Car Insurance

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.

AS IF YOU don’t have enough to do during the mad rush of holiday shopping, take a few extra steps to safeguard your car. Will Estes, a claims manager with the Chubb Group of Insurance Cos., says claims for thefts from vehicles in particular increase dramatically in November and December. Even antitheft devices and car alarms aren’t enough to keep determined thieves from breaking into a car to snatch newly bought gifts.

Your homeowners insurance policy usually covers such losses, but only when the loss exceeds the deductible of $250, $500 or even $1,000. (If your loss doesn’t exceed the deductible by much, think twice about submitting a claim. Subsequent claims could put you in a high-risk category, leading the insurer to raise your rates–or even drop you.) A broken car window or lock would be covered under the comprehensive portion of your auto policy, which is usually subject to a deductible of $250 or $500. (Chubb applies only one deductible if an incident involves both damage and theft.)

THE MUTUAL-FUND industry contends that the fast-spreading allegations of improper trading at fund companies should not worry the approximately 400,000 corporate sponsors of 401(k) plans. But worry they do.

[paragraph] That, at least, is the conclusion of a new survey by CFO magazine, in which a full 86 percent of respondents express concern about mutual-fund mismanagement. More than half, in fact, say they are quite or extremely concerned, especially about conflicts of interest among fund traders and high management fees.

Overall, the worrying doesn’t seem to have translated into drastic action, at least not yet. Rather, as the investigations of fund abuses proceed, many sponsors are waiting to see how funds in their 401(k) portfolios may be affected before they do anything. The CFO survey indicates, for example, that less than one-third of finance executives would support dropping an affected fund immediately from the 401(k) portfolio, while 57 percent would institute a review first.

“Companies are asking how high up the problems went, how serious they were, and what actions have been taken to remedy the situations,” says Patrick Reinkemeyer, president of Morningstar Inc.’s consulting group. Before they make a decision to drop a mutual fund, plan sponsors want to know “to what degree the fund’s ability to manage money has been compromised.” From the sponsor’s perspective, deciding on a particular fund’s future in the plan “is not easy,” says Reinkemeyer. “The standards can’t be the same for Calpers [the California Public Employees’ Retirement System] as they are for a neighborhood car wash.”

A proposal unveiled Thursday by Insurance Commissioner John Garamendi to base auto insurance premiums primarily on how motorists drive and not where they live is pitting drivers in rural areas against those who live in big cities.

Garamendi said the new regulations, which he announced at a news conference in Sacramento, are meant to force insurers to give far less importance to a driver’s ZIP code when setting premiums than what is allowed under current regulations. Critics of the current system say it is unfair because motorists living in urban areas tend to pay more for auto insurance than rural residents.

Garamendi said the new regulations are about carrying out “the intent, the basic fairness that was inherent” in Proposition 103, the automotive insurance initiative passed in 1988. It requires that your driving record — and not your address — be the main criteria used by insurers to set premiums.

“The present system is patently unfair. Not just to urban citizens in one community or another but across the state,” said Garamendi. “This is about enacting the will of the people that has not been enacted for 17 years. Somecompanies are going to howl and scream because change is something they don’t like to do.”