Subscribe To
Posts
All Comments
Wednesday, November 16, 2011
Citizens Insurance proposes sweeping changes
A recent article does a pretty good job of proposing Citizen's proposed changes. Citizens plays a special role on the west coast of Florida since virtually no major Insuror will write new policies. This leaves the majority of insurance consumers no choice but to purchase their homeowners coverage through Citizens.
Friday, April 1, 2011
Fraud and your Auto Insurance premium, Part 2
Recently the National Insurance Crime Bureau did a study on Florida questionable claims and came up with the following findings:
1) 22,679 questionable claims were referred to the bureau for further examination in 2010
2) This represented a 34% increase from 2009
3) 84% of these claims were auto insurance related
4) Miami was the worst city in the state for fraud, followed by Tampa and Orlando respectively.
The reader may find this interesting but question what it has to do with him, an honest insurance consumer. The answer is it has everything to do with your Auto Insurance premium. First we need to understand what Insruance is, and why it is important and effective.
Insurance as a concept spreads the financial risk of an accident among many that the individual could not bear. As an example, there are many drivers but relatively few serious accidents. One person bearing the costs of a serious accident could bankrupt this individual or cause serious financial harm. If this risk of this relatively small amount of accidents was absorbed by a large group of drivers, each person could afford to pay a much smaller amount, decreasing the risk of financial ruin to the group.
Enter auto Insurance. Insurance companies access the risk, set the premium, collect the premium and administrative costs. It is normal for an insurance company to divert 30% or so of the premium to adminstrative costs and pay out roughtly 70% in claims. Often the entire profit of an auto insurance carrier will be the amount they are able to make while they hold your money, called investment income, but this is a subject for another day.
Some companies model the risk better, are more restrictive, or target certain groups, hence the variance in costs and why your neighbor may get a quote from your company and say it is more than he pays, but if you call his company, it may be more than you pay. Confusing, yes.
The company's administrative costs are fixed, or relatively fixed. when there is an increase in fraud, or frequency of claims, the company will increase the premiums to THE ENTIRE GROUP it insures. Insurance companies break the risk down in macro and micro territories. So if Florida as a group loses money, the entire state will see rate increases. If certain areas are problem areas, they will see even larger increases.
This brings us back to the current state of affairs. Unfortunately auto Insurance Premiums in Florida are rising, and companies are 'underwriting' for multiple claims that fit certain patterns. In insurance lingo, this is called a hard market, and we are in one now. I hope this helps the reader understand why their premium has risen lately, regardless of what company you purchase your insurance with.
1) 22,679 questionable claims were referred to the bureau for further examination in 2010
2) This represented a 34% increase from 2009
3) 84% of these claims were auto insurance related
4) Miami was the worst city in the state for fraud, followed by Tampa and Orlando respectively.
The reader may find this interesting but question what it has to do with him, an honest insurance consumer. The answer is it has everything to do with your Auto Insurance premium. First we need to understand what Insruance is, and why it is important and effective.
Insurance as a concept spreads the financial risk of an accident among many that the individual could not bear. As an example, there are many drivers but relatively few serious accidents. One person bearing the costs of a serious accident could bankrupt this individual or cause serious financial harm. If this risk of this relatively small amount of accidents was absorbed by a large group of drivers, each person could afford to pay a much smaller amount, decreasing the risk of financial ruin to the group.
Enter auto Insurance. Insurance companies access the risk, set the premium, collect the premium and administrative costs. It is normal for an insurance company to divert 30% or so of the premium to adminstrative costs and pay out roughtly 70% in claims. Often the entire profit of an auto insurance carrier will be the amount they are able to make while they hold your money, called investment income, but this is a subject for another day.
Some companies model the risk better, are more restrictive, or target certain groups, hence the variance in costs and why your neighbor may get a quote from your company and say it is more than he pays, but if you call his company, it may be more than you pay. Confusing, yes.
The company's administrative costs are fixed, or relatively fixed. when there is an increase in fraud, or frequency of claims, the company will increase the premiums to THE ENTIRE GROUP it insures. Insurance companies break the risk down in macro and micro territories. So if Florida as a group loses money, the entire state will see rate increases. If certain areas are problem areas, they will see even larger increases.
This brings us back to the current state of affairs. Unfortunately auto Insurance Premiums in Florida are rising, and companies are 'underwriting' for multiple claims that fit certain patterns. In insurance lingo, this is called a hard market, and we are in one now. I hope this helps the reader understand why their premium has risen lately, regardless of what company you purchase your insurance with.
Friday, February 25, 2011
Auto Insurance fraud, staged accidents, Florida, and your insurance premium.
We hear about it all the time. Insurance Fraud costs us money. The cheats pass on their illicit gains to those of us who are honest and only put in legitimate claims. Florida leads the nation in staged auto accidents, often performed by gangs of organized criminals. But how serious is the problem really?
A letter recently sent to all Infinity Auto Insruance policyholders in Florida may shed some light on the scope of the problem. Below is this letter re-printed in its entirety;
Did you know that you are paying approximately $400 more for auto insurance because of fraud? Auto insurance fraud is driving up insurance costs and threatening your safety.
During each of the last three years, Florida has had the highest number of questionable auto claims resulting from staged accidents in the nation. With 1,446 in 2009, Florida's questional auto claims represent 30.1 percent of the national total; its number far exceeds that of 2nd place New York which was 765. These numbers, of course, only include proven instances of fraud. We believe much more fraud exists, and is the source of rising costs for everyone.
Insurance fraud is a particularly serious issue in the Tampa, Miami, Orlando, and Hialeah areas. These four cities rank in the top 10 worst citieis in America in rates of questionable auto claims.
Reforms to limit auto insurance fraud should be a priority for the Florida State Legislature. Auto insurance fraud is putting the safety of Florida drivers at risk and significantly increasing costs for Florida drivers. Based on the latest data available, Florida motorists as a group pay the 2nd highest auto liablilty insurance premium in the nation. The 2007 average annual liability premium is $719, which is 51 percent higher than the national mean of $475.00.
Today, the reality is that fraudulent claims and staged accidents are the most significant drivers of auto insurance premium increases in the state. We must eliminate the funding source for these criminal operations, and put procedures in place that protect both the safety and the wallets of Florida drivers.
We know that Floridians are struggling in today's economy, and we want to do our part to keep auto insurance costs from escalating due to fraud. You can help. Please visit http://www.insurancefraudUncovered.com and take action-write your local legislators and urge them to take action on this important issue.
It is time for lawmakes in Tallahassee to put consumers first and take action to stop auto insurance fraud once and for all. Let them know just how serious we are.
This letter was signed by vice president of Infinity,Mr. William Dibble.
So what is going on? In short, people fill up a car with co-conspirators, stage an accident and all of them seek medical attention at often dubious facilities that may or may not be in on the operation. You and I pay for this. Insurance companies set their rates on known risk factors, and out of control fraud will and has caused major carriers to leave certain marketplaces, like Tampa, Miami and Orlando.
Let's hope the problem is addressed soon
A letter recently sent to all Infinity Auto Insruance policyholders in Florida may shed some light on the scope of the problem. Below is this letter re-printed in its entirety;
Did you know that you are paying approximately $400 more for auto insurance because of fraud? Auto insurance fraud is driving up insurance costs and threatening your safety.
During each of the last three years, Florida has had the highest number of questionable auto claims resulting from staged accidents in the nation. With 1,446 in 2009, Florida's questional auto claims represent 30.1 percent of the national total; its number far exceeds that of 2nd place New York which was 765. These numbers, of course, only include proven instances of fraud. We believe much more fraud exists, and is the source of rising costs for everyone.
Insurance fraud is a particularly serious issue in the Tampa, Miami, Orlando, and Hialeah areas. These four cities rank in the top 10 worst citieis in America in rates of questionable auto claims.
Reforms to limit auto insurance fraud should be a priority for the Florida State Legislature. Auto insurance fraud is putting the safety of Florida drivers at risk and significantly increasing costs for Florida drivers. Based on the latest data available, Florida motorists as a group pay the 2nd highest auto liablilty insurance premium in the nation. The 2007 average annual liability premium is $719, which is 51 percent higher than the national mean of $475.00.
Today, the reality is that fraudulent claims and staged accidents are the most significant drivers of auto insurance premium increases in the state. We must eliminate the funding source for these criminal operations, and put procedures in place that protect both the safety and the wallets of Florida drivers.
We know that Floridians are struggling in today's economy, and we want to do our part to keep auto insurance costs from escalating due to fraud. You can help. Please visit http://www.insurancefraudUncovered.com and take action-write your local legislators and urge them to take action on this important issue.
It is time for lawmakes in Tallahassee to put consumers first and take action to stop auto insurance fraud once and for all. Let them know just how serious we are.
This letter was signed by vice president of Infinity,Mr. William Dibble.
So what is going on? In short, people fill up a car with co-conspirators, stage an accident and all of them seek medical attention at often dubious facilities that may or may not be in on the operation. You and I pay for this. Insurance companies set their rates on known risk factors, and out of control fraud will and has caused major carriers to leave certain marketplaces, like Tampa, Miami and Orlando.
Let's hope the problem is addressed soon
Wednesday, February 16, 2011
STATE FARM FILES FOR 28% RATE INCREASE FOR FLORIDA HOMEOWNERS
STATE FARM FILES FOR 28% RATE INCREASE FOR FLORIDA HOMEOWNERS
Yesterday State Farm Florida Announced they have requested from The Florida Insurance Department that they Grant State Farm a 28% rate increase. Florida State Farm Policyholders have endured many rate increases and have also endured State Farm threatening to cancel all of their homeowner policies and leave the state , so it will be interesting to see if 1) they get the rate increase they are asking for and 2) whether or not it will be well tolerated by weary State Farm Policyholders. Many State Farm customers have already left for smaller Florida Based startup insurers to save money, or in areas that State Farm isn't actively writing new policies (like Hernando and Pasco counties), many have left and placed their policies with Citizens Insurance Company. A battle with State Regulators is sure to come, so stay tuned to this blog for updates.
Yesterday State Farm Florida Announced they have requested from The Florida Insurance Department that they Grant State Farm a 28% rate increase. Florida State Farm Policyholders have endured many rate increases and have also endured State Farm threatening to cancel all of their homeowner policies and leave the state , so it will be interesting to see if 1) they get the rate increase they are asking for and 2) whether or not it will be well tolerated by weary State Farm Policyholders. Many State Farm customers have already left for smaller Florida Based startup insurers to save money, or in areas that State Farm isn't actively writing new policies (like Hernando and Pasco counties), many have left and placed their policies with Citizens Insurance Company. A battle with State Regulators is sure to come, so stay tuned to this blog for updates.
Subscribe to:
Posts (Atom)