewals.
I am surprised that the consumer has to pay for the "proof", and it does seem like an awful low fee for a "comprehensive, interior and exterior premises" survey. Eight years ago you could get $75 for the same, in an urban / suburban area up here. Would the carrier subsidize the inspection company over that $50 rate?
How do the mortgage companies tolerate this? They are not going to let a risk go unprotected, or is there a basic fire policy made available in the marketplace for those that don't "pass"?
That would be an interesting marketplace to be underwriting in. |
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Ghostbuster
476 Posts |
Posted - 03/27/2003 : 21:55:25
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Too soon to know...this program is but a few months old and is still in the 'jelling' stage. I suspect your $75Canada is about eqiuvalent to $50US. Nope, Joe Lunchbox forks it all over. The onus is on his back.
Take this thought to bed tonight... the customer has to prove he is worthy of being a customer. Ain't that wild? All the consumer advocates are screaming in their nightmares. |
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CCarr
Canada
1200 Posts |
Posted - 03/27/2003 : 22:00:57
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| Don't we have to "prove" our wothiness as a customer, client or member to banks, credit cards, country clubs, hunt camps, neighbourhood poker games etc? What is the difference? To hell with the consumer advocate groups. |
Edited by - CCarr on 03/27/2003 22:02:28 |
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Manmut
USA
26 Posts |
Posted - 03/28/2003 : 09:26:03
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Inspections and reinspections are the wave of the future among insurance carriers. When I was laid off, not so long ago, I freelanced for a contract inspection company out of Florida(I won't mention the name). My inspections consisted of taking two angle photos of the house, and a photo of the roof. The inspection form asked the style of home, age, roof type, siding type, if there were any dogs, pools, trampolines, or other hazards. I got all of $15 for such an inspection, and an additional $5 if the inspection was more than 25 miles away. On a good day, I could knock out 8 to 12 inspections. I got a little concerned when my employer asked if my wife wanted to be an inspector. I responded that she didn't know anything about home construction. His answer, "That's not a problem." Their training solution was about five webpages with diagrams showing the different styles of construction. Amazing.
Still, it will be harder and harder for consumers to find good, affordable insurance coverage as carriers tighten up their underwriting and implement reinspection programs. The list of unacceptable dogs has grown over the past few years from three - dobermans, rottweilers, and pit bulls - to include akitas and chows. I've read that there is a subtle movement in the industry to begin to add other breeds, and eventually to exclude all dogs from liability coverage.
Other issues are raising their ugly heads as well. Homes with less than 100 amp service are now being non-renewed or refused as new business. I've even heard it suggested that 200 amp service might become a standard for preferred-type policies.
Underwriters are increasingly making more use of exclusionary endorsements to limit the exposure of a carrier. Look at the extreme popularity of hurricane deductibles, earthquake deductibles, and windstorm/hail deductibles among carriers. I understand that a couple of the major carriers are considering percentage deductibles on windstorm/hail for risks in the Midwest. Imagine the hue and cry!
Underwriting referrals are also finally beginning to be taken seriously. I've been doing quite a few more, and have noticed that action is actually being taken on such policies.
I think that the power of agents to bind is going to become more and more rare. I'm guessing that binding privileges will be limited to top agents only. I know that when I was an agent at a prudent life insurance company, we were told that if we did less than a certain amount of P&C business annually we would not have binding privileges. I can imagine that such a limit could be attached to loss ratios for agents quite easily.
Curioser and curioser...
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Patrick W. Laws |
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CCarr
Canada
1200 Posts |
Posted - 03/28/2003 : 13:44:33
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Pat, I think inspections and reinspections are more of a sign of the "return to basics", than a wave of the future. There was some talk of 'inspections' in one or two other threads last year. However, in the early 70's carriers staffed up Loss Control departments in branch and regional offices. The two large carriers I worked for had very viable LC departments that grew in stature and 'power'. If a risk did not "measure up" according to their assessments, it was not written, or it was not renewed - no "ifs / ands or buts". Similarily, if there were recommendations made by the LC people for risk improvement, they had to be complied with. However by the early 80's, when the evolution started from measuring results by underwriting profit / loss to "overall results" i.e. return on equity (ROE); many carriers got a large thirst for marketshare, and LC has no place in that equation, and LC was phased out to token representation pretty well limited to HPR type accounts.
The $15 "drive by" you speak of, to me, is a joke, and akin to panning for gold, hoping to find a few nuggets from a ton of gravel; nor does it take much skill, and if your wife had the time she would likely do well at it.
I really don't care how hard it is or becomes for consumers to find affordable coverage. Why should it be any less difficult than finding an affordable new 1/2 ton truck, or quality dry aged 28 day old cuts of prime beef?
However, in that hunt, the search for "good" will grow more difficult, if that measure for that commodity is broad coverage with prompt, fair and professional claims service.
The issue of dogs has long gone past the point of being very costly to insurers, and continues to escalate. As a young buck adjuster, I used to enjoy the liability investigations of dog bites. At that time, and until about 1990, the insurer carried the 'wild card', with their reliance on the old "Doctrine of Scienter". The simplest form of this legal principal was the proverb that "every dog is allowed one bite". The reliance on that is now gone, and this is a serious liability issue throughout North America; and by its tie to insurance, a cause of many claims. What follows is a minor amount of data, that hopefully will convince you that the carrier is not the 'mean and autocratic evil' as perceived by the general public.
In 1986, nonfatal dog bites (USA) resulted in an estimated 585,000 injuries that required medical attention. In 1986, dog bites ranked 12th among leading causes of nonfatal injury in the USA.
In 1994, an estimated 4.7 million persons (USA) sustained a dog bite, and of these, approximately 800,000 sought medical care.
During 1995 - 1996, at least 25 people died as a result of dog attacks.
Sources for the above data - Humane Society of the USA, National Center for Injury Prevention, CDC
Therefore, for many reasons, I would support and advocate a premium surcharge for any insured who owed any dog, or some form of policy exclusion.
I don't think it is an "ugly head" being reared, concerning the insurability of dwellings with less than a 100 amp electrical service. I doubt there is any building code on the continent that allows new dwelling construction with less than a 100 amp service. Homes with less than a 100 amp service were built many years ago, in an era with little reliance on electrical products, appliances or fixtures, relative to 'today'. To live in such a dwelling today, in any manner of what would be considered as a "modern existence"; is truly dangerous when less than a 100 amp service is utilized. If people are not willing to update this service and its components, why should insurance be offered?
The use of deductibles, whether peril specific or percentage based, is an effective way to offset costs and increase the sharing of risk; and I feel they should be aggressively marketed by carriers and their agents.
The 'day' of the small agent is nearly gone. A carrier's results with an agent who has a small volume is to volatile. Either that agency is small overall and not growing sufficiently in its marketplace, or the carrier is being selected against with their small book in that agent's office. Few carriers will tolerate less than a $100K premium volume with any agent, and most set the minimum at $250K. Agents normally fail to acquire all the benefits of 'association' with any carrier until their volume exceeds $500K and in some cases $1M.
When contingent profit contracts between carriers and agents revert back to their fundamental intent regarding "profit", the concept of U/W authority for agents will have more validity again. But, when those contracts have their equation centered on volume, as exists today, then "profit" has little real meaning, and the agent's U/W authority can be counter productive to "profit" if measured by U/W results in that office.
We have wandered far and wide, from my original post and topic title, which is okay; but I have changed the title to better reflect the evolving content. |
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jlombardo
USA
212 Posts |
Posted - 03/29/2003 : 04:57:47
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Would ya'll consider the greater use of the adjuster as a "back to basics" avenue to the road of profitibility?
I think that too many carriers are relying on the Preferred Contractor programs......and the inside telephine claims handler.........What about large CAT call centers????? |
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CCarr
Canada
1200 Posts |
Posted - 03/29/2003 : 11:31:43
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Joe, you and I, and perhaps others would / could consider how an 'adjuster'might be better utilized as a "tool" on the "back to basics" road to insurer profitability. However, the problem lies in the inherent perception of that "tool" in a cat claims environment; therefore my answer continues to be no, the cat adjuster will not have greater use to insurers.
The things you think that too many carriers are relying on - Preferred Contractor programs, inside telephone handling, and large cat call centers - will continue to grow.
Consider the insurer "insurance coin" to have two sides - underwriting and claims; but you must recognize that IT and finance departments are driving the impact of either side of that coin, at this time.
Insurers are being forced to 'claw back', returning to some basic and more fundamental underwriting concepts. They are being forced in that direction because of escalating poor underwriting results, compounded by poor financial markets that erodes their available capital, and are being forced by their reinsurers who no longer care to tolerate the loss trough that is close to overflow.
It is all part of "control". For insurers to regain some control over underwriting, they simply have to remind themselves of what underwriting is, and dig in their 'feet'; regarding risk selection, risk retention, product pricing, as well as coverages offered.
On the claims side of the "insurance coin", certainly cat claims is not at the top of the list of insurers attention or concern. However, in their quest for "control" of this aspect, you will see more of the things that you think too many carriers are relying on.
Regarding the 'adjuster' overall, in the insurers march down the 'back to basics' trail, a trail of undefined length and a march of undetermined time, I feel it is prudent to bring forth previous threads. Some of these threads address signs of this movement, others the current or coming effects of it, while others discuss ways in which the 'adjuster' may want to adapt to what is going to happen around them.
I think it would be timely to review the following threads in the "General" forum;
'A claims department as a profit center'
'2003 job decline of 67%'
'2003 Issues facing Adjusters'
'Supply and demand?'
'Independent Contractor marketing initiatives' |
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Insurers "clawing back" to underwriting basics?
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