Allstate to Purchase Esurance & Answer Financial

Posted & filed under Car Insurance, insurance news.

The “safe hands” people are expanding their grip on the auto insurance industry.

Allstate Corp, long a major player on the American car insurance scene, is trying to expand its online insurance sales. To that end, it has recently announced that it is in the process of acquiring Answer Financial and Esurance.

The Chigago Tribune reported on a conference call earlier this morning, in which Allstate announced that it would be purchasing both of the other companies for $1 billion. Elaborating on reasons for doing so, Allstate Chief Executive Tom Wilson said that while the company had been growing its direct-to-consumer sales, it hadn’t yet, “…captured share from other people.”

Wilson also said that he wanted his company to, “…compete aggressively in that segment of the market.”

Last year, Allstate’s direct business, which had improved by 19.8 percent over the previous year, totaled $745 million, while Esurance, which does its insurance sales entirely online, wrote $836 million in premiums in the same year.

Of course, direct sales are only a small slice of the Allstate pie. The insurer’s revenues from property-liability premiums were significantly higher than $745 million in 2010 – almost $26 billion, actually.

Allstate, currently the second-largest home- and auto insurer in the United States, was trading stock at $32.37 earlier today (down 0.5 percent). It is purchasing Answer Financial (which offers customers the opportunity to have online insurance quote comparisons) and Esurance from the White Mountain Insurance Group

Pennsylvania House Approves Stricter Guidelines for Teen Drivers

Posted & filed under insurance news, Pennsylvania Car Insurance, Teen Drivers.

The House Transportation Committee in Pennsylvania approved several driver-safety bills last Tuesday. One of them, HB 9, involves the enforcement of stronger driving and licensing restrictions for a segment of the driving population long known to be a high-risk auto insurance group: 16- and 17-year-olds.

According to the Centers for Disease Control and Prevention, drivers in this age group (16- to 19-year-olds) are four times as likely (per mile driven) as more mature motorists to get into accidents. HB 9 was written specifically to address this issue, in part by increasing the already-extensive licensing requirements in the state of Pennsylvania.

Currently, Pennsylvania drivers under the age on 18 who are testing for a junior driver’s license must complete fifty hours of “supervised practical driving experience.” This bill would increase the required hours to sixty-five, with at least ten of them being at night, and a minimum of five hours of practice in inclement weather.

HB 9 would also restrict the number of passengers under the age of 18 to one, when the driver was in possession of a junior license. This sort of restriction has been shown to help reduce the number of teenager involved in fatal crashes, says the Insurance Institute for Highway Safety. The IIHS adds that when there are are three or more passengers the fatal crash risk is roughly “…3 times higher than when a beginner drives alone.”

While the House Transportation Committee’s passage of HB 9 is a good first step, the bill must still be approved by the entire House and pass the state Senate before being sent to the governor of Pennsylvania to be signed into law.

Movie of the Month: Teen Driving

Posted & filed under YouTube Tuesday.

Ah, spring. The sun is shining (well, somewhere), the birds are singing, the kids are going to prom…wait…prom? That means a bunch of intoxicated teenagers driving in the wee hours of the night, right? Does that make teens even more dangerous behind the wheel?

This month’s video doesn’t speak directly about prom night, but it does offer some really good information about teen drivers.

Enjoy.

Motorcycle Deaths Down in Florida, and the Nation

Posted & filed under Florida Car Insurance, Motorcycle Insurance, Motorcycle Safety.

Good news for Florida bikers with high motorcycle insurance premiums: fatal accidents involving bikers dropped two percent in the first nine months of last year, as compared with the same period in 2009.

According to a recently released report from the Governors Highway Safety Association, there were 3,359 motorcyclists killed in the first nine months of 2009, while the nation saw only 3,279 bikers die in the same period in 2010. Of those deaths, Florida had 293 bikers who died in accidents in 2009, and 286 (seven fewer) in the same time period in 2010, making the Sunshine State second in line behind Texas for the number of motorcycle fatalities for the first three quarters of last year. (The number-one state, Texas, had 311 motorcylist fatalities.)

Overall in 2010, the state of Vermont had the fewest number of bikers who died in wrecks, with just two posted.

Speaking about the lower number of biker deaths in her state, Ann Howard, spokesperson for the Florida Department of Highway Safety and Motor Vehicles, said, “Seven is a good number.” She credits the state’s requirement that a safety course must be taken in order to get a motorcycle endorsement on your drivers license as a major factor in the reduced fatalities.

This decline follows an even more dramatic drop – 16 % – between 2008 and 2009, the first such decrease in fatalities after eleven years of increased fatalities.

Figures for the fourth quarter should be released in June, but last year’s third quarter was less than positive, with increased numbers of motorcycle deaths. Across the country, there was a dramatic increase in such accidents in the third quarter of the year.

The same study also said that 13% fewer bikers were wearing federally approved helmets in the first nine months of last year. Such helmets reduce the motorcycle drivers’ chance of being killed in an accident by roughly 40%, according to safety advocates.

Currently 20 state require that motorcyclists wear helmets, but only 13 specify that the helmets must meet minimum federal standards, the National Transportation Safety Board says.

Florida Has Biggest-Ever Insurance Fraud Bust

Posted & filed under Florida Car Insurance, Insurance and Social Justice.

Yesterday in Florida, the state’s Chief Financial Officer Jeff Atwater, along with Miami-Dade State Attorney Katherine Fernandez Rundle announced the arrest of seventeen people, including a clinic owner and employees, doctors, and staged recruiters, in the action known as “Operation Deep Horizon.” This makes it the state’s biggest auto personal injury protection (PIP) insurance bust.

Atwater touted the operation as representative the state’s commitment to ending auto insurance fraud, saying, “This case is just one example of the hundreds or similar fraud schemes run daily by accident clinics operating throughout Florida.” He added, “The fraud schemers bill insurance companies for procedures that never happened and we all get stuck with the bill through increased auto insurance premiums.”

These arrests involved fraudulent billing by five clinics in Miami-Dade county, including AB Diagnostic, Coral Way Rehabilitation, Medico de la Familia, New Horizon Practice, and Therapium Health Corporation.

According to investigators, Else Terrero, owner of New Horizon Practice, allegedly helped to organize staged accidents, directing participants where to go for treatment afterward. Dr. Gerald Amado then signed paperwork documenting follow-up visits and treatments that had never actually occurred.

At Medico de la Familia, it was alleged that the staff recruited and paid people to come to the clinic and be coached on how to commit fraud by learning specific responses to insurance company inquiries. As well, Dr. Gustavo Acosta signed paperwork for examination that were never performed.

Investigators charged that all five clinics had employees who were involved in obtaining and creating fake claims which were then submitted to insurance companies for payment.

Katherine Fernandez Rundle, Miami-Dade State Attorney, spoke to the press, saying, “When professional healers become professional criminals in order to make some easy cash we all lose and this insurance fraud scheme could not have worked without medical professional claiming serious injuries where none existed. Lies upon lies led to dollars upon dollars for all the parties charged today.”

In addition to the seventeen people already arrested, investigators are still seeking eight other people involved in the case. Between them, the twenty-five involved individuals face a total of 142 charges, including insurance fraud, grand theft and organized theme to defraud, racketeering, and staging accidents. Under Florida state law, staging an accident alone carries a mandatory minimum sentence of two years in prison. Collectively, the involved parties face up to 1,115 years behind bars.

Working along-side state investigators were the investigative units of several insurance companies, including, Gainsco, GEICO, Imperial Fire & Casualty, Mercury Insurance, and State Farm. The units were praised for their substantial assistance to the overall investigation, as were the U.S. Secret Service Electronic Crimes Task Force and the National Insurance Crime Bureau (NICB).

According to the NICB, Florida ranks first in the nation for staged accidents, with Miami having the third highest number of questionable claims. The Insurance Information Institute says that the average Florida family with two cars pays $100/year more in insurance premiums because of insurance fraud.

“If you multiply that by 11 million cars in our state it amounts to nearly a billion dollar fraud tax,” said Atwater.

The arrest comes just days before the opening of Florida’s legislative session where reforming the state’s no-fault system is a top priority of lawmakers, insurers and consumer groups.