In this recessionary climate, consumers are rethinking their expenses and risk as health, mortgage and personal assets insurance issues loom large. New findings suggest that consumers are paying more than they should for insurance coverage.

In his new co-authored research paper entitled, "Why Do People Buy Too Much Insurance?," NYU Stern Professor Zur Shapira, an expert in managerial risk taking and organizational decision-making, with co-author Professor Itzhak Venezia, finds that 19 to 25 percent of insurance customers overpay for insurance by purchasing policies with low or zero deductibles.

The study found:

• Consumers overestimate the benefits of full-coverage policies that cover every damage, even if it is very small or the chance of it occurring is highly improbable, which leads them to purchase unnecessary, expensive policies

• In most cases, consumers should purchase policies with deductibles, which would save them money while providing ample coverage

• Consumers are more prone than insurance professionals to underestimate policies with deductibles

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On May 21, 2008 President George W. Bush signed a law that prohibits discrimination against anyone whose genetic information shows a predisposition to illnesses such as cancer or heart disease.

The Genetic Information Nondiscrimination Act, passed by overwhelming majorities in the House of Representatives and the Senate, bans health insurers and employers from discriminating on the basis of genetic information.

"In other words, it protects our citizens from having genetic information misused, and this bill does so without undermining the basic premise of the insurance industry," Bush said.

The law bars health insurers from rejecting coverage or raising premiums for healthy people based on personal or familial genetic predisposition to develop a particular disease such as cancer, diabetes, heart ailments or others.

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Pay-as-you-drive (PAYD), auto insurance has been talked about for several years, adoption among property and casualty (P&C) insurers remains low. However, a Gartner Inc. survey shows that consumers are increasingly looking for ways to control and reduce their insurance costs, and they are becoming more interested in PAYD auto policies. Consumer interest far surpasses the policy options on the market.

A 2007 Gartner study conducted with 1,091 consumers - age 18 years or older in the - found that 43 percent of consumers strongly agreed with the statement: "I would be interested in pay-as-you-drive auto insurance."

So, what are your thoughts?

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Nationwide Insurance recently released its second annual DWD (Driving While Distracted) study, which found that, while 98 percent of Americans claim to be safe drivers, a vast majority also admit to DWD. More than four out of five cell-phone owners are guilty of talking on their phones while driving, and nearly three-quarters (72 percent) of all drivers admit to partaking in some form of distracting behavior while driving, from cell phone use to eating. Further, almost 80 percent have been in a vehicle with distracted drivers and more than 40 percent have been hit or almost hit by another driver who was talking on a cell phone while driving.

The survey found that the prevalence of DWD can be attributed to technology and our societal mindset to be available at all times.

Too Much Technology

• Nearly half (48 percent) considered cell phones and other technology use to be the most dangerous distraction.

• Availability of technology was cited by 35 percent as the reason DWD is so common today. Use of technology extends beyond speaking on the phone to text messages and e-mail.

• Nearly 40 percent of teens and Gen Yers who own cell phones admit to texting while driving, which requires additional visual, cognitive and manual attention.

Too Much Pressure

• Almost two-thirds of drivers who own cell phones said their colleagues, friends and family expect them to be available by cell or other electronic communication devices at all times.

• Our current societal mindset and busy, on-the-go lifestyles were cited by 35 percent as the reason why people drive distracted. Specifically, multitasking was cited by 22 percent and having too much to do and too little time was cited by 30 percent.

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A wave of deadly hailstorms and tornadoes whipped through Northern Colorado last week leaving behind a legacy of destruction that makes it the fourth most expensive storm in state history. Insurance companies won't be happy about the flood of claims expected in its wake: an estimated total of $147 million.

About 80 homes were completely destroyed by the storm and almost 800 others suffered damages. At least one man lost his life at a campground outside of Greeley, Colorado.

According to the Rocky Mountain Insurance Institute about 8000 property claims and 12000 car insurance claims are expected, everything from broken windows and roof damage on the homes to dents in cars from the hail.

Damage caused by tornadoes, wind and hail is covered by homeowners insurance and the damage to the vehicles will only be covered if the owner has comprehensive auto insurance coverage.

This is hardly uncommon in Colorado, unfortunately. Residents in the northern part of the state especially definitely put their insurance dollars to work. Professionals in the insurance industry call this the most expensive storm ever to occur outside of Denver. If you're a Colorado resident or live in an area similarly plagued by raging storms, keeping up with your insurance payments and investing in a little extra coverage should definitely be a priority.

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If you're looking for a reason as to why insurance rates are so high, here's one: fraud. According to the Coalition Against Insurance Fraud, about $80 billion in phony claims are made every year in the United States and in order to cover the cost, insurance companies must increase the price of premiums and insurance policies.

After two years of investigation, there has finally been an arrest in a Philadelphia, Pennsylvania, case that has been quite costly to the insurance industry. According to Michael Matza at Pennsylvania's Inquirer, "District Attorney Lynne Abraham announced the arrest of Wallace "Pops" Morris, 42, whom she described as "the mastermind" in an alleged conspiracy to defraud 10 insurance companies of more than $1 million in phony claims stemming from staged automobile accidents."

There are more than 187 fraudulent claims attributed to Morris. He is currently waiting to be arraigned on over 400 counts of fraud, theft by deception, perjury and filing false reports, all of which are associated with the 187 fake claims. Morris is looking at felony charges that carry the penalty of up to 20 years of incarceration for each count.

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Defaults on privately insured mortgages rose 37.2 percent in March, as a growing number of homeowners failed to keep up with loan payments. The Mortgage Insurance Cos of America said on that 58,131 insured borrowers were at least 60 days late on payments in March. That is up from 42,362 a year earlier, but down 4.6 percent from February's 60,911.

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According to the National Association of Insurance Commissioners (NAIC), 48% of consumers are insufficiently prepared -- in terms of their insurance coverage -- to deal with potential losses due to disasters.

The NAIC survey also found that the majority of consumers do not have the coverage necessary to protect themselves from specific types of losses that are not reimbursed under standard policies:

• 69 percent do not have earthquake insurance.
• 65 percent do not have flood insurance.

• 56 percent do not have insurance for a water line break.

• 55 percent do not have insurance for a sewer line break.

The bottomline: check your home owners policy and get the coverage you need...in the event that something should happen, you'll be glad you did.

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Newsday's Tom Incantalupo reported recently that an insurance research group is saying the two new safety systems available in luxury cars soon have the potential to save lives. These safety measures are the new lane departure warnings and collision avoidance systems.

According to the Insurance Institute for Highway Safety, the two systems in question might have prevented or significantly reduced the impact of more than 2.75 million crashes in the United States every year. Of these, more than 17,500 resulted in fatalities.

How It Works

Collision avoidance is a feature already available in a number of models already on the street. They work by using radar to detect when the car is coming too close to another object. When detected, the driver is warned with tightened seatbelts and flashing lights or alarms.

The lane departure warning is also available in certain models. These work by visually or audibly alerting the driver is the vehicle veers out of its lane. Some use a video camera while others vibrate the steering wheel and one applies the brake to one wheel to help coax the vehicle back into its lane.

Other Safety Systems Available

Certain other safety systems are common in cars these days and go a long way toward providing safety on the roads. According to Newsday, these include "the "brake assist" systems that detect and augment panic braking; "adoptive" headlamps whose beams turn slightly with the steering wheel; and "blind spot detection," which warns drivers of vehicles in adjacent lanes that are not in the driver's field of vision or visible through outside rearview mirrors."

Better safety systems ultimately mean lower rates on car insurance as well as the benefits of a safer ride. And that's good news, too!

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I saw this article in Kiplinger's Personal Finance and thought it was very well written; therefore I wanted to share it with you. As the reporter, Erin Burt, says, financial planning doesn't have to be complicated. She provides an easy-to-follow strategy will help you meet your needs today and tomorrow.

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According to MetLife's Sixth Annual Employee Benefits Trends Study more than half of working Americans (52%) are now obtaining the majority of their financial and retirement products through the workplace – up from 46% a year ago. Growing financial concerns among employees are creating a greater interest in advice and guidance at the workplace – 44% of employees would like access to general financial planning advice at work, up from 30% last year. Nearly half (49%) of all employees also want their employers to provide retirement advice.

Also among the study's key findings:

Benefits, Loyalty, & Retention – Employers underestimate how important benefits are to employee loyalty; benefits are increasingly important factors in employees' decisions to remain with their employer.

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Insurers' use of credit scoring to price insurance policies makes pricing more accurate and results in many consumers paying less for their automobile and homeowners' insurance policies, as numerous studies over the past decade have confirmed time and again. A study released by the Federal Trade Commission (FTC) in July reaffirmed the strong connection between credit information and loss risks and the soundness of using credit scoring to determine rates.

"Credit scoring is a highly accurate underwriting and rating tool," said David A. Sampson, PCI's president and CEO. "Using this information allows for more accurate pricing and saves many consumers money on their automobile and homeowners' insurance policies. Consumers expect to pay a fair price for their insurance that matches their individual risk. Insurers simply want to use the most accurate, statistically valid tools available to achieve that goal. Credit information has proven to be one of the most accurate methods of predicting losses."

The FTC report's findings are consistent with earlier studies. Its major conclusions are as follows:

• Insurance scores are effective predictors of risk under automobile policies. They are predictive of the number of claims consumers file and the total cost of those claims. The use of scores is, therefore, likely to make the price of insurance better match the risk of loss posed by the consumer. Thus, on average, higher-risk consumers will pay higher premiums and lower-risk consumers will pay lower premiums.
• Use of credit-based insurance scores may result in benefits for consumers. For example, scores permit insurance companies to evaluate risk with greater accuracy, which may make them more willing to offer insurance to higher-risk consumers for whom they would otherwise not be able to determine an appropriate premium. Since scores also may make the process of granting and pricing insurance quicker and cheaper, cost savings may be passed on to consumers in the form of lower premiums.
• Credit-based insurance scores appear to have little effect as a "proxy" for membership in racial and ethnic groups in decisions related to insurance. The relationship between scores and claims risk remains strong when controls for race, ethnicity, and neighborhood income are included in statistical models of risk.

What do you think?

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Floods threaten homes from coast to coast - and they can happen anytime, anywhere and without warning. The damage from a flood is not covered under a standard homeowners policy. Before snowmelt and spring rains bring the potential for flooding, the NAIC suggests all homeowners and renters review their flood insurance needs.

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