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Managed Competition News

As recently published in “The Massachusetts Agent” (Official Newsletter for The Massachusetts Association of Insurance Agents):

MAIA Files Another Complaint About Progressive Business Practices …

MAIA has filed a second complaint about the business practices of the newest private passenger auto insurer, Progressive Direct. The letter of complaint, filed with both the Commissioner of Insurance and the Office of the Attorney General, outlines five different areas of concern including:

Transfer of Insurer: The complaint explains that in many cases, Progressive has not issued the Notice of Transfer of Insurer (Form 2A) prescribed in their manual (Rule 4. Standard Procedures, D. Transfer of Insurer). In lieu of the Form 2A, Progressive is issuing a Verification of Insurance form. This form is not “signed by the producer of record and certified by affixing the company stamp of the new carrier” as required by their rule. In those cases where Progressive has issued the Form 2A, none of the forms we’ve reviewed were signed. Rather, the Form 2A has the name of the Progressive producer typed in a script font above the insurance stamp. In addition, many of Form 2As as well as the unacceptable Verification of Insurance forms are sent to the former carrier and not to the producer of record as required by their rule.
Issuance of Policy to Persons Without an Insurable Interest in the Vehicle: In several instances, we have observed that Progressive has issued policies in the name of a listed operator who does not own and has no insurable interest in the vehicles being insured. In some of these cases, there were loans on the vehicles and the named insured on the Progressive policy is not a party to the loan. Furthermore, Progressive issued either a Form 2A or a Verification of Insurance to the previous company, in essence, cancelling the vehicle owner’s policy and in many cases putting the owner in violation of his/her finance agreement with the lienholder. The owners of the vehicles were not alerted to the situation until the former agent of record followed up on the change with the vehicle owner.
Registry Paperwork: The most recent complaint we’ve received was from a member who had a new customer come in and purchase a policy and register a vehicle. After seven days, the agent received notice from Progressive indicating that they had issued a new policy. When the agent followed up with the client to determine why he had switched to Progressive, the agent was told that it was “more convenient” to buy a policy and get the vehicle registered immediately than to wait for the Registry paperwork to be mailed by Progressive. We are not suggesting that Progressive is suggesting this course of action, but we feel that any company writing auto insurance in MA without any local representatives in the state should be cautioned that this procedure is not an option.
NOTE: As we went to press with this edition of The Massachusetts Agent, we received additional complaints from MAIA members indicating their clients were informed that they can get the RMV paperwork done by us [the local agent] quickly and then they’ll “2A it to Progressive.”
Misleading Quotes: MAIA provided documentation of an online quote and the subsequent policy declarations page that caused great concern. The initial quote for a six-month policy was $291. The actual premium for the policy issued as a result of the quote was $1,584. The only change on the policy that might increase premium was a change in Part 4 limits from $50,000 to $100,000 (normally resulting in an increase in premium of about $1). The big difference in premium appears to be that the online quote did not include any merit rating surcharges for the applicant who had 8 points. There was no indication that the premium may change as a result of the applicant or any listed operator’s driving record or any other information that may impact premium. In our opinion, quotes of this type are incomplete, deceptive and misleading. We are certain that when the consumer purchased this policy, she had no idea that the true cost of the policy would be five times the amount of the original quote.
Policy Term: I have included below the text of an email from Progressive which explains their stance on policy terms:
“Thank you for contacting us. We appreciate you taking the time to obtain a quote. I received your request for a 12 month quote. Unfortunately, we must sell the policy as a six month policy and then we can change the policy to a 12 month policy. The premium for the 12 month policy will be twice the six month rate. Based on the quoted six month rate, your 12 month rate would be $618.00.

“I hope you find this information helpful and I look forward to assisting you in the future. If you have any additional questions or concerns, please feel free to reply to this e-mail or contact us at 1-800-PROGRESSIVE (1-800-776-4737). Our licensed Customer Service Representatives are available 24 hours a day, 7 days a week to assist you.”

It certainly appears that Progressive’s business practices are in direct conflict with your Bulletin No. 2008-07 which provides:

“Insurers may submit a form filing to the Division offering a private passenger motor vehicle insurance endorsement that limits the term of the standard private passenger motor vehicle insurance policy to six months, provided that such form filing includes a process by which the insurer first obtains the written acknowledgement from a current policyholder or a new applicant that indicates that he or she understands that:

“1. the law requires that every insurance company offer twelve-month term private passenger motor vehicle insurance policies at the option of its customers;

“2. a six-month term policy is shorter than a twelve-month term policy;

“3. a six-month term policy will have a premium that is half as much as a twelve-month term policy; and

“4. the premium for a renewal of the policy for an additional six-month term will be based on the rates in effect for that insurance company on the renewal effective date.”

Certainly, no written acknowledgement form is obtained prior to the issuance of a six month policy. As you can see from the language in Progressive’s email, their default policy term is six months.

MA Auto Insurance Co. Discounts

As a public service, Massautoquote.com, offers the following list of Massachusetts Insurance Companies and their April 1, 2008 discount programs.

We recommend that you get a quote from us. Our licensed, independent, professional Massachusetts Insurance Agents use numerous companies and will find you the best discounts and insurance programs.

American Automobile Insurance Company Annual Mileage, Anti-Theft, Multi-Car, Public Transit

Amica Annual Mileage, Anti-Theft, Good Student, Multi-Car, Other Policy, Public Transit, Years Licensed, Years with Company

Arbella Advanced Driver Training, Annual Mileage, Anti-Theft, Group Membership, Multi-Car, Other Policy, Public Transit, Years with Company

Citizens Insurance Company of America Advanced Driver Training, Annual Mileage, Anti-Theft, Group Membership, Multi-Car, Other Policy, Public Transit

Commerce Insurance Annual Mileage, Anti-Theft, Group Membership, Multi-Car, Other Policy, Public Transit, Years Licensed, Years with Company

Electric Insurance Annual Mileage, Anti-Theft, Group Membership, Multi-Car, Other Policy, Public Transit, Years Licensed

Encompass Insurance Annual Mileage, Anti-Theft, Group Membership, Multi-Car, Public Transit, Years Licensed

Farm Family Insurance Company Annual Mileage, Anti-Theft, Daytime Running Lights, Group Membership, Multi-Car, Public Transit, Years Licensed

Liberty Mutual Insurance Company Annual Mileage, Anti-Theft, Good Student, Group Membership, Multi-Car, Other Policy, Public Transit, Years Licensed, Years with Company

Massachusetts Homeland Insurance Company Annual Mileage, Anti-Theft, Group Membership, Multi-Car, Other Policy, Public Transit, Years Licensed, Years with Company

Metropolitan Insurance Company Annual Mileage, Anti-Theft, Good Student, Group Membership, Multi-Car, Public Transit, Years Licensed

National Grange Insurance Company Annual Mileage, Anti-Theft, Good Student, Multi-Car, Other Policy, Public Transit, Student Away, Years Licensed

Norfolk & Dedham Mutual Fire Insurance Company Advanced Driver Training, Annual Mileage, Anti-Theft, Good Student, Group Membership, Multi-Car, Other Policy, Public Transit, Years Licensed

Plymouth Rock Assurance Corporation Advanced Driver Training, Annual Mileage, Anti-Theft, Good Student, Group Membership, Multi-Car, Public Transit, Student Away, Years Licensed, Years with Company

Praetorian Insurance Company Annual Mileage, Anti-Theft, Multi-Car, Public Transit

Quincy Mutual Insurance Company Advanced Driver Training, Annual Mileage, Anti-Theft, Group Membership, Multi-Car, Other Policy, Public Transit, Years Licensed, Years with Company

Safety Insurance Company Advanced Driver Training, Annual Mileage, Anti-Theft, Good Student, Group Membership, Multi-Car, Other Policy, Public Transit, Student Away, Years Licensed, Years with Company

State Farm Insurance Company Annual Mileage, Anti-Theft, Multi-Car, Public Transit

The Travelers of Massachusetts (Premier) Annual Mileage, Anti-Theft, Good Student, Group Membership, Multi-Car, Other Policy, Public Transit

USAA Insurance Company Annual Mileage, Anti-Theft, Good Student, Multi-Car, Public Transit, Student Away

Open Group Discounts

Group discounts, like the popular AAA discount, have long been the elephant in the Massachusetts auto insurance room. Some of these groups are “open” group discounts that are open to anyone (like the AAA discount); others are “closed” group discounts that can only be received by going through a particular agency or directly through the company. *As a disclaimer: some of these may not be complete group listings, certain groups may no longer be available, and the discount percentages may not be 100% accurate.

Metropolitan Insurance

ADDED VALUE/TRUSTED CHOICES

Part 1: Massachusetts Auto Insurance

My name is Kevin Johnson. I am a Massachusetts Insurance Agency owner. I am a licensed, professional Independent Insurance Agent.

The Nation is watching as the world of “Massachusetts Auto Insurance” moves into “managed competition.”

What is going to become of the Independent, Massachusetts Insurance Agent?

Part 2: The Incredible Shrinking Agency

With continued rate decreases and competition (slipping retention rates), many MA Insurance Agencies are working longer, working harder and still our books of business are shrinking.

Over the past decade companies are having the local agent do more of the processing and more of the underwriting. We have had to keep pace with technological advancements with ongoing, significant expenses.

Companies try to commodatize and marginalize what we do and continue to reduce commissions.

Part 3: Is It Time To Close Up Shop?

“No Business for Old Men.” Sounds like a movie. I can see my senior partner playing the lead role fumbling with usernames, passwords and rating software.

Direct writers and new carriers threaten our professional existences. How can we compete?

Many in the biz. wonder if it is time to close up shop.

Part 4: Conclusion

The Massachusetts Independent Insurance Agency community is vital part of a healthy insurance system.

I have a note on my desk that says: “Add Value.” It is a daily reminder of why I am here. We are advocates for our clients. We represent our clients at claim time and we make certain of fair and timely settlements. We are a voice on the other end of the phone, or in the office, that has the interest of our client in mind.

We are here for billing problems or insurance-related, life issues.

We market multiple lines of insurance, with multiple carriers and we shop for the best rates and insurance programs. We offer Trusted Choices.

Part 5: Epilogue

With the strength of Added Value & Trusted Choices the Massachusetts Independent Agent should be buoyed. Instead of us wondering how to compete, we should start feeling bad for the direct writers.

They don’t stand a chance.

Eight Gas Saving Tips

Gas prices are through the roof. The best way to save gas money is to ride a bike. If that’s not realistic, Massautoquote.com offers Eight Gas Saving Tips:

Go easy on the brakes and gas pedal. Avoid “jackrabbit” starts. Try to anticipate stops to avoid sudden braking.
Avoid long idles. Turn off your engine if you expect a lengthy wait. Idling burns more gas than restarting the engine.
Avoid carrying unneeded junk in the trunk. More weight equals worse gas mileage.
Avoid driving at high speeds. Mileage improves by 15% if you drive 55 mph instead of 65 mph.
Keep air conditioning to a minimum. Try rolling down the windows instead.
If your vehicle has overdrive, use it. It’s more economical at high speeds.
Keep tires inflated properly.
Get regular tune-ups and maintenance checks, both improve gas mileage.

What to do in case of an Accident:

Your Professional, Massachusetts, Independent Insurance Agent offers:

What to do in case of an auto accident:

Stop. Be Courteous. Stay Calm. Your interest will be served best if you are courteous and engage in no controversy at the scene of the accident.
If there is significant damage to any of the vehicles or any potential injuries call 9-1-1 immediately.
Get the names fo the owners and drivers involved. Get license numbers, telephone numbers, and registration (plate) numbers.
Get the names, addresses, and telephone numbers of witnesses.
Express no opinion as to who was at fault. Give no information except for as required by the authorities. Do not sign any statements unless required by authorities.
For prompt claims help:

Contact your Professional, Massachusetts, Independent Insurance Agent.

Home Insurance Primer

Home insurance rates have been going up across the country. The best way to save money on your home insurance is to package it with your auto insurance.

The first step for home insurance is figuring out the appropriate amount of coverage. Your Coverage A, Dwelling, amount should represent the “Replacement Cost” of your home. This should be the amount that it would take to rebuild your home if you were to suffer a catastophic loss. The “Replacement Cost” or Dwelling Amount should not be confused with the home’s Market Value.

Once you have the “Dwelling Amount,” the next three parts (B, C, & D) are usually percentages of this coverage amount.

For example:

Coverage A, Dwelling, amount: $300,000

Coverage B, Other Structures (10% of Coverage A amount): $30,000

Coverage C, Personal Property (70% of Coverage A w/Replacment) $210,000

Coverage D, Loss of Use (20% of Coverage A amount): $60,000

Home insurance also provides you Liability Coverage (Parts E & F).

Part E, Personal Liability Coverage, protects you from on and off-premises liability claims against you & family members. We recommend limits of $500,000 per occurrence and we recommend you consider Personal Liability Umbrella Coverage that sits over these and your auto limits.

Part F, Medical Payments Coverage, is usually in the amount of $1,000 or $2,000. If provides Medical Payments coverage for anyone (except household members) injured on your property.

For savings, we recommend you compare deductibles from: $500, $1,000 & $2,500 deductibles.

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Personal Liability Umbrella

When it rains it pours. Especially, it seems once you’ve been at fault in a serious car accident. Do you have Umbrella Coverage? If you are unsure, then you probably don’t have a Personal Liability Umbrella policy.

A Personal Liability Umbrella Policy “sits-over” your home and auto liability limits. Coverage starts at $1,000,000 and provides you protection from lawsuits.

Coverage is relatively inexpensive to purchase. $1,000,000 of coverage, sitting over two autos and a home, would cost about $180 annually.

Umbrella Policies require underlying motor vehicle liability limits of $250,000 per person/$500,000 per accident.

In addition to coverage limits, insurance companies provide legal defense. So, when you purchase higher limits you are also purchasing improved legal defense.

Auto Accident Surcharges in MA

In Massachusetts, unless combined damage is less than $500, drivers that are found “at-fault” are assessed points. If over $2,000 is paid out the accident is considered “major” and 4 points are applied to the driver’s driving record. If less than $2,000 is paid out then the accident is considered “minor” and 3 points are applied. If less than $500, there are no surcharge points.

There are two burdens of proof when it comes to an at-fault accident. The first burden of proof is with the insurance company. Who, in the accident, was more at fault. There are certain “rules of the road” that assit claim handlers when deciding fault. Some example of “at fault” accidents are: taking a left hand turn, pulling out of a parking space, leaving a stop or yield sign, rear-ending someone, or being in a single vehicle collision. If you have broken one of these “rules of the road,” then you will, most likely, be found “at-fault” for the auto accident.

Once you have deemed found “at-fault” for an accident by the insurance, you will receive a surcharge notice from The Commonwealth of Massachusetts.

The second burden of proof is with the state. Unlike the insurance companies that deem someone at-fault (unless the accident is considered a 50%-50%) for an accident, the state will consider contributing factors in the accident when it comes to applying the surcharge.

In other words, if you rear end someone in an auto accident, your insurance company will find you “at-fault” for the accident and they will have to pay for damages. You will then receive a surcharge notice from the state. For a fee of $50 you can appeal the surcharge. If the accident was weather related, we always recommend our clients fight the surcharge. If there were other contributing factors, such as, ice, snow, rain, sun in the eyes, or the other vehicle suddenly stopped short because a family of ducks were crossing and you rear-ending the other party was unavoidable, then you stand a real good chance of winning the appeal.

If you have been surcharged for an accident, and if you believe you were less than 50% at-fault, you may contact the Massachusetts Merit Rating Board to appeal.

Merit Rating Board @ 617-351-4400

Keep Insurance Costs Down

We suggest that homeowner and auto insurance should help insure you against catastrophic loss. Catastrophic losses are ones that destroy your home or liability or injury claims that leave you financially devastated. With this in mind, consider higher deductibles. Take the savings and invest in improved liability limits. Make certain that you have adequate Dwelling limits on your home so that you will be able to adequately re-build. Also, consider a Personal Liability Umbrella Policy. An Umbrella Policy “sits” over your home & auto liability insurance.