Monthly Archives: September 2012

Insurance 10% to 30% Off

Now there’s a
headline that might grab your attention, but it doesn’t refer to a discount
program, it refers to the fact that in some lines of insurance between $.11 and $.30
of every premium dollar is lost to fraud. Reducing fraud could get each and
every one of us a lower insurance premium. Insurance group estimates suggest
that fraud, in the aggregate, costs us $80 billion a year in the United States.
That works out to about $256.75 for every man woman and child living in the United
States today.

The insurance
industry watches these numbers pretty closely, as they should. The higher the
fraud numbers go, premiums follow and no one likes to see their insurance
premiums rise. Insurance professionals talk about “hard fraud” and “soft
fraud.” Hard fraud in insurance terms is something like a made up claim or a
faked accident. These are the sorts of things you read about in the newspaper
where someone recruits a number of people to go to a dishonest doctor or health
center where they are given bills and records but no treatment and the bills
are sent to the insurer. Some of these scams cost millions of dollars before
they are uncovered. Soft fraud is much more pervasive and insurance companies
believe much more costly. Soft fraud occurs when people misrepresent their
losses on a claim or misrepresent items on their insurance application in order
to obtain a lower premium. The prevalence of these two forms make insurance
fraud the number two economic crime in the United States. What is number one
you ask; tax evasion.

When you consider
the frequency of these two economic crimes, you may be right in judging that
there are some common underlying reasons. A large majority (76%) of people say they would be more likely to commit insurance fraud during an economic downturn. Almost 25% of people believe it is at least somewhat acceptable to
cheat an insurance company. In general, consumer attitudes toward insurance
fraud appear to be coming more permissive. That is probably not a good thing so
far as our future premiums are concerned.

In Washington
State, the Insurance Commissioner has a responsibility to make sure that
insurance companies and their representatives play fair in pricing,
representing their policies and paying claims. The commissioner also has a
responsibility to make sure that people play fair with the insurance companies.
The commissioner’s office has a special investigations unit that looks into insurance fraud in Washington whether it is perpetrated by individuals, agents
or companies and their instructions for reporting fraud on the Washington State
Insurance Commission website.

You can help out
as well by avoiding the temptation to “fudge” an insurance claim or an
insurance application and by being willing to report suspicious circumstances,
such as a body shop that offers to inflate your car repair bill and split the
difference.

In the coming
years, we can expect to see a lot more information about insurance fraud. There
are some who believe that there are enormous savings to be found in Medicare by
reducing fraud, but it is not only government operated insurance programs that
suffer from fraud. All private insurers have to be vigilant in their claims
processes every day.  CIGNA insurance company, for example, was the target of a fraud that began in 2006 and was and
uncovered until 2010; it cost them about $1.25 million in claim costs.

Wildfires in the News

Washington
wildfires have been in the news for over a month now. Most recently, theWenatchee complex fire has gathered a lot of attention but in mid-September,
there are seven fires burning in the eastern part of Washington and the
governor has declared a burn ban on all outdoor and agricultural burning in
Eastern Washington. Washington is not alone in having a severe fire season;
there are many fires burning throughout the Western states. There is even a
website that maps wildfires in the US and provides status updates on each fire;
you can find it here.

Wildfires are a
danger every year in the United States. 
There were 294 recorded between 1980 and 2008 and their annual costs
exceeded $1.4 billion a year; 57 people a year died in these fires, including
some from the Olympic Peninsula. Nearly 200,000 people every year are affected
by wildfires through loss, evacuation or temporary displacement.

Your Washington homeowners insurance covers losses due to fire, but if you live in an area with
a high fire danger you may not realize that your risk of fire may have an
impact on your insurance premiums. Insurance companies consider factors such as
distance from a fire station, the amount of brush in the area and home
construction type when setting rates. If there is a history of wildfires in thearea it may even be difficult to find a company willing to underwrite insurance. An organization called the Insurance Services Office actually
maintains information on the performance of fire services and provides a rating
through a Public Protection Classification. The classification scheme runs from
1 to 10 and if your classification is at 10 it may actually be difficult to
find an insurer willing to underwrite.

If you live in an
area that may be susceptible to wildfires, there are things that you can do to
help reduce your risk. One of the most important things to do is to create a
defensible space around your house. Experts recommend at least a 30 foot
noncombustible area be created around your home to provide a buffer against an
approaching fire. This means cutting grass and weeds and making sure your yard
and particularly your roof are kept clean of potentially combustible materials.
If you have a woodpile, stack your wood away from buildings, again the
recommended distance is at least 30 feet. When planting around your house,
choose fire resistant trees or plants, but remember that fire resistant doesn’t
mean fireproof and any plants that are allowed to dry out and die can present a
fire hazard. There are excellent publications available that can help you select fire resistant plants. You should also prone branches that hang low to
the ground. This may help keep branches away from a low burning grass fire. You
should also consider your roof and determine whether or not it is fire
resistant. These steps may help you or the fire department defend your home in
the event of a wildfire.

 

Edsel at 55

ehood_ornament.jpg  The hype started early.  In November 1956 Ford announced the name of its new medium priced car, the Edsel. By January 1957 Ford Motor Company was touting first-year sales of 200,000 units and talking about a unique campaign to market this revolutionary new vehicle. The pitch continued in February with the release of model names and vehicle characteristics. Production of the Edsel began in July 1957, together with the first paid advertising for the car which appeared in Life Magazine as two-page ads featuring blurred photographs of the new car. The secrecy continued from there with cars shipped from the factory to dealerships under wraps and with the dealers themselves sworn to secrecy on pain of risk to their franchises. The secret was safe except from subscribers to Motor Trend magazine; the magazines August 1957 edition published a photo of the Edsel taken by a kid who sneaked over the fence at Ford’s proving ground.
 

By the end of
August 1957, production of the new Edsel was approaching 20,000 cars a month
and the hype had reached magnificent proportions. On September 4, 1957 the
Edsel was revealed to the motoring public. In all likelihood, a Rolls-Royce
could not have met the bar the advertising set as an estimated 2 ½ million
lookers piled into Edsel show rooms to see what all the excitement was about.
The result was a resounding thud as most of those 2 ½ million turned right
around and walked out.

The Edsel did not
sell 200,000 units in its first year; in fact, it barely cleared 60,000 units
in the US. The car was intended as a mid-price vehicle bridging a gap between
Ford on the low-end and Mercury at the high-end. The Edsel’s pricing actually
overlapped with both of those cars across its different models. While it had a
number of innovative features – a rolling speedometer and Teletouch pushbutton
shifting to name two – the buying public was evidently not quite able to figure
out where the Edsel really belonged. After reviews that characterized the car
as looking like “a Pontiac pushing a toilet seat” and some reliability problems
consumers apparently did figure out where the car did not belong; in their
garage.

Ford quickly
scaled back production and mercifully killed the Edsel in 1959 – the 1960 model
being the last made. The car at that time had four sedan models and three
station wagon models in a price range from $2500-$3750. Today a mint condition
Edsel Citation might sell for around $50,000. If you need Washington auto
insurance for your Edsel you will want to be looking in the collector car
insurance market.

The Edsel is not
just a car; it is now piece of American colloquial history. The name Edsel has become pretty much synonymous with commercial failure or overhyped and
underperforming. The development, marketing and production of the car is
estimated to have cost Ford about $2.5 billion in today’s money.

Traffic Attitudes and Enforcement – Part 2 –Target Zero

In Part 1 of this
series, we talked about the National Highway Traffic Safety Administration
(NHTSA) and how its studies of public attitudes and behaviors about driving
have helped shape public policy in enforcement. 
Today we will look at Washington State’s Target Zero program. 

Washington’s
Strategic Highway Safety Plan – called Target Zero – sets a goal to reduce
traffic fatalities and serious injuries to zero by the year 2030. The program
set out in 2000 to identify Washington’s traffic safety needs and helps
organize the investments necessary to achieve significant reductions in traffic
fatalities and serious injuries on all public roads. While this may seem like
an unattainable goal, it is good to remember that in the early 1980s there was
little safety belt use in this country and motor vehicle accidents were a
leading cause of death. Today, in Washington State, safety belt use has been
above 95% for a number of years, traffic fatalities and serious injury
accidents have been significantly reduced. This has come about through a
combination of engineering to improve belts, communications to help the public understand
the benefits of safety belts, public laws that mandate belt use and enforcement
to assure those laws are observed. This combination has already been used in
Washington with a result that our state had the seventh lowest fatality rate in
the nation in 2008.  When applied over
the next 20 years, these principles are highly likely to drive our highway
fatality rate well toward that zero figure and with improved safety, we can
hope there will be a beneficial impact on Washington auto insurance rates. You
can get a copy of the Target Zero plan, as updated in 2010, here:
http://www.wsdot.wa.gov/planning/SHSP.htm
.

The Target Zero
plan, as revised in 2010, sets out four priority areas to be addressed; each
priority area has specific areas of focus. For example, statewide, the first
priority is to look at impaired driving, run-off-the-road collisions (a vehicle
leaves the road during a collision) and speeding. The plan sets out the reasons
why each of these areas is important and describes the set of measures that
will be used to try to reduce their effects.

Even though a set
of goals and priorities is established on a statewide basis, the plan
recognizes that there should be different priorities for different counties. A
rural setting like the Olympic Peninsula presents different hazards from those
of an urban environment and a rural environment with an access controlled
interstate may present a still different picture. By analyzing the causes of
fatalities and serious injuries in each county, the plan can mix and match the
priorities most important for each county and sometimes for cities within a
county. For example, on the Peninsula as a whole the priority one areas are
impaired drivers and run-off-the-road collisions. In Clallam County, speeding
is added as a top priority area; in Jefferson County, only distracted driving
is listed as the top priority area.

These priorities
reflect the most serious causes of death and serious injury in the county; they
do not mean that other laws will not be enforced. In fact, Clallam and
Jefferson counties participate in enforcement exercises such as “Drive Hammered
– Get Nailed’ and “Click it or Ticket”.

The public
documents that describe the target zero program are pretty dry reading, but if
you are interested in how you are at risk on the road they have a lot of very
interesting information not only about your risks, but about the things that
many people in the state of Washington are doing to try to help mitigate those
risks.