Car Insurance

As the debate continues over the use of insurance credit scores in personal lines, one expert says that the insurance scores are being used in commercial lines.

“We believe it’s happening,” says Lamont Boyd, insurance market manager for Fair Isaac & Co. in San Rafael, Calif. “But carriers are very concerned about competitive advantage, so they don’t want to tell anyone they might be using our scores for commercial underwriting.”

Credit-based scores help insurers predict losses, says Boyd. “At the time we originally developed credit-based scores, we wanted to see if there was a correlation between scores and claims,” he says. “And we found very distinct relationships between 15-25 variables on a credit report and whether person would make a claim on an insurance policy.”

On the personal lines side, credit based insurance scores are widely viewed as an accurate tool to underwrite risk and have been in use for many years. “Credit-based insurance scores are an integral part of the underwriting process, a very important factor,” says Tim Hollyer, an agency product development manager for Progressive Insurance, which has been using the scores since 1992 in personal lines underwriting.

“We’ve found that credit helps us predict future losses better and more accurately, along with the standard factors such as age, driving record, car, location,” says Hollyer. “Credit scores help us be even more accurate, so we can offer a premium that reflects expected claims costs.”

Regulators, however, want to be sure people are not being unfairly denied coverage. Several states have pending legislation on regulating the use of scores in underwriting personal lines coverage, according to the Insurance Information Institute. In Louisiana, lawmakers are even considering whether to outlaw insurers’ use of credit information altogether.

IF YOU COULD LINE UP identical insurance policies a glass display case and dangle a price tag from each one, you’d uncover the insurance industry’s dirty little secret: Some companies charge two to three times more than their competitors for the exact same coverage. Buyers sign up for overpriced policies all the time simply because they don’t know about the other choices.

That’s where the Web comes in. Theoretically, you can answer a few questions, click your mouse and instantly see accurate quotes culled from vast databases containing hundreds of companies–all without having to speak with an agent. And, in theory, you can use the Internet’s vast array of calculators to help you figure out how much insurance you need.

But high-tech insurance shopping can quickly turn into a nightmare. For one thing, you could spend weeks visiting all the sites that promise to offer the best deal–but usually don’t. Because insurance is subject to patch-work of individual state regulations, you’ll find a limited menu of policies in some states. What’s more, you may get instantaneous quotes and you may not. And you’ll usually pay the same price as if you called an agent.

It’s not unusual to end up with inaccurate quotes, long waits, few companies to compare (or none at all, after wasting your time filling out excruciatingly detailed forms), and a never-ending stream of e-mail and calls from insurance agents.

Discouraged? That’s why we went through the mind-numbing experience of exploring the sites, requesting quotes for different families in different parts of the U.S., and checking to see how accurate those quotes were. (For more on how we shopped and the prices we were quoted, go to www.kiplinger.com) We name the top sites, plus runners-up.

You might call insurance a “necessary evil.” You can’t own a home or drive a car without it. When life moves along smoothly and you don’t make a claim, you wonder why you you’re paying for it in the first place.

If you do make a claim, it most likely means you were in a traffic accident or your home was damaged or destroyed in a fire or a bad storm. Either way, you pay and you lose.

But in some cases, a little bit of insurance can be a good thing. How about some SCC insurance? There are few issues in our industry as exciting and important as self-consolidating concrete (SCC). What would you say if I told you there is a way to formulate an SCC mix design that is guaranteed to meet the parameters and characteristics you set out for it?

There has been much research conducted on SCC, but none of it got down to the nuts and bolts of material selection, the actual mix design calculation, and the influences of certain variables.

To help cover those bases and tie up those loose ends, Axim Italcementi Group, the admixtures supplier in Middlebranch, Ohio, launched its SCC Web-based mix-design software online at www.scczone.com in early 2003. For the six previous years, Axim had used the technology in a non-Web-based application only in-house.

But as SCC became more popular, “we saw it was going to take a large portion of the market going out to 2010, so we developed a plan to have this model become a part of our entire offering,” says Jim Wamelink, Axim’s director of marketing. “We could sell admixtures and give you a support person, but combine that with this mathematical model, and you will design SCC day in and day out perfectly.”

When former college football player and University of Michigan graduate Gregory F. Goss sought a career change, he turned to the nontraditional path of selling commercial insurance. Following a stint as a car salesman, Goss chose the commercial insurance market because he saw it as a field with untapped potential–one with few minority members. But there was one problem: Goss had no insurance billings. No track record, of course, meant that no company would want his representation. To gain experience as an insurance salesman, Goss joined Cambridge Underwriters Ltd. in Livonia, Michigan.

Working his way up to sales manager in two years, Goss soon entered into a joint venture with the firm. Two years later, however, he was ready to break out on his own. His goal: targeting black businesses and educating them about risk management and safety procedures.

Opening in Detroit’s main business hub in 1994, Goss laid out a game plan that would see his company accumulate $4 million in insurance billings in its first 18 months. His first step was to line up potential clients. To achieve his goal of obtaining a black clientele, he paired up with minority suppliers, giving him the opportunity to write their insurance business.

Ford Motor Co. is wrestling with a “proposal” that would see its health care costs increase 20% next year, WAW has learned. Ford confirms it is “in negotiations” with Blue Cross and Blue Shield, the document’s author and the administrator of Ford’s primary employee health-care plan, but won’t reveal its implications or disclose how much is spent on employee health care. An insider tells WAW that such a hike would have a pricetag of about $400 million. It’s another headache, on top of sales that fell 7.5% in August compared to year-ago and 10.8% year-to-date vs. like-2000. Ford also is distracted by more recalls, confirmation the National Highway Traffic Safety Admin. is examining stabilizer bar links on the ‘97 and ‘98 Ford Expedition and the revelation that cash reserves have declined to $4.1 billion from $14.7 billion and speculation they could fall below $1 billion by December after significant one-time charges such as last spring’s $3 billion Firestone tire recall. Meanwhile, fears of layoffs follow the announced integration of Ford’s North American car and truck engineering. Effective Oct. 1, North America car vice president Chris Theodore became vice president-North America product development, reporting to North America Group Vice President Nick Scheele and Richard Parry-Jones, global product development group vice president and chief technical officer. Meanwhile, Gurminder Bedi, vice president-truck development, announces his resignation after 30 years, and Ford offers generous buyout offers to white-collar employees - including senior managers - in a bid to entice as many as 5,000 workers into leaving the company. The offers include beefed-up pensions, a year’s vacation pay and up to $25,000 toward the purchase of a new car or truck. Cost of the program is estimated at $1.1 billion.