Can You Hear That? The Fat Lady is Singing

Well its over, I have completed my exam in eCommerce through Boston University and I am on the plane heading home. What follows are several random thoughts on the entire educational experience.

I am happy that I took the time and went to the expense to travel to Boston University. Even though it was only for a few days, I can say I attended BU. I am looking forward to returning to Boston in May with my wife Carla for graduation.

I plan to offer BU some ideas on how to improve their online educational experience. For example; they should sponsor visits to campus like what I just did. They could arrange accommodations; meal cards; visits to local attractions, and they could charge a fee to even make it profitable. BU needs to adjust their online course schedule slightly to take a few major holidays into account. Most notably would be Easter and Thanksgiving. Both of those holidays usually fall during a course and no allowance is made for family time.

I also plan on putting to use some of the management skills I have learned. I want to further develop our agencies website, possibly offering customers the chance to register as members. Members would be offered additional benefits such as a newsletter; access to coverage explanations, etc. I want to improve our customer service model and our marketing techniques. Its not that I want to be the biggest agency I town, I just want to be the best. When someone has an insurance need they come to me because we provide over-the-top service. I’ll keep you posted as to the progress we make.

Today is Test Day

Well today is test day. I have been studying eCommerce exclusively for the last 3 days. The exam is online and needs to be completed by 11:59PM December 17th. Our group project; an eCommerce website to sell college textbooks has been launched. If interested you can view our site as well as other student's sites for this class by going to: www.ecommerceclass.org In the drop down select: Brian's Class Click Go Section I; Team 3 is our site: University Bookseller.com

Feel free to browse the other Sections (classes) and Teams sites. Several sites are quite good. Not bad for 3 weeks of the class devoted to web development. I know of 1 error in our site, can you find it? Where there more errors? If so, let me know.

As you know, I have been studying at Boston University. It has been interesting. I guess I have been lucky to avoid real winter weather, but knowing my interest in severe weather, I could have enjoyed a real Nor'easter.

Most of the students (kids) have ignored me, but a few have viewed me with curiosity. They have asked if I am faculty, someone doing research, or someone taking college classes late in life. They seem surprised and encouraging when I explain what I am doing (working on a masters degree). The funniest moment came when a cashier at the cafeteria did not believe me when I said I was a student; she gave me the faculty discount. Needless to say I went through her line as often as possible.

It has been fun experience and I need to thank my wife Carla for her support throughout this program and her encouraging me to actually take my last exam at Boston University.

Blog On Vacation? Not Quite

To all of my loyal readers, I will be posting to this blog rather sporadically for the next week to 10 days. You see, I am in my final week of my final class in a Masters program through Boston University. The degree (if I get through this last week) will be a Masters of Science in Insurance Management.

Currently I am in an eCommerce course building a website as a team project. What better example of the power of the internet than this online Masters program. It is interesting to have classmates and team members from all around the world. Although most students are from the U.S. currently I have a classmate from France and I have had a class facilitator (instructor) from Argentina. My current team members working on the website project are from Kentucky, Michigan, 2 from Pennsylvania, and I am in Illinois.

I will try to keep you updated on my team project, and my studying progress. Although it is not required, I am going to the Boston University campus for the last 4 days of this course to study and experience BU. If I have a degree from Boston University, I want to be able to say I have been there, done that.

Wish me luck!

Commercial Insurance Rates Continue to Fall

The commercial insurance market continues to enjoy an outstanding year of profits. The lack of hurricanes this season and increased rates for catastrophe prone areas and has sent profits soaring. With soaring profits insurance companies are lowering rates to retain clients and attrack new clients. According to one market study, insurance rates have fallen for the last 5 quarters and the average rate decrease for October 2006 was 9%.

Every client is different, but in general, if you have had few to no claims for the past year or two, and you have made money for your insurance carrier, you should be seeing a lower premium for your business insurance. If not, talk to your agent, or better yet, talk to me.

For you personal lines clients, pricing on auto and home insurance does not flucuate like it does on business insurance. I will make a note to discuss this again in the future.

Blogging: The Insurance Way

It is hard to believe the explosion that has occurred in blogging. I am relatively new to blogging too, but when Pekin Insurance Company, a regional carrier operating in about 5 midwestern states holds seminars about the importance of blogging and insurance agents develping a blog site, blogging is getting out of hand.

As I have stated in an earlier post, blogging about insurance may not be the most exciting topic, but insurance issues are important to the financial well being and peace of mind for families and businesses alike. It will be interesting to see what Pekin Insurance offers as suggestions to their agents. I will be watching, and maybe using any new ideas they offer.

'Tis The Season For ... Annuities!

Guest Author: Bill Folkerts, CPCU, CIC
Auto-Owners Insurance Company

With a name like Auto-Owners Insurance, it may seem odd to understand that this Fortune 500 company writes a significant amount of life insurance products, including annuities. Auto-Owners Insurance has been the corporate name since it's origin in 1916 (that's right, we are celebrating our 90th anniversary!) when we began writing solely Auto Insurance coverage to individuals and families. This financially sound carrier has developed into a solid P&C (Property and Casualty) insurance company that writes personal lines and commercial lines accounts. On the Life side of the house, our motto is Safe. Sound. Secure. Our belief is based upon fixed rather than variable investment options which provides greater stability and less risk in an ever-changing marketplace.

One of the greatest wonders of the world is compound interest. Save early - Save often. Using an Auto-Owners annuity and guaranteeing lifetime income provides flexibility and income tax advantages. What a tremendous benefit! Annuitization can guarantee an income that cannot be outlived. And, because of the exclusion ratio, which is a combination of interest and principle, annuitization also helps spread tax on interest over time.

Be careful when comparing Certificates of Deposit to an Annuity. That's like comparing an apple to an orange. Which fruit tastes better to you? Let's find out. CDs typically use APY (Annual Percentage Yield). Auto-Owners uses APR (Annual Percentage Rate). APY, on the surface, seems to offer the better interest rates. But let's take a closer look. If you studied each illustration side by side, you would recognize that the difference is compound interest. Our analysis unveiled that a 3.8% APR equals a 4.1% APY over a five year time period. Over a ten year time period, we calculate a 3.8% APR equals a 4.52% APY. So, it's important to understand the difference between interest rate (APR) and interest yield (APY).

* Tax Planning: Auto-Owners offers tax deferral of interest earnings with their annuities. CDs come with a 1099 ... interest is taxable as ordinary income each year.

* Liquidity: Annuities offer partial withdrawals permissible without penalty. CDs have significant penalty for early withdrawal.

* Guaranteed lifetime income: flexible settlement options are available with annuities which a CD does not offer.

* Estate Planning: Annuities are not subject to probate. CDs are subject to probate.

Is your retirement nest egg Safe. Sound. Secure.?
Safe: Is your current retirement plan free of administrative fees, loads, and management fees?
Sound Tax Planning: Are your accounts taking advantage of possible tax deductible contributions? Secure Retirement Planning: Are your retirement funds with a company rated among the top 2 to 3% of all insurers by the leading independent rating organization?

You, too, can accumulate wealth and enjoy financial security while taking advantage of substantial multi-policy discounts by insuring your Auto and Home with Auto-Owners Insurance. Did you know that we offer a 5% discount on your personal lines account for policyholders who also have a deferred annuity at a minimum balance of $2,000 or more? Our current interest rate starts at 4% and is guaranteed at a 3% rate. For example, let's say you pay $2,400 per year for your auto and home insurance. A 5% discount would save you $120 per year on your personal lines premium. At our current interest rate of 4%, your first year return on your investment would be $80. In total, that is a $200 return ($80 plus $120 P&C savings). Where else can you receive a Safe. Sound. Secure. return on your money for 10%, as illustrated in this example?

Auto-Owners has earned the reputation as The "No Problem" People because we deliver on the promises we make. We will not gamble with your financial well being. Dedicated to the Independent Agency System, Auto-Owners products are brought to you through caring, knowledgeable professionals, who live and work right in your community ... solid individuals like Jeff Luken, CPCU. Please contact Jeff or one of his qualified staff today should you be interested in learning more about Auto-Owners and Annuities!

Safeco Ins: Give Credit When Credit is Due

I had originally plan on this post slamming Safeco Insurance for their mishandling of a policy in my office. Safeco, like most insurance companies want their agents to quote and issue policies online. Online quote and issuance of policies is quicker, cheaper, and requires less underwriting review. If the client fits through all of the online underwriting guidelines, then the policy is quoted and issued. As insurance agencies have become more technologically savvy, agents have generally embraced this concept. It allows us to serve the client faster, therefore better.

Recently we quoted and issued a policy through Safeco. A couple of weeks later our regional office in Indianapolis notified us that the policy in question would be cancelled in 60 days. When we question the reason for cancellation, we were told that there was a programming error and this policy should have never been approved or allowed to issue, therefore Safeco was canceling. We asked another underwriter for help and received the same answer.

My next call was to Mr. Mike Hughes, the Executive Vice President for Insurance Operations. Although after several calls I never did get to speak directly to Mr. Hughes, my message was heard. The underwriting department has agreed that if we (agents) are to use their quote and issue systems, then Safeco must stand behind the information we are given. If the system produces a quote and issues the policy, then Safeco must honor it.

Today I was notified by the regional office in Indianapolis that Safeco will reinstate this policy. Congratulations to Safeco for doing the right thing.

Real Trees; The Tradition Continues...

Before I get back to insurance issues (starting Nov. 28th) the main topic of this blog, I thought I would share a photo of at least part of the family, my wife, daughter and our two dogs, during our annual Christmas tree cutting. For 25 of the last 26 years we have cut our tree at the same Christmas tree farm about 10 miles from our home. And since this is a "family" event, we must always include the dogs in our outing. My son is taking the picture and I am cutting the tree (a view you probably would not want to see). The only year we did not cut our own tree was in 2003, this first year both kids were gone to school. My wife purchased a fake tree, over my protest, and when the kids came home, they revolted, so we are back to real trees.

For any of the environmentally inclined, this is at a Christmas tree farm. Trees are planted on a farm around grain fields, with the purpose of creating a wind block and generating additional income for the farmer.

Guest Author Coming

On December 1, 2006 I have arranaged for Bill Folkerts, a representative of the Auto-Owners Insurance Company, to be a guest author on this blog. The topic and content will be his to choose. Check back to see what Bill has to say.

What am I Thankful For?

I have been so blessed in life, family and health! More blessed than I deserve.

Just thought I show you what I am most thankful for; my two kids JB & Lucy!

Have a Happy Thanksgiving!

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Auto Safety Ratings

While I am on the topic of teenage driving safety, let’s consider the types of autos we let our kids drive. If we are concerned about safety, why would we let our kids drive a Chevy Camaro Z24 or a Ford Mustang 5.0? If you put young drivers into a high performance car they will drive it like a sports car. It is what you would expect; you and I would drive it the same way.

As parents we can use common sense and put our kids into cars that have high safety ratings. How do you know what a car’s safety ratings are? Go to The Insurance Institute for Highway Safety website at http://www.iihs.org/; click the link for Vehicle Ratings; and select the vehicle you what to check out. For example, I compared a Dodge Neon, a car that is popular with young drivers with a Honda Civic. For model years 2000 – 2005 the Neon gets a “Marginal” rating; for years prior to 2000 the Neon receives a “Poor” rating. A Honda Civic gets an “Acceptable” rating for 1996 – 2000 models and a “Good” rating for 2001 and newer models. Which car makes the most sense, safety wise?

Take a moment, look at the safety rating of your own auto… you might be surprised.

Teenage Drivers: A Parents Nightmare

A drivers license is one of the first signs that your son or daugther is moving from childhood towards adulthood (Photo Copyright of Mike Rizzo, 2006) and the responsibilities that go with it. Turning your 16 year old loose with a car on Friday night is one of the scariest things a parent can do. Auto accidents can alter or at worst, end someone’s life. As a parent you want to protect your child the best you can, but you know that driving is a right of passage towards adulthood. So what can you do to help keep your young driver from being involved in an accident?

First, talk to your teenager; explain the risk and responsibilities of driving. They will be in control of a machine that could hurt, maim, of kill themselves or someone else. They need to understand this. Show your teenager photos of car crashes or better yet, take your teenager to the local junk yard or body shop so they can see a wrecked car up close. Seeing a wrecked car in person makes an impact. Ask your insurance agent for additional safe driving tips. Some insurance companies have developed safe driving videos for teen drivers to watch. You can also check with your local library.

Even though many states have special driving laws for teenagers, set your own “family” rules for teen drivers. Rules such as:

· No late night driving for the first 6 month after being licensed (length to be determined)
· No cell phone use while driving
· No more than one other passenger in the car at any one time
· Know who the passenger will be
· Radio volume must be set at a normal level
· No eating while driving
· A moving traffic violation results in the loss of driving privileges; a minimum of 90 days
· A predetermined time to return home… yes a curfew

For more information see: http://www.safeco.com/safeco/for_you_or_your_family/consumer_Tips/teen.asp

You may have other family rules, but don't hesitate, talk to your teenage driver before it is too late.

Insurance Blogs that Bug Me

How many insurance blogs have you looked at? Not too many I bet. For insurance to be such a large part of a family's or businesses financial security and budgets, there are surprisingly few good insurance blogs. Too many insurance blogs seemed focused on trying to quote your insurance rather than foster dialog about insurance issues. A few blogs I have found that did not bombard me with links to quote my insurance seemed a little to technical for the average person.

Granted insurance may not be as exciting as blogging about the Ohio State - Michigan game or maybe the Alabama-Auburn game depending where you are, but there should be enough interest in what coverages you (or a business) may need, tips on buying quality insurance at a fair price, and even on how to read and understand the insurance contract. All issues that we will get into as this blog matures.

GEICO: Insurance Is Not A Commodity

Wikipedia defines commodity as "a term with distinct meanings in business and in Marxian political economy. For the former, it is a largely homogeneous product, whereas for the latter, it refers generically to wares offered for exchange." A homogeneous product, according to The Random House Dictionary means "composed of parts all of the same kind."

GEICO wants the insurance buying public to believe that all insurance is the same. That what you receive from one company is the same as another. However, each insurance company offers its own unique options, pricing, and coverages for the customer to choose from. Insurance is not the same from every company.

GEICO and similar companies do not value the advice and counsel of an insurance agent. They assume that all situation faced by their policyholders can be handled online or by phone. Face to face relationships are not important. GEICO's advertising states you can save money by going direct, implying that bypassing the agent saves money. Have you ever wondered if the savings for bypassing an agent are being spent on advertising? Does any insurance company advertise as much as GEICO? Did you ever consider how much it must have cost to train a Gecko to talk or drive a car?

I believe that a local agent adds value to the insurance contract; he is a licensed insurance professional. He meets the customer; he gets to know the customer and the customer's needs. The agent is a trusted advisor who helps identify other areas that may need additional forms of insurance. The agent is a member of the local community and if the customer has a problem, the insured can meet with the agent face to face.

Notice in this post I have not distinguished between "types" of agents; independent agents, direct writers, captive agents. Regardless of the form, they all add value.

Don't be short changed; get your moneys worth and work with a local insurance agent for your insurance needs.