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Archive for the ‘Insurance Carrier related’ Category

Claim denied 1Purchasing an insurance policy enables us to shift the financial risk of paying for certain losses to an insurance carrier in exchange for the premiums we remit.   The terms and conditions of the transaction are detailed in a legal contract, or the insurance policy we receive. Knowing how hard it is for consumers to compare and contrast the terms and conditions between different policies, many insurance carriers market their policies by focusing consumer attention on the one part of the transaction they well understand: the cost. Meanwhile, savvy consumers and the trusted advisors who guide them should ask how it is some insurance carriers that sell policies at a cost far lower than other carriers can still earn a profit. Have some carriers developed a secret strategy? 

Their Secrets Revealed

One strategy some carriers use to lower the cost of coverage while maximizing their profits is to issue policies that protect consumers from fewer risks.  This works quite well, as the subtle yet important differences in the policy language (the proverbial “contract fine-print”) that detail the risks that are and are not covered by different insurance policies is very hard for consumers to discern. Another strategy some of these carriers use to maximize profits is to adopt claims practices that make it extra difficult for claimants to be reimbursed for losses that are covered.  In this scenario, aggrieved policyholders seeking payments that have been denied for losses that are covered by their policies must rely upon state regulators and the legal system to determine if the claims practices used by such carriers are or are not consistent with the terms of the contract.  For the many policyholders who do not experience a loss, both of these strategies can be dismissed as “no harm, no foul”.  Until a loss occurs.

A Simple Formula To Make Better Decisions

Consumers wishing to avoid learning these lessons the hard way — after a loss for which coverage is either deficient or inexplicably denied —- can be assured the remedy is both simple and logical:  conduct better research!  Here’s the simple two step formula:

  1. Enter the name of your insurance carrier (or a carrier are considering) in your search browser and then add these two words: carrier’s name claim practices”.
  2. Carefully examine the content on some of the sites revealed by the search to better understand that carrier’s approach to responding to the claims of their policyholders.

That’s it – just taking those 2 steps can arm consumers with important insights needed to make better-informed decisions and begin selecting coverage from insurance carriers that is actually worth paying for!

Why use the words “claims practices” in your search?  Again, more important than knowing the cost of coverage is to learn if the insurance you are paying actually honors their contractual obligations!  Do not rely on popular who-is-the-best-carrier survey results, as those findings include a number of less important criteria that are not reflective of a carrier’s claims paying practices.  Instead, research the two words that will reveal important insights on an insurance carrier’s claim practices and examine the far more revealing insights.

Search Results Can Be Eye-Opening!

The time-honored business practice of “not speaking poorly of competitors” is one I understand and respect.  To remove the appearance of bias and finger pointing, I encourage consumers to use the power of the internet to perform the above search for ANY insurance carrier. To illustrate the revealing insights that can be gained, consider just the first few results that appear in the screenshots below for a search on the two companies that insure more homes and cars than any other carriers in the United States.

Google SF

Google AS

To be fair: these carriers are often able to save many policyholders hundreds of dollars each year in premiums, just as their advertisements promise. Examining their claim practices can help to explain how they can do so while still earning a profit.

In Conclusion:  This information is provided in an effort to arm consumers with the insights needed to make better informed decisions about their insurance protection.  To protect ourselves from the shell-game advertising tactics that cleverly shift our focus away from what really matters (being paid after a covered loss) to something of lesser consequence but providing an immediate result we all want (a lower premium), it is critical to conduct better research. On any carrier. Then, read the reviews.  Those reviews can often expose the business strategies used by some carriers to fund the “savings” they have advertised to lure your business.

Think I’m making this up? To read an astonishing investigative report that details how State Farm and Allstate contracted with consulting firm McKinsey and Company to reduce their claims costs, simply enter the four words “McKinsey State Farm Allstate” into any search engine. Of all that has been reported about this sordid tale, The Insurance Hoax as reported in Bloomberg News is the most revealing. If you prefer video, check this CNN report by Anderson Cooper available on You Tube.     

Let the buyer BeAware!

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pounce of protectionEspecially over the past decade, several insurance carriers have introduced a wide range of valuable services to help those who collect all sorts of valuables understand their vulnerability to loss and take steps to reduce a wide range of risks.  If you want the long story on the many services available, check this article:  http://www.irmi.com/expert/articles/2012/obrien11-personal-risk-management.aspx

For those who prefer the short story —- this 2 minute video http://bcove.me/0rt69i82 features Ron Fiamma and Rand Silver of AIG Private Client Group explaining the services their team of risk management specialists offer. Most industry insiders would agree that the Risk Management Services provided by AIG Private Client Group are viewed as “best in class” for those with significant collections.

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Citing an unusually high number of catastrophic weather events last year, ratings agency A.M. Best reports that the U.S. property/casualty industry reported its largest underwriting loss since 2006.  The industry’s combined ratio is expected to deteriorate 6.5 points to 107.5 for 2011 from 101.0 in 2010. (Combined ratio equals expenses and losses divided by premiums; a value greater than 100% means the company is paying out more than it’s taking in.)

What might this portend for insurance consumers?  Briefly, we should expect to see many carriers applying to state insurance commissioners for approval to increase rates in those areas and for the lines of business where losses have been most significant. Also expect to see carriers become much more selective in their efforts to underwrite new risks, and more aggressive in their efforts to non-renew existing policyholders with profiles determined to be prone to loss.   I sure wish the news was better…..

For more details: http://www.insurancejournal.com/news/national/2012/02/06/234256.htm

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This video on You Tube is part of a series that shows in vivid detail the remarkably customer centric protection and world class service available to all who insure their home with Chubb and experience a loss.

The vast majority of those I speak with believe that insurance products are a commodity — able to be differentiated by price alone. Sophisticated consumers know better. Meanwhile, only those who are unfortunate enough to experience a truly large loss have a first hand chance to examine the actual “worth” of the coverage provided by their policy. For claimants fortunate enough to be insured by Chubb, the well chronicled ”Chubb Difference” becomes very apparent, and as you will see, very quickly. This video is eye opening for those who think “all insurance is the same”.

A question: what insurance carrier do you want handling your claim, or a claim for your best client? Watch the video, and send it to those who wrongly think “all insurance is the same”.  

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A client who had been insured by a well known carrier recently asked if there wasn’t “any other carrier out there” that could also offer broad coverage for his large home “that didn’t charge an arm and a leg”. I explained that his carrier’s rates reflected their overall loss experience, and reminded him of a claim that he had many years ago and how happy he was with the outcome. Pressing his point, he asked if there were any carriers that had “better loss experience” so that they were able to price their coverage at a lower cost.  Enter a new carrier I’ve written about frequently here – Pure High Net Worth.

This excerpt is form a recent professional journal assessing the marketplace for high valued home insurance summarizes the opportunity: “However, there is some competition out there for these big players. For instance, a relatively new company from Florida called Privilege Underwriters Reciprocal Exchange (PURE) is making a big splash on the East Coast right now.  PURE offers similar features to Chartis and Chubb, and is very open to coastal properties where others are more restrictive in coastal areas.”

When my client reviewed the terms of Pure’s offer, he asked how the costs could be appreciably lower given the very similar coverage. I explained that because Pure was just beginning to add new risks, they had not yet experienced many losses, adding that Pure’s risk selection process relies heavily on credit scoring, which they believe will help attract policyholders who better manage their finances and their homes. The client shared that he regards this as a de-facto “sale” on home insurance, and told me I should explain it in such terms to others.

Well —– although insurance carriers do not have “sales”, it is fair to observe that new carriers entering the marketplace without the burden of prior losses and who also carefully select the risks they insure are able to price their policies at rates that can give the impression they are on “sale”.  For those who find the idea of a “sale on insurance” appealing, please contact me to examine an offer from Pure.  Meanwhile, as an independent risk advisor, my advice on “who the best carrier is” remains unchanged:  it is whichever carrier best meets that particular client’s specific protection needs.

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A recently released white paper from Ace Private Risk Services reminds financial advisors that many investors are increasingly turning to their passion for fine art, wine and other collectibles in an effort to rebalance their investment portfolios. Sound risky? Well, it is not uncommon that well managed collections outperform more conventional investments.

This strategy is not without risks, as many collectors and their financial advisors often do not take the extra steps to intelligently manage the hidden risks that can threaten the value of their collections. To learn more about the “Eleven Steps for Protecting Passionate Investments”,  click here to access the white paper on Ace’s website.

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Almost forever, consumers who have wanted “the very best” in personal insurance protection have placed their coverage with Chubb. While Chubb has remained the leading insurer of fine homes and valuable articles, they have also seen a marked decrease in the number of automobiles they insure over the past decade. Mass marketers, offering variations of the “save x %  in y minutes” (those savings are funded by coverage that is often very deficient after a large loss, by the way), have caused Chubb to research and introduce a new approach to pricing their program that rewards those families who have the best risk characteristics.

The result? Chubb is recapturing many of the automobile accounts they lost to the “better deal” carriers in the past decade.  This isn’t just a price play; in many cases Chubb not only competes well on cost, but provides vastly improved protection. If you or your clients have not seen an automobile coverage offer from  Chubb in the past 6 months, we can help you evaluate the many reasons to also regard Chubb as “the very best” in automobile insurance.

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