Car Insurance

By combining various off-the-shelf products, agencies create custom solutions that meet their unique needs

Car salespeople sell cars. Broom salespeople sell brooms. And insurance agents and brokers sell insurance. That’s just what they do. Well that’s what some insurance agents and brokers do, anyway.

Others differentiate themselves. More and more, they’re achieving distinction through the delivery of risk management services. And they’re tapping technology to help.

Focus on risk Scott Addis, CPCU, president of The Addis Group, based in King of Prussia, Pennsylvania, has built a process that he’s dubbed “The Risk Management Audit.” “This lets us, very efficiently, uncover an organization’s risks, prioritize and measure them, and then set a strategy to mitigate those risks,” he says. Addis’s staff also evaluates related tools and processes that the entity has in place, including claims management systems, insurance program design, risk management procedures, and any training initiatives.

The whole task requires some heavy lifting. “We go in, typically, nine months before renewal and go through this process,” Addis says. This raises a slew of eyebrows among his peers. They’re convinced the work, while beneficial, just can’t be cost effective.

Addis disagrees. “It’s just the opposite,” he says. “When we go through the audit process, which typically takes from two weeks to two months, we literally become the broker on the account instantaneously.” He’s adamant that the audit process is less time-consuming than traditional agent practices. Plus, his hit ratio hovers around 90%.

To help deliver, Addis and his team use automation-from customer relationship and management tools to robust risk management software. He’s also developing and refining technology to make the process more efficient, something he sees as necessary for agents and brokers who want to, as he says, “get away from the commodity trap.”

The name works literally-short for reconnaissance, which Tyler says agents should be ready to perform every day-or as an acronym: Research the data, Examine the risk, Collaborate on solutions, Organize the players; and Neutralize the risk. Either way, it features a service timeline that covers the entire policy period, spelling out exactly what the agency will deliver each month. “It’s been unbelievably successful,” Tyler says. “We’re able to renew many of our accounts two months before renewal date. That keeps a lot of our competition out.”

Effective use of technology helps drive RECON 365. In creating the program, the agency bought commercial software where it existed and built tools to fill gaps. The piece-meal approach came, in large part, because Tyler wasn’t satisfied that any product on the market at the time would meet all of the agency’s requirements. RECON 365 does.

A key element is automated communication between agency and insured. Included in this are electronic newsletters the agency sends clients, addressing risk management issues that businesses face.

Online claims viewing is also included. “For companies interested in managing their claims, we create regular reports, using proprietary software, and then hold quarterly review meetings,” Tyler says. “We take carrier claims information and present it to clients in graphical format, complete with analysis.” These meetings can take place in person but often are done online using Web conferencing software.

The agency also uses off-the-shelf and proprietary software to deliver OSHA logs and other safety and wellness information. And clients can perform online policy selfservice through InScope, a feature of the agency’s management system. “They can go in and look at their policy whenever they want,” Tyler explains. “They can print out certificates of insurance, automobile ID cards and dec pages on their own schedule,” Tyler notes.

Higgins and his staff use proprietary software, along with products from two Australian firms. The process involves a thorough examination of the types of events that could affect the firm’s people, income, reputation, and objectives.

Offenders involved in this study lacked basic financial knowledge which presented a barrier to their success upon release. The researcher modified existing curriculum and created a course in financial literacy for offenders within a medium security correctional facility based upon their personal experiences. The offenders gained financial knowledge as measured by a pretest and posttest covering financial topics. Offender financial histories were identified in several areas such as savings and debt, banking experience, and housing. The findings suggest students made gains in knowledge. This class covering money management is of great benefit to the offender as they prepare to once again reenter today’s society.

What does one teach in a financial literacy class targeted toward offenders? The nature of correctional education is very diverse. How can one meet the needs of an offender who has been incarcerated for 30 years? Thirty years ago the minimum wage was close to $2.65 per hour; a gallon of gas sold for around $.80 per gallon; you could purchase a new car for approximately $5,000. Visa cards were just beginning to emerge and grow in usage. Family dynamics were very different in the late 1970s with many husbands expected to be the breadwinners in their household.

Consider also the situation of an offender who has been locked away in prison since before he could even drive. What financial skills will this offender need in order to be successful upon release? He may have never held a job, written a check, or found housing for himself. It is likely that he will obtain employment at a salary close to minimum wage. Today, credit cards are easily obtained, and advertising sells the idea of a lifestyle that many will not be able to afford; especially those with lower incomes.

The typical correctional education classroom is by nature a rather formal, reserved environment. Working as a correctional educator makes one aware of some of the financial experiences encountered by offenders. Sharing of personal experiences in a classroom setting is not always a routine practice in correctional education. Studies have shown that there is value in incorporating these personal experiences into learning. In planning for a class in financial literacy offender experiences were incorporated into the curriculum, and student gains in knowledge were measured as well.

Literature Review

The current economic climate in the United States is growing ever more complex. Consumers have a growing number of financial decisions that they must make. Increased advertising and marketing can lead American citizens to make clouded decisions. National statistics show that money management is of immediate concern here in the U.S. The bankruptcy rates have doubled over the past ten years (Borja, 2004). ‘An estimated 10 million American adults have no relationship with a mainstream financial services provider. One third of these adults are African American and 29% are Hispanic. One-fourth of all lowerincome families are un-banked” (Sarbanes, 2002, ¶ 4). Many offenders affirm these statistics as they generally have lower incomes, minority backgrounds and no previous banking experience.

One of the reasons for these economic trends might be attributed to a lack of understanding about Investing and financial planning. A small number of adults today are able to recall participation in a class covering financial topics. Without formal instruction, many are left to learn from their parents, or on their own by experience. This statement is consistent with this current research where approximately 76% of the students surveyed had learned about money management from family or through their own personal experiences. Congress passed the Excellence in Economic Education Act in 2001, which provided for increased funding of programs in financial literacy (Borja, 2004). In May 2002, President Bush created the Office of Financial Education. Their goal is to educate Americans with practical skills they will need to make better-informed financial decisions (US Treasury).

The JumpStart Coalition for Personal Financial Literacy has published National Standards in Personal Finance covering four areas: (a) Income; (b) money management; (c) spending and credit; and (d) saving and investing (Mandell, 2002). In addition, The United States Treasury’s Office of Financial Education has created eight key elements to a successful financial education program. These eight elements are grouped into four main categories: content, delivery, impact, and sustainability. They present that the areas of savings, credit management, home ownership, and retirement planning should be covered (US Treasury, 2004). Several of these topics were incorporated into a class on financial literacy for offenders.

Objectives and Purpose

The purpose of this study was to uncover some of the financial experiences today’s offenders have faced and identify areas where offenders were lacking knowledge in money management. The next objective was to use this information to teach personal money management topics that met individual offender’s educational needs. The overall goal in teaching this new class In financial literacy was to better prepare the offender to live successfully upon release from prison. The action research question became: What impact does the Integration of the financial history of offenders into a newly created class in financial literacy have on their knowledge and understanding of money management skills?

The test data was analyzed by using Microsoft Excel spreadsheets to see which test questions were missed most frequently. A Microsoft Access database was created to analyze the other student data. By using this program, student characteristics could be combined and printed in useful and informational reports such as offender age and education level, or number in their household and their housing history. Daily student comments were kept by the teacher within a journal throughout the class.

Findings

Financial History of Today’s Offenders

The tools used in compiling the personal financial experiences of today’s offenders included the survey of past financial experiences, interviews and comments during in-class discussions. The data were used to create tables and queries using Microsoft Access. The following data are significant as they present financial characteristics that can attributed to offenders at any location.

Financial problems

When asked about their previous financial problems, a few students claimed that they did not have any. Other offenders shared that they found it difficult to keep up with paying bills at times. Not budgeting, not saving, and spending cash too quickly were also factors that contributed to financial difficulties for the class participants. Their responses showed that most offenders had some financial difficulties at some point.

The amount of debt experienced by the offenders varied quite a bit. Six offenders claimed that they had neither current debt nor savings. Seven offenders claimed to have more debt than savings, with debts ranging from $200 to $20,000. Four of the offenders listed that they had more in savings than they had in debt. These saved amounts ranged from approximately $200 to $20,000. One offender claimed his amount of debt was equal to his savings. The majority of offenders involved in this study held a zero or negative balance in savings.

The offenders shared the sources of their debts. Two of the offenders mentioned owing court fees and three offenders still had restitution to pay. Four of the offenders owed for unpaid child support. Medical bills comprised much of the debt for three offenders, other miscellaneous sources of debt were unpaid bills such as rent, traffic tickets, cell phone bills, bank loans, and money owed to the IRS. One student mentioned that he had worked with a collection agency to get some of his bills paid off. The presence of even a small amount of debt may constitute a large hurdle for many offenders upon release.

Banking

Five of the offenders never had a bank account. Of the remaining students, twelve had some form of a savings or checking account. The majority of offenders in this class had never taken out a bank loan. Only four of the seventeen men had previous experiences with a loan from a financial institution. Those same four students were also the only ones who had a credit card in the past.

Retirement

Of the seventeen offenders in this study, only two of them had begun to save for retirement. This included both retirement savings of their own accord or those established through an employer. In other words, fifteen men from the ages of 20 to 49 had not yet begun to put aside anything for retirement.

Analysis of the test showed student scores dropped slightly on the budgeting questions. The students showed only marginal Increased knowledge with the questions on saving and housing. To conclude, these areas could have used further review. The classes showed moderate improvement through testing in the topics of insurance, credit cards, credit, interest and payroll. The students scored noticeably higher with the questions on retirement, cars, trouble, and privacy.

Integrating Financial Experiences to Foster learning About Money Management

After collecting Information on the financial experiences of offenders via the survey and interview, those experiences were then incorporated Into daily class activities. There are two main ways that this was done. The first was to teach directly to some of their deficiencies in experience. Credit cards and retirement are examples of topics that were covered as few of the offenders had prior knowledge or experience with them.

Second, the offenders assisted in the effectiveness of the class as they shared their own personal experiences through classroom discussions. By incorporating actual student experiences the students learned from each other. The following paragraphs will explain some of the lessons covered and also some of the personal comments that were shared by the offenders in class. This type of instruction gives a real-life perspective to the topics covered.

The lessons on insurance began with the students viewing a video on insurance risk and working through additional activities. One student shared that his apartment had burned In the past and without a renter’s insurance policy he lost $7,000 worth of property.

In the unit on credit cards the students discussed personal experiences in class and also worked out interest fees mathematically on a worksheet. Several showed surprise at the high cost of Interest to be paid when making only the minimum balance payment. One offender remarked, “I ain’t never going to have a credit card, I’m always going to pay cash” (personal communication, June 9, 2005).

During a discussion about loans and banking one student shared an experience where he had co-signed for an automobile loan for a friend. A few months later the car was totaled in an accident. There was no insurance on that vehicle but the loan was still there to pay.

During the discussion on savings options one offender shared his experience with collectibles. He had a collection of miniature cars that had doubled in value over time. A mini-unit on the stock market was also incorporated into this financial literacy class. The students showed skepticism throughout their remarks about Investing their money into the stock market. They shared that they were not willing to risk losing what they had worked hard to earn.

Online, magazines aren’t just a place where buyers read ads, they’re a place where deals get transacted. They’re not just a place for reading, they’re a place for reading–and then action.

Thirty-five different interactive tools are embedded in the Money.com Web site.

Readers can delve into their own finances in any number of ways. “How Deep is Your Debt?” whispers one tool. “Are you Saving Enough?” nudges another. Other tools offer wide-ranging advice, from stock screening to insurance picking to home relocation recommendations.

Much of the print magazine’s content is online, but the tools are the heart of this site. More evergreen than a feature about understanding Alan Greenspan’s remarks, more engaging than check boxes on glossy paper, tools define the site. As well they should, says Money. com editor Craig Matter.

“People don’t come to the Internet to read–they come to work,” he says.

That sums up the Internet’s deep and far-reaching impact on the magazine industry. After decades of serving as an impartial chorus that chronicled pastimes and industries, providing news and insights, magazines suddenly find themselves not just informers, but enablers. Online, they respond to reader demands for interactivity by establishing new relationships with readers via tools like those at Money.com. They bring together buyers and sellers in Internet marketplaces. And they even drive their own business growth through on-site customer service and subscription capabilities.

“The Web allows us to serve the consumer more directly, in ways we haven’t in the past,” says Mark Holmes, vice president for programming and product development at National Geographic’s Web arm.

Such new capabilities aren’t easy to conceive and launch. For decades, magazines applied their knowledge of customers down a one-way street–producing, printing and distributing expert views to their interested communities. Now, they are learning how to be managers of two-way communication, extending past the letters page to being moderators, merchandisers and toolmakers.

Swept into the swirl of Internet marketing and business models, magazines are seeking to establish partnerships with rising software companies and media operators without being hoodwinked. Associated issues range from being forced to understand new ways of presenting text, to signing contracts with software developers that are in the midst of hyper-growth.

“Obviously, we’re not up to speed in terms of technology,” acknowledges Kevin Brown, president of MediaEdge Communications in Toronto, which is nonetheless proud of its nascent marketplace venture with technology developer eMarketplaces. Daunted by the colossal capital and skills development required to establish a successful online marketplace–a business model that was largely a conceptual notion until a few years ago–MediaEdge, publisher of Canadian Property Management and Condominium Magazine, among others, turned to eMarketplaces. The resulting strategic relationship, PMmarketplace.com, is intended to provide a place for property and building managers to request services and reach contractors. It’s radically different from publishing stories and selling advertisements, but Brown says it’s a way to reduce the print medium’s inefficiency in trying to link suppliers, buyers and information about each.

Tools as Marketing Devices

Perhaps the simplest way magazines go to tools-based publishing online is with a clickable quiz, which is among the most pervasive features of magazine Web sites. Magazines use them to experiment inexpensively with the content that they are already using in print. The assignment is in, the art is budgeted–all it takes is a redesign and the site has a tool that will last for a year or more. Further, the opportunity for targeted advertising is obvious any time the quiz results in advice.

Inexpensive tools with strong opportunities to lead to sales are also increasingly important for magazines, which don’t usually have access to the seemingly limitless capital with which Wall Street has rewarded the risk-taking dot.coms. At Red book, for example, the Web site has piggybacked its featured tools on existing magazine features. A workout adviser, a makeover tool, a bra selector–all were adapted from features the magazine contracted and paid for. “You could never create a tool like this without the images, and shooting this would be a huge amount of money by Web standards,” says Jennifer Woodhouse, Web site editor at the venerable women’s title. Redbookmag.com is also building a few of its own tools from scratch, she says, but doing so is much different from assigning a story for print publication. Woodhouse says she had to select a freelancer who could grasp the concept of developing content not for the linear narratives that are traditional in magazines, but for the decision-tree wizards that a re common in software and Internet applications.

In turn, that means new business arrangements with content providers. “We came up with a flat fee for what we thought would be fair,” she says, instead of the per-word price with which freelancers are familiar.

Some are striking partnerships with sky-rocketing Internet operators such as VerticalNet, providing content in exchange for a cut of the partners’ e-commerce success. Others are establishing their own operations, flinging themselves with abandon into the new world of e-commerce.

The Independent Publishing Co., for example, which operates a handful of packaging magazines, established a strategic relationship with marketplace developer TechTrader to launch a marketplace aimed at its readers and advertisers. The strategy stems from a learning process started in 1994, when the St. Charles, Illinois, publisher launched a controlled-access Web site. Over the years, it has experimented with developing advertisers’ Web sites, taking subscription orders online and offering an interactive bingo card. Relatively few readers take advantage of these services, says Pat Farrey, national sales manager for IPC–but the ones who do are active, involved and of high value to advertisers and the magazine alike.

IPC now is convinced that its historical strength in news about packaging will position it to take the central role in the packaging marketplace as well. Companies that simply erect marketplace frameworks and expect them to effortlessly fill with vendors and buyers overlook the essential skill of knowing who these vendors and buyers are, and what they want to know in order to make purchases, Farrey says. “You can’t build a mall without knowing the demographics of the people who will shop in it,” he says.

Perhaps the most important time in the awful life cycle of an identity theft is the first few days, as the thief is trying out his new identity, making small purchases, signing up for odd and unsavory services. It’s a time when, in theory, quick action can help stem the damage and speed the recovery. Sadly, most people are unaware that their identity’s been stolen until very late in the game, when a lot of damage has been done and the timeline for regaining control of your name, address, social security number, and such can stretch into years.

Intelius, a Seattle-based background-check company, believes it has come up with a solution, called IDWatch, to help ID theft victims learn they’re in trouble much, much sooner.

The idea is pretty straightforward: You sign up with the service and for a monthly fee, the company will watch your relevant data and report to you via e-mail or text message that your ID is possibly at risk. The report will include the recent suspicious activity, and you’ll either confirm that you (or someone you authorized) conducted the activity or deny that it’s you. The latter might mean that you were a victim of identity theft, in which case Intelius would offer you services and even a personal advocate to help you untangle the mess.

Of course, it’s not quite that simple. First of all, where does Intelius get its information, what is it watching, and how does it see new transactions that you may or may not have made? As we noted, one of Intelius’s core businesses is delivering background information to clients about themselves and others. All of the data comes from publicly available sources. This does not mean it’s all accessible by you to find online or elsewhere. You would have to know where to find it, whom to ask, and what documentation you’d need to access it. But this is Intelius’s business and it claims to have billions of data points. Included in this data are your name, bankruptcy liens, judgments, licenses, address history, phone numbers, marriage and divorce records, and property information.

Signing up for the service is relatively straightforward. Since Intelius already has your data, you just have to verify that you are who you say you are. To confirm this, Intelius quizzes you on both “in-wallet and out-of-wallet questions,” said Paul Cook, senior vice president of business development at Intelius. So in addition to your name, social security number, and date of birth, Intelius asks about a car you bought in 1995 and a home you owned in the mid-eighties. Once verified, the company will give you access to your own background report. You can even help Intelius ferret out existing inaccuracies and outdated information.

Intelius offers a free baseline background and people search on its site, but it stops at name, age, and state. If you want a full background report without the IDWatch service, you’ll pay $49.95. If you want IDWatch, it’s $29.95 for three months’ coverage, and you get access to your report. Intelius also offers the option of paying $7.95 a month or $95 a year (a 60-cent saving), or $495 for three years of coverage.

With your coverage in place, Intelius works with transaction companies to watch for an address change, a new credit line opened in your name, a purchase made in your name with a different billing address, and other red-flag activity. Any of these changes triggers an e-mail or text message to you.

Obviously, this strategy is ripe for a never-ending stream of false-positive reports, where you’re constantly confirming, “Yes, I did that.” Intelius’s Cook said the company is aware of this and is working to let customers opt out of certain kinds of alerts.

If the activity detailed in the IDWatch alert is not something you’re aware of, Intelius’s IDWatch will begin guiding you through the process of ID theft action and recovery on the IDWatch Web site, where you’ll find general advice about what to do and information about the advocate that’s been assigned to your case. Intelius has also partnered with an insurance company to cover $25,000 worth of any out-of-pocket expenses you may incur as a result of the theft.

Intelius is not the only company to try the public-information approach. MyPublicInfo (www.mypublicinfo.com/), which launched its PIP (Public Information Profile) service earlier this week, also gives customers access to their background information. You can access your profile for $79.95 and, the company says, “Find out what others can learn about you and review for accuracy and errors.” The company does not offer e-mail alerts for suspicious activity.

One concern with both of these services is whether or not someone can impersonate you and access your detailed background information. Like Intelius, MyPublicInfo offers a quiz on its secure site where you have to verify that you are who you say you are. But Intelius is aware that someone could try to guess at correct answers to access the IDWatch service. Intelius’s Paul Cook says it already has a safeguard in place: “If someone tries to come in and hit the site and fool it, after three tries, we’ll never work with you again—if you get it wrong three times, you’re done.”

Now, from the comfort of your home or office, you can make a complete car purchase on the Internet. According to a study done by J.D. Power and Associates, 62 percent of all new vehicle buyers are turning to the Internet for shopping information. Most go to the web before visiting a dealer. Consumers can now make comparisons, get price quotes from dealers, obtain insurance and extended warranties, and even handle financing — all online. The Better Business Bureau offers the following tips to help make your online car buying experience a satisfactory one:

* First, do some comparison-shopping. Make sure to include as many similar vehicles as possible. There are several online resources that will allow you to compare different styles and models, evaluate prices and option packages.

* Get at least two price quotes online, and if you want to make further comparisons, get at least two price quotes offline.

* When considering price, do not forget to calculate tax, title and licensing fees into the vehicle price. The amount will vary based on your state and locality of residence.

* If you are comparing price with a traditional dealer, watch out for “add-ons” such as rustproofing, paint sealant and extended warranties that can boost both the price and the dealer’s profit. The purchase of these items should not be required to get a low price. They are optional items and should be handled that way.

* Be aware that the price you receive may include rebates, which may have an expiration date. This can be expensive if you decide to buy a few days past the end of a rebate program. Be clear on exactly what the price includes and if there is an end date to any incentive that is included in the price.

* Decide how you are going to finance your vehicle before you start shopping. Will you use dealer financing or an online lender? If you plan to use an online lender, be sure to check several lenders to obtain the best interest rate. Compare online lenders against your local bank and/or credit union. Dealer finance may or may not be the best option for you. The single advantage of financing a car at the dealership is convenience - you buy and finance the car at the same time. The main disadvantage is variation of interest rates.

* Extended warranties and auto insurance can all be purchased online. Spend some time examining exactly what coverage is available. There is a wide range among different plans. Finally, watch the amount of the deductible.