As CEO of insurance giant Allstate, Edward Liddy presided with a Midwesterner’s even temper, able to make tough, often unpopular, corporate decisions and stick to them. In particular, Mr. Liddy caught substantial flak for his move to convert Allstate’s sales force to a network of independent agents, and stirred consumer wrath when the insurer stopped writing homeowners policies in coastal towns vulnerable to hurricanes.
That resolve should serve Mr. Liddy well in his newest position atop the hemorrhaging insurance giant American International Group. Mr. Liddy, who retired as chairman of Allstate five months ago, was tapped to replace CEO Robert Willumstad after rating downgrades sparked a liquidity squeeze and near-collapse at the insurer, setting up the Federal Reserve’s $85 billion bailout attempt last week.
Mr. Liddy’s fat Rolodex should also help as he takes on the job of selling off assets of the country’s largest insurer. He’s a member of an elite group of directors that overlap on a number of blue-chip company boards. (In late 2006, Mr. Liddy was number seven on FW’s Mightiest Directors list for his considerable clout in governance circles.) It was on the board of Goldman Sachs that Mr. Liddy got to know then-CEO Henry Paulson, and clearly made a good impression; as Treasury Secretary, Mr. Paulson selected him for his new post. Mr. Liddy also sits on the boards of 3M and Boeing.
AIG could be Mr. Liddy’s biggest challenge yet. While Allstate traditionally was narrowly focused on consumer, auto, homeowners and life insurance, AIG is a conglomerate with far-flung operations, including specialized and exotic products like insurance for corporate directors and identify theft, as well as the derivatives designed to protect investors against losses in subprime mortgages.
“It’s going to be a big job—more complex—than Allstate,” said Peter Newsome, an analyst at Chicago investment firm Sandler O’Neill.
Source
Wednesday, October 29, 2008
Wednesday, October 22, 2008
Present driving age acceptable
For a couple of years now, you've driven your teens to school, dance lessons, church events, football and basketball games, soccer matches and to their friends' houses.
When the teens turn 16 and get their Level 2 driver's license, you're more than happy to end the chauffeuring act and let them drive off on their own.
But studies show that kids who get their licenses at 16 are much more likely to get in a crash and, ultimately, die in one than are those who wait until 17 or 18.
What do you go for, your convenience or keeping your kid out of harm's way?
It only makes sense to pick the latter.
Because the leading cause of death for teens is the car crash, the Arlington, Va.-based Insurance Institute for Highway Safety, an auto insurance industry-funded research agency, is pushing to raise the driving age to 17 or 18.
The institute made its pitch to the annual conference of the Governors Highway Safety Association last week in Scottsdale, Ariz.
Some say it's silly to put licensure on the same time frame as going to college, joining the service and voting. Delaying teen driving, they say, also would make teens less responsible and postpone a traditional rite of passage to quasi-adulthood.
Anyone who got a license at 16 can vouch for the sense of liberation that came with it.
Still, there are those studies. The National Highway Traffic Safety Administration says the rate of crashes for 16-year-olds is 10 times worse than for those between 30 and 59. Those crashes claim the lives of more than 5,000 teens every year.
New Jersey is the only state to have taken the leap to 17, and it has the stats to show the success of that decision. British Columbia and the United Kingdom license at 17.
Source
When the teens turn 16 and get their Level 2 driver's license, you're more than happy to end the chauffeuring act and let them drive off on their own.
But studies show that kids who get their licenses at 16 are much more likely to get in a crash and, ultimately, die in one than are those who wait until 17 or 18.
What do you go for, your convenience or keeping your kid out of harm's way?
It only makes sense to pick the latter.
Because the leading cause of death for teens is the car crash, the Arlington, Va.-based Insurance Institute for Highway Safety, an auto insurance industry-funded research agency, is pushing to raise the driving age to 17 or 18.
The institute made its pitch to the annual conference of the Governors Highway Safety Association last week in Scottsdale, Ariz.
Some say it's silly to put licensure on the same time frame as going to college, joining the service and voting. Delaying teen driving, they say, also would make teens less responsible and postpone a traditional rite of passage to quasi-adulthood.
Anyone who got a license at 16 can vouch for the sense of liberation that came with it.
Still, there are those studies. The National Highway Traffic Safety Administration says the rate of crashes for 16-year-olds is 10 times worse than for those between 30 and 59. Those crashes claim the lives of more than 5,000 teens every year.
New Jersey is the only state to have taken the leap to 17, and it has the stats to show the success of that decision. British Columbia and the United Kingdom license at 17.
Source
Wednesday, October 15, 2008
State's high insurance rates hurt consumers
In 1973, Michigan adopted a no-fault law, where a claim is filed with one's own insurer instead of suing "the other guy." No fault promised quick service, generous benefits and lower rates. In exchange, you gave up the right to sue, and you were required to have insurance.
But there was a hitch. Rates didn't go down. They went up.
So, in 1978, the Michigan Supreme Court struck down the no-fault law as unconstitutional, ruling the state can't require people to have insurance without some guarantee that rates will be affordable. The Supreme Court ordered the Legislature to develop a definition for affordability that ensures "fair and equitable" rates for consumers. But in a twist, the Legislature defined affordability from the insurance industry's perspective, not the consumer's.
The Legislature's confusing, loophole-riddled definition says rates are affordable if insurers are "reasonably competing" with one another, regardless of whether premiums exceed the consumer's ability to pay.
Since 1989, Michigan's rates have skyrocketed 69 percent -- the fastest rate of increase in the nation. Our $1,000 average premium is approaching New Jersey's $1,100, the country's highest. And Michigan's $436 collision premium is the priciest in the country.
Ironically, Michigan drivers are rated safest in the nation, according to Allstate's 2008 "America's Best Drivers" report. Michigan had 9,000 fewer accidents between 1996 and 2006.
Source
But there was a hitch. Rates didn't go down. They went up.
So, in 1978, the Michigan Supreme Court struck down the no-fault law as unconstitutional, ruling the state can't require people to have insurance without some guarantee that rates will be affordable. The Supreme Court ordered the Legislature to develop a definition for affordability that ensures "fair and equitable" rates for consumers. But in a twist, the Legislature defined affordability from the insurance industry's perspective, not the consumer's.
The Legislature's confusing, loophole-riddled definition says rates are affordable if insurers are "reasonably competing" with one another, regardless of whether premiums exceed the consumer's ability to pay.
Since 1989, Michigan's rates have skyrocketed 69 percent -- the fastest rate of increase in the nation. Our $1,000 average premium is approaching New Jersey's $1,100, the country's highest. And Michigan's $436 collision premium is the priciest in the country.
Ironically, Michigan drivers are rated safest in the nation, according to Allstate's 2008 "America's Best Drivers" report. Michigan had 9,000 fewer accidents between 1996 and 2006.
Source
Wednesday, October 8, 2008
DCA says auto dealers violate consumer laws
Violations of New Jersey consumer law were found at 49 of 97 motor vehicle dealerships visited in Burlington, Camden, Essex, Mercer, Monmouth and Union counties, according to the state Division of Consumer Affairs.
The division conducted unannounced inspections at the dealerships earlier this year. Those cited either failed to post prices for used vehicles for sale, or failed to post a Used Car Buyers Guide. Prices are required under the state's Consumer Fraud Act, and the buyers' guide is required under the Used Motor Vehicle Trade Regulation Rule and under the Motor Vehicle Advertising Regulations.
Of 2,144 used vehicles inspected, 1,492 had no posted price and 472 did not have a buyers' guide.
Source
The division conducted unannounced inspections at the dealerships earlier this year. Those cited either failed to post prices for used vehicles for sale, or failed to post a Used Car Buyers Guide. Prices are required under the state's Consumer Fraud Act, and the buyers' guide is required under the Used Motor Vehicle Trade Regulation Rule and under the Motor Vehicle Advertising Regulations.
Of 2,144 used vehicles inspected, 1,492 had no posted price and 472 did not have a buyers' guide.
Source
Wednesday, October 1, 2008
How Guaranty Funds Protect Consumers
With all the turmoil in the financial services sector, consumers might ask what would happen if the company holding their car, homeowners or life insurance policy or annuity fails.
Insurance companies do fail sometimes, but there are safety nets in place to protect individual policyholders.
First, state regulators are charged with guarding companies' financial solvency, and can step in to take over a company that is in danger of failing. When regulators get involved, they can oversee the company's turnaround, including selling it to a financially stronger company. They can also order it into liquidation, or run-off.
If a company enters liquidation, the regulators in charge make sure the policyholders are paid first before any other creditors. If the company does not have enough money to pay all of its claims, regulators turn to the state guaranty funds to make up the difference. Every state has a guaranty fund to cover auto, homeowners and workers' compensation claims and another fund for life and health insurance claims. All insurance companies that do business in the state pay into the funds, so regulators have a pool of money to use when necessary.
Since 1976, about 600 companies that write car, homeowners, workers' compensation and other property/casualty lines have gone insolvent. The guaranty funds have paid about $21 billion to cover claims from those companies. On the property/casualty side, generally, state statute assigns guaranty funds the responsibility of paying claims for insureds residing in their states. The exception to this is workers' compensation coverage. Those claims are handled by the state of residence of the employee (not the employer, who bought the policy). Some states have separate guaranty funds for workers' compensation claims.
Source
Insurance companies do fail sometimes, but there are safety nets in place to protect individual policyholders.
First, state regulators are charged with guarding companies' financial solvency, and can step in to take over a company that is in danger of failing. When regulators get involved, they can oversee the company's turnaround, including selling it to a financially stronger company. They can also order it into liquidation, or run-off.
If a company enters liquidation, the regulators in charge make sure the policyholders are paid first before any other creditors. If the company does not have enough money to pay all of its claims, regulators turn to the state guaranty funds to make up the difference. Every state has a guaranty fund to cover auto, homeowners and workers' compensation claims and another fund for life and health insurance claims. All insurance companies that do business in the state pay into the funds, so regulators have a pool of money to use when necessary.
Since 1976, about 600 companies that write car, homeowners, workers' compensation and other property/casualty lines have gone insolvent. The guaranty funds have paid about $21 billion to cover claims from those companies. On the property/casualty side, generally, state statute assigns guaranty funds the responsibility of paying claims for insureds residing in their states. The exception to this is workers' compensation coverage. Those claims are handled by the state of residence of the employee (not the employer, who bought the policy). Some states have separate guaranty funds for workers' compensation claims.
Source
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