HIGGINBOTHAM READY FOR BLAST-OFF
The merger between Fort Worth insurance agency Higginbotham & Assoc. and InsureZone has been finalized. The combination, announced last March, allows InsureZone to provide businesses such as banks, insurance carriers and B2B/B2C web portals a turnkey solution for selling insurance online to their customers throughout the United States, with end-to-end, integrated processing of online insurance transactions.
NAME YOUR PRICE
Internet retailer Priceline.com and insurer W.R. Berkley Corp. plan to offer car insurance online through a new joint venture called Priceline.com Auto Insurance Agency Inc. The new venture will pay Priceline.com an annual licensing fee based on revenues generated, the companies said. W.R. Berkley is to oversee underwriting and recruit other car insurers to participate in the service.
"Soon, customers will be able to name their own price for one of the most competitively shopped insurance categories in America—auto insurance,'' said Ben Ness, senior vice president of financial services for Priceline.com, which allows customers to bid online for air tickets, car rentals and other services, under the slogan "Name your own price.''
THE SLEEZE FACTOR
Results of a recent Zogby America poll demonstrated an almost even division in opinion regarding the trustworthiness of insurance salespeople. The telephone survey polled 1,035 adults nationwide, asking them to, "Rate each of the following professions on how much you trust them to do an adequate job and treat you fairly: insurance salesperson."
Thirty-two percent said they did not trust insurance salespeople to do an adequate job and to treat them fairly. However, 28 percent expressed the opinion that insurance salespeople could be trusted. The remaining 38 percent were neutral. Results showed that younger people put more trust in insurance salespeople. While 32.2 percent, of older respondents said they did not believe insurance salespeople would treat them fairly and honestly, 39 percent of responding 18-24 year olds expressed trust in insurance salespeople.
There was also a difference between the responses of men and women, with 38 percent of men expressing distrust of insurance salespeople. Only 26.5 percent of women expressed the same opinion.
STATE FARM BRANCHES OUT
State Farm Insurance Cos., the nation's largest home and personal auto insurer, has agreed to sell Fortis individual health insurance through its more than 16,000 captive agents. State Farm agents serve close to 67 million customers across the United States. State Farm will offer Fortis' individual medical insurance policies.
MORE RELIANCE SELL-OFF
Travelers Insurance has reached an agreement in principle with Reliance Group Holdings to purchase the renewal rights to a portion of Reliance Insurance Group's commercial lines middle-market book of business. Beginning next month, subject to execution of the definitive agreement and customary individual underwriting reviews, Travelers plans to offer renewal policies for many of Reliance's middle-market accounts at terms and conditions similar to those in place.
The sale marks the third unit to be sold by Reliance over the last several weeks. The piecemeal sales led to the recent decision by Leucadia National Corp. not to purchase the struggling insurer. In Pennsylvania, where Reliance is domiciled, the Department of Insurance reports ongoing discussions with Reliance.
Spokesperson Angela Yarbrough said that while the department is meeting with the company "and other regulators on a consistent basis" she did not want to suggest that the liquidation process has begun, or that it ever would. In April, Reliance units were purchased by The Hartford and Kemper insurance companies. Speculation has been made by analysts that the next unit to go could be Reliance's international business.
GULF PICKS UP FRONTIER BUSINESS
Gulf Insurance Group and Frontier Insurance Group have reached an agreement in principle whereby Gulf Insurance Company and its subsidiaries will acquire the renewal rights to Frontier's environmental, excess and surplus lines casualty businesses and certain classes of surety. The agreement includes the transfer of certain key staff from Frontier to Gulf.
$4 MILLION ARM
The San Diego Padres filed a lawsuit in U.S. District Court against Lloyd's of London for the insurance consortium's alleged refusal to pay on a policy the ball club took out on the contract of pitcher Randy Myers. According to Harvey R. Levine, the attorney representing the Padres, Lloyd's had agreed to pay $4 million each for the 1999 and 2000 seasons in the event that Myers incurred an injury and was unable to pitch. Due to an injured shoulder, Myers did not pitch in 1999. He is currently on the disabled list and may not pitch for the rest of the 2000 season. The Padres are seeking $4 million for the 1999 season as well as unspecified punitive damages and legal fees. Lloyd's has 20 days to file a response to the suit.
AVIATION BOOK CHANGES HANDS
CNA has entered into an agreement to sell Associated Aviation Underwriters Inc. (AAU) to the British Aviation Insurance Group (BAIG). AAU is jointly owned by CNA and The Chubb Corp. The agreement will take effect in September, subject to regulatory approval. BAIG is an international player in the aviation and aerospace insurance industry. The acquisition of AAU, by providing access to the important U.S. market, will round out the company's global capabilities. BAIG operates a pool in which CNA will participate, thus providing a continuous market for CNA's aviation and aerospace customers.
DRESDNER, COMMERZBANK—NO DEAL
Six weeks of merger talks between Dresdner Bank and Commerzbank have reportedly collapsed, ending efforts to create what would have been Germany's No. 2 bank. The banks could not agree on synergies that would be achieved through the merger, according to two separate statements. According to an Associated Press report, The Handelsblatt business newspaper said that the chief executives of both banks met with the head of Allianz Insurance Company, which holds 22 percent of Dresdner's shares. It said Dresdner and Allianz made clear to Commerzbank that the larger Dresdner would need to have a 60 percent controlling interest in the merged entity. It was then that the talks collapsed, creating the second embarrassing merger failure for Dresdner this year.
Questions & Answers
Q: We have a business client whose home is located on 10 acres of land with a barn. On this land the insured, who is not a farmer, keeps a small tractor/mower and several horses, along with saddles and tack for personal use by the family. We have had two underwriters tell us that the special limit of liability of $2,500 on business property applies to the saddles, tack and mower and that the barn is not covered even for 10 percent under the dwelling extension.
A: No. Your underwriters need to catch up by about five years. Prior to October 1, 1995, the homeowners policy referenced farm and ranch property and commercial, manufacturing or farming purposes in the policy language, which caused a lot of confusion. Effective October 1, 1995 the homeowners policy changed due to a request by the Independent Insurance Agents of Texas.
The other structures coverage now states, "We do not cover other structures: used for business purposes; or wholly rented to any person, unless used solely as a private garage." Regarding the limit of $2,500 on Business Personal Property, the limitation applies to "business" property. The term "business" is defined to include trade, profession or occupation. With this change in the policy language, coverage for your insured's personal property (saddles, tack and mower) without the $2,500 limitation, as well as coverage on the barn under the dwelling extension, would be included
Q: One of our insured's called asking about a possible law on diminished value. He is asking if a dealership can diminish the value of his vehicle when he trades it in, even though the dealership is the one that is repairing damage due to an accident. Can you provide us with further information?
A: It sounds like you have two different issues at work here.
Your insured has had an accident and the damages are being repaired at a dealership and/or the dealership has made an estimate of the repairs, and is also offering to take the car as trade for another. Essentially, they are offering to buy the car wholesale.
Your insured is probably just now learning that the car won't be worth as much as it was before the accident, even after the repairs are done, because the prospective buyer (in this case, the dealer) knows it's been in an accident.
The repair cost is all that the insurance company is responsible for. It is not responsible for this so-called "diminished value." The Commissioner of Insurance recently put out a bulletin clarifying this fact.
Regina Anderson is director of technical services for the Independent Insurance Agents of Texas.
