Car Insurance

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 driving record — and not address — be the main criteria used by insurers to set premiums.

The Progressive Group of Insurance Companies has opened a service center for vehicle claims at 601 SE 89th St. in Oklahoma City.

Customers can drop damaged vehicles at the service center and leave in a rental car. A claims representative will handle the repair process.

A Progressive claims representative prepares a repair estimate and contacts an auto body shop. Progressive and the shop reach agreement on the cost of the repairs. After repairs are made, the car is returned to the service center where the customer can pick it up.

Time is money, and anyone involved in an accident will tell you that they don’t have time to deal with it, said Jason Mathies, Oklahoma City Service Center manager, Progressive. So, we say, ‘let us deal with it for you.’

The objective, according to Progressive President and CEO Glenn Renwick, is to create a more efficient and positive experience for everyone involved in a claim - customers, repair facilities and Progressive.

After cruising through his driver’s test and wrapping his fingers around a brand-new driver’s license, Eric arrived home to find a shiny 2003 Mazda Protege waiting in the driveway.

The black Mazda was Eric’s dream car. But the dream didn’t last long. On September 17, less than four months after he first got behind the wheel, Eric lost control of his car while speeding down a winding road in Virginia. He crashed into a tree and died instantly.

Eric’s mom, Janet Celly, is still haunted by the death of her popular, outgoing son. “You just don’t expect that this is going to be about you or your kid,” she told NBC. “[The accident] permeates my entire life, my every thought.”

Experts say tragedies like Eric’s are far too common. Car crashes are the leading cause of death of teenagers in the United States. According to recently released statistics, about 10 U.S. teens ages 16 to 19 die in teen-driven car accidents every day. And even though teens make up only 6.7 percent of all motorists in the United States, they account for 14 percent of the fatal crashes. Officials say teens’ inexperience and recklessness on the road have a lot to do with the deadly statistics.

A boulder thrown into the small pond of employee benefits law will soon ripple out into the larger business world, giving workers more power to sue insurers - and insurers a big reason to raise health-care rates.

Two weeks ago, the New York State Insurance Department quietly issued a decision barring insurance companies and health- maintenance organizations from writing discretionary clauses into their group benefit policies. Discretionary clauses offer health and disability insurers wide latitude to decide whether an insured employee deserves coverage following an illness or injury. Employee advocates have long argued that insurers wield this advantage to deny claims.

Insurance companies got to cloak themselves behind discretionary clauses, says Justin Frankel, partner with law firm Frankel & Newfield in Garden City. [The decision] is a big deal because New York is a pro-insurer state.

The ruling, issued March 27, applies to health plans governed by the federal Employee Retirement Income Security Act, a 1970s law written by former U.S. Sen. Jacob Javits, a New Yorker. It opens a new avenue for employees - and their attorneys - to use the courts to challenge insurance company claim decisions.

We see this as an extremely liberating, groundbreaking ruling, says Kevin Schlosser, head of the litigation department at Meyer, Suozzi, English & Klein in Mineola.

But attorneys who defend insurers say New York is joining a growing nationwide trend in demonizing insurance companies. Federal law, backed by a 1989 U.S. Supreme Court ruling, already provides adequate protections for employees to challenge insurance company decisions, and the state’s move to intervene is practically begging for a protracted fight, says Norman Tolle, a former insurance company executive and a partner at Rivkin Radler in Uniondale.

New York has gone on the bandwagon, he says of the ruling. There’s no doubt there will be a legal challenge.

In the meantime, company health plans will get more expensive, for employers and employees alike, Tolle predicts.

AS THE economy stumbles and stock prices shrink, you might think twice about splurging on a new car. But break your arm and you can’t put off a trip to the emergency room. That, in essence, is what earns hospitals and other health-service providers a reputation for being able to deliver steady growth no matter what the economic environment. That perceived stability helped the group soar nearly 120% last year as tech stocks cratered. The medical group pulled back about 15% this year to April 12, but the sector’s prospects remain bright (and aversion to technology remains high), so health care stocks may be just the right prescription for your portfolio.

Not surprisingly, demographics are working in favor of health-service providers as an aging population feeds demand for medical insurance and hospital care. Membership in the 45-plus age group is expected to increase by about 24% in the next decade, to 120 million. Hospital chains in particular stand to gain the most from growing demand. After 15 years of declining patient numbers, admissions have started to climb again. Any additional increase in patient volume boosts profits greatly, says Bank of America Securities analyst Gary Taylor.

After years of declining profit margins, the pricing environment for health care insurers is also improving. These companies make money by predicting future medical costs and by pricing their premiums high enough to cover their costs and generate some profit. From 1996 to 1998 insurers incorrectly forecast a cycle of declining costs. Instead, huge drug-price increases sent medical inflation spiraling, while the biggest payer into the health care system, the federal government, cut medicare reimbursements to comply with the Balanced Budget Act of 1997. That combination led to large losses for many insurers and subsequent industry consolidation.