Category Archives: Premiums

How News Stories Can Affect Our Insurance Premiums

malaysia-planeWe have all been struck dumb by the loss of flight MH 370 and the 239 passengers on board. As if the loss of life and property weren’t enough to produce extreme emotional reactions in us all, those of us in the insurance industry are aghast at what this might cost in terms of our already overburdened insurance markets.

Hurricanes, floods, windstorms, harsh weather all contribute statistically to the recent rise in insurance costs, but current events, such as this one, also affect our industry. This is the second major Asian airline to be involved in an incident in less than a year. An Asian flight July of 2013 was landing in a California airport when it was involved in a runway accident which killed three people.

These occurrences, together with the ever present threat of terrorism, 9/11, the Boston Marathon Bombing and other events throughout the world certainly make underwriters sit up and take notice when considering their exposure to risk when underwriting an event.

Insurance information sources indicate that Allianz was the lead insurer for the missing Malaysian flight. Although they are only one of many, including reinsurance companies, rumor has it that they are looking at a payment of approximately $100 million for the plane and its passengers under aviation policies in effect at the time of the loss.

Occurrences such as these, including the missing aircraft, make a strong argument for the continuation of Terrorism coverage in the United States.

So, the next time you get an increase on your renewal, keep in mind that we are all affected by what goes on here as well as abroad.
– Karen Skoler, CPCU

Does It Really Matter if I Pay My Insurance Premiums Late?

past-dueI remember an old sitcom about a family where money was tight and they had a lot of bills to pay. What did they do? Well, to buy some time, they sent their electric bill payment to the water company and the water bill payment to the electric company. Then they pretended they never received the gas bill by wadding up the bill, throwing it up in the air, thus buying themselves a few days. While pretty funny on TV, there are some real life consequences for late payments that aren’t too funny.

Paying your insurance premiums late on a regular basis can affect you negatively. How?

1. You May Be Required to Pay Your Entire Premium up-front

Each time an insurance company has to issue a Cancellation Notice, it costs them money to process this paperwork. Once they receive the payment they have to issue a Reinstatement Notice advising that payment has been received and there is no lapse in coverage. If the coverage was legally required insurance, such as Workers’ Compensation or Automobile Insurance, they also have to notify the regulatory agency so that the insured is not fined for any lapse in coverage. After numerous cancellations, some insurance carriers penalize customers by refusing to allow installments and requiring that the entire premium be paid up-front.

2. Insurance Companies are NOT Required to Reinstate a Policy

Did you know that in most states an insurance company is NOT required to reinstate a policy? While a carrier will usually reinstate, for clients that repetitively have Cancellation Notices, they can decide not to reinstate the policy and simply return your payment. The result is that you now have to find insurance elsewhere.

3. Your New Insurance Policy May Cost More

Now, since your policy was cancelled for non-payment of premium, most carriers when approached for a replacement policy, will check your past payment history. Since late payments invariably affect your credit score, you are likely to be offered coverage at a higher price. Some carriers refuse to offer quotes to insureds who have been cancelled for non-payment within the last three years!

So as you can see, it simply doesn’t pay to play the late-pay game with your insurance. If you are one that simply forgets to pay, you might consider signing up for “Electronic Funds Transfer” where the carrier will automatically transfer the funds from your bank account on a specified date. Either way, if you’ve had a few Cancellation Notices within the same policy period, discuss this with your agent so that you don’t suffer the consequences of late payments.

By Ray Alvarez, AAI, AIS