Get Me (and the Caterer) to the Church on Time

Photo: Hugo Burnand/Clarence House
Found on The Telegraph Website

I know I'm (really) late to the party, but with William and Kate's wedding still on everyone's mind, and being three weddings into a seven weddings season myself, I thought it would be an appropriate time to discuss wedding insurance.

Clearly Lloyds thought so too since on April 26th they offered a somewhat humorous, but informative article on wedding insurance in light of the royal wedding. Closer to home, the Massacusetts Division of Insurance provides a consumer guide for wedding insurance.

Back in 2009, Rough Notes Magazine provided an outline of what wedding insurance covers. They mention more information could be found in their PF&M publication, which the library does have access to, if you're interested in more detailed research.

The Insurance Information Institute also offers helpful advice on wedding insurance on their website. They mention that you might not need all the coverage available in a stand alone wedding contract and to check with your credit cards and homeowners or other insurance to see what coverage would be available there.

If you're confused about what other insurance you already have which might be able to provide similar coverages to a stand alone wedding insurance contract, your insurance agent should be able to explain your coverages and what options are available.

Not Another Brick in the Wall

I have to admit, I'm a little proud of the title of this blog post, mostly because I think of it as a double entendre. I plan on announcing an educational opportunity for you, specifically one that has to do with construction!

Next week you, dear readers, have the opportunity to attend a Builders Risk and Insurance Seminar or Nuts and Bolts of Contractual Liability (or both). These seminars are being lead by Donald S. Malecki and Greg Deimling of Malecki Deimling Nielander & Associates, LLC.

Donald Malecki may be well known at our library for his Additional Insured Book, but he's literally (co-) written the book on Builder's Risk. He is a prolific writer and one need only take a look at some samples from Malecki On Insurance (or order a subscription to see it all) to realize how important his contribution to insurance is. Both Mr. Malecki & Mr. Deimling were major contributors to the MCS-90 book a comprehensive text with no equal.

In addition to his insurance expertise, I will always think of Mr. Deimling as a super-hero because of his help in averting disaster one year when he joined us in stuffing almost 400 name tags before our big event. I mention this so you get a peek at their character as well. I consider Don Malecki and Greg Deimling insurance Superstars, in the best possible sense. Not only are they leading consultants working on analyzing and interpreting the confusing world of insurance, but they're approachable and eager to share their expertise. I sincerely hope you get a chance to attend next week's seminars; not only so you get to witness insurance greatness, but because of the invaluable knowledge you'll take away.

Plate Movement

That's not exactly the kind of plate movement I plan on discussing today. As I mentioned last week, I planned on writing a post on earthquakes before I got interrupted by another snow storm. Luckily, because of the lag time before posting far more people have written on the topic of earthquakes and I can provide you with links for further reading. Just like the 2001 "summer of the shark" 2010 could have been called "the year of earthquakes." The number of earthquakes in 2010 (and so far in 2011) does not seem to be above average. You can look at earthquake data for the last decade from the U. S. Geological Survey for confirmation. According to the June, 2010 Reactions Magazine article, The $1trn Exposure "The number of earthquakes this year [2010] has been normal but the casualties and insured losses have not. Risk Modellers are asking where the next Mega quake could strike." UPDATE: This sentiment was re-affirmed today by the Wall Street Journal article: Swiss Re Expects Quakes to Become Deadlier, Costlier. The article goes on to provide some forecasting of the most vulnerable regions world wide. The region in Japan they thought most likely to cause severe damage (and casualties) was not the one where the current earthquake has hit. Wired Magazinee discusses this error in their article Japan Quake Epicenter Was in Unexpected Location. I believe if you asked the average person where they think the next big US-based earthquake would be, they would respond California. They wouldn't necessarily be wrong. Cascadia is listed as a "most vulnerable area" in the Reactions article cited above. Los Angeles is listed as a U.S. Megadisaster threat for earthquakes on an informative map that Risk Management Magazine published in March of 2010 (for more from this map, feel free to contact us, or stop by the library to take a look). George Santayana would be disappointed in those responses though, especially in this, the bicentennial year of the New Madrid earthquakes. According to Risk Management Magazine's Risk Atlas mentioned above, "recent research suggests that the [New Madrid] fault line may be more stable than ever, but FEMA has said that a 7.7 magnitude quake here could lead to 'the highest economic losses due to a natural disaster in the United States." The fault line affects Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee but when it quaked in 1811 and 1812 it affected states even farther away. BestWeek, in a February 28, 2011 article said: "The area along the Mississippi River is no longer a sparsely populated area with the occasional log cabin. If a series of three major earthquakes were to strike that area today, it could cost an estimated $79 billion in insured property losses, according to AIR Worldwide." The article is accompanied by a colorful loss map illustrating the losses in millions for the New Madrid Seismic Zone. Of course, insured losses are different than total losses; this is especially true in the United States where flood and earthquake insurance are not included in the standard homeowners or commercial property policies. BestWeek published another article in their February 28, 2011 issue titled Costly Quake Covers Limit U.S. Policies. The article points out that 90% of the homeowners in New Zealand (the site of two earthquakes in the last six months) have earthquake insurance. New Zealanders attending a meeting on earthquake insurance, were shocked to find out that 90% of Californians do not have earthquake coverage. According to Advisen's front page news on Monday, The Wall Street Journal published an article examining coverage in the United States for major disasters like those in Japan. The article, entitled: Disaster Insurance: How Well Are You Covered, addresses some of the same concerns as those mentioned in the BestWeek article. Risk Management Magazine has an article in the March, 2010 edition titled After Haiti: The Future of Disasters. They end their article with this: "Catastrophes are just as possible domestically as they are abroad. The longer we go without taking the necessary steps to increase preparedness, the sooner we will have to stop calling these natural disasters and start calling them man-made catastrophes." Perhaps that's a bit sensational, but it does get across the point that natural disasters, especially earthquakes, require preparation on our part. The library stands ready to answer more in-depth questions about earthquake insurance, both for consumers and those in the industry. We have access to any of the articles mentioned in this blog post as well as statistical information on earthquake insurance and groups writing such insurance in various states. We even have some (though not a lot) of information on earthquake and other natural disaster forecasting. Please feel free to contact us if you're interested in any specific information.

Snow Business, Like No Business I Know

It's snowing again here in Boston and, according to weather.com, it could snow again on the 27th. I don't usually complain about cold weather because I grew up in Alaska and I prefer the cold to the sweltering heat and humidity Boston can throw at you, but I am tired of winter. I left Alaska for a reason.

I planned on writing a blog post on earthquake risk in the United States, but I can't think of anything other than snow at this point. It's old news but in case you missed it AIR Worldwide announced in early February that the snowstorms which took place on February 1st and 2nd were projected to cost 1.4 Billion dollars. It was one of the largest storms across the country since the 1950s. The snow storm back in February wasn't as disastrous for us as the, infamous in these parts, "blizzard of '78." Estimated losses for that blizzard were about $350 million more than the losses AIR is projecting for this year's storm. In case you were interested in some background and visuals on the blizzard of '78, the National Oceanic and Atmospheric Administration put together a power point presentation for the 30th anniversary.

Clearly, today's snow flurries here in Boston don't compare with others we've faced even this winter, but I'm tired of snow. Isn't it time we should be facing risks from rain? I can't believe I just typed that since we just passed the 1 year mark for the flood The Library had in its basement which destroyed a number of valuable items. It required a week of 12+ hour days to save what historical items we could and we're still reminded of the flood daily as we look at the recovered items still waiting to be scanned.

On the other hand, it might be exciting to test the three new sump pumps we had put in after last year's extreme rain. I suppose I'll have to wait for those April showers, but what happened to the lamb March was supposed to go out like?

Six Degrees of Separation

I missed my posts the last two weeks. The past week was such a blur it's been hard to catch up. I was hoping that one of the presidents had worked as an insurance agent or company man before taking on the mantle of leadership for our country so I could post on that; unfortunately, I found no evidence to that effect. Instead, I offer you a recent request and how it ended up interrelated (in my mind) with other recent topics we've discussed.

I was asked if insurance companies were allowed to use credit scores when giving homeowners insurance rates in Massachusetts. The following answer is posted on the Massachusetts Division of Insurance website under FAQ for homeowners insurance in response to a question that is NOT the same, but I think the answer still applies: "Unlike Massachusetts' auto insurance market, the homeowner insurance market is not take-all-comers. Insurers may decide to non-renew your policy or decline offering a policy as long as they do not base their decision on specific criteria outlined in our insurance laws (M.G.L. Ch. 175, section 4C)."

As far as credit reporting, Chapter 93 Section 51 seems to imply it can be used for insurance generally (see subsection 3 (iii)) and Chapter 93 Section 62 outlines other ways that the information can be used in insurance. Just to be sure that credit scoring wasn't considered unfair, I also checked the Massachusetts “UNFAIR METHODS OF COMPETITION AND UNFAIR AND DECEPTIVE ACTS AND PRACTICES IN THE BUSINESS OF INSURANCE”regulation which does not mention the use of credit scores at all. You, dear readers, may remember this law from our mention of it back in our insurance rebating post. While all of those laws indicate that credit scores can be used for homeowners insurance, currently credit scoring is not allowable in Massachusetts auto insurance rating, according to regulation 211 CMR 79.

The use of credit scores for insurance rating is not a topic without controversy. I almost mentioned what a hot topic credit scoring for insurance rates was in our post on redlining. People have suggested that using credit scores is the newest form of discrimination. You can read a recent Rough Notes article, "Remain Calm All is Well" on it. That is not the first article on the topic though, Independent Agent, for example, had an article back in May of 2002.

The National Conference of Insurance Legislators (NCOIL) created a model act in 2002 "regarding use of Credit Information in Personal Insurance." It was last updated in 2009. As of 2007, 26 states had adopted the law. The model appears to allow the use of credit scores but:

prohibits an insurer from refusing to insure an applicant, insured, or other individual seeking insurance coverage because the person’s insurance score fails to meet or exceed a minimum numeric threshold, unless one or more other applicable underwriting factors independent of credit information are considered.

Massachusetts was not one of the adopters of the model, despite (or perhaps because of) the fact that this topic has cropped up almost every year in the last decade (we have The Standard and MassAgent articles to prove it). Massachusetts appears to still allow the use of credit scores in homeowners insurance, though, as we mentioned above it's prohibited it in the use of auto insurance rating.

The Massachusetts Attorney General's office as recently as the fall of 2010 was attempting to strengthen the anti-credit scoring regulations. They issued this report on it in December of 2009. Finally, I am not sure about the documentation of the claim, but according to autoinsurance.org, there are currently 46 states in which an auto insurer can look at your credit score and use it as a factor in rating, Massachusetts is one of the four states in which this is not legal.

As I learned researching a different request this week, Massachusetts has had unique auto insurance regulations almost since the dawn of auto regulation. According to Donald Hillman in his 1980 publication: Strategic Study in Support of Competitive Automobile Insurance Rating in Massachusetts, "In 1925, Massachusetts, after four years of legislative study, adopted the first compulsory auto insurance law in the nation. It was to be the only compulsory auto insurance law in the United States for the next 32 years." He goes on to discuss how Massachusetts introduced no-fault auto liability insurance in 1970:

This first-in-the-nation law radically changed the manner in which bodily injury claims were adjusted and paid. The no-fault law is the one example of undeniably successful lawmaking in the area of auto insurance in Massachusetts -- claims were reduced and premiums for bodily injury coverages fell accordingly.

Massachusetts's current stance on the use of credit scoring in auto insurance appears in keeping with its pattern of being in the minority (dare I say forefront) of auto insurance regulation.

I mentioned in last week's post that I planned on discussing advertising in this week's post. I thought it would be appropriate because it would be following Super Bowl Sunday. While my husband appreciates the game, I tend to prefer the commercials in between. You'd think I'd know then that there are rarely insurance related commercials aired during the Super Bowl, but I didn't. After watching the entire three and a half hour show and not seeing a single insurance commercial, I turned to our library's journal index to answer some questions. What I found was fascinating.

It turns out (according to various articles from BestWeek in the last few years) that national insurance companies haven't advertised in the Super Bowl since 2007, and even then I believe it was only Nationwide who advertised. They had started a fairly new "life comes at you fast" campaign and premiered a new ad featuring Kevin Federline.

I did not take any marketing or sales courses in college so a lot of the considerations discussed in the articles had never crossed my mind before. Apparently some insurance companies aren't willing to spend the money for a super bowl ad because they're afraid they'll get lost in the shuffle of all the other ads. Other companies find that their branding is working so well, they simply don't need to spend the extra money. Usually the companies that do decide to advertise in the superbowl are, like Nationwide, looking to launch a new brand.

According to a January 2006 Best's Review article (A Brand New Approach: A Legend in Its Time) on Auto Insurance branding, "In the world of advertising, the insurance industry traditionally has had a low profile, said William Pitt, senior advisor with HawkPartners, a Boston-based marketing consultancy. "

Mr. Pitt cites GEICO and Aflac as being different than other insurance companies who don't use consistant branding. It's certainly true that GEICO and Aflac have quite a following. You can buy a stuffed duck that quacks "AFLAC!" In 2007, there was a short lived dramedy based on the GEICO cavemen and currently you can get GEICO ringtones as well as other gecko gear. Since GEICO has three different campaigns running simultaneously, I'm not sure that can still be called "consistent branding." Regardless, it looks like those two companies aren't alone anymore.

Auto Insurance Report wrote an article in their August 24, 2009 edition entitled: "Going with the 'Flo' Progressive Makes Progress Toward Profitable Growth." In the article they say:

And count us as a skeptic won over regarding the company's advertising campaign. With the now-ubiquitous 'Flo' burrowing into the nation's consciousness, it appears the marketing is finally working. . . While we're not ready to annoint Progressive as a member of the league of Extraordinary Insurance Advertising Gentlemen, which includes GEICO, Allstate, State Farm, esurance and a few others, Progressive is no longer at the very back of the pack.

In fact, Flo has become so popular, Progressive even has a section of their website dedicated to showing fans how to dress like her, right down to the "tricked out name tag."

Allstate has also followed the humorous spokes-person trend. As of June, 2010, they started a "mayhem campaign" You can read more about it in The New York Times. There are a number of ads (they even focused a whole series on football -- just not the Super Bowl) but below, you'll see the one where Mayhem is introduced.

While we are not trying to endorse any particular insurance company, we hope that you found this post somewhat entertaining. We do have far more data on advertising and insurance companies, including some information on the use of social media, advertising expenditures by insurer and how independent insurance agents can "combat the GEICO Effect." Please feel free to email or stop by the library to see what we have to offer on this, and other topics.

All the News That's Fit to Link

We wanted to draw your attention to an interesting article in the New York Times today. It discusses concerns of the Tuscon Survivors about the cost of their medical treatment.

In other current events, there are a few articles and blog posts out there on Travel insurance in light of the events in Egypt. A Wall Street Journal Blog posted a reminder about civil unrest exclusions in travel insurance on February first. The Seattle Times had an article on how policies vary on canceling and re-booking trips to Egypt on the second. Also on the second, the Budget Travel blog posted about how much travel insurance can help in a situation like Egypt's. The most recent article we found on the topic is actually dated tomorrow (it's from Australia). The Australian is reporting that an insurance company is insisting it is still safe to fly into Egypt (and thus is denying travel insurance claims).

Next week, we'll be back to discuss insurance ads (seems appropriate after super bowl Sunday)!