Don't be a Scrooge!

"At the ominous word 'liberality', Scrooge frowned, and
shook his head, and handed the credentials back." -- A Christmas Carol

On Black Friday last year, I posted the many ways you could donate to The Library. The ways haven't changed, though the various wishlists have had additions of subtractions. I mentioned in another post that after several years of having it on the wishlist, we were the lucky recipients of a lap top. We also had several individuals step forward in the past year to adopt books (we showed off the re-furbished History of Insurance in Philadelphia at this week's Annual Meeting). In case you wanted to donate to a charity as you shopped on amazon, or you wanted to make sure to get a donation in to one of your favorite charities before the end of the year, we thought we'd publish the three main ways to donate in one easy to find place!

The Annual Fund is where general monetary donations throughout the year go. The money is spent on up-keep of the library as well as focusing on one or two projects for the year. Companies and individuals who donate to the annual fund get their name published in our newsletter (we're a non-profit so your donation may also be eligible for a tax deduction -- we're not tax experts though). This year, a portion of the money went toward cleaning the library and putting finishing touches on rooms that had been damaged in the flood. If you take any classes from the library, you'll notice the basement classrooms have been spruced up!

Another way of supporting the library and its collection is through the "Adopt A Book Program" which provides for preservation of our historical publications and documents. The money donated goes toward a specific item --you can read some background about the books and look at them online in their tattered state to pick which one you want to adopt. We make sure a personalized book plate is put in the front of books, when requested, so users know whose generosity ensured future use of the material. The book plate can be donated in honor of someone in case you want to buy it as a gift for someone else. Your recipient can come into the library any time they want and admire the book-binder's handiwork and their name emblazoned on the inside cover.

Finally, the library has an Amazon Wishlist. While you're completing your other shopping on amazon, you can click over and skim the list. If anything catches your fancy, you can simply add it to your cart with the rest of your purchase and Amazon should know to send it to us. You'll notice there are items on the list for general office upkeep. We're currently using the 2004 version of Quicken and would love to upgrade to a more recent version. As you would expect, the rest of the list is filled out with books. Many of these books have been requested by patrons or are for very specialized areas of insurance interest but aren't in our budget. If you find something that falls within your particular area of interest, we'd love it if you'd donate it to our library so we could share it with many more people.

We are very grateful for all the ways in which our membership supports us, without your generosity we would not be able to offer the services we do!

Annual Meeting

The library had its annual meeting today and welcomed a new trustee, Patrick Quinn of Quinn Group Insurance, to the board.

Patrick Quinn and Frederick N. Nowell, III

Three awards were presented at the meeting as well. Sara Hua of Ironshore earned The Frank W. Humphrey Award. Joe Sciacca, her instructor, presented the award after a heartfelt speech about all of Sara's hard work. Her acceptance speech almost brought the group to tears!

Sarah Hua and Joseph Sciacca

Marc Cleary presented The Barbara W. Thornton Award to his colleague and student, Samantha Frank of Liberty Mutual. She spoke highly of Marc in her acceptance speech mentioning his excellent track record in preparing her for the national examinations.

Marc Cleary & Samantha Frank

Finally, Marc Cleary received an award as a teacher of excellence, for the above average passing ratio of students in his classes. It is the highest level of award from The Institutes, and Marc seemed both surprised and very pleased to be the recipient! He commented that it's the students who do so well, he merely encourages them to take the tests. "You can't pass unless you try."

We are very proud of all three award winners and pleased that they could attend the meeting this morning!

Auto Insurance Codes

We realize that not everyone has taken the time to explore the resources we've posted on our website, so we thought we might highlight some here on our blog.


From time to time, we get calls asking for the name of a company based on a company code. While we're more than happy to answer these calls, we do have links on our website to the Massachusetts, New York and New Jersey insurance company codes. While there may be other states that use auto insurance company codes, these are the three we get asked for most frequently.


These codes are codes that are assigned by the department of motor vehicles (or, in Massachusetts, by the Commonwealth Auto Reinsurers). They should not be confused with the National Association of Insurance Commissioners codes or with the codes that A. M. Best assigns companies. For one thing, the NAIC and AM Best assign company codes to more than just auto Insurance Companies.


If you're interested in finding the company name associated with an NAIC code, you can go to their consumer information source and look it up. You can also find out information on the company's financials and consumer complaints. If you're interested in recent Annual Statements, you can find that information there as well.


For A. M. Best Company Codes, you can go to the Company and Rating Search section of their website and look up a company by their A. M. Best Number (or by the NAIC number if you care to). Not only will it tell you the company name, but it will also provide you with contact information and, if you're a subscriber, related articles.



We hope that this information makes your research easier!

Insurance Library Annual Meeting

This year's Insurance Library Association's Annual Meeting will be held on Tuesday, November 22, 2011. The meeting is open to all of our members (member companies may send a representative). If you'd like to attend the meeting or assign a proxy, you can email Jean Lucey, or fill out the form found here.

11-11-11

Unlike Memorial Day, Veterans Day is designed to honor all of those in our armed services, not just those who died in service.

Though Veterans Day is a U.S. National Holiday, Britain celebrates Remembrance Day on the same day (both holidays began to honor the Signing of the Armistice at the end of World War I). We thought you might be interested in this link to Lloyd's During World War 1. Not only does it provide information on the many ways that Lloyd's was involved in the war effort (and honors those who lost their lives), but it has examples of telegrams sent shortly after the Armistice was signed.

Onward & Upward

Sandra Glaser Parrillo, 2011 Insurance Professional of the Year Award Winner

Donald F. Vose, President of the Board of Trustees for The Insurance Library Association of Boston

I'm afraid this blog languished while we worked on the Education Fair in September and the Insurance Professional of the Year Event in October. November is suddenly upon us and we're shocked at how quickly our annual meeting is approaching.

I mentioned last year that after The Insurance Professional of the Year Award Ceremony it often feels like a new year around here (perhaps it's no coincidence that our event occurs in the same season as Rosh Hashanah). So I'm sure you'll pardon us as we reflect a little.

A lot has happened in the last year:

1. We've worked harder on maintaining our website and blog. We've started a LinkedIn profile for the library and we're exploring ways to make our library even more available electronically.

2. We've added more items to our adopt a book program, and to our wishlist (and we finally got the laptop we'd put on there several years ago!).

3. We held our first ever Education Fair (with a lot of support), and had our 10th Insurance Professional of the Year Award Ceremony (which included a lot of firsts as well).

4. We put on our first ever (though, not last) silent auction during the social hour at The Award Ceremony -- thanks to a lot of support for that, we raised about $6,300 for the library!

Some staff changes include:

1. Our Director, Jean Lucey, changing her schedule to working three days a week.

2. Our "other" Jean, Jean Osborne, increasing her hours to three days a week (we don't ever want to be short a Jean).

3. Meagan completing another two CPCU tests on her way toward earning the designation.

It really does feel like a whirlwind, but we are glad that you were here for the ride!

Dropping In

In light of the satellite expected to fall to earth, there's an interesting article on slate about insurance coverage for falling satellites: http://www.slate.com/id/2304426/

Board?

We're overwhelmed with preparations for two big events this fall. The first is our Education Fair,scheduled for Thursday September 8th. We'd love it if you stopped by the Library to explore some of our course offerings, get education counseling or just to take a look at some of our spruced up classrooms. We'll have refreshments and drawings for some great prizes as well as insurance-related items free for the taking!

We're also working on preparing printed invitations for The 10th Annual Insurance Professional of the Year Award Ceremony printed this week so that we can mail them out next week. We have 26 tables already reserved, leaving 9 still available (if you're interested, you should probably act soon!).

Since we’re so busy and I’m finally making a blog entry, you might think I would be popping in to discuss hurricane-related subjects-- a lively wind vs. water debate, perhaps. You'd be wrong though. I saw something interesting on the web and thought I would share it here for those who are interested. This spring, I wrote on earthquakes and one of the earthquakes mentioned was the one in New Zealand which damaged Christchurch Cathedral.

They've come up with a unique solution for an interim church. They're creating a cardboard cathedral. The architect has built similar structures in Japan, following their earthquake. You can read more about the solution here, here and here. I think (though I might be misunderstanding the model) that they'll even have stained glass windows. It's not a cheap solution, but it is supposed to last for a decade, at which point they hope to have a suitable replacement.

For those of you disappointed we didn't talk about hurricanes this time, I leave you with a link to this article. It reminds me of a scene from Low and Behold, an independent film dealing with claims adjusters in post-katrina New Orleans. There's a point in the movie where the main character attends a claims adjuster conference and the leader says:

I used to lay in bed at night and pray to God that he would bring a natural disaster on this country, a disaster so large as to bring massive property damage. No one would get hurt or die. But it would yield the largest claims the industry had ever seen.

The director said that he'd actually heard this speech given when he was training to be a claims adjuster but that no one believed him. Perhaps he wasn't making it up. . .

Still disappointed? How about this article from the New York Times which mentions:

While insurers have typically covered about half of the total losses in past storms, they might end up covering less than 40 percent of the costs associated with Hurricane Irene, according to an analysis by the Kinetic Analysis Corporation.

Tin, That's All?

The first year I started at the library was also the first year the library hosted The Insurance Professional of the Year Award Ceremony (for a history of the award please refer to this post). It's with much pride that we've reached the 10th anniversary of this award!

It turns out that classically 10th anniversaries aren't anything particularly special (they're not golden, or silver, just tin or aluminum). It is a notable achievement for the library, though. This year is the first year that a person from the greater New England area has been selected to receive the award. It is also the first year the award has been given to a woman.

The Library is happy to announce that this year's winner is Sandra G. Parrillo, CPCU, President and CEO of The Providence Mutual of Providence, Rhode Island and its subsidiary Providence Plantations Insurance Company. Ms. Parrillo is very active in the insurance industry nationally, including in her role as Director and Chairman of The National Association of Mutual Insurance Companies (NAMIC), as well as in her local community. A brief biography may be found on our website.

If you'd like to join the library in a letter of congratulations to Ms. Parillo, you're welcome to "sign" a letter which will be printed in the October 14th, 2011 edition of The Standard by going to our website. You can also register now for a seat or a table for the October 21, 2011 event at the same time, if you'd like. The options are listed on the left side of the ecommerce section of our website under the title: Insurance Professional of the Year Award Ceremony Reservations. We will be sending out an official email announcement about the event next week followed by printed invitations sometime next month. We thank all of you for the continued support which has made the past ten years possible!

Back to the (Marriage) Future

The last real blog post here discussed wedding insurance. In the course of another research project, I came across an interesting letter from the Department of Insurance in Lansing, MI dated April 9, 1931. The letter discussed speculation in marriage futures.

You have submitted to this Department a Specimen of a Contract. . . which
certificate has the form of an insurance policy. . . .The object of the
corporation, as expressed in its articles, are 'to encourage marital relations
by aiding prospective candidates for matrimony, to provide funds therefor and to
enter into contracts in relationship to the same in the state of Michigan, and
elsewhere in the United States of America and the Dominion of Canada.'

You request an opinion from this Department as to whether the proposed
contract is an insurance policy and therefore subject to the jurisdiction of the Insurance Department.

The marriage speculation insurance appears to have been set up like a fraternal benefit society. Members paid in and then received funds for their wedding once they got married. Unlike Fraternals though, the marriage contracts didn't seem to meet the criteria of insurance.

The Michigan Division's letter goes on to describe the definition of insurance citing case law and Couch on Insurance. It also makes clear that marriage "insurance" is not new, there was a case in Alabama on marriage insurance which found such a contract void (in this case the contract paid more the longer you postponed your wedding). Similar cases had the same findings in Pennsylvania, Indiana and Maine.

If you are interested in seeing the letter in full, please feel free to contact the library. We also have some information on the history of fraternal benefit societies in general.

Falling Off the Wagon

Dear readers (if there are any left). I am so sorry I've failed to write for so long. There are lots of things currently in the works here at the library (stay tuned for updated information on the Insurance Professional of the Year Award Ceremony and an Education Fair!) and I got distracted from my commitment to keep this blog current.

Back when I made the commitment, I had said sometimes the blog posts would be light and merely mention some articles we found interesting. I should have at least kept up posting those light posts because when you stop blogging for awhile there's a pressure to come back with something big.

I have a post that was started back in May on wedding insurance, but other than that, I think we'll have to be content with light content. I promise something more researched by the end of summer though (any suggestions on areas of interest?).

As always, thank you for your continued support, of the library and this blog!

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)!

Redlining

Last week I promised a post somewhat related to Martin Luther King jr. and the Civil Rights Movement. There is so much information available on the topic I had in mind that it's been hard to provide a concise and insightful post on it. I suppose that's a great argument for why you should be a member of the library -- then you could borrow all of our resources and become an expert on the subject yourself!

When I tried to come up with an insurance topic related to the holiday, the first one that came to mind was Redlining. According to the IRMI Glossary of Insurance and Risk Management Terms it is:

An underwriting practice involving the rejection of a risk based solely on geographical location. This practice is prohibited under the laws of most states as it tends to be discriminatory to minorities.

The practice of redlining began in the 1930s though the term wasn't used until the 1960s (if wikipedia can be believed). It literally refers to the red lines that used to be drawn on maps used for property loans. Below you can see an example of a similar map of Philadelphia:

If you click on the map, you will be transferred to the UPenn website on redlining where you can click on different locations on the map and zoom in to see what it says (this is all courtesy of the Free Library of Philadelphia Map Collection). The insurance industry adopted a similar stance to that of banks and as a result it was difficult to get insurance in certain urban areas. In 1968 the President's National Advisory Panel on Insurance in Riot Affected Areas examined the ill effect that not providing affordable insurance just based on locality was having on communities. A 1979 publication entitled Insurance Redlining: Fact Not Fiction, describes the issue by saying:"The problem of insurance unavailability is not one that randomly affects isolated individuals but rather strikes at residents of older urban communities. Insurance unavailability threatens the viability of entire communities."

The result of the 1968 examination was the establishment of Fair Access to Insurance Requirements or FAIR plans. As Gregory D. Squires says in Insurance Redlining: Disinvestment, Reinvestment, and the Evolving Role of Financial Institutions, "I have often referred to the issue of insurance redlining as the ugly duckling of the fair housing movement." The Fair plans established in the early 70s required inspection of properties to determine their risk level and provided minimal standards of insurance for hard to place risks.

In the years that followed that initial study, many states also adopted anti-redlining legislation. "The State of Missouri enacted one of the earliest antiredlining laws" in 1977, according to Insurance Redlining: Fact not Fiction. The National Association of Insurance Commissioners added an antiredlining section to their recommended Unfair Trade Practices Act in 1978. Their reasoning, explained in the 1978 NAIC proceedings was that

It is the position of the NAIC that the insurance industry has been perceived
to be redlining, and the perception can only be altered by implementing such
practices as stating exact reasons for rejections, cancellations and
nonrenewals. The insurance industry should also abandon underwriting
"short-cuts" such as refusing to accept an application solely because the
applicant was refused coverage by another carrier.

While I would like to report that the threat of redlining has been completely eradicated, there have been well publicized cases regarding redlining filed by the NAACP as recently as the 90s. Still, I hope that Martin Luther King would be proud of the progress that has been made.

If you'd like more information on the history of redlining, we have the items cited in this post, as well as Regulatory Challenge Business Principles Versus Social Pressures (an analysis of property and casualty insurance regulation) by Conning and Company; Problem of Property Insurance In Urban America, a Hearing Before the Subcommittee on Housing and Urban Affairs; Full Insurance Availability: Department of Housing and Urban Development and Fairness and Balance in Residential Property Insurance: A National Survey of Homeowners Attitudes. We've also got journal articles discussing redlining.

What Are You Doing For Others?

We hope that you're out volunteering in honor of Martin Luther King Jr. Day. We'll just assume that's where you are and that's why you won't have time to read a blog post today anyway. We promise an MLK appropriate post by the end of the week.

Insurance Rebating

I have mentioned before that I like sales. I brave the crowds on the day after Thanksgiving, I Google coupon codes before buying anything online and I cut upc codes off boxes and send away for my manufacturers rebates. There's one kind of rebate I don't take advantage of though, and that's insurance rebating; it's illegal.

Recently, we were asked what the definition of rebating is in Massachusetts. The International Risk Management Institute (IRMI) has a general definition in their Glossary of Insurance and Risk Management Terms. As far as I know there isn't an exact definition in the Massachusetts code. There are guidelines to help determine whether something is rebating. For example, the law doesn't address allowing customers to pay their premium via credit card although they may get airline miles or other incentives from their credit card company by doing so. As the incentive is not being offered by the agent, but by the credit card company, this may well not be considered rebating. The law doesn't specifically say that you can't offer Red Sox tickets to customers who go with a particular insurance company, but you can't. It's considered a special inducement which is prohibited. If a specific issue arises in this context, an opinion can be requested from the Massachusetts Division of Insurance.

Chapter 176D entitled: UNFAIR METHODS OF COMPETITION AND UNFAIR AND DECEPTIVE ACTS AND PRACTICES IN THE BUSINESS OF INSURANCE covers this topic. Specifically section 3 subsection 8:

Rebates: Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any insurance contract, including but not limited to a contract for life insurance, life annuity or accident and health insurance, or agreement as to such contract other than as plainly expressed in the insurance contract issued thereon, or paying or allowing, or giving or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance or annuity any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; or giving, or selling, or purchasing or offering to give, sell, or purchase as inducement to such insurance contract, or annuity or in connection therewith, any stocks, bonds, or other securities of any insurance company or other corporation, association, or partnership, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract.

Massachusetts was the first state to enact an anti-rebating law (it was promulgated in 1887, coincidentally the same year our library started). The current Massachusetts law is based on the National Association of Insurance Commissioners model "Unfair Trade Practices Act." Massachusetts is not the only state to have adopted an anti-rebating stance. At one point, every state had an anti-rebating law (according to the 1946 NAIC Proceedings). Currently, most states still have insurance anti-rebating laws.

Some states have looked at the constitutionality and effect of the laws, especially since a number of consumer groups have questioned their use. Thus far, the only two states that I can find without anti-rebating laws are California (in 1988 a vote for proposition 103 repealed the anti-rebating law they had previously) and Florida repealed theirs in the 1980's when their courts ruled it unconstitutional.

Back in 2006 Massachusetts had an informational Hearing on "marketing practices" but doesn't appear to have followed up with a bulletin or significant change to their law. More recently, New York felt that their anti-rebating law was not descriptive enough and in 2009 they issued a circular letter "to provide guidance and clarification to licensed insurance agents and brokers (collectively, “insurance producers”) as to what kinds of services (often referred to as “value-added” services) may be provided to insureds or potential insureds without running afoul of the rebating and inducement provisions set forth in the New York Insurance Law." Insurance anti-rebating laws continue to be a topic of interest and if anything groundbreaking happens regarding them, we'll try and post an updated blog post on them.