Risk & Business

Commerical Airplanes have "black boxes"  to tell the company how pilots are flying and also help put together the story after a misfortunate crash. This technology is now being moved into automobiles and the insurance companies are taking advantage of it. Using the monthly reports that the black boxes send to the companies, car insurance policy holders are charged premiums based on driving habits of the owner. Is this right? Many people think that this is an invasion of privacy, while many others welcome this technology. If you are a great driver who has been safe and accident free, the black box will help you pay less in insurance premiums. On the other side of this equation, is the driver that runs red lights and continually drives over the speed limit, could be faced with increasing monthly premiums. Will this make people better drivers because their habits are immediatel rewarded or penalized by the "black box"? It remains to be seen how this will change things ...

Insurance companies are paying claims from accidents caused by distracted driving. This has put a lot of pressure on legislatures to pass laws preventing the use of cell phones while driving. But is this short sighted? It may be. Look at all the gadgets cars have these days to cause distractions. GPS units, IPod units, video screens, climate control computers etc... just to name a few. No one is discussing all these items as far as distractions to drivers. I have a GPS unit in my car and sometimes the unit can be a very distracting. So how is the insurance industry going to deal with this emerging risk. I think you will see continued pressure by the industry for states to pass laws regarding cell phone and eventually start discussing the other "gadgets" in cars. Maybe the real answer is cars that protect the drivers when they are distracted. Hey there are cars that can wake up a driver who is dozing off, then cars can  help with distractions.  Hey car manufacturers can yo...

Insurance companies have been using to much success, three pricing models over the last few years. These highly sophisticated computer algorithms have kept pricing soft during the recession. This has been good news for buyers of commercial insurance. For 2012 and 2013 insurance companies are using the three models, Catastrophe, Predictive, & Economic to set rates, and most are predicting higher pricing. There is a catch however and that is capital. Most insurance companies have tons of it and this is creating a interesting scenario for company CEO's. Do they follow the models or do they make rate decisions based on capital reserves?. This is uncharted territory for insurance companies and how it plays out in the pricing cycle over the next few years will be interesting to observe. I have read some analysts predicitng  "mini" cycles of hard and soft rates over the next decade. This could be due to the accuracy of modeling, or capital surplus. Any way you slic...

Accord changed the certificates in 2010 and most agents have put the new certs in play. The new certs however are causing agents and brokers a whole lot of extra work and frustrating clients. In the old days agents were amending certs to satisfy their clients contractual demands. Most of the time the request for the certs and the policy changes came after the client had already signed the contracts and needed the cert to get paid. Now most state jurisdictions do not allow agents to change certs by law and telling clients they are out of luck has not been easy, To help get their clients in contractual compliance agents are going the extra mile to find ways to get around the cert issue. sending actual policies and manuscript endorsements from insurers has become more routine. Talking with the owners who let out the contracts and convincing them to modify the agreements to comply with ISO insurance policies is also becoming a job agents are doing on a day to day bases. Until everyone ...