Friday, January 29, 2010

Online insurance complaint tool: See how insurers compare

Here's an online tool our office built so consumers could compare the number of complaints in Washington state against each insurance company. The tool includes auto-, homeowners' and some health insurance companies.

(Hint: you can sort the columns by clicking at the top of each column.)

Wednesday, January 27, 2010

Insurance news: Insurer touts the fact that it DOESN'T use credit scoring

an interesting development in the debate over credit scoring, an insurance-industry practice that Washington state Insurance Commissioner Mike Kreidler is trying to ban.

Some background: Many insurers now pull your credit information and use that as a key factor to determine your rates for insurance, including auto- and homeowners' coverage. Kreidler argues that the data has nothing to do with how you drive or care for your home; the companies that use it argue that credit is valuable information that's closely correlated with claims and risk.

This morning, Los Angeles-based Workmen's Auto Insurance Company issued a press release saying that it supports the ban and "has never used an individual's credit when considering their eligibility or determining their insurance premium."

Insurance news: Earthquake `mortgage' insurance: worth the cost for those who can't get earthquake coverage?

That was the topic of a Northwest Cable News report last night. Point to remember, though: It's not a substitute for true earthquake coverage, which can be pretty cheap even in the earthquake-prone Northwest.

Tuesday, January 26, 2010

Kreidler, Gregoire to Congress: Don't give up on health care reform

Washington state Insurance Commissioner Mike Kreidler joined Gov. Chris Gregoire Monday to call on Congress to push ahead with health care reform:

"We have an unsustainable system. It's only getting worse. The numbers are getting worse. We have an opportunity now to make a huge difference. Congress must act in order to address this issue or we've lost our window of opportunity for another generation."

Thursday, January 21, 2010

Credit scoring hearing: Nearly four hours of testimony

The Washington state House Financial Institutions and Insurance Committee's two-hour hearing on a credit-scoring ban stretched to nearly four last night, with 9 pages of people signed up to testify.

"There's a lot of interest in this little bill," said Rep. Steve Kirby, D-Tacoma.

Insurance Commissioner Mike Kreidler is trying to ban the use of credit scoring by insurance companies, on the grounds that your credit history has nothing to do with how you drive or how you maintain your home. (The scores are widely used to set rates for auto- and homeowners' coverage.) Especially in this economy, Kreidler argues, it's flatly unfair to charge policyholders more simply because of their credit history. On Wednesday night, consumers described being penalized for what most would consider responsible actions, such canceling a credit card.

Here's a one-minute excerpt from Kreidler's testimony:

(To hear the rest of the testimony, including that of consumers and insurance industry officials, click on the play icon again when the video pauses.)

Friday, January 15, 2010

Kreidler and state lawmakers propose ban on "credit scoring" by insurers

Washington state insurance commissioner Mike Kreidler and state lawmakers are pushing for a ban on the insurance industry's controversial practice of credit scoring.

Eight years ago, the legislature passed a law restricting the industry's use of certain factors in your credit history -- such as absense of credit and the number of credit inquiries. Today, your credit history is one of the largest factors in determing your rate. Kreidler believes the practice is inherently unfair -- especially in today's economy.

A hearing on House Bill 2513 is set for Wednesday at 6 p.m. in the John L. O'Brien Bldg., hearing room D.

To learn more about this bill and how insurers use you credit, check out our special credit scoring page.

Kreidler: New law would help preserve flood insurance market in the Green River Valley

Washington state insurance commissioner Mike Kreidler urged state lawmakers this week to approve the creation of a joint underwriting association in the rare cases where a flood insurance market dries up, leaving businesses struggling to find coverage.

"You're going to hear that there isn't a need for this legislation because there's adequate insurance that's out there already," Kreidler told lawmakers at a recent hearing. "...I'm fully convinced, from every evidence that I have, that there is not an adequate market out there for the Green River Valley."

A weakened abutment beside the Howard Hanson Dam, in south King County's Green River Valley, has led to a 1 in 33 chance of serious flooding in the heavily developed valley below the dam, according to the Army Corps of Engineers. (The dam is not believed to be at risk of failure. The flood risk comes from the fact that the Corps may have to release more water than normal to avoid stressing the dam.)

In the wake of that news -- and earlier estimates pegged the risk as high as 1 in 3 -- the market for flood insurance appears to have tightly contracted. And according to the Corps, it could be 7 years before the dam is fully repaired.

Local lawmakers are trying to pass legislation that would allow Kreidler to set up a joint underwriting association, a group of insurers who agree to underwrite and sell flood coverage.

"We must move quickly on this bill to protect our area from an economic crisis caused by the potential threat of flooding," Rep. Tina Orwall, D-Des Moines, said in a press release this week.

Insurance news: Health care deal "very close", and MA motorcyclists to get insurance rebates

In health-care reform news, the New York Times reports that a health care deal is very close and that late-night negotiations have been focused on the costs of the plan.

In Massachusetts, meanwhile, EnterpriseNews reports that many of the state's motorcyclists stand to get rebates under settlements with insurers. The alleged overcharges totaled $11 million.

Wednesday, January 13, 2010

Question of the day: Will my homeowners insurance cover my home, which is sinking into a bog?

As we mentioned earlier today, the Seattle Post-Intelligencer has an interesting story today about the fact that much of Seattle is apparently built on bogs, and that drainage from development seems be drying out the bogs. Result: the land under some people's homes is dropping. The story highlights the case of a man whose land has sunk two feet, bending pipes and causing other problems.

And so, the obvious question for this blog: Would homeowner's insurance cover this type of damage?

Unfortunately, probably not. "Soil subsidence" and settling are typically excluded from homeowners policies. This is a significant problem, it turns out, in places with lots of old abandoned mines.

Insurance news: trade group balks at climate-change survey, American Trade Association fined, and story about bogs eating Seattle homes

Lots in the news today:

The New York Times reports that an insurance trade group is warning that it's "exceedingly risky" for companies to blindly accept scientific conclusions about climate change, given the "serious questions" around the extent to which humans cause atmospheric warming. A trade group official told the paper that "it's fairly obvious that certain regulators have made up their minds about what the answers to those questions are."

Pennsylvania insurance commissioner Joel Ario responded that climate change would have profound impacts on insurers: "If climate change does pose the risk that environmentalists say it does, then guess who's going to bear that risk on their business? It will be the insurers."

"The insurers are perhaps the one group that is more concerned about climate change than the environmentalists," Ario said. "If climate change does pose the risk that environmentalists say it does, then guess who's going to bear that risk on their business? It will be the insurers."

In Oklahoma, insurance commissioner Kim Holland announced this morning that she's fining American Trade Association and two affiliates $25,000 each for violating an order not to illegally sell insurance products in that state. (Washington state has issued a very similar order against the company and affiliates, as have other states.)
Also much news about health care reform. (All these links are from the New York Times):
Why does health care cost so much?
White House tense as clock ticks on health care bill
House GOP leader: We can beat this bill
Proposal to save patients billions by changing rules for generic drugs

And here's your reward for reading this far: A story with some insurance ramifications in the Seattle Post-Intelligencer: Will bogs keep eating Seattle homes?

Tuesday, January 12, 2010

Insurance news: Health reform and insurance fraud

ABC News says that it may take a decade to find out if the cost-control measures in the federal health care reform legislation actually work:
It may take 10 years or more to find out. Costs are expected first to go up, as tens of millions of previously uninsured Americans get coverage and start going for checkups, mammograms and MRIs. Over time, if the plan works, health care inflation would slow. With the magic of compounding, shaving even 1 or 2 percentage points a year from rising spending rates would translate into big savings across the economy.
The New York Times reports that President Obama remains committed to taxing costly health insurance policies, but says he is also willing to amend the proposal to ease its effect on working families.

The Wall Street Journal's Alicia Mundy writes that annual mammograms, "seemingly on their way out under new federal guidelines last year, may be coming back."

Insurance and Financial Advisor, citing a Coalition Against Insurance Fraud survey, says that "the number of insurance agents involved in suspected frauds has risen" during the recession.

Friday, January 8, 2010

WA orders Serve America Assurance, American Trade Association, and other companies to stop selling illegal health coverage

Washington state Insurance Commissioner Mike Kreidler has ordered five companies and seven individuals to stop selling unauthorized health insurance and discount plans in Washington state.
The entities include Serve America Assurance, Ltd. and American Trade Association. Both have been the subject of state consumer protection orders and warnings in other states, including Oklahoma, North Carolina, Indiana, Connecticut, Arkansas and Michigan.

“These companies are not playing by the rules that our state set up to protect consumers,” said Kreidler, who heads the agency that regulates insurance in Washington state. “With authorized companies, we review their policies and finances to make sure that they’ll be able to make good on their promises. With these companies, consumers have no such assurances.”

The order includes Serve America Assurance, Ltd., Beema-Pakistan Company, Ltd., American Trade Association, Smart Data Solutions, and Real Benefits Association. The individuals named in the order include Bart Posey, Colin Youell, William Worthy II, Obed Kirkpatrick, Richard Backman, David Clark, and Saifuddin Ahmed. None are properly licensed to sell health insurance or discount plan products.

Kreidler is ordering the companies and individuals to:

- turn over a list of all their Washington insurance-related customers,

-report all premiums paid by those consumers,

-inform their Washington customers about the cease-and-desist order,

-and, upon request by the consumer, to replace any improperly sold insurance with a policy from an authorized insurer.

“In many of these cases, the folks who are buying these bargain-basement products are the people who can least afford to be taken advantage of,” said Kreidler.

The Insurance Commissioner’s office knows of more than 70 Washingtonians who purchased coverage from the companies named in the order. Some have reported problems with delayed or unpaid claims.

Nationwide, more than 10,000 consumers are believed to have purchased this coverage at a cost last year of more than $14 million. The respondents “have acted in concert” to sell Washingtonians a product that consists of a mix of insurance and medical care discounts according to a cease and desist order issued by Kreidler’s office.. But this product is not authorized in the state, and the sellers are misrepresenting it as comprehensive health coverage. (For a typical pitch from a `broker’ – or marketer -- selling American Trade Association coverage, see this video.)

Based on faxed solicitations and the statements of telemarketers selling the coverage, the order states, “consumers are led to believe that the product offered constitutes comprehensive health insurance, and the bank and credit card accounts of consumers who agree to purchase the product…are immediately debited.”

The plans being sold cost at least $199 a month for individuals and $369 for families. A typical faxed sales pitch offered “hospitalization,” primary, specialist, or chiropractic care for just “$25 at time of visit,” “huge savings on name brand and generic drugs,” “up to 60% savings” on vision and hearing care, and coverage of root canals, X-rays, MRIs, EKGs, CT scans, intensive care stays and more. It even promises “pre existing conditions OK… You will be enrolled!”

To protect consumers, Washington law requires people selling insurance to be licensed. Insurance must also be authorized by the insurance commissioner’s office, which looks at policy language, financial stability and other factors to make sure that companies can make good on their promises.

“The whole point of regulating the industry is to ensure that consumers are not left holding the bag when they have a claim,” said Kreidler. Licensed sellers and authorized insurers are required to comply with laws designed to protect consumers.

In this case, the sellers were not licensed, the product being offered was not authorized, and it was falsely advertised as comprehensive coverage, among multiple other violations.

The five companies and seven individuals have been ordered to immediately stop:

-Engaging in the unauthorized business of insurance in the state of Washington,

-or soliciting Washingtonians to buy the coverage by e-mail, fax, phone, mail or website.

To read the complete cease-and-desist order, please click here.

UPDATE: The Better Business Bureau reports that Smart Data Solutions, LLC has an "F" rating from its Nashville office.

Thursday, January 7, 2010

Auto Repair Warranty Inc. ordered to stop selling unauthorized vehicle service contracts in Washington state

The Washington state insurance commissioner’s office has issued a cease-and-desist order against an Ohio company that’s selling unauthorized vehicle service contracts.

Auto Repair Warranty, Inc. and company founder Michael F. Petruziello have been ordered to immediately stop selling or advertising insurance in Washington. Under state law, such contracts are considered to be insurance.

Neither the company nor Petruziello is authorized to issue or sell insurance in Washington. Neither has applied for or been granted a registration as a motor vehicle service contract provider.

Investigators for the insurance commissioner’s office know of at least two Washington consumers who have purchased coverage from the company. The company’s website is:

The order requires the company and Petruziello to provide the insurance commissioner’s office with a list of Washington customers, how much they’ve paid, and their contact information. The company is also required to notify all Washington customers about the order.

Under Washington law, any unauthorized insurer is individually liable for the performance of the contract and for the full amount of any loss sustained by an insured person under such a contract.

For a copy of the complete cease-and-desist order, click here.

Update: The Better Business Bureau reports that the company is not BBB-accredited and has a "D" rating with the group. The link has more information re: resolutions of the 84 BBB complaints filed against the company.

State insurance agents search Burien home, seize auto-glass business records

Washington state insurance investigators on Wednesday searched a Burien home and seized boxes of business records as part of an investigation into alleged auto-glass fraud.

Seattle's King 5 TV covered the case:

Tuesday, January 5, 2010

Best job of them all? Survey says...ACTUARY has put out a new survey ranking 200 occupations by pay and other criteria. The study concludes that the best job of them all is to be an actuary.

"Great work environment, few tight deadlines, low stress," the study says. (And here's the full ranking.)

The Wall Street Journal wrote about the study, leading with a California insurance actuary who says that throughout the recession, he's been felt out by headhunters at least twice a month. And the pay's not bad, either: a related Wall Street Journal chart shows that actuaries earn $49-$161k a year.

Math majors should be happy with the results. Mathmaticians, statisticians and accountants all ranked as excellent jobs, as did software engineers and computer systems analysts.

And the worst jobs? Oil-rig roustabout, lumberjack, ironworker, dairy farmer, welder, garbage collector and taxi driver. Also ranking low: butchers, photojournalists, newspaper reporters and choreographers.