Thursday, April 29, 2010

Helping Those In Need

Following the devastating earthquake in Haiti earlier this year, several people here at CSE asked what we could do to help.

Earlier today, the American Red Cross presented us with a certificate honoring our contribution.

More later.

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Tuesday, April 27, 2010

Enforce The Law Against Uninsured Motorists

The furor over the freshly passed law in Arizona regarding illegal immigrants aside, there is a side issue needing to be discussed. Namely, the issue of uninsured motorists.

California, Nevada and Arizona state law requires insurance for any vehicle registered in the state. Similarly, most insurers require anyone who buys an auto policy from them have a valid, current drivers license.

Despite this, the number of uninsured motorists currently on the road is alarmingly high. It has been estimated that in 2007 18% of all drivers in California carried no insurance. The same group (Insurance Research Council) estimated that in 2010 this number could rise to 20%. In other words, one out of five drivers on the road would have no insurance.

Where does this leave people who follow the law?

Consider California specifically. Say you're in an accident. It's the other driver's fault. They have no insurance. Who pays?

You're not out of luck if your policy has Uninsured Motorist coverage.

So what is this coverage and what does it do?

Uninsured Motorists Coverage pays for bodily injury losses to you and your passengers as a result of an accident with a driver who has no liability protection and is legally responsible for the injuries. This includes a hit-and-run vehicle whose owner and operator cannot be identified.

Uninsured Motorists Coverage also provides Underinsured Motorists Coverage. This coverage pays for bodily injury losses to you and your passengers as a result of an accident with a driver who has liability protection with limits that are lower than the Uninsured Motorists limits you have selected, and that person is legally responsible for your injuries.

The California Insurance Code requires an insurer to provide Uninsured Motorists Coverage in each bodily injury liability insurance policy it issues covering liability arising out of the ownership, maintenance, or use of a motor vehicle.

Uninsured Motorist Coverage insures the insured, his or her heirs or legal representatives for all sums within the limits established by law, which such person or persons are legally entitled to recover as damages for bodily injury, including any resulting sickness, disease or death to the insured from the owner or operator of an uninsured motor vehicle not owned or operated by the insured or a resident of the same household. An uninsured motor vehicle includes an underinsured motor vehicle as defined in subdivision (p) of Section 11580.2 of the Insurance Code.

While you're covered as a law-abiding citizen, you can see where this can and will also drive rates upward. When one company has to pay for a claim where, had both parties been properly insured, the expense would have been borne in whole or part by the other driver's carrier... not too hard to do the math.

So what's the solution?

Simple. Enforce the existing law.

If the politicians are as interested in the taxpayer's well-being as they claim, they'd insist on this simple step to save their constituents money.

So why don't they?

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Thursday, April 22, 2010

What Should We Do To Spread The News?

Discussing politics is outside the realm of this blog. At CSE, we deal with all sides in an even-handed manner. Party labels and/or labor affiliations are immaterial to our fundamental directive, namely providing quality personal casualty insurance to public employees and the general public. That said, an illustration from the political arena provides insight into our profession.

College professor, published historian and political pundit Victor David Hanson recently wrote an article titled An Age of Untruth. In it he identified five lies permeating contemporary debate:

  • Calls for "civility" in debate after hurling whatever bile suits ones fancy;
  • The heralding of "diversity" where in fact none exists;
  • Overselling the effectiveness of alternative; i.e. "green" energy sources when they are incapable of supplying a substantive amount of energy needs;
  • Using euphemisms to disguise deficit spending;
  • An unwillingness to genuinely deal with issues related to border security.

Insurance is a practical business, one dealing with facts and not feelings. There are very, very few gray areas. A policy covers this but not that; one claim is legitimate while another isn't. Simple? No. However, it is usually rather cut and dried.

Be it at the provider or agent level, the basic principals of insurance do not shift with the blowing winds of public sentiment or presently approved speech patterns. This leads to conflicts, especially among those lacking genuine knowledge of how the business works. No, insurance companies don't have the resources to cover every everything. No, we do not go out of our way to deny claims and/or coverage. Yes, there are avenues of redress available should an insurer not act properly.

Are we doing a sufficient job explaining this?

Not really. Or at the least, not often enough.

The synchronized challenge and opportunity for the independent agent is spreading the truth in simple yet not simplistic terms about insurance; what it can and cannot do. There are no great trade secrets here. Insurance ought to be an open book, one where all parties involved avoid legalese in favor of straightforward communication. A business conducted honestly has no need to be anything but honest in its presentation to those who write its paychecks. Namely, the consumer.

So how can we best go about this? What can we do, as an insurance provider, to better serve those who have entrusted us with their business? What can be done at the agent level to disseminate factual information about insurance? We want to hear from you, industry professional and consumer alike. Leave a comment; let us know. We're listening.

P.S. Ed Morrissey expounds on some examples of what can happen when you don't communicate properly or accurately.

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Tuesday, April 20, 2010

The Essence Of Essays

Your semi-humble corporate blogger person here has been spending much time the past several days reading through entries for our annual scholarship contest. Given that we received over 250 entries prior to the cut-off date for accepting them, it's taking a while. That said, they will all be read.

The entrants were required to write a short essay on ways to reduce the accident rate of teenage drivers. They also needed to demonstrate they met the entry requirements: GPA of 3.0 or higher, graduating with their class, letter of recommendation from a teacher, administrator or counselor at their current school, already accepted to an institution of higher learning, and at least one parent who is an active or retired civil servant.

It's been interesting reading the entries. I've done this before, and have noticed a general uptick in the quality of what's crossed my desk. There's been a few that have left me reaching for the aspirin. However, there have also been some that have been stunning in their thoughtfulness and quality. I'm eager to share them once we've selected the winners.

Almost as interesting have been the letters of recommendation. They've ranged the gamut from two sentence "yeah, they're a student here" to tightly packed three page epics portraying the applicant as something akin to a lightworker. Um, sure.

Time to get back to reading. In the meanwhile, speaking of high school here's an instant classic ad about the tribulations of same:

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Thursday, April 15, 2010

It's Tax Day! Hooray! (Or Something Like That)

Today is, of course, Income Tax Day. Yes, we're all thrilled.

To hopefully make the process a tad less painful, here are some (ahem) "reasons" that allegedly come from genuine court cases, provided by defendants when asked why they were tardy with their Form 1040 or variations thereof

  • The Paperwork Reduction Act relieves Americans of their duty to file tax returns.
  • I was not required to file my tax return because I never received a court order to do so.
  • When I was audited by the IRS many years ago, the agent told me that he had never seen a taxpayer as scrupulous and honest in his affairs as me, and that I would never have to file a tax return again.
  • I am a CPA. And I was too busy preparing other people's tax returns to file my own tax return on time.
  • I was convicted and imprisoned for not filing my 1987, 1988, 1989 and 1990 federal income tax returns. After my release from prison, I had difficulty compiling my records, so I didn't file my 1993, 1994 and 1995 returns.

Wouldn't it have been easier to just pay up?

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Tuesday, April 13, 2010

Flood, Earthquake... Can We Hold Off On The Fire, Please?

A couple of recent news items highlight the relationship between insurance and government. No, it's not all railing by posturing politicians against the evil soulless corporate machine, although there have been times recently when it's sure seemed that way.

In California, Glenn Pomeroy, head of the California Earthquake Authority, is asking for federal assistance in the form of it providing a repayment guarantee on any loans taken out by the CEA should this be necessary to cover claims from a major earthquake. Pomeroy has stated should this guarantee be in place, the CEA would be able to reduce the premium it currently charges. Which, in a word, is high. How high? Last year the average price in earthquake-prone areas such as Riverside and San Bernardino County hit $801.

Meanwhile, an area in which the federal government is much more directly involved, namely flood insurance, is currently hanging in legislative limbo. The National Flood Insurance Program, which offers flood insurance to property owners living in communities participating in the program, lapsed on March twenty-eighth of this year due to fighting between Democrats, who tacked additional legislation on to the bill plus wishing for it to be categorized as an emergency funding bill which would add its cost to the national debt, and Republicans who insisted the funding should come from already allocated albeit unspent stimulus funds. Meanwhile, people trying to close on houses they wish to buy which are in flood areas, therefore are required to have flood insurance, have one more headache to deal with on top of the struggle many homebuyers presently face. The National Association of Realtors commented in a press release, "Flood insurance is required by law for home sales mortgages on properties located in the 100-year floodplain areas, which are left unprotected by this lack of congressional action. Until Congress renews this program, worthy buyers will be left without access to mortgages."

And insurance providers are the bad guys?

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Thursday, April 8, 2010

Getting Help Going Social (Media)

David Reutimann is a name known to NASCAR fans if few others. He drives a car sponsored by Aaron's and Best Western among others in the Sprint Cup series.

By his own admission, Reutimann is no social media maven. In an era where personal interaction between performer on any stage, be it some field of entertainment or sports, is becoming almost a given, what to do?

Making lemons out of lemonade, Best Western got together with Michael Waltrip Racing, the team for which Reutimann drives, and put together a contest for three lucky tweeters to attend this weekend's race at Phoenix and tweet on Reutimann's behalf. No, they don't get to ride in the car during the race, although that would certainly elicit some interesting tweets:

  • "YAAAH! The car really does get three inches from the wall at top speed!"
  • "David! Does your mother know you talk like that when someone bumps you?"
  • "If I promise not to spill, can I get an ice cream during the next pit stop?"

Anyway, the notion of an employer (to be technically correct, sponsor) reaching out to the social media community in order to promulgate the brand is interesting. If not closely monitored it can be fraught with peril, since the person or people are visibly representing you. Would not be a good thing if an individual tweeting on your behalf started dropping f- and s-bombs when you're a family-oriented business. You also need to make sure the person or people has solid working knowledge of what they're talking about. Although the individual isn't a corporate spokesperson per se, the last thing you need is someone with a tangible connection to your organization telling the world your core corporate philosophy revolves around an unshakable belief in the moon being a gigantic dusty grapefruit.

Such possible horrors aside, the advantages of having help when it comes to social media far outweigh the potential pitfalls. A skilled writer who is comfortable with social media's parameters can and will do wonders to spread your message. It's impossible to overestimate the power of direct communication. Think of it as hiring a corporate spokesperson. The big boys have one. Why can't you?

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Tuesday, April 6, 2010

Are S Corporations About To Get Slammed?

The national debt is currently estimated at $12,792,967,119,405.50. Divided by the current number of people in the United States, estimated at 309,021,537, this comes out to about $41,398.30 per person.

Think they'll take a check?

While the above figures are good for a grim chuckle and a resigned "what can you do," an additional reality isn't nearly as amusing. Unless Congress acts to extend tax cuts instituted by the Bush administration in 2001 and 2003, these cuts will expire at the end of the year. Should this happen, small businesses, especially those organized as S corporations, will see an immediate increase in their tax burden.

Specifically, the aforementioned tax cuts reduced the individual income tax rate. The structure of an S corporation is that although the corporation is not subject to federal income tax, all profits are passed through to the shareholders in the company. These profits are considered income upon which federal income tax is levied. In short, prepare to get clobbered come 2010.

The owner(s) of an S corporation pays taxes on their proportional share of the corporation's profit. Given that most independent agents own their agencies, this heavily impacts our agent force. In addition to federal taxes, S corporations in California pay a 1.5% franchise tax on their net income.

While nothing is inevitable except death and taxes, being taxed to death isn't a pleasant way to go. For all the hot air floating above Washington about not raising taxes on the middle class (*yeahrightsnort*), should taxes go up by default it's going to hit a lot of people hard. Given Washington's insatiable appetite for spending, believing this will go any other way is most likely wishing on unicorns. Keep a close eye on this issue. It's not going to go away on its own.

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Thursday, April 1, 2010

The Great Constant

Baseball season starts next week, a sign that we've survived another winter and spring has finally sprung. Or something like that.

As the pre-season winds down, most teams play one or two games at home before the actual season starts. Such was the case here in the San Francisco Bay Area this evening, as both local teams got together for some, uh, "friendly" exhibition activity in San Francisco. And so, I switched on the radio.

Throughout my decades on this dusty orb, listening to baseball on the radio has been a great constant. Season after season, win or lose I've tuned in and listened. Not that I'm averse to watching the game on television or going out to the old ballpark a few times a year. But more often than not, I've listened.

Baseball announcers, assuming they're any good, become comfortable, familiar voices after a few years. They're a part of life's routines, one which never grows tiresome but is always welcome. It's a good thing to have in your life.

In a way, we're like that here at CSE.

We're not one of those organizations needing a conveyor belt to shuttle people in and out the door. Our relationship with many of our agencies spans not years, but decades and generations of families carrying on the business.

It's not a case of fossilization. Rather, we do what we do well because we've been at it for a while. We're as much about relationships as proper business practices. Good relationships within an organization are proper business practices. As is the case with our customers.

It's good to have a constant in your life. Hopefully you'll consider making us one.

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