Auto Insurance Premiums Drop in Most States

Millions of Americans saw their car insurance premiums decline significantly in the last 12 months, according to the results of a survey conducted by independent research firm. Analysts say that the average car insurance rate dropped by some six percent during a twelve-month span from June 2008 to June 2009. Even so, experts say that the current level is actually 12 percent higher than the premiums before the start of the economic crunch.

The tough economic environment is forcing many motorists to reconsider their insurance premiums, with some deciding to drop their policies altogether. Even insurance providers are feeling the pinch, with many insurers slashing rates just to stay afloat in the fierce industry competition.

Despite the reported actual increase in insurance rates between the beginning of the recession and this year, some states have posted lower than even premiums. In fact, motorists from the states of Massachusetts, Mississippi, Alabama, and Ohio have witnessed insurance rates decline significantly last year compared to premiums the previous year. Massachusetts alone posted an eight percent drop in average insurance premiums.

Some states like Nebraska and Delaware, on the other hand, saw insurance rates climb slightly. Analysts say that the hikes have been fairly small and insignificant and are expected to be offset by the lower average premiums in recent months.

Experts point out that because of the current economic climate, insurance firms and car owners alike are looking for ways to cut back on expenses. With so many American motorists raising deductibles to slash premiums, providers are fast losing revenues. The presence of more competitors and fewer willing car owners means lower demand for insurance. This has resulted in many insurance companies lowering rates to drum up demand.

With insurers slashing prices in response to lower demand from motorists, other providers have followed suit. This has lead to tougher competition and an ongoing price wars. The situation has been complicated with the sudden influx of college-bound drivers looking for affordable auto insurance.

A separate study found out that 90 percent of all policyholders have expressed their intention to look for lower premiums. The figure is a huge increase over recently published data regarding car owners switching providers. The alarming figures are also compounded by the fact that the number of new motorists looking for cheaper insurance rates have jumped by some 20 percent compared to last year. Experts say that this conclusive proof that car owners are looking for ways to save money on their insurance policies.

Auto insurance rates jump 10% in Dallas-Fort Worth

AUSTIN – Drivers in the Dallas area have seen their insurance rates jump by double digits from a year ago, while homeowners have seen a more modest increase of around 5 percent, according to new rate figures compiled by the Texas Department of Insurance.

The figures, based on mandatory rate filings by the top 25 insurer groups in Texas, showed that the cost of liability coverage for drivers jumped more than 10 percent in most parts of Dallas County and surrounding areas. Liability coverage makes up about half the premium for a typical auto policy.

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In six Dallas County ZIP codes – North Dallas, South Dallas, Duncanville, Garland, Irving and Richardson – the average annual rates for liability coverage ranged from $556 to $574 for a married male driver age 25 to 65 who uses his car to drive to and from work. The figure reflects an average credit rating and no traffic violations.

The rate comparisons indicated a wide range of rates, with one company charging as little as $230 in Irving and another company charging as much as $1,215 in all six ZIP codes.

Insurance industry representatives said the higher rates reflect medical costs that have gone up sharply despite the slow economy and relatively low inflation. Consumer groups said the increases are excessive and unwarranted, and in some cases resulted from poor returns on insurer investments in the stock market.

"I can't fathom any justification for such an increase," said Alex Winslow of Texas Watch, a consumer group that is active in insurance issues. "A double-digit increase in one year is a lot, particularly in tough economic times."

Considering Disability Income Insurance

Can you believe that according to some estimates one out of every ten persons will become permanently disabled before age 65? If you became that “one” and you could not perform your current job, what options would you have? For most people this would be a financial tragedy, and unfortunately most rely solely on Social Security, or workmen’s compensation and unemployment insurance from their employers to cover any unexpected disability. The trend of relying solely on these forms of disability income coverage is unfortunate because the maximum benefits from these sources, in most cases, is very limited and most people would have to dramatically change their lifestyle to survive on these types of disability income alone. Considering a disability income insurance policy from your insurance agent is an alternative to consider for people who realize the risk of becoming disabled and want to protect their current income and standard of living.

Disability income insurance is designed to replace one’s income when they are no longer able to work due to a disability. There are many different elements that make up a disability income insurance policy so it is important to understand when and how one will receive the disability income if the need arises. For example, one will need to know how their policy defines and covers short and long-term disability and total disabilities. In addition, it is also important to know if there is a waiting period for the income to kick-in and how or if the income from the disability insurance policy will affect Social Security, workmen's compensation or unemployment benefits. There are also different types of policies to consider such as choosing a short or long-term policy period. Another key element to look for when choosing a policy is knowing if it covers disabilities from both accidents and illnesses. Here is a list of questions that will be important to ask and discuss with your agent when considering a disability income insurance policy:

1. What is the definition of disability in my policy?
2. How long will I receive my benefits?
3. How much will I receive? (usually a % of one’s current salary)
4. Will my benefit amount adjust for inflation?
5. Is there a waiting period before my benefits kick-in?
6. Can I get partial benefits if I can still work part-time?
7. How will my benefits affect my Social Security, workmen’s compensation, or unemployment benefits?
7. What are the exclusions of the policy?
8. Is the issuing company strong financially?
9. Can I renew my policy without doing another medical exam?

It is best to meet with a few agents to compare policies and quotes and don’t be afraid to ask a lot of questions. If you are working with an agent who does not answer your questions to your understanding, it is best to find an agent who is willing to take the time to help you understand the policy in-depth. Like any insurance policy, disability income insurance has many different coverages that need to be understood and it is especially important that you know what you are getting and when, since this will be the income you and your family may be depending on in the future.

Health Insurance Reform Definitions

The health care reform terms are piling up in the news and on talk radio. You want to understand what lawmakers now want to call "health insurance reform," but it gets a little confusing.

If you are feeling like you just need a quick primer on some of the health care insurance reform definitions then take a look below at some of the most common health care reform terms:

Public Option
Public option is the term being used for a proposed government choice for health care insurance. This is part of a larger bill proposed by President Obama in the first year of his presidency to overhaul the health care system with health care reform and insurance reform.

Fee for Service
Fee for service is the term for how doctors get paid. For each service the doctor performs they get paid a fee. The fee for service health care model has been criticized by health care reform advocates.

Pre-existing Conditions
Having a pre-existing condition when shopping for health insurance can a difficult task. Understanding the definition of a pre-existing condition can be a good first step in obtaining a good health insurance policy.

Mandated Health Insurance
Mandated health insurance is when one is mandated, or required to purchase health insurance. This is the term most often used in the new health insurance reform legislation by the Obama administration.

Insurance Exchange
A health insurance exchange is the proposed way under the Obama administration to help with health insurance competition and health insurance reform. This new program will be a key component in providing health insurance to millions of uninsured Americans.

Life Premium Has Worst Half-Year Decline in Nearly 70 Years, LIMRA Says

WINDSOR, Conn., Aug. 31, 2009 — After a 26 percent dive in the first quarter, individual life insurance annualized premium dropped 20 percent in the second quarter, according to LIMRA's U.S. Individual Life Insurance Sales report.

Overall, premium sales fell 23 percent for the year so far, and no product line was spared.

"Despite recording the steepest six month decline since the second half of 1942, the second quarter gave us reasons to be hopeful," said Ashley Durham, senior analyst, LIMRA product research. "Forty percent of companies were able to increase their total individual life sales over the second quarter of 2008 (this compared to less than 30 percent in Q1)."

Variable sales (with the strongest ties to the market) continue to suffer the most, down about 50 percent for the second quarter and 55 percent for the first half of the year.

Universal life (UL) sales were down 29 percent for the quarter and 27 percent for the first six months of 2009. This is the fourth consecutive quarter of double-digit declines. In addition to the poor economy, another likely factor affecting UL premium is a decline in sales to senior buyers, which tend to be higher face amounts and represented more than half of annualized premium sales in 2008.

Whole life and term continue to be the most resilient. Whole life fell three percent in the second quarter and four percent at the mid-year mark; while term dipped only three percent for both the quarter and year so far. Both products have maintained their 28 percent market share of new premiums issued.

Overall, policy count continued to drop in the second quarter, down four percent, six percent YTD. Every product except UL, which increased eight percent, experienced declines in the second quarter.

On average, companies sold slightly smaller policies during the first half of 2009 than they did this time last year. The average amount of coverage purchased for most products remained steady; however, new UL policies tended to be smaller, 18 percent lower than those purchased during the first six months of 2008.

View the latest data table on U.S. life insurance sales trends. For more statistics, visit the newly updated Data Bank.

LIMRA Contact:

Howard S. Drescher, 860-285-7875, hdrescher@limra.com
Catherine Theroux, 860-285-7787, ctheroux@limra.com

About LIMRA

LIMRA is a worldwide research, consulting and professional development organization that helps more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com.

Insurance Rate Increases Being Stifled, Claims Marsh

Excess capacity and competition have been stifling insurance rate increases across Europe, the Middle East and Africa in the first half of 2009, according to new figures from broker Marsh.

According to the company, although rising claim notifications are increasing the upward pressure on rates, at the same time the competition between carriers, along with "plentiful" capacity, has applied counter-pressure.

Figures supplied by Marsh showed that property rate changes in the first half of 2009 were between 0% and -10% in France, Germany, Greece, Poland, Italy, Russia and Saudi Arabia. Rates changes were static in the Netherlands, Norway, Finland, Austria and Belgium. The only countries to show increases were Israel, Nigeria, South Africa and the United Kingdom (large corporates), of 0% to 10%.

For casualty rates the figures are just as grim. Only three countries -- Israel, Slovenia and the United Kingdom (large corporates) -- saw increases of 0% to 10%. The others were either static (0%) or saw changes of 0% to -10%. Spain saw rate changes of -20% to -30%.

"As clients look to manage their way through the economic downturn, they are reducing the sums they insure in an effort to cut costs where possible, potentially leaving them underinsured," said Bruce Trigg, leader of Marsh?s risk management practice in Europe, the Middle East and Africa, in a statement on the figures. "This has resulted in premium reduction and increased capacity in the market."

He said this means the overall insurance marketplace remains competitive, "especially in countries that have a developed insurance market. Capacity is largely unchanged and insurers' appetite for risk remains. However, as claims rise, insurers are beginning to negotiate more aggressively on renewals, as previous rate reductions were unsustainable."

Busy summer hits M&S Money Pet Insurance

M&S money Pet Insurance claims that summer is the busiest time of year for its advice line, as pets find new and unusual ways to get injured.

Among the calls received by its 24-hour Vetfone line was the story of a six-month old English Bull Terrier who somehow managed to swallow a whole frog while out on a walk.

Clare Scantlebury, Vetfone deputy operations manager, comments that it is important to remember that accidents such as this one do happen and can cause real problems.

She says: "It's lovely for pets and their owners to enjoy being out and about during the summer, but they need to be aware of hidden dangers."

Advice from M&S Money Pet Insurance indicates that dog owners should be watching out for conkers, as weather conditions have led to them falling early this year and if swallowed they can cause dogs to become ill.

In September North America will be celebrating Pet Health Insurance Month, according to the North American Pet Health Insurance Association.

Insurer To Pay $17m To State

A Texas health insurer yesterday agreed to cough up $17 million in fines and other costs and will be barred from signing up new Massachusetts customers after it was accused of not delivering on promises to self-employed workers and other policyholders.

The settlement between HealthMarkets Inc. and the state is believed to be the largest consumer protection agreement by a health plan in Massachusetts history.

HealthMarkets Inc., mostly through its Mega Life and Health and Mid-west National Life subsidiaries, has about 27,000 customers in Massachusetts.

HealthMarkets has been battling for years with regulators over accusations it hasn't properly overseen its agents. In 2006, it agreed to pay $850,000 to settle disputes with the state.

Yesterday, Attorney General Martha Coakley and Insurance Commissioner Nonnie Burnes signaled they've had enough with HealthMarkets, whose spokesman couldn't be reached for comment.

"With health reform in Massachusetts and the requirement that individuals in Massachusetts have health insurance, it has been even more important to stop predatory practices in the health insurance market," Coakley said in a statement.

In an interview, Burnes said HealthMarkets just wouldn't or couldn't control the inaccurate coverage promises made by representatives to potential customers.

"They weren't controlling their agents," Burnes said.

Under the deal with Coakley, Health Markets will pay $17 million, much of it going to compensate people for coverage-related disputes. The firm is banned from signing up new customers for five years, Coakley's office said.

Under a separate deal with Burnes, HealthMarkets will pay an additional $2 million -- and possibly $3 million more if it doesn't abide by agreements.