Thursday, 20 September 2012 22:40

Shops Can Put News, Trends Related to Insurers to Good Use

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It’s easy as a shop owner to get so caught up in day-to-day operations that it can be a challenge to follow the news directly affecting collision repairers.

But there’s plenty of “insurance-related” news that shops also should know about, because it can help them educate their customers, market their business, and maybe even alter how they vote or shop for insurance themselves.

Loyalty doesn’t always pay. Have a customer with an insurer you’d rather not work with? You might want to tell them about a new study that found that a policyholder who stays with the same auto insurance company for more than eight years could save 19 percent on annual premiums by switching.

“Consumers must shop their policies to ensure they aren’t overpaying for insurance,” Deeia Beck of the Texas-based Office of Public Insurance Counsel (OPIC), said.

Beck said her organization’s data shows “the longer a policyholder stays with the same company, the more likely it is that they are overcharged.” Even after just three years, Beck said, a consumer stands to save 5.2% by switching.

Despite this, a 2010 study from Deloitte found that four out of 10 auto policyholders were with their insurer for more than a decade, and that six out of 10 of policyholders “rarely or never shop their policy for a better deal.”

Read more about this study at: http://tinyurl.com/bq8s5cv.

Feds still considering regulation


The role of financial institutions in the economic meltdown from which the U.S. is still struggling to recover has helped keep federal regulation of the insurance industry on the table.

A recent report released by the Troubled Asset Relief Program (TARP) states that American International Group (AIG, now selling auto insurance as “21st Century”) is still in need of “effective, comprehensive and rigorous” regulation to ensure history does not repeat itself at the insurance giant. The report notes that four years after a $161 federal billion bailout of AIG, there is currently no designated federal regulator of the company.

Meanwhile New Jersey’s Rep. Scott Garrett, a senior Republican member of the House Financial Services Committee, introduced legislation in August that would bar federal regulators from designating insurance companies as ‘systemically significant,’ more commonly referred to as ‘too big to fail.’

Garrett’s bill would prevent insurers from having to comply with heightened regulation and capital standards placed on other types of financial institutions that are categorized as too big too fail.

Progressive stumbles on social media
Progressive had taken a pummeling in the social media world recently after a New York man posted a blog with the provocative title, “My Sister Paid Progressive Insurance to Defend Her Killer in Court” (read it at: http://tinyurl.com/8jqtdwa).

Turns out Progressive believed that its own insured (the sister of comedian and blogger Matt Fisher) was at fault in the accident that took her life, and assisted with the defense of the driver of the other car (who had a suspended license and little insurance).

Though Progressive may have been in the right, it didn’t help its cause in trying to explain the complicated situation by making public statements parsing words, and sending out tweets (some of which originally had Flo’s smiling face accompanying them) saying such things as it had “properly handled the claim within its contractual obligations.”

A New York Times article explains the situation well, and could be a good reminder for all insureds to check the amount of uninsured motorist coverage they carry (read at: http://tinyurl.com/8vtzfd7).

Long-standing parts-related lawsuit comes to an end
A federal court in California has tossed out class action and individual lawsuits against Allstate, GEICO, State Farm and Liberty Mutual, saying the plaintiffs in the case failed to provide an admissible method for determining which replacement parts are inferior.

The suits, originally filed in 2006, alleged that the insurers created a ‘sham organization’ (CAPA, the Certified Automotive Parts Association, also a defendant in the case) and used other means to conspire to unfairly compete by specifying use of inferior crash parts.

The judge’s decision to dismiss the cases was not based on the quality of the parts, but rather on the fact that he found the testimony of the plaintiffs’ expert for evaluating the parts was unreliable.

The expert witness for the plaintiffs was Allen Wood, a retired California Bureau of Automotive Repair (BAR) investigator who subsequently was executive director of the Collision Repair Association of California. Wood argued that six non-OEM part categories and four salvage part categories are ‘inferior’ and have at least a 25% probability of ‘significantly lessening’ the quality of vehicle repairs (in terms of ‘safety, fit and structural integrity’).

Insurers called Wood’s testimony “biased, junk-science research” because Wood “is not a statistician or engineer, lacks a rudimentary understanding of basic mathematical concepts and statistical principles, and therefore lacks the relevant expertise to identify and offer quantitative assessments of the alleged ‘inferiority’ of imitation and salvage automotive repair part categories.”

Allstate again ranks best and worst drivers


Allstate’s annual ranking  of the 200 largest U.S. cities in terms of how frequently drivers are apt to file a claim ranks Sioux Falls, SD, as having “America’s Best Drivers” (for the fifth time in eight years), and Washington, D.C. at the bottom of the list.

The report indicates that nationally drivers are in a collision once every 10 years; that average is 13.8 years in Sioux Falls, but just 4.7 years in Washington, D.C.

Other cities where drivers average 12 years or longer between accidents include Boise, ID; Fort Collins, CO; Madison, WI; Lincoln, NE; Hunstville, AL; Chandler, AZ; Reno, NV, Knoxville, TN, and Springfield, MO.

Phoenix led the list among cities of 1 million or more people, with drivers there averaging an accident every 10.2 years.

In addition to Washington, cities where drivers average under six years between claims are Newark, NJ; Glendale, CA; and Baltimore, MD. To see the full list, see: tinyurl.com /cx2dz75.

Insurers should sell more coverage, not less. A recent claims satisfaction report by J.D. Power and Associates found that insurers are better off selling policyholders broader coverage with lower deductibles rather than lower-priced policies with more limitations and higher deductibles.

“Settlement satisfaction falls significantly among claimants paying in excess of $300 beyond their deductible, with satisfaction 89 index points (on a 1,000-point scale) lower than among those who pay only their deductible,” J.D. Power reported.

The finding indicates insurers may improve customer retention if they do a better job convincing consumers they’ll be better off in the long run with a more all-encompassing policy.

Think quality, not just price. ConsumerReports.org in September reminded readers that its surveys find that, depending on the insurer involved, between 10% and 26% of those filing an auto insurance claim encountered a problem.

The article encourages consumers to choose a “top-rated insurer” rather than one that costs less but “may cost you more overall by low-balling loss estimates, forcing the repair shop to cut corners and making you pay extra for OEM parts if you choose them over cheaper knock-offs.” Go here to read the article: http://tinyurl.com /cjspd4k.

Growth of telematics spurs concerns


As Allstate, Progressive, State Farm and The Hartford continue to expand availability of their policy discounts based on use of data from in-car monitoring systems, many consumers continue to voice privacy concerns.

California Department of Insurance spokeswoman Pat McConahay said some state regulators have lingering “concerns about the technology” used in the programs, which can track both how and when a vehicle is being driven.

“There are concerns that insurers might penalize drivers for factors outside of their control,” she said. “One example might be charging more to a customer for their occupation that forces them to drive at night.”

An insurance industry blog this fall quoted a Deloitte Consulting analyst who believes even many good drivers have privacy concerns that make them unwilling to provide data to an auto insurer through telematics just to save $100. The consultant argues that insurers may miss out if they just presume these drivers “have something to hide.”

 

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