Fair Vs. Unfair Discrimination

Discrimination is regularly practiced by insurance companies and it's quite necessary. Before going further, let's make an important distinction. Insurance companies must practice fair discrimination. Discrimination refers to making choices and the practice makes sense as long as the choices are not unfair.

Unfair Discrimination

Unfair discrimination takes place whenever a choice revolves around a distinction that is irrelevant to offering insurance coverage. An example of this is to deny coverage based upon an arbitrary difference such as race or religion.

Fair Discrimination

Insurers are constantly involved in discriminating. They continuously evaluate situations to see if they are in a position to offer insurance coverage. Companies note differences and make choices among their insurance applicants. This process is important because insurance programs are designed using justifiable distinctions regarding the type of persons, property and situations they wish to cover.

Market Selection and Pricing

When an insurance company does business, it has to make decisions about the market it wants to serve. For example, in the car market, does it wish to insure only regular cars and drivers with pristine records or expensive sports cars and drivers with a few blemishes? In the homeowner's market, does the company wish to target higher-value homes, such as those with a value over $300,000 or might it decide to exclusively write mobile homes?

Once their market niche is selected, a company has to create matching prices. What components must a company consider? Well, an insurer must charge premiums that reflect the:

• dollar amount of losses paid to all parties filing valid claims
• company's costs to investigate and settle claims
• insurer's operating expenses (including compensation to employees and agents)
• premiums charged by their competitors
• the legal requirements of applicable state insurance regulators

Underwriting

Underwriting comes after market selection and pricing. A company has to create and follow rules for selecting and keeping the type of business that matches its premiums. Through underwriting, an insurer must properly select (fairly discriminate) among persons and kinds of property that fit its insurance program. If a company doesn't apply their selection standards consistently, it will eventually lose the ability to do business. An easy way to determine a company's selection practices is to look at their applications. If the information is important for underwriting, it should show up on the application. This is true no matter the type of insurance or market targeted by the insurer.

Discriminating Conclusion

Remember, the decisions made by an insurer in writing and renewing coverage must validly affect their market and prices. When the decisions are not based on these factors, then unfair discrimination takes place.

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COPYRIGHT: Insurance Publishing Plus, Inc. 1999, 2005, 2010
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Contractors or Cons?

Your home may be destroyed by a fire, flood, storm or other catastrophe. You're scrambling around to get your life back in order and you may think that things couldn't get worse. Well, they can and often do because of people who can't spell contractor without c-o-n.

The period after a serious loss is hectic, emotional and disorienting. Your major concern is to get your home repaired or rebuilt. These elements make you very vulnerable to "CONtractors," people who specialize in victimization instead of construction and in rip-offs rather than repairs.


Slow Down And Make Good Decisions

While you may be in a hurry to restore your loss, it is critically important to avoid persons who appear on your damaged doorstep offering to start construction. While handling a serious loss, think of taking precautions such as the following in order to avoid compounding your problems:

• Pay attention to any "feelings" you get about any contractor, particularly when they initiate contact
• Refuse to pay any money "up front"; a reputable contractor always works according to a written agreement, spelling out cost of materials, labor and other important work details
• Contact more than one contractor to get competitive estimates
• Make sure that any contractor you talk to provides references and proof that they are insured
• Check references and ask for evidence of how long the contractor has been in business
• If a local chapter is available, call the Better Business Bureau and check for complaints
• Ignore any tactics intended to pressure you into making an immediate financial commitment.

Keep in touch with an insurance professional during such trying times. They're already committed to providing genuine help.

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COPYRIGHT: Insurance Publishing Plus, Inc. 2001, 2005, 2010
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Identity Theft - Part 2

Part 2 is a brief explanation of what can be done to prevent ID Theft. Please see Part 1 for an explanation of what is meant by ID Theft.

Unfortunately, even as instances of ID theft grow, insurance is not a particularly important anti-ID theft tool. The type of loss is not something that an auto, home or similar insurance policy may be adequately adapted to handle. While homeowner policies do typically protect against credit card loss, coverage is usually just for the amount that falls below the minimum liability imposed by federal law (currently $50 per card). The serious harm suffered by ID theft victims are the costs associated with clearing up the aftermath, such as correcting one’s credit history and straightening out various accounts and records. This effort routinely takes months and hundreds to thousands of dollars in legal fees.

More insurers offer coverage for ID theft. Typically, the coverage reimburses legal fees or paying costs related to dealing with third parties to correct records. The most effective protection is for individuals to prevent becoming ID theft victims. Following are some suggestions:

• Keep your account information and Social Security Number (SSN) safe. One idea: keep home records in a locked file.
• Keep details about your various account numbers in a safe place so you can rapidly take care of stolen or lost cards.

• Be very careful with on-line transactions. Is the Website you use secure?
• Find out the privacy guidelines and safeguards of the businesses and parties you deal with.
• Make sure that you verify that websites for online transactions are legitimate
• Use password protection on smart phones and never leave such devices unattended

• Challenge those who request an SSN. Why is that information needed? Can some other information be used as an alternative?
• Think about buying and using a paper shredder. Many information thieves steal mail by going through garbage.
• Write companies who send unsolicited charge cards and have yourself removed from their mail list.
• Check bank and business records thoroughly for irregularities. Track down the reason for any unusual transactions or entries.

• Ask stores that use credit cards if they transmit the information with a wireless network. If yes, ask what safeguards they use to prevent airwave theft.
•  If you ever have a charge card transaction involving an imprinter that uses a carbon set for copies, ask for the carbon or watch the clerk destroy the carbon before it’s thrown away.
• Collect mail from mailboxes quickly and don’t put outgoing mail in your own mailbox. These practices give thieves fewer opportunities to fish for checks and private information.

Remember that these are just a few suggestions. Taking steps to minimize the chance of ID theft is a lot of work. That is a major reason that ID theft will continue to be a problem to individuals and businesses.

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COPYRIGHT: Insurance Publishing Plus, Inc. 2002, 2006, 2011
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.

Identity Theft - Part 1

Part 1 is a brief explanation of ID Theft and its consequences. Please see Part 2 for information on what can be done to prevent it.

ID theft is another form of fraud that has been around for as long as there have been dishonest people. It is a high-profile problem because technology has created many more opportunities for this crime. Credit cards, funds transfer cards, ATMs, wireless payments, slipshod business practices and the Internet have all combined to make identity theft a major problem for individuals and businesses.

ID theft describes any dishonest and unauthorized use of private information. In the past, the term rightfully described forgery or passing oneself off as another person to trick someone out of money and/or property. Today, it refers to an unauthorized party who secures goods, services, or other financial benefits by the fraudulent use of another person’s confidential information.

The favorite piece of information is a social security number. This information has routinely been used for gaining access to other private information such as driver’s history, credit information, bank accounts, loan information, credit cards, occupational history, military records, mortgage information, investment accounts and so on. Having this critical bit of information can allow a criminal to use another party’s accounts, secure loans, and charge a host of goods or services; the list is only limited by the criminal’s resources and imagination.

A complication of ID Theft is that it is a by-product of modern commercial life. Lenders, retailers, supermarkets, gas stations, airlines, travel clubs and everyone else have elevated cashless payments into the premiere way to do business, either live or electronically. This "ease" comes at great cost. As naïve as it sounds, business still operates on the assumption that everyone is honest. Few businesses have adequate safeguards to protect the information they collect on customers. Many businesses commonly mail out or electronically transit communications and solicitations that include private account information. It is common for electronic transactions to be transmitted through wireless networks and thieves are now able to intercept such data. Further, since businesses are often embarrassed that information has been stolen or compromised by hackers, many businesses keep such invasions secret or substantially delay reporting incidents to authorities and to their customers.

In light of business practices and attitudes, it’s basically up to the individual consumer to guard against ID theft. Though, in recent years, business best practices and government regulations are ramping up security activities. See Part 2 for tips on guarding against it.

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COPYRIGHT: Insurance Publishing Plus, Inc. 2002, 2006, 2011
All rights reserved. Production or distribution, whether in whole or in part, in any form of media or language; and no matter what country, state or territory, is expressly forbidden without written consent of Insurance Publishing Plus, Inc.