Emerging Threats to our Vehicles & Potential Safety

Fiat Chrysler Cyber Risk Recall of 1.4M Vehicles Seen as Industry First

July 26, 2015 by Jeff Plungis and Mark Clothier

Fiat Chrysler Automobiles NV is recalling about 1.4 million cars and trucks equipped with radios that are vulnerable to hacking, the first formal safety campaign in response to a cybersecurity threat.

The move marks a milestone for the industry, which last year set a record with 64 million autos called back for fixes in the U.S. The National Highway Traffic Safety Administration, under fire from Congress for not catching defects more quickly, has been considering punitive action against Fiat Chrysler for failing to protect vehicle owners.

Unauthorized remote access to certain vehicle systems was blocked with a network-level improvement on July 23, the company said in a statement. In addition, affected customers will receive a USB device to upgrade vehicles’ software with internal safety features.

Fiat Chrysler was already distributing software to insulate some connected vehicles from illegal remote manipulation after Wired magazine published a story about software programmers who were able to take over a Jeep Cherokee being driven on a Missouri highway.

The company, led by Chief Executive Officer Sergio Marchionne, reiterated that it’s not aware of any real-world unauthorized remote hack into any of its vehicles. It stressed that no defect was found and said it’s conducting the campaign out of “an abundance of caution.”

NHTSA said it encouraged the action to protect consumers against a vulnerability that could affect a driver’s control.

Expanded Action

“Launching a recall is the right step to protect Fiat Chrysler’s customers, and it sets an important precedent for how NHTSA and the industry will respond to cybersecurity vulnerabilities,” NHTSA Administrator Mark Rosekind said in a statement Friday.

The recall covers about a million more cars and trucks than those initially identified as needing a software patch. The action includes 2015 versions of Ram pickups, Jeep Cherokee and Grand Cherokee SUVs, Dodge Challenger sports coupes and Viper supercars.

“That’s not a small number to go after,” Mark Boyadjis, an analyst with IHS Automotive, said in a telephone interview. “This is a pretty quick response and much of it could be P.R. driven. But I think it will keep consumers comfortable and prevent current ones and future ones from straying away from the brand.”

This isn’t the first time automobiles have been shown to be vulnerable to hacking. What elevates this instance is that researchers were able to find and disable vehicles from miles away over the cellular network that connects to the vehicles’ entertainment and navigation systems.

That capability makes the possibility of remote hacking of cars a reality. Earlier hacks have mostly been achieved by jacking the researchers’ laptops into diagnostic ports inside the cars.

Fiat Chrysler’s UConnect infotainment system uses Sprint Corp.’s wireless network.

“This is not a Sprint issue but we have been working with Chrysler to help them further secure their vehicles,” said Stephanie Vinge Walsh, a Sprint spokeswoman.

NHTSA said it would open an investigation of the remedy “to ensure that the scope of the recall is correct and that the remedy will be effective,” agency spokesman Gordon Trowbridge said in an e-mailed statement. The agency said its electronics and cybersecurity experts will continue to monitor hacking threats and take action when necessary.

Consumer Confidence

There’s a possibility the recall could affect consumer confidence in Fiat Chrysler, even though the company isn’t the only one with cybersecurity challenges, said Thilo Koslowski, vice president and automotive practice leader at technology consultant Gartner Inc.

“It validates that cyber-hacking with cars is a serious issue that the auto industry must pay attention to,” he said. “The auto industry needs to develop new technology to combat these technological problems.”

General Motors Co. has a team working on cybersecurity and has hired Harris Corp.’s Exelis and other firms to develop anti- hacking systems, said Mark Reuss, the Detroit automaker’s executive vice president for global product development. GM seeks to block hackers’ access to its autos, he said, and if they do get in, it tries to prevent them from gaining control.

“It’s probably one of the most important things we spend time on,” Reuss said. “Anyone who wants to do something like that will probably get on, so you have to look at what happens when they do.”

Proposed Legislation

GM has also worked with the U.S. military and with Boeing Co. on its anti-hacking systems, he said.

Senators Edward Markey of Massachusetts and Richard Blumenthal of Connecticut, both Democrats, introduced legislation on July 21 that would direct NHTSA and the Federal Trade Commission to establish rules to secure cars and protect consumer privacy.

The senators’ bill would also establish a rating system to inform owners about how secure their vehicles are beyond any minimum federal requirements. The lawmakers released a report in 2014 on gaps in car-security systems, concluding that only two of 16 automakers had the ability to detect and respond to a hacking attack.

Markey questioned why it took nine months after learning about the security gap for Fiat Chrysler to order a recall.

‘No Assurances’

“There are no assurances that these vehicles are the only ones that are this unprotected from cyberattack,” he said Friday in an e-mail. “A safe and fully equipped vehicle should be one that is equipped to protect drivers from hackers and thieves.”

Although general cyber threats have been acknowledged previously by the industry, the specific ability to take control of critical vehicle functions in the affected Fiat Chrysler vehicles only became clear with the Wired magazine report, said Fiat Chrysler spokesman Eric Mayne.

“Prior to this month, the precise means of the demonstrated manipulation was not known,” Mayne said.

Representatives Fred Upton and Frank Pallone, leaders of the House Energy and Commerce Committee, sent letters to 17 manufacturers and NHTSA in May to gather information about how the industry is addressing cybersecurity.

“As the underlying technologies seemingly evolve by the day, so too must our manufacturers and regulators keep pace to protect drivers from these growing threats,” the Michigan Republican and New Jersey Democrat said in a statement Friday. 

(By Bloomberg Reporters Mark Clothier and Jeff Plungis; with assistance from Patrick Ralph in New York, David Welch in Southfield, Michigan, and Jordan Robertson in Washington.)

Copyright 2015 Bloomberg.

 

Hackers Remotely Kill a Jeep on the Highway—With Me in It

I was driving 70 mph on the edge of downtown St. Louis when the exploit began to take hold.
Though I hadn’t touched the dashboard, the vents in the Jeep Cherokee started blasting cold air at the maximum setting, chilling the sweat on my back through the in-seat climate control system. Next the radio switched to the local hip hop station and began blaring Skee-lo at full volume. I spun the control knob left and hit the power button, to no avail. Then the windshield wipers turned on, and wiper fluid blurred the glass.

As I tried to cope with all this, a picture of the two hackers performing these stunts appeared on the car’s digital display: Charlie Miller and Chris Valasek, wearing their trademark track suits. A nice touch, I thought.

The Jeep’s strange behavior wasn’t entirely unexpected. I’d come to St. Louis to be Miller and Valasek’s digital crash-test dummy, a willing subject on whom they could test the car-hacking research they’d been doing over the past year. The result of their work was a hacking technique—what the security industry calls a zero-day exploit—that can target Jeep Cherokees and give the attacker wireless control, via the Internet, to any of thousands of vehicles. Their code is an automaker’s nightmare: software that lets hackers send commands through the Jeep’s entertainment system to its dashboard functions, steering, brakes, and transmission, all from a laptop that may be across the country.

To better simulate the experience of driving a vehicle while it’s being hijacked by an invisible, virtual force, Miller and Valasek refused to tell me ahead of time what kinds of attacks they planned to launch from Miller’s laptop in his house 10 miles west. Instead, they merely assured me that they wouldn’t do anything life-threatening. Then they told me to drive the Jeep onto the highway. “Remember, Andy,” Miller had said through my iPhone’s speaker just before I pulled onto the Interstate 64 on-ramp, “no matter what happens, don’t panic.”¹

 

As the two hackers remotely toyed with the air-conditioning, radio, and windshield wipers, I mentally congratulated myself on my courage under pressure. That’s when they cut the transmission.

Immediately my accelerator stopped working. As I frantically pressed the pedal and watched the RPMs climb, the Jeep lost half its speed, then slowed to a crawl. This occurred just as I reached a long overpass, with no shoulder to offer an escape. The experiment had ceased to be fun.
At that point, the interstate began to slope upward, so the Jeep lost more momentum and barely crept forward. Cars lined up behind my bumper before passing me, honking. I could see an 18-wheeler approaching in my rearview mirror. I hoped its driver saw me, too, and could tell I was paralyzed on the highway.

“You’re doomed!” Valasek shouted, but I couldn’t make out his heckling over the blast of the radio, now pumping Kanye West. The semi loomed in the mirror, bearing down on my immobilized Jeep.

I followed Miller’s advice: I didn’t panic. I did, however, drop any semblance of bravery, grab my iPhone with a clammy fist, and beg the hackers to make it stop.

For the rest of this article, please visit: http://www.wired.com/2015/07/hackers-remotely-kill-jeep-highway/

 

Understanding Commercial Property Underwriting and ‘COPE’

Construction, Occupancy, Protection and Exposure (COPE) are the same four basic elements of underwriting data that real property underwriters have used for nearly 300 years.
So what are these time-honored elements? The following paragraphs briefly explain each element of COPE.

Construction (C)

For underwriting analysis, construction is broken down into three sub-parts:

• Construction materials;
• Square footage; and
• Age of the structure.

Construction Materials

Insurance Services Office (ISO) defines six construction classifications (from “1” to “6”) based on the combustibility and damageability of the materials used to construct the structures “major structural features.” The lower the number, the more susceptible the structure is to damage by fire. Construction class codes are a function of the “major structural features”: exterior load-bearing walls combined with roof and floor(s).
Assigning a construction class code is first a function of the load-bearing wall material and secondarily a function of the floor and roof materials. Four exterior, load-bearing wall types are considered along with four floor and roof types. Combining the wall type with one the floor/roof types produces the structure’s construction class.

Mixed Construction Problems

What effect does a combination of building materials and assemblies have on a commercial property’s construction classification? Factually, mixing construction material can be detrimental to the building’s ultimate construction class and loss cost/rate.
Simply, to qualify for a higher construction class rating, the superior construction must equal or exceed 66 2/3 percent of the ratable structural feature. This 2/3 requirement applies first to the walls and separately to the combined area of the floors and roofs.

Square Footage

Structure size influences many aspects of the underwriting process related to the “construction” element of “COPE.” Square footage also factors into the “protection” section of COPE (i.e. the need for a sprinkler system, etc.). But the main aspect of structure size from the underwriting aspect is in the comparison of the building’s “maximum possible loss” (MPL) versus its “probable maximum loss.” (PML)
Essentially, it is “possible” that the entire structure may be destroyed in any one loss; thus the MPL is the entire structure (100 percent). However, the chances that the building will suffer a total loss are inversely proportional to the size of the structure. Basically, the larger the building, the less likely the entire structure will be destroyed in a single event. Thus, the PML percentage decreases as building size increases (subject to the protection (“P”) used in the building).

Age of the Structure

Aging structures create concerns and questions in the underwriter’s mind. Specifically, underwriters concern themselves with the building’s major systems (roofing, plumbing, HVAC and wiring) when underwriting an older structure. The older the structure, the more likely a major system will malfunction, leading to a possible claim due mostly to an internal issue rather than caused by an external force.
Have the systems been maintained and updated as necessary? When were the last updates? What was the extent of those updates? Who did the updates? These are all questions underwriters may ask when evaluating older structures.
Agents should concern themselves with the age issue as well. Many construction-related ordinances and laws may have been updated or enacted since the building’s original construction. Any increased cost related to bringing a structure into compliance with local building codes following a covered cause of loss is specifically excluded in the un-endorsed commercial property policy.

Importance of ‘Construction’ Information

Taken on its own, “construction” may ultimately be the most important element in property underwriting. Although the second element, “occupancy” (what the insured does), is often seen as primarily important among the four elements; occupancy really is secondary to construction when the risk is a class of business the underwriter normally writes.
Granted, construction and occupancy can each be seen as a function of the other in regard to underwriting decisions, often times the decision comes back to construction. For example, an underwriter may offer coverage to a restaurant in a masonry/non-combustible building (construction class “4”); but may not be willing to offer coverage to the same operation located in a joisted/masonry building (construction class “2”).

Class on Understanding Commercial Property Underwriting and COPE

Occupancy (O)

“Occupancy” information is comprised of two parts: 1) what the insured does; and 2) how the insured manages the hazards associated with what they do. Determining what the insured does is rather simple; determining how they manage their “hazards of occupancy” requires closer investigation (either by the agent, insurance carrier staff, or independent inspection firm).
Each class of insured (retail, office, wholesale, manufacturing, service, etc.) presents its own relative risk of first party property loss. The greater the risk of loss, the more closely the underwriter analyzes the operations (occupancy) and the higher the relational cost of coverage. An office, for example, presents less of an operational hazard than does a paint and body shop; resulting in a lower property occupancy rate factor for the office.
Beyond merely knowing the insured’s operations/occupancy, the insurer must also investigate how the insured manages those operations (part two of the occupancy review). Similar insureds do not necessarily manage operations in the same manner. Since each insured manages its exposures and hazards differently, each has its own “hazards of occupancy” that must be considered in the underwriting process.

Protection (P)

Underwriters and building code officials are often jointly interested in the property protection aspects of structures, but for different reasons. Property underwriters view property protection measures in regards to their ability to lessen the amount of property damage; building code officials generally view protection from a general public and personnel protection angle.
Sprinkler systems, fire extinguishers, alarm systems, fire doors and fire walls, and public fire protection are the primary protection mechanisms evaluated by underwriters. A particular structure’s construction and occupancy may dictate which property protection mechanisms are required or desired by the underwriter.

Exposures (E)

Is the insured property exposed to any external hazards? Not all hazards are related to the insured structure or operation; some come from outside the premises or are simply geographic in nature. A few external exposures relevant to property underwriters include:

• The insured structure’s proximity to a high-hazard operation;
• The local wildfire risk;
• The possibility for damaging winds and/or water;
• The structure’s flood zone location (located in or near a special flood hazard area (SFHA));
• The structures earthquake exposure; and
• The jurisdictions building code requirements.

Understanding COPE fosters better planning during the property underwriting process. Knowing what to provide and why to provide specific information makes the underwriting process smoother and, hopefully, quicker. Also, knowing COPE can assist clients when planning upgrades to current structures or constructing new buildings.

Questions regarding Commercial Property Underwriting and "COPE" can be directed to our Commercial Lines Agency Specialists by calling (760) 201-0923, or visiting our website at www.TagueAlliance.com

By Christopher J. Boggs | February 3, 2015

www.InsuranceJournal.com

Tague Alliance - Insurance Industry Report Out Now

At Tague Alliance we try to keep our members updated on what is happening in the insurance industry so we all have a better idea of the trends that will have an impact on our agencies and our clients.  Read the report below for a ton of good information:
http://www.treasury.gov/initiatives/fio/reports-and-notices/Documents/FIO%20Annual%20Report%202013.pdf

Tague Alliance - Focus on Retention

This was a great post from MetLife Auto and Home and Tague Alliance felt that it was worth sharing:


Focus on Retention
As you enter the New Year, take some time to reflect on ways to improve your business model in the coming year. This may include expecting more than others think possible. One area of critical importance is customer satisfaction. Ask yourself, “Is your client the most important person on the premises?” A few simple steps can start you down the road to improved customer service.

5 Simple steps that can make a difference in your retention (by Larry Moffett)

Review your agency's 3-year retention numbers
This simple act will give insight on how your customers view your agency. Is your retention level in the 90 percent range or in the 70’s? The lower the retention percentage, the more probable customer satisfaction is an issue. Often, when we think about customer satisfaction, we think in terms of “over the top” service. That’s great, and a worthy goal to strive for. But, “over the top” service probably won’t happen in most agencies on a consistent basis. What is possible and attainable is for the agency to render service that will resonate with their clients. Generally, this can be achieved with little or no investment. Customer satisfaction is achieved not through programs, but by changing behaviors and attitudes. Customer satisfaction increases when agencies intentionally focus on areas that truly resonate with clients. Educating front-line staff—training and coaching them to adopt skill sets that resonate with customers—pays big dividends.

Determine how your agency measures up

Reliability - if the level of service dependable? Are the clients' concerns addressed and questions answered in a reasonable timeframe?
Assurance - does the service build confidence?
Empathy - do the people giving the service communicate they care?
Responsiveness - are customers needs uncovered and addressed?
Tangibles - pay attention to the things your customers see and feel. Do staff and surroundings appear professional and inviting?

Take control of factors that can influence customer satisfaction
Multi-policy: Customers who have more than one policy with the same agency/company, such as auto and homeowners insurance, are more likely than clients with mono-line policies to be satisfied with their policy offerings. “Bundled clients” renew policies at an 11 percent higher rate than “single policy” clients.
Get it right the first time: Customers are more satisfied when they only have to contact their agent once to resolve an issue. Satisfaction declines significantly with each additional client-initiated contact.
Return calls: When call backs to clients are required, agents who call back as promised get consistent high satisfaction ratings.
Time is critical: Clients who file physical damage claims expect prompt service. Same-day response to the first notice of an accident, followed by a settlement within a week and repairs completed within two weeks, characterize best practice. Some data suggests satisfaction with claims handling drives 44 percent of the overall impression of the insurer.

Policy reviews
Clients who have their policy needs reviewed each year report satisfaction levels that are significantly higher than those who do not. Customer surveys reveal that nearly half of those surveyed report that they have not been offered an annual policy review by their agent. Unless a customer files a claim, offering the client a “risk review” is one of only a few opportunities an agent has to build trust with the customer. Otherwise, the sum of their interaction is limited to paying their bills and reviewing periodic policy changes.

Stay focused and enjoy the benefits
High levels of customer service mitigate price; good service helps shift the focus away from price. Our friends in retail learned long ago that the better the service, the higher the prices they can charge for their products. The bottom line is that happy customers directly equate with agency financial performance. Every customer lost has an impact on the bottom line

Tague Alliance is focused intently on R.P.G. - Retention, Profit, Growth! Growing is made much more difficult when your agency retention is lagging. For every client and policy that you keep, it is one less that has to be found, quoted, and sold.

Tague Alliance - We Have Been Saying The "Hard Market Is Coming"

Tague Alliance members need to be prepared for what a Hard Market brings: disruption to our books of business, more pressure on carrier appointments and production, a sharper focus on profitability and book quality, and policy rewrites. The Hard Market is disruptive and every few years the insurance cycle shifts. In our estimation, 2012 will be the transition year and possibly very disruptive.

The silver lining is that many more people will be shopping their insurance which creates more new businesses opportunities for our members. On the flip side, proactive client management is the name of the game to ensure you are retaining the majority of your client base.

Be prepared so your agency can take full advantage of the changing market place.

Below is a great article which provides some insight into the first nine months of 2011 and how the industry is doing.

Specialty Insurers Lead Way in 2011, but Industry Underwriting Results Down

By Phil Gusman, PropertyCasualty360.com

November 22, 2011

26

NU Online News Service, July 21, 1:41 p.m. EST

Specialty commercial insurers continue to lead the way for property and casualty insurers’ underwriting results for this year’s first nine months, but results overall are down sharply compared to same period in 2010, according to a Fitch Ratings analysis.

Fitch says underwriting results for a group of 47 publicly traded P&C insurers and reinsurers it follows have deteriorated so far this year, posting an aggregate combined ratio of 105.3 compared to 96 a year ago. Fitch adds that 32 of the 47 companies posted underwriting losses for the year’s first nine months compared to 15 companies in 2010.

“These lackluster underwriting results led to anemic profitability for most GAAP filers,” says Fitch. “Fitch’s universe reported an operating profit of $8.1 billion year to date, versus $24.2 billion for the same period in 2010.”

Fitch adds that the group reported a net profit of $9.7 billion during the year so far compared to a net gain of $26.4 billion last year.

Catastrophe losses are partly to blame, with losses for the group more than doubling to $28 billion for the first nine months this year compared to last year. Additionally, realized investment gains are lower, totaling $4.2 billion in the current year so far compared to $5.9 billion in the first nine months of 2010.

While all lines are feeling the effects of the weather and economy, specialty commercial insurers have seen the best results of commercial-lines sub-segments, which Fitch says is a trend that has continued over the past several years. “The group’s aggregate combined ratio rose by 5.9 points to 98.1, but was still the only segment in Fitch’s analysis to produce an underwriting profit,” Fitch says.

The segment benefitted from favorable loss-reserve development, which trimmed 5.9 points from the aggregate combined ratio, but that favorable development is down from the 6.4 points trimmed in the first nine months of 2010.

The benefit of reserve releases across the industry is down for 2011 so far compared to 2010. The overall impact has been 2.8 points trimmed from the industry’s aggregate combined ratio in 2011 compared to 3.5 points in the first nine months of 2010. Fitch says the vast majority of underwriters in its group continued to report favorable development, but the rating agency cites Hartford Financial Services Group and HCC Insurance Holdings as two notable exceptions that saw unfavorable reserve development.

For personal lines, the aggregate combined ratio jumped from 95.7 to 102.4 as the sector was hit by Hurricane Irene on the East Coast and heavy tornado activity and winter-storm losses earlier in the year.

Reinsurers saw their aggregate combined ratio climb to 117.3 from 93.1 a year ago due to first-half catastrophes such as earthquakes in New Zealand and Japan, Australian floods and U.S. storms. Reinsurers did report a third-quarter underwriting profit, Fitch says, as Hurricane Irene losses centered more toward primary writers.

Commercial diversified insurers’ combined ratio is 104.6 for the year so far, compared to 96.6 at this time last year. Fitch says only two insurers in its group for this sector—ACE Ltd. and Hartford—produced accident-year combined ratios under 100.

Pointing to trends over the year so far, Fitch says capital generation is at a standstill, loss reserve releases are moderating, catastrophe losses are compounding and there has been a sharp drop in return on capital. However, Fitch notes that signs of a pricing shift have materialized.

“Fitch Ratings believes that this price reaction is well overdue,” the rating agency says, “but it remains unclear if momentum will hold for further pricing improvement that is necessary to return the broader market to adequate return on capital levels.”

What's The Difference?! Vacant & Unoccupied Homes

First, there IS a difference. The difference between the two is a matter of time and intent. While unoccupancy is a temporary condition and an exception to a residence normally having occupants, vacancy generally represents abandonment of property. The point is that either condition may affect your coverage under a typical homeowner policy. It is quite important to understand the consequences of either condition in order to keep your coverage intact.

Peeking At A Homeowner Policy

Generally, a homeowner policy has a couple of areas that may be affected by a home's occupancy status: damage caused by freezing, or certain property and loss due to vandalism. Let's talk about them in detail.

A homeowner policy usually protects a home from any loss that is caused by a frozen:

plumbing system
heating system
air conditioning system or
appliance

Example 1: Fern Guddyson and her family leave their home in Minnesota in January. They'll spend the next 10 weeks in Miami because Fern is teaching a graduate course in Zen awareness at Palm Leaf University. During a bitter cold spell at their home at the end of March, the water line to their refrigerator (for its ice-maker) freezes and breaks. Later, when the line thaws, it overflows and, eventually, soaks all of the home's oak flooring and carpets. Fern makes a claim to her insurer when the family returns home. The insurance company rejects the claim when they find out the home was unoccupied for more than 30 days before the loss.

Unfortunately for the Guddysons, most homeowner policies will not cover freeze-related losses that occur during an extended period in which the home is either vacant OR unoccupied. But this loss of coverage can be avoided if the homeowner takes special steps. Precautions usually involve either draining any systems or appliances of water and shutting off the home's water supply, or keeping the home heated during the absence.

A homeowner policy typically offers protection to a home that is damaged by acts of vandals.

Example 2: Fern Guddyson and her family leave their home in Minnesota in January. Again, they'll be in Miami for the next 10 weeks while Fern gets her doctorate in surfing from Palm Leaf University. A week before the Guddysons return, a group of kids breaks most of their home’s windows. They then enter the home and use tools to smash doors, floors and walls. Fern makes a claim to her insurer when the family returns home from Miami. Their insurer estimates the damage and gives Fern a check to cover her loss.

Typically, vandalism losses are covered even during periods of extended unoccupancy. However, if the Guddysons had emptied their home of all furnishings and turned off the power for the time they were gone, the vandalism loss would not have been covered.

Why Are Such Exclusions Necessary?

Homeowner policies contain such exclusions in order to avoid special loss situations. A vacated home becomes an attractive nuisance, often attracting vandals. If a home is to be vacated, it may be necessary to purchase dwelling fire coverage to protect the home. In regards to loss caused by freezing, insurers want to encourage homeowners to do a little planning in order to reduce or eliminate the chance that a system or appliance causes a loss. If an insured refuses to act responsibly toward their property, they risk the chance of an uninsured loss.

If you're facing a situation in which your home will be unoccupied or vacant for an extended period, talk to the helpful people at Tague Alliance and make sure you do whatever is necessary to preserve your full insurance protection.

COPYRIGHT: Insurance Publishing Plus, Inc., 1996, 2000, 2007

Tague Insurance Holiday Hoodie & Toy Drive!

This holiday season, Tague Insurance is supporting North County Solutions for Change in Vista by collecting hoodies (hooded sweatshirts) and toys for children in our community!

North County Solutions for Change has a driving commitment to ensure that every child has a home. They help homeless families get back on their feet by providing support and permanent solutions to those that need help.

If you would like to support our Holiday cause this year, please bring a new, unwrapped hoodie sweatshirt (any size), or a new unwrapped toy for a child or teen to our office in Carlsbad (2801 Jefferson St). Your donation will help bring a smile to a child's face during this holiday season!

For more info on North County Solutions for Change, please visit their website at http://solutionsforchange.org/index.htm

Tague Alliance - Business Insurance

Business Insurance Costs

Besides worrying about the daily responsibility of running their business, commercial insureds may have other concerns such as rising insurance costs, reduced insurance availability, the impact on coverage due to experiencing recent losses, etc.

Businesses price their products to cover the costs of production as well as their sales and marketing expenses. Prices also reflect some post-sales costs such as repair or replacement under warranty. At one time many industries used a pricing strategy for their products that failed to reflect their true costs. They assumed that lower prices would promote increased sales and the higher sale volume would make up the cost difference. The strategy wasn’t successful. It hasn’t worked for the auto industry, the computer industry or the insurance industry.

The problems of the insurance industry became apparent within the turn of the century and were drastically exasperated by the events of September 11, 2001. That catastrophe substantially affected the insurance industry. Workers Compensation, a coverage that had never experienced a loss of that magnitude, was struck by a catastrophic loss. Property losses, business income losses, liability losses, life insurance claims, every category of insurance coverage affected by that man-made event.

The insurance industry’s beginning attempts to gradually correct their faulty pricing practices was replaced by the need for a sudden and violent change. For much of the current decade, insurance companies have had to handle many more claims being presented many years after their policies have expired. In the case of pollution, asbestos and employment practices, the industry is being asked to handle losses that policies weren’t designed to even cover.

Well, what can a business owner do to minimize their high insurance cost? Before considering sacrificing the amount of protection a business carries just to save money, consider alternatives. Some other solutions would be:
1. Review your coverage:
a. Take a close look at your insurance. Could you increase the deductibles to lower your premium?
b. Are you carrying physical damage coverage on commercial vehicles that aren’t worth it?
c. Are you insuring items you could replace out of pocket? Are there pieces of equipment that are insured when they could be replaced from operating funds without submitting a claim?
2. Review your exposures:
a. Could you reduce the premium by installing an alarm system or fire protection system? Would these premium savings offset the cost of the system?
b. Could you implement safety programs that would reduce the cost or make the insurance company more interested in providing coverage? For example: driver safety programs, back to work programs, safety training in proper use of equipment and job functions.
3. Identify your insurance goals:
a. Do you need an insurance company that can provide loss control services?
b. Do you need an insurance company that can provide claim-handling services for your Workers Compensation insurance?
c. Do you need an insurance company that will allow you to make payments by phone or on-line 24/7?
d. Do you need an insurance company that has a local agent/representative that can assist you in your insurance solutions?
Shopping and price are not the only issues in insurance. What you don’t know can cost you more in the long run than you could ever save in premiums. Discuss your situation with an insurance professional and make the choice that works for you.
COPYRIGHT: Insurance Publishing Plus, Inc. 2003, 2008

Tague Alliance - Inducted Into The Safeco Insurance H.K. Dent Society

Tague Alliance is excited and proud to have been inducted into the H.K. Dent Society. This is an elite group of independent insurance agencies who represent Safeco Insurance. Only 7% of Safeco's 12,000+ agents are part of the H.K. Dent Society.

Many thanks to all the members of Tague Alliance for their Safeco production over the years which has allowed us to qualify for this honor.

Tague Alliance - Carlsbad Condo Court Case Overview

The court case review below provided by Rough Notes is an interesting case where some more complex coverage triggers are discussed.


270_C276
EFFICIENT PROXIMATE CAUSE DOCTRINE DID NOT APPLY TO THIRD PARTY CASE

Insurance Company of the State of Pennsylvania (ISOP) insured the City of Carlsbad (City) under a general liability policy that covered bodily injury and property damage losses to third parties resulting from City's negligence. It defined property damage as "physical injury to or destruction of tangible property, including all resulting loss of use of that property." However, an exclusion provided that ISOP would not defend or pay for claims or suits brought against City for property damage arising out of land subsidence for any reason whatsoever. The definition of land subsidence included landslide.

As a result of City's negligent maintenance and repair of a fire hydrant and water line located within the La Costa de Marbella Condominium Complex (Marbella), an earthen slope above it became saturated with water and failed. The resulting landslide damaged or destroyed 15 units and part of the common area. The Marbella Homeowners Association sued City, seeking damages for property damage and emotional distress. ISOP defended under a reservation of rights. City settled the lawsuits for $12,670,000. ISOP indemnified City for the bodily injury claims but denied coverage for the property damage claims. City sued ISOP, alleging breach of contract and breach of the implied covenant of good faith and fair dealing.

Both parties filed motions for summary judgment. City asserted that it was entitled to indemnification under the "concurrent causation doctrine" because the exclusion did not explicitly negate coverage that resulted from more than one cause, that the exclusion was illegal, and that it did not apply to landslides caused by man-made forces. ISOP argued that the exclusion unambiguously applied to all property damage arising out of landslide, that the concurrent proximate cause doctrine did not apply because there were not two separate and independent acts of negligence to cause the damage, and that the exclusion applied even if the concurrent proximate cause doctrine applied.

The trial court heard the motions together, denied City's in its entirety, and granted ISOP's in its entirety. City appealed on essentially the same basis as its initial motion. It asserted that the trial court erred because the exclusion was ambiguous as to whether it covered landslides regardless of cause, that it did not apply to landslides caused by man-made forces, and that it was entitled to indemnification under the "efficient proximate cause" doctrine and related Insurance Code. The Court of Appeal determined that, based on the evidence, there was no need to interpret policy language and that the issue was a pure question of law.

Under the "efficient proximate cause doctrine," when a loss is caused by a combination of covered and specifically excluded perils, it is covered if the covered peril was the efficient proximate cause of the loss. On the other hand, the loss is not covered if the covered peril was only a remote cause of the loss, or the excluded peril was the efficient proximate, or predominant, cause. An insurance company is liable for a loss where a peril insured against was the proximate cause, although a peril not contemplated by the policy may have been the remote cause of the loss; but is not liable for a loss where the peril insured against was only a remote cause. However, this doctrine is limited to first party cases, where an insured seeks coverage for its own property interests. In third party cases like this one, where coverage is sought for liability to third parties, the concurrent proximate cause doctrine applies. As a result, the first party cases that applied the "efficient proximate cause doctrine" that City relied on were irrelevant to the appellate court's analysis. City did not assert coverage under the concurrent proximate cause doctrine that applies to third party cases. Even if it had, it would not have applied because it applied only where there were two negligent acts or omissions, one of which independent of the excluded cause rendered the insured liable for the resulting injuries. The Court of Appeal affirmed the trial court's judgment in all respects.

Court of Appeal, Fourth District, Division 1, California. City of Carlsbad, et al., Plaintiffs and Appellants, v. Insurance Company of the State of Pennsylvania, Defendant and Respondent. No. D053843. Nov 20, 2009. 180 Cal.App.4th 176. 102 Cal.Rptr.3d 535

Tague Alliance - Do Not Lie On Your Insurance Application

By Tony Veteto
Tague Alliance, a SIAA Master Agency

As an insurance agent one of the most challenging things to work through with the insured is the "truth". There are many prospects that come to us for a quote on auto insurance and when we question them about accidents and tickets they suddenly have selective memory. To be fair, many of us cannot remember exactly when we may have received a ticket or had an accident. However, most of us know that we have had some type of incident during a given time period. I recently came across an article from Rough Notes Magazine regarding a court case where coverage was denied due to misrepresentations by the insured.



Insured responsible for statements on application

On October 22, 1992, Jaber (first name not shown) met with William Kasirye, an independent insurance agent, about automobile insurance from Prudential. He stated that he was married, employed, had not been cited for or convicted of a traffic violation in the past 60 months, and had not been involved in any losses or insurance claims during the 36 months preceding his application. At that time, Jaber paid a premium of $129 and Kasirye issued a binder effective immediately.

Prudential then requested and received a report from the Ohio Bureau of Motor Vehicles which showed that Jaber had moving violations in 1989 and 1991, and had been involved in an accident on January 2, 1992.

On November 9, 1992, Jaber submitted a notice of loss in which he reported his car had been stolen two days before. On December 7, Prudential sent him a letter denying liability and declaring the policy void from inception. The company returned the premium that Jaber had paid.

In May 1995, Jaber filed suit for declaratory judgment and sought reimbursement for his car and compensatory and punitive damages. Prudential asserted that the policy was void from inception since his statements in the application were warranties and that the application was a part of the policy. Also the binder had been issued based on the application.

The trial court entered judgment in favor of Prudential, and Jaber appealed.

Jaber contended that, although he had signed the application, the agent had filled in the answers to the questions and, thus, he was not responsible for the falsity of those answers. Furthermore, he asserted that the policy did not warn that any misrepresentations in the application would void the policy.

The higher court pointed out that the policy contained the following statement: "By accepting this policy, you agree that the statements on your Application are true and correct. This policy is issued relying on the accuracy of these statements." The binder that had been issued also contained a similar statement.

The judgment entered in the trial court in favor of Prudential was affirmed.

Jaber, Appellant, v. Prudential Insurance Company of America--No. L-95-347--Court of Appeals of Ohio, Sixth District, Lucas County--August 16, 1996--681 North Eastern Reporter 2d 478. *

©COPYRIGHT: The Rough Notes Magazine, 1998



After reading the case above there should be no doubt in the mind of the agent or the insured that true and accurate information must be represented on the insurance application! The insurance company has grounds to deny a claim if an insured misrepresents the facts when applying for the insurance policy.

Tague Alliance - Stay Educated and Connected

The blog post below by Penny Hagerman is a great reminder that insurance agents need to get out of their office and start networking with other professionals. In addition, it is critically important that the agent become educated and knowledgeable on the coverage and products they are selling. Get out and make it happen. Tony

The Importance of Staying “Edumacated”

by Penny Hagerman

Last week, one of the agents on our network called to speak with me directly after reading this blog. He wanted to contribute his views on a previous post “in person,” rather than leaving a comment.

During that conversation, which ended up lasting nearly an hour (and I loved every minute of it!), we ended up talking about the challenges of being an agent, from persistency, to the cost of underwriting, to finding ways to stay in touch with clients.

But one thing this agent asked resonated especially loudly with me: Why aren’t agents getting out away from their desks, taking seminars and conferences, becoming experts on their products, and networking with other professionals?

And he’s right. There’s a definite perception in the industry that if you’re not sitting at your desk working leads, making calls and following up with clients, you’re not making money.

In fact, a recent article published online at American Agent & Broker indicates that “…agents aren’t particularly keen on lunches and conferences for new product information. Just 4 in 10 say they learn about new insurance products at lunches or speaker events, while less than that say they go to conferences to gain this knowledge.”

I’d like to pose another question I think has equal merit: How much more time could you save and money could you make if you started:

• learning everything there is to know about the products you’re selling (as well as new ones being introduced)
• networking with other agents to gain their perspectives, ideas and opinions (and possibly find some you’d consider partnering with)
• talking and role-playing with others to learn techniques for educating, selling and forming long-term relationships
• Staying up-to-date on the laws and regulations that govern insurance in your state
• Visiting with customers “in person” (as I did with this agent) to let them know you’re there if they need anything and are always willing to help (this can be accomplished in person, by email from a PDA or by phone while you’re on your way to another appointment or out grabbing lunch)

We all know the power of referrals. They cost you nothing and can result in some pretty substantial income. By staying educated, possibly trading business with other agents whose products compliment yours, and using your knowledge to educate clients and promote yourself and your agency, you’re likely to, in turn, increase your referral volume.

Staying educated can also help you gain confidence in yourself and what you do, enabling you to more effectively convey value to new leads and clients.

Do you sit at your desk day after day, working leads but neglecting opportunities to grow your business in other ways? If so, I’d like to encourage you to make a change today. You never know what you’re missing until you try.

P.S.—Please pardon the title. I couldn’t resist!

Tague Alliance - Is Your Mortgage Company Forcing You To Have More Insurance

There are legitimate times when a mortgage company requires the borrower to have more insurance coverage when a home is truly under insured. However, on more than a rare occasion the mortgage company will attempt to require the borrower to carry property insurance coverage in the amount of the home loan. If the home is insured to replacement cost the mortgage company is not legally able to require the borrower to insure the home for more coverage. This pertains to California.

The member agencies of Tague Alliance run into this situation too often. We have successfully helped our clients by providing the mortgage company a copy of the replacement cost estimate and a the civil code below. You may find this helpful in your agency when working on behalf of your clients.

CALIFORNIA CIVIL CODE - 2955.5

___________________________________________________________________________

THE CODE

a) No lender shall require a borrower, as a condition of receiving or maintaining a loan secured by real property, to provide hazard insurance coverage against risks to the improvements on that property in an amount exceeding the replacement value of the improvements on the property.

b) Any person harmed by a violation of this section shall be entitled to obtain injunctive relief and my recover damages and reasonable attorney’s fees and costs.

c) A violation of this section does not affect the validity of the loan, note secured by a deed of trust, mortgage, or deed of trust.

d) For purposes of this section:

1) “Hazard insurance coverage” means insurance against losses caused by perils which are commonly covered in policies described as a “Homeowner’s Policy,” “General Property Form,” “Guaranteed Replacement Cost Insurance,” “Special Building Form,” “Standard Fire,” “Standard Fire with Extended Coverage,” “Standard Fire with Special Form Endorsement,” or comparable insurance coverage to protect the real property against loss or damage from fire and other perils covered within the scope of a standard extended coverage endorsement.

2) “Improvements” means buildings or structures attached to the real property.

CODE INTERPRETATION AND SUMMARY

California Civil Code - 2955.5 - specifically addresses the issue regarding the limit of insurance a lender is able to require their borrower to purchase covering a loan that is secured by real property. The Code places the Maximum Limit of Insurance that a lender can require at the Full Replacement Cost of the real property and it’s improvements. It does not state that a property must be insured or a lender require the real property be insured at full replacement cost value of the real property and it’s improvements.

We hope this information is helpful to your agency and clients.

Thank you.

Tony Veteto

Tague Alliance

Tague Alliance - CDI Rate Filing Approvals

Tague Alliance likes to keep it's members updated on recent CDI rate change approvals as a way to help stay up to speed on coming changes that impact our marketplace.

How To Improve Your Auto Insurance Loss Ratio

How to Improve Auto Insurance Loss Ratio article by eHow.com

• Step 1:
  Check out the area where the individual lives. Although insurance companies know where the highest crime rates occur, these are often in chart form and as averages. You have the advantage because you know your town well. Don't market to these areas.
• Step 2:
  Use several different companies for quotes. If you find iffy behavior in your client, don't quote companies that offer a bonus for improved loss ratio. You can't refuse to sell insurance, but you don't have to use the same company for every client.
• Step 3:
  Watch the client's behavior on the cell phone. If it rings constantly while you're interviewing him and he responds, chances are he answers while he drives. This can cause accidents, so use an alternative company for his application.
• Step 4:
  Direct your marketing list to married men and families, because married men often have fewer accidents than single men the same age. Younger women statistically have fewer accidents and tickets than men the same age, so marketing to women is another option.
• Step 5:
  Recommend higher deductibles for your clients. Many accidents are fender-benders that don't meet high deductibles or are so close that clients prefer to pay for the damage themselves rather than incur a claim. By recommending a higher deductible, you lower the amount of premium you receive. But that doesn't matter because the potential payouts keep your loss ratio a lot lower.
• Step 6:
  Secure referrals from clients you know have excellent records. Most people enjoy the company of people similar to them. The maniac driver is seldom included in the carpool-driving list. Ask your clients for names of people they consider good drivers. Explain that the fewer accidents paid by the company, the lower the premium becomes in the future.
• Step 7:
  Include all the information you can when you're writing an application for clients, and select your marketing list carefully. Ask about any drivers who frequently use the car. A good driver might have a crazy boyfriend or girlfriend who often drives the car. Know your clients well. Include all the information about them on

Tort Reform Is DEAD Or A Crisis Is Looming

Tony Veteto

Tague Alliance

A SIAA Master Agency

Dr. Robert Hartwig of the Insurance Information Institute on Tort Reform: