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Using Insurance

2011-07-22T07:39:00.001-07:00

Using Insurance

Your premiums will increase if you make more claims, so try to be careful to prevent losses.

For example, get deadbolt locks on your outside doors at home so that thieves can’t get in easily.

Turn off your car’s engine and lock your car doors, even if you are just going into a store for a minute.

If a claim isn’t much more than your deductible, don’t claim it.

Your premiums may go up or you may have problems renewing your insurance.

Check every year to see if your insurance needs have changed. You may need more insurance or less insurance.

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Problems with Insurance

2011-07-22T07:37:00.002-07:00

Problems with Insurance

You must always try to fix the problem first by talking to the insurance company yourself.

If you can’t fix the problem yourself, you can get help from the OmbudService.

You can’t go to court about the problem while you are using the OmbudService.

You can’t use the Ombudservice if you have already been to court about this problem.

If you have a problem with home, auto, or business insurance, you can call the General Insurance OmbudService at 1-877-225-0446.

If you have a problem with life or health insurance, you can call the Canadian Life and Health Insurance OmbudService at 1-888-295-8112.

If the OmbudService can’t fix your problem, you may want to go to court.

Find a lawyer who specializes in insurance problems.

Ask about the lawyer’s fees.

If your case is for personal injuries, the lawyer usually gets paid from the settlement (court decision on how much you get paid), not in fees.

If your insurer goes out of business, you are covered for unpaid claims up to a limit.

For property insurance, the limit is $250,000.

You can also get back part of your money for premiums you already paid for that year (up to $700).

You may get all of your claim money back after the insurer’s bankruptcy is settled.

You need to get insurance from a new company right away.

For life and health insurance, your insurance will be transferred to another company and you will keep at least 85% of the benefits you had.

If you had deposits with the insurer, you will get up to $100,000 of your money back.

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Car Insurance

2011-07-22T07:37:00.001-07:00

Car Insurance

Some provinces (British Columbia, Saskatchewan, Manitoba, and Quebec), have government-run car insurance companies or plans.

Private insurance companies also sell car insurance in all the provinces and territories.

You must have liability insurance to cover losses you may cause to other people from an accident.

You must also have insurance to cover you if you are injured.

If you want, you can buy collision insurance to pay for damage to your car or comprehensive insurance to cover theft, vandalism, and other perils.

Questions to ask:

· What kind of insurance does the law require me to have?

· What other coverage can I buy? What will it cover?

· Will I get a rental car if my car is being repaired?

· Does this insurance cover me when I am driving a rental car?

If you are in a collision:

Always call the police if someone is hurt, if there is a lot of damage, or if the other driver may have broken the law (for example, drunk driving).

Write down the police officer’s name and badge number.

The police officer will get all of the important information from the other people in the accident and give it to you.

If you don’t call the police, move your car to the side of the road if you can.

If you can’t move your car, turn on your hazard lights if possible.

Write down what happened, the time, date, and place, the speed of all cars and the road conditions. Make a drawing of the accident.

Get names, addresses, and phone numbers of the other car owners, passengers, and anyone who saw what happened (witnesses).

Get insurance information from all the drivers, including the driver’s licence and plate numbers and the names of their insurance companies and brokers.

Don’t say you caused the accident or promise to pay for anything.

Call your insurance company right away if you are in an accident that must be reported to the police or if anyone may be making a claim.

Some provinces have no-fault car insurance laws, so each driver claims benefits from his or her own insurance company.

Then the insurance company of the at-fault driver (the one who caused the accident) pays back the other insurance companies.

Making a Claim

If you are going to make a claim against another driver, tell that person as quickly as possible. You can also tell that person’s insurance company.

A claims examiner from the insurance company will call you about your claim. This person will look after your claim at the insurance company.

The insurance company will send an adjuster to see the damage. Some adjusters work for insurance companies and some are contractors.

Don’t fix anything until the adjuster has seen what happened or the insurance company agrees to get it fixed.

The insurance company may want you to take the car to a repair shop that the company uses for repairs.

If you have collision insurance, your insurance company will pay for the repair or replacement of your car.

The insurance company can also choose to give you the cash value of the car (the amount it was worth right before the accident).

The insurance company may decide the car is a write-off.

This means the cost of repairing the car and the salvage value (amount the company can get by selling it for parts) is more than the cash value of the car.

Then the company will pay you the cash value and sell the car for salvage.

If the insurance company is repairing your car, you should end up with a car that is as good as yours was just before the accident.

The car can be repaired with used parts.

If your car is worth more after the repairs (such as if a rusty door is replaced with a good door), you may have to pay for the increase in value (“betterment”) of your car.

If the part is important for car safety (like tires), the insurance company will use new parts and you may have to pay for betterment.

Using Insurance

Your premiums will increase if you make more claims, so try to be careful to prevent losses.

For example, get deadbolt locks on your outside doors at home so that thieves can’t get in easily.

Turn off your car’s engine and lock your car doors, even if you are just going into a store for a minute.

If a claim isn’t much more than your deductible, don’t claim it.

Your premiums may go up or you may have problems renewing your insurance.

Check every year to see if your insurance needs have changed. You may need more insurance or less insurance.

Problems with Insurance

You must always try to fix the problem first by talking to the insurance company yourself.

If you can’t fix the problem yourself, you can get help from the OmbudService.

You can’t go to court about the problem while you are using the OmbudService.

You can’t use the Ombudservice if you have already been to court about this problem.

If you have a problem with home, auto, or business insurance, you can call the General Insurance OmbudService at 1-877-225-0446.

If you have a problem with life or health insurance, you can call the Canadian Life and Health Insurance OmbudService at 1-888-295-8112.

If the OmbudService can’t fix your problem, you may want to go to court.

Find a lawyer who specializes in insurance problems.

Ask about the lawyer’s fees.

If your case is for personal injuries, the lawyer usually gets paid from the settlement (court decision on how much you get paid), not in fees.

If your insurer goes out of business, you are covered for unpaid claims up to a limit.

For property insurance, the limit is $250,000.

You can also get back part of your money for premiums you already paid for that year (up to $700).

You may get all of your claim money back after the insurer’s bankruptcy is settled.

You need to get insurance from a new company right away.

For life and health insurance, your insurance will be transferred to another company and you will keep at least 85% of the benefits you had.

If you had deposits with the insurer, you will get up to $100,000 of your money back.

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Tenant’s Insurance

2011-07-22T07:35:00.000-07:00

Tenant’s Insurance

Your landlord’s insurance doesn’t cover your personal things, like clothes and furniture.

You can buy tenant insurance that covers your personal property for losses from theft and damages from accidents.

It also pays for losses if you are legally responsible for damage to the building or someone else getting hurt.

For example, your bathtub overflows and the water goes into the apartment below yours. Your policy would pay, not the landlord’s policy or the policy of the tenant in the apartment below.

If you are on social assistance, you can ask Social Services to include the cost of insurance in your shelter allowance.

Basic liability coverage pays for losses if you or your guests cause damage to the building.

Contents coverage replaces your personal things if they are lost or damaged. You can get contents coverage on named perils or all risks.

Add up the cost of buying everything you own now to decide how much insurance you need.

With tenant insurance, your personal property is usually insured while it is temporarily away from your home, anywhere in the world.

So if something is stolen out of your car or while you are travelling, you can claim it on your tenant insurance, up to a limit.

Questions to ask:

· What is covered by this insurance policy? What is not covered?

· Will I get replacement cost on my property?

· What are the limits on valuables?

· What is my deductible? How much money can I save on my premium with a higher deductible?

What a mess!

Katarina took good care of her apartment.

She kept it neat and clean.

But one day, she started a bath for her child.

Then she heard him crying.

She ran to the living room to see what was wrong.

He had bumped his head on the corner of a table.

She checked his head to see if he was OK.

Then she heard a pot on the stove.

It was boiling over.

She ran to the kitchen to turn back the heat.

When she came out of the kitchen, she heard a strange noise.

It sounded like a waterfall.

She said, “Oh, no! The bathtub!”

She ran down the hall to turn off the bath, but it was too late.

There was water everywhere.

· Katarina’s tenant insurance will pay to fix the bathroom in her apartment and the damage in the apartment underneath hers.

· The insurance will pay for Katarina’s things that were damaged by water.

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Tenant’s Insurance

2011-07-22T07:31:00.000-07:00

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Home Insurance

2011-07-22T07:29:00.000-07:00

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Home Insurance

2011-07-22T07:27:00.000-07:00

Home Insurance

Home insurance covers sudden and accidental losses, like fires and burglaries.

It doesn’t cover items that are damaged because of ongoing problems (like an old leaky roof) or items that wear out over time.

It doesn’t cover things that you should prevent, like indoor pipes freezing.

Home insurance can cover the building and the contents (everything you have inside the building).

Usually, you need to show proof of home insurance to get a mortgage.

You decide how much insurance to buy. Add up the cost of replacing the building (but not the land) and all the contents.

Comprehensive policies cover the building and its contents for all risks, except for the risks that are excluded.

Basic/Named Perils policies are less expensive. They cover only the perils that are written in the policy.

Broad policies are less expensive than comprehensive policies. They provide comprehensive coverage on the building and named perils coverage on the contents.

Some insurers offer no frills policies for homes with physical problems that don’t meet the standard for regular policies.

You can insure your property for actual cash value, which means you get the amount that your property is worth when you make a claim.

For example, if you bought a TV two years ago for $700, you may get $200 now.

You can insure your property for replacement cost, which means you get the amount you paid for the property. (You get $700 for your TV.)

You can pay extra for replacement cost endorsement, which means you get enough money to buy the same item now. (If the same TV costs $800 now, you get $800.)

Usually, the contents are insured for actual cash value, unless you pay for extra coverage for replacement cost.

Usually, the building is insured for replacement cost, up to the amount you’re paying for with the policy.

There are usually limits on valuables (expensive things), like computers and jewellery.

Questions to ask:

· What is covered by this insurance policy? What is not covered?

· Will I get replacement cost on my property?

· What are the limits on valuables?

· What is my deductible? How much money can I save on my premium with a higher deductible?

It is a good idea to take pictures or a video of your home, so that you can show what you lost if you have a fire or theft. You can also make a list.

Keep purchase receipts for big items.

Keep your pictures, list, and receipts in a safe place (not in your home).

If you have roomers or boarders who are not related to you, their property is not covered by your policy.

If someone gets hurt by accident and you are legally responsible for the accident, your home insurance will pay for the damages you legally have to pay.

The accident could happen in your home or anywhere in the world.

Your personal property is usually insured while it is temporarily away from your home, anywhere in the world.

So if something is stolen out of your car or while you are travelling, you can claim it on your home insurance, up to a limit.

Making a Claim

If you have a problem and you want to make a claim, you call your broker or agent.

If there has been a burglary or theft, you must also tell the police.

You should also try to stop any additional damage (for example, by shutting off the water supply if you have a broken pipe).

Take pictures that show the damages.

A claims examiner from the insurance company will call you about your claim. This person will look after your claim at the insurance company.

The insurance company will send an adjuster to see the damage. Some adjusters work for insurance companies and some are contractors.

Don’t fix anything until the adjuster has seen what happened.

Ask your insurer before you throw away anything that was damaged.

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Home Insurance

2011-07-22T07:25:00.000-07:00

Home Insurance

Home insurance covers sudden and accidental losses, like fires and burglaries.

It doesn’t cover items that are damaged because of ongoing problems (like an old leaky roof) or items that wear out over time.

It doesn’t cover things that you should prevent, like indoor pipes freezing.

Home insurance can cover the building and the contents (everything you have inside the building).

Usually, you need to show proof of home insurance to get a mortgage.

You decide how much insurance to buy. Add up the cost of replacing the building (but not the land) and all the contents.

Comprehensive policies cover the building and its contents for all risks, except for the risks that are excluded.

Basic/Named Perils policies are less expensive. They cover only the perils that are written in the policy.

Broad policies are less expensive than comprehensive policies. They provide comprehensive coverage on the building and named perils coverage on the contents.

Some insurers offer no frills policies for homes with physical problems that don’t meet the standard for regular policies.

You can insure your property for actual cash value, which means you get the amount that your property is worth when you make a claim.

For example, if you bought a TV two years ago for $700, you may get $200 now.

You can insure your property for replacement cost, which means you get the amount you paid for the property. (You get $700 for your TV.)

You can pay extra for replacement cost endorsement, which means you get enough money to buy the same item now. (If the same TV costs $800 now, you get $800.)

Usually, the contents are insured for actual cash value, unless you pay for extra coverage for replacement cost.

Usually, the building is insured for replacement cost, up to the amount you’re paying for with the policy.

There are usually limits on valuables (expensive things), like computers and jewellery.

Questions to ask:

· What is covered by this insurance policy? What is not covered?

· Will I get replacement cost on my property?

· What are the limits on valuables?

· What is my deductible? How much money can I save on my premium with a higher deductible?

It is a good idea to take pictures or a video of your home, so that you can show what you lost if you have a fire or theft. You can also make a list.

Keep purchase receipts for big items.

Keep your pictures, list, and receipts in a safe place (not in your home).

If you have roomers or boarders who are not related to you, their property is not covered by your policy.

If someone gets hurt by accident and you are legally responsible for the accident, your home insurance will pay for the damages you legally have to pay.

The accident could happen in your home or anywhere in the world.

Your personal property is usually insured while it is temporarily away from your home, anywhere in the world.

So if something is stolen out of your car or while you are travelling, you can claim it on your home insurance, up to a limit.

Making a Claim

If you have a problem and you want to make a claim, you call your broker or agent.

If there has been a burglary or theft, you must also tell the police.

You should also try to stop any additional damage (for example, by shutting off the water supply if you have a broken pipe).

Take pictures that show the damages.

A claims examiner from the insurance company will call you about your claim. This person will look after your claim at the insurance company.

The insurance company will send an adjuster to see the damage. Some adjusters work for insurance companies and some are contractors.

Don’t fix anything until the adjuster has seen what happened.

Ask your insurer before you throw away anything that was damaged.

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Disability Insurance

2011-07-22T07:17:00.000-07:00

Disability Insurance

Disability insurance gives you money if you can’t work because you become disabled.

Individual disability insurance is very important for self-employed people and for people who don’t have a group disability plan at work.

An employer may offer Short Term or Long Term disability coverage (or both) to employees. You may pay your own premiums or your employer may pay premiums for you.

If you have paid into Employment Insurance (EI) or Canada Pension Plan (CPP), you may be able to get disability benefits from EI or CPP.

You may have disability insurance on your mortgage or car loan.

When you make a claim for disability insurance, all of these kinds of insurance work together so that you get benefits up to 60-80% of your income.

Types of Disability Insurance

There are three kinds of individual disability insurance.

Noncancellable policies mean the insurer must renew the policy and the premiums can’t go up.

Guaranteed renewable policy premiums can go up.

Commercial policies let the insurer refuse to renew the policy. The insurer can also change the premiums when you renew.

Dismemberment coverage gives you money if you lose a limb, vision, or hearing.

Critical Illness insurance covers you if you become disabled because of illnesses such as cancer, heart attack, or multiple sclerosis.

Long Term Care coverage helps to pay for care if you become very ill and need to be looked after 24 hours a day.

Benefit Payments

Some plans pay benefits based on loss of income and some pay based on ability to work.

Some plans pay if you can’t work in your own occupation.

Some plans only pay if you can’t work in any occupation.

Some only pay if you can’t work in any occupation for the rest of your life (called total and permanent disability).

Often, plans combine these definitions of disability and give time limits.

For example, a plan may pay benefits for two years if you can’t work in your own occupation. After two years, the plan may only pay if you can’t work in any occupation.

Most disability insurance gives you monthly payments while you are ill.

Critical illness insurance pays the whole amount in one payment.

Questions to ask:

· How does this policy define a disability?

· Will I be paid if I can’t do my current job or any job?

· Is the policy noncancellable, guaranteed renewable, or commercial?

· Are there limitations or exclusions?

· How long will I get benefits? How much will I get paid?

· What is the waiting period before I can claim benefits?

· If I go back to work part-time, can I get partial benefits?

· Are the benefits taxable?

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Life Insurance

2011-07-22T07:14:00.000-07:00

Life Insurance

You may want to buy life insurance to pay for expenses if you die.

Life insurance is important if you have children or other dependants, so that they will have money to live on if you die.

The person who will get the money when you die is the beneficiary.

There are two kinds of life insurance.

Permanent life insurance covers you for your entire life, until you die.

Term life insurance covers you for a fixed number of years or until you are a certain age (such as 60 or 65). Term insurance is less expensive in the beginning but you will pay higher premiums if you renew the policy after it expires.

Term life insurance is good if you have bigger expenses now and not too much money for insurance (such as if you have a young family).

Make sure that your term life insurance is renewable (you can get a new term at a higher premium without a health examination).

Make sure it is also convertible (you can change it to permanent life insurance later on without a health examination).

Most life insurance policies will let you cancel without a penalty if you change your mind in the first 10 days after you get the written policy.

If you return the policy to the company within 10 days, you will get back any premium you paid.

Questions to ask:

· How long has the company been in business?

· What qualifications does the salesperson have?

· What is guaranteed in the policy (premiums, benefits, riders)? What is not guaranteed?

· What is the difference between the policies you are looking at?

· For term policies, how much will it be to renew in the future? Are renewal rates guaranteed? When does the policy expire? When does any conversion right expire?

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Health Insurance

2011-07-22T07:11:00.000-07:00

Health Insurance

Almost everyone in Canada has basic government health insurance.

You can buy extra health insurance for the things that government health insurance does not cover, like buying glasses and prescription medicine.

A few companies sell health insurance for visitors to Canada and returning Canadian residents who can’t get basic government health insurance yet.

The insurance is often just for emergency medical treatment.

Extended health plans often cover prescription medicine, ambulance services, and vision care.

Check your policy to see what it covers.

Dental plans usually cover check-ups, cleaning, fillings, and dental x-rays.

Usually health insurance covers the plan member and dependants (spouse or partner and children under 19). Older children may be covered if they are full-time students or if they are disabled.

Usually you pay a deductible every year ($25 or $50 per person).

Some plans have a deductible every time you use a service (such as $5 for every prescription).

Some plans have co-insurance, which means you pay part of the expenses (from 10% up to 50%).

Many plans also have a maximum amount you can claim per year for a kind of service (like glasses).

Some plans don’t cover expenses for a pre-existing condition (a health problem you had before you got the insurance).

Making a Claim

Usually you pay the bill, and then you fill out a form and attach a receipt to make a claim. The insurance company pays you back.

Sometimes the insurance company pays the pharmacy or dentist for your claim, and you only pay the part that is not covered by your insurance. The insurance company gives you a card with your policy information to show at the pharmacy or the dentist.

Usually you get money back quickly from your claim.

Some insurance companies pay by direct deposit and some pay by cheque.

Questions to ask:

· What does the plan cover? What does it not cover?

· Do I need a medical examination?

· How much is the deductible?

· Is there co-insurance? How much do I pay?

· Does it cover expenses for a pre-existing condition?.

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Health Insurance

2011-07-22T07:05:00.000-07:00

Health Insurance

Almost everyone in Canada has basic government health insurance.

You can buy extra health insurance for the things that government health insurance does not cover, like buying glasses and prescription medicine.

A few companies sell health insurance for visitors to Canada and returning Canadian residents who can’t get basic government health insurance yet.

The insurance is often just for emergency medical treatment.

Extended health plans often cover prescription medicine, ambulance services, and vision care.

Check your policy to see what it covers.

Dental plans usually cover check-ups, cleaning, fillings, and dental x-rays.

Usually health insurance covers the plan member and dependants (spouse or partner and children under 19). Older children may be covered if they are full-time students or if they are disabled.

Usually you pay a deductible every year ($25 or $50 per person).

Some plans have a deductible every time you use a service (such as $5 for every prescription).

Some plans have co-insurance, which means you pay part of the expenses (from 10% up to 50%).

Many plans also have a maximum amount you can claim per year for a kind of service (like glasses).

Some plans don’t cover expenses for a pre-existing condition (a health problem you had before you got the insurance).

Making a Claim

Usually you pay the bill, and then you fill out a form and attach a receipt to make a claim. The insurance company pays you back.

Usually you get money back quickly from your claim.

Some insurance companies pay by direct deposit and some pay by cheque.

Questions to ask:

· What does the plan cover? What does it not cover?

· Do I need a medical examination?

· How much is the deductible?

· Is there co-insurance? How much do I pay?

· Does it cover expenses for a pre-existing condition?

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Buying Insurance

2011-07-22T07:03:00.000-07:00

Buying Insurance

Make sure you know what your policy doesn’t cover. Ask questions until you understand any exclusions.

If you are comparing prices between companies, make sure it is for the same level and kind of insurance.

An insurance company that has much lower prices may not want to pay if you make a claim.

Be careful to tell the truth on your insurance application.

If you don’t tell the insurer something important, you may pay your premiums and not be paid when you make a claim.

For example, you can’t say you are a non-smoker if you smoke a few cigarettes every month.

Changing Insurance Companies

If you cancel your policy before it comes up for renewal, you may pay a penalty.

If you want to cancel your policy or change companies, tell your insurer in writing.

Don’t stop paying your premium until you tell the company, or you will be charged a higher rate because you are a ‘bad risk.’
If you are changing companies, make sure your new policy is issued before you cancel your old policy.
Buying Insurance

Make sure you know what your policy doesn’t cover. Ask questions until you understand any exclusions.

If you are comparing prices between companies, make sure it is for the same level and kind of insurance.

An insurance company that has much lower prices may not want to pay if you make a claim.

Be careful to tell the truth on your insurance application.

If you don’t tell the insurer something important, you may pay your premiums and not be paid when you make a claim.

For example, you can’t say you are a non-smoker if you smoke a few cigarettes every month.

Changing Insurance Companies

If you cancel your policy before it comes up for renewal, you may pay a penalty.

If you want to cancel your policy or change companies, tell your insurer in writing.

Don’t stop paying your premium until you tell the company, or you will be charged a higher rate because you are a ‘bad risk.’

If you are changing companies, make sure your new policy is issued before you cancel your old policy.

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Who Sells Insurance?

2011-07-22T07:01:00.000-07:00

Who Sells Insurance?

Agents sell insurance for one company.

Direct sellers sell insurance for one company by telephone or over the internet.

Brokers sell insurance for more than one company.

An agent or broker who sells life and health insurance may also sell savings and investment plans, and is often called an advisor.

Group plans can be for many kinds of groups, like people who work together or people who went to the same university.

Group plans are usually less expensive than individual plans.

You get group insurance with your employer or with an association.

But when you are not a member of the group any more (such as when you leave a job), your group insurance may stop. You may be able to get an individual policy that continues the benefits of your group insurance.

Any person acting as an agent or broker must have a licence to sell insurance in Canada. The licence should be from your province.

Some companies offering insurance (such as payday loan companies or car dealers) may not be licensed.

Ask to see the agent’s or broker’s insurance licence before you buy.

You can check to see if the person has a licence by calling your province’s Superintendent of Insurance or Financial Services.

Safety Tips

You may see an ad offering cheap insurance, but it may not be true.

Some people pretend to be insurance agents or brokers.

They tell you that you can have a much lower premium for your insurance.

They ask you for a payment or charge you a fee in cash or by wire transfer.

They may just take the money and not get insurance for you at all.

They may call a real insurance agent and pretend to be you. They may lie about your application to get a lower rate.

If you don’t have valid car insurance and the police stop you or you are in a car accident, you will pay a big fine.

You may have to pay to fix the other car and for medical costs for anyone who got hurt in the accident.

This could be many thousands of dollars.

If an agent or broker fills out an application for you, check to make sure everything is true before you sign it.

Don’t sign a blank form for the agent or broker to fill in later.

If anything is not true on your application, the insurance company can refuse to pay any benefits if you make a claim.

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Paying for Insurance

2011-07-22T06:56:00.000-07:00

Paying for Insurance

The amount you pay for the insurance is the premium.

The insurance company decides on the premium using the information in your application.

For life and health insurance, the application will ask questions about your health.

You may need to have a doctor or nurse examine you or have your doctor give the insurance company some information.

The insurance company will decide on your premium depending on your age, gender, whether you smoke, and other information.

For property insurance, the application will ask you to describe the property and tell how you use it.

For example, if you drive your car to work every day, you will probably pay a higher premium than if you only use it on evenings and weekends.

Making a Claim

If you have a loss, you make a claim to the insurance company.

You need to show proof of the loss, such as receipts for health care expenses or a death certificate for a life insurance claim.

For property insurance, an adjuster from the insurance company will decide on the value of the damage to the property.

For property and health insurance, you pay for part of the loss – the deductible. The amount of the deductible is in your policy.

For example, if your claim is for $3,500 and your deductible is $200, the insurance company will pay you $3,300.

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Newcomer Finances Toolkit Insurance

2011-07-22T06:55:00.000-07:00

Insurance

Insurance is a contract between you and an insurance company.

When you buy insurance, you pay an amount of money every month or every year. The insurance company pays you if an accident happens that lowers the value of the insured item (a loss).

Insurance works by collecting small amounts of money from many people and paying the few people who have a loss. The amount that the insurance company will pay is in the contract.

People use insurance to protect themselves against big losses, like a fire or a car accident.

You must have some kinds of insurance (like car insurance) by law.

You can choose to have other kinds of insurance. Many people have insurance to protect themselves and their families from big losses.

Types of Insurance

Property insurance protects you against a loss of “things,” such as cars and homes.

For example, a fire damages your home. The insurance company pays to repair your home and to replace things that were damaged by the fire, such as furniture and clothes.

Property insurance also gives liability insurance, which pays people who get hurt or have their property damaged when you are responsible for an accident.

For example, someone falls on the ice and gets hurt because you didn’t shovel the snow out of the way. The insurance company may pay for special nursing care to help the person get better and for the person’s lost wages.

Life insurance and disability insurance protect you against lost income if the insured person dies or becomes disabled.

Health insurance pays for some expenses that the province’s health insurance doesn’t cover.

Insurance Policies

Usually, you fill out an application for insurance.

You get a policy or contract (a written agreement) from the insurance company.

You are the policyholder or the insured.

You are insured against perils (things that cause loss or damage, like a fire or theft). Some insurance policies cover all perils, and some don’t.

Exclusions are things that your insurance policy does not cover. Make sure you know about all the exclusions so you don’t get a surprise.

If you add coverage for something extra on the policy, it is a called a rider.

For example, you can get a rider to your home insurance policy for extra insurance for valuable jewellery.

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INSURANCE SECTOR IN PAKISTAN

2011-07-22T06:50:00.000-07:00

Insurance Sector in Pakistan

A Review of Insurance Sector and HRM/HRD Aspects

Prof. Dr. Khawaja Amjad Saeed*

Email: kamjadsaeed@yahoo.com

Financial Sector

As of November 07, 2007 there were 637 companies which were listed on Karachi Stock Exchange with a total market capitalization of Rs. 4121 billion (66 billion $). This figure has registered an increase now and our Karachi Stock Market is approximately US$ 72 billion. Out of this financial sector constitutes 41% of the total market capitalization of Karachi Stock Exchange. However, the Insurance Sector is a small one and needs immediate attention for its growth, development and rapid expansion to meet the challenge of 21^st Century for accelerating socio-economic growth of Pakistan with an emphasis on wider prosperity.

Insurance Sector

Insurance Sector has registered a very slow growth in the history of Pakistan. Based on our research, the following conclusions emerge:

Listed insurance sector on Karachi Stock Exchange in terms of companies is only 4.4%.
Share of listed insurance sector on total listed companies on Karachi Stock Exchange is only 1.41%.
Out of 637 listed companies, only 29 relate to insurance sector.
From the birth of Pakistan till now we have added only 29 listed companies- giving us a ratio of less than 0.5 per company per year.
Turnover for 10 months (January – October 2007) on the Karachi Stock market was only 1.55% of the total turnover.

*Principal, Hailey College of Banking & Finance, University of the Punjab, Lahore Pakistan,

Email: kamjadsaeed@yahoo.com – Website: www.kamjadsaeed.edu.pk Mob: 03334363363

Member Governing Council, International Federation of Accountants (IFAC) (1997-2000), President, South Asian Federation of Accountants (SAFA) (1997), President, Institute of Cost and Management Accountants of Pakistan (1997-2000), President, Association of Management Development Institutions of South Asia (AMDISA) (1993-96), Pro Vice-Chancellor University of the Punjab, Lahore (1994-1996), Founder Director, Institute of Business Administration (IBA), University of the Punjab, Lahore (1973-1996).

Share of insurance sector on listed companies on Karachi Stock Exchange is only 3.83% in respect of Market Capitalization.
Share of insurance in GDP of Pakistan is only 1.80%. Ten percentage companies’ shares are listed below par. Therefore, these are sick. They need revival.
In the case of life insurance there is a vast scope. State Life Insurance Corporation of Pakistanshould be immediately privatized. Their Mission Statement should be reviewed and revisited and on war-footing Insurance Policy of a vibrant nature should be developed so that Insurance Sector starts serving the economy of the country. As of today, excluding Group Insurance, there are hardly 2.5 million people in a total population on 166 million who enjoy the life insurance cover. This percentage requires to be given a quantum jump so that its expansion is seen for the benefit of the community. In this respect, we plan to develop a draft Insurance Policy for submission to the democratic Government of Pakistan so that they give a serious attention to this critical area and also develop insurance (Conventional) and Takaful (Islamic Insurance).

HRM / HRD

One of the biggest problem in Pakistan has been that no attention has been given in the past to produce qualified insurance experts through the Universities. No autonomous institute with statutory recognition exists in the country. It is high time that the profession is restructured on the lines of UK Institute of Chartered Insurance and statutory recognition is given to such an Institute for serving the noble cause of developing professionally qualified people in the country. Moreover, it is pertinent to note that the Father of the Nation, Quaid-e-Azam Muhammad Ali Jinnah on April 18, 1948 while delivering his address of welcome to Edward College, Peshawar had stated as under:

“I entirely ….. That instead of turning more clerks and government servants, your college is now offering suitable subjects or students, which would enable them to take their place in commerce, trade, industry, banking and insurance business. It should be the aim of our colleges to produce first class experts in Agriculture, Zoology, Engineering, Medicine and their specialized subjects. Only thus shall we be able to come to grip with the problems that are now facing us in the task of raising the standard of living, especially of the common man”.

The misfortune is that no University responded to the clarion call of the Father of the Nation as mentioned above. By the grace of Allah and with the support of University of the Punjab and Insurance Association of Pakistan, Hailey College of Banking & Finance* whose name is going to be changed as Hailey College of Banking, Insurance & Finance commenced education for producing duly qualified students to serve the Insurance Industry in the year 2006. Currently, the above College is offering the following degree courses:

Four Years regular BBA Hons (Insurance & Risk Management).
Two Years regular MBA Morning Program (Insurance & Risk Management).
Two Years regular Executive MBA Evening Program (Insurance & Risk Management).

The courses for the above programs were developed in consultation with stakeholders – in particular with the Insurance Association of Pakistan. An excellent teaching is continuing and the first batch of MBA will be shortly available. There is a growing need for these graduates within the country and in the Middle East for which preparation is being made to send the students abroad for employment. Our slogan is “preparing locally for global jobs”. Various courses being offered in the scheme of four years BBA Hons Program include:

Functional English (Composition & Grammar), Principles of Accounting, Introduction to Business, Money Banking & Finance, Principles of Insurance & Risk Management, Functional English (Essay Writing, Precise Writing etc.), Fundamentals of Statistics. Insurance Accounting & Finance, Mathematics & Basic Calculus, Islamic Culture and Ideology of Pakistan, Business Correspondence & Report Writing, Economics, Property & Pecuniary Insurance, Taxation, Information Technology& its Application to Insurance, Mercantile and Corporate Law, Principles of Marketing, Principles of Management, Cost & Managerial Accounting, Marine Insurance, Life Insurance, Economy of Pakistan, Research Methodology, Financial Analysis, Data Base Management, Structure of Pakistan Insurance Industry, Motor Insurance, Life Insurance – II, Risk Management-I, Human Resource Management, Insurance Law & Practice, Regulation of Insurance in Pakistan, Liability Insurance, Claims Management,

* 5^th Constituent College of the University of the Punjab, Lahore.

Risk Management-II, Workshop, Underwriting Management, Disability & Health Insurance, Reinsurance, Insurance Marketing, and Benefits of Insurance for the country,

The above course structure has been broken into eight semesters.

Scheme of Study relating to Two Years MBA (Insurance & Risk Management) degree program includes the following:

Financial Accounting, Principles of Management, Economics, Quantitative Method & Techniques, Principles of Insurance & Risk Management, IT for Insurance Professionals, Insurance Law & Contract, Insurance Marketing, Human Resource Management, Risk Management, Financial Analysis & Investments, Life and Health Insurance, Insurance Marketing, Human Resource Management, Mercantile & Corporate Laws, Economy of Pakistan, Property & Pecuniary Insurance, Reinsurance: Principles and Practice, Motor Insurance, and Liability Insurance.

Conclusion

It is hoped that the stakeholders will rise to the occasion and the Government of Pakistan, Securities & Exchange Commission of Pakistan and other regulatory bodies, Ministry of Commerce, Insurance Companies, Insured Persons, Students, Teachers and other representatives of civil society will make an enriched contribution in strengthening the frontier of HRM / HRD so that the yawning gap which existed in the past to serve the insurance sector is minimized and there is a real flourish of Insurance Sector to serve the economy of the country in a befitting manner. Earlier this is done the better.

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SAMPLE INSURANCE AGREEMENT - PROFESSIONAL CONSULTANTS

2011-07-22T06:49:00.000-07:00

SAMPLE INSURANCE AGREEMENT - PROFESSIONAL CONSULTANTS

I. Notwithstanding any terms, conditions or provisions, in any other writing between the parties, the consultant hereby agrees to effectuate the naming of the municipality as an unrestricted additional insured on the consultant’s insurance polices, with the exception of workers' compensation and professional liability. If the policy is written on a claims-made basis, the retroactive date must precede the date of the contract

II. The policy naming the municipality as an additional insured shall:

• Purchase an insurance policy from an A.M. Best rated "secured" New York State licensed insurer.

• Contain a 30-day notice of cancellation.

• State that the organization's coverage shall be primary coverage for the Municipality, its Board, employees and volunteers.

• The municipality shall be listed as an additional insured by using endorsement CG 2026 or broader. The certificate must state that this endorsement is being used. If another endorsement is used, a copy shall be included with the certificate of insurance.

III. The consultant agrees to indemnify the municipality for any applicable deductibles.

IV. Required Insurance:

• Commercial General Liability Insurance

$1,000,000 per occurrence/ $2,000,000 aggregate.

• Automobile Liability

$1,000,000 combined single limit for owned, hired and borrowed and non-owned motor vehicles.

• Workers' Compensation and N.Y.S. Disability

Statutory Workers' Compensation, Employers' Liability and N.Y.S. Disability Benefits Insurance for all employees.

• Professional Errors and Omissions Insurance

$1,000,000 per occurrence/ $2,000,000 aggregate for the professional acts of the consultant performed under the contract for the municipality. If written on a “claims-made” basis, the retroactive date must pre-date the inception of the contract or agreement. Coverage shall remain in effect for two years following the completion of work.

• Excess Insurance

On a “Follow-Form” basis, with limits of $3,000,000 each occurrence and aggregate.

• Performance Bond

In an amount representing 100% of the contract price. The municipality shall be named as the Obligee, and an original Power of Attorney, Corporate and Surety Acknowledgements must accompany the bond.

VI. Consultant acknowledges that failure to obtain such insurance on behalf of the municipality constitutes a material breach of contract. The consultant is to provide the municipality with a certificate of insurance, evidencing the above requirements have been met, prior to the commencement of work or use of facilities. The failure of the municipality to object to the contents of the certificate or the absence of same shall not be deemed a waiver of any and all rights held by the municipality.

VII. The municipality is a member/owner of the NY Municipal Insurance Reciprocal (NYMIR). The consultant further acknowledges that the procurement of such insurance as required herein is intended to benefit not only the municipality but also the NYMIR, as the municipality's insurer.

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IEEE INSURANCE COMMITTEE CHARTER

2011-07-22T06:46:00.000-07:00

IEEE INSURANCE COMMITTEE

CHARTER

Contents

I. Administration

II. Duties & Responsibilities

III. Rotation Plan

IEEE INSURANCE COMMITTEE

CHARTER

I. ADMINISTRATION

A. Bylaw 305.13 establishes an Insurance Committee responsible to the Board of Directors with the duties & responsibilities outlined in Section II.

B. The Treasurer, as a member of the Insurance Committee, is authorized to refer any action to the Board of Directors for approval prior to implementation, as the Treasurer deems necessary.

C. The IEEE Insurance Committee shall consist of the IEEE Treasurer, Chair of the MGA Individual Benefits and Services Committee, Chair of the Employee Benefits and Compensation Committee, and from three to five additional members-at-large. The Chair and members-at-large shall be appointed by the Board of Directors on the recommendation of the Treasurer. The Secretary of the Committee shall be designated by the Staff Director, Financial Services.

In view of the expertise required, non-members of IEEE shall be eligible for appointment as voting members of this Committee. For re-appointment it is necessary for members-at-large to be able to demonstrate currency in insurance or risk-management activities. To demonstrate currency, individuals must be either employed in an insurance or risk-management environment, or demonstrate an active interest or professional involvement in insurance or risk management. The decision as to whether a member can demonstrate currency will be determined by the Insurance Committee, and approved by the Board of Directors.

The Insurance Committee shall meet and act pursuant to such rules as it shall determine. The Board of Directors shall periodically review the operation of the Insurance Committee and shall require such notices and reports from the Insurance Committee as the Board of Directors determines may be required to permit such a review.

II. DUTIES & RESPONSIBILITIES

A. To provide guidance and counsel on insurance related matters to the Institute, the IEEE MGA Individual Benefits and Services Committee (IB&SC), and the IEEE Employee Benefits and Compensation Committee (EBCC).

B. To review and evaluate the adequacy and suitability of the Institute's Corporate Insurance Program, and advise the Board of Directors and Staff on same.

C. To review and evaluate insurance-related products and services that may be offered to IEEE Members and / or Staff, and make recommendations to the IB&SC and EBCC as appropriate.

III. ROTATION PLAN FOR MEMBERS-AT-LARGE AND CHAIR

Members-at-large are defined as members who possess expertise in insurance-related matters. The Chair will recommend the appointment of the members-at-large to the Treasurer, who will then obtain the Board of Directors’ approval.

A. Members-at-Large

Members-at-large of the Insurance Committee shall be appointed for an initial one-year term, with the possibility for re-appointment for 2 additional three-year terms, for a maximum of seven years of service. When deemed in the best interest of the Institute, the Board of Directors may re-appoint a member-at-large for an additional three-year term. The maximum years of service on the Insurance Committee shall be 10 years.

B. Chair

The Chair of the Insurance Committee should be appointed for an initial one-year term, with the possibility for re-appointment for up to four additional one-year terms.

IEEE Bylaw I-305.13

Insurance Committee. The Insurance Committee shall be appointed by and shall report to the Board of Directors. The IEEE Insurance Committee shall advise and assist the Board of Directors on matters relating to IEEE corporate insurance programs. The Insurance Committee shall advise and assist the Individual Benefits and Services Committee on matters relating to IEEE member insurance programs. The Insurance Committee shall act pursuant to such rules as it shall determine. The Board of Directors shall periodically review the operation of the Insurance Committee and shall require such notices and reports from the Insurance Committee as the Board of Directors determines may be required to permit such a review.

Membership. The IEEE Insurance Committee shall consist of not more than eight members who shall be the IEEE Treasurer; Chairs of the MGA Individual Benefits and Services Committee and IEEE Employee Benefits and Compensation Committee; and three to five additional members-at-large. The Chair of the Insurance Committee and members-at-large shall be appointed by the Board of Directors on the recommendation of the Treasurer. In view of the expertise required, non-members of IEEE shall be eligible for appointment as voting members of this Committee.

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Storms, floods, insurance and you

2011-07-22T06:44:00.000-07:00

Storms, floods, insurance and you
A guide to getting your insurance paid

How insurance policies work

Will my insurance policy pay?

The insurance policy is your contract with the insurance company. It states when, how and what the insurance company must pay for. Most policies state that the insurance company will pay for damage caused by rainwater or stormwater, but will not pay for damage caused by floodwater.

What is the difference between floodwater and rainwater?

You will need to look at the definition in your insurance policy, but generally:

- rainwater generally means water falling from the skies that runs off over the surface of the land (and may include water overflowing from stormwater drains)

- floodwater means the covering of normally dry land by water escaping or released from rivers, lakes, channels, dams or canals

The insurance company cannot go beyond the words in the policy. For example, if the policy reads: “Floodwater is water escaping from a river or stream”, and if the damage was caused by water running down gullies of a mountainside, it will not be defined as floodwater and the insurance company will be required to pay.

How do I know whether the water was floodwater?

Insurance companies obtain reports from experts (such as hydrologists) to determine whether damage was caused by rainwater or floodwater. These reports recreate the events that led to the damage. They may calculate what the maximum level the water in your house would have risen to if it was just rainwater and, if the water level is much higher than this figure, then they will argue that the water is partly floodwater.

Experts can get it wrong

Hydrologists’ reports are a recreation of the events that led to the damage. They assess the direction the water flowed, whether the water came from a river or from stormwater runoff, and what level the rainwater would have reached on its own. Their findings are not conclusive, may be based on false assumptions or inconsistent with reliable eyewitness or video evidence.

What if my home was damaged by both rainwater and floodwater?

If your home was damaged by both rainwater and floodwater sometimes the insurance company will reject the claim. Sometimes the decision will be correct, but sometimes it may not. There may be arguments the insurance company has not considered:

1. The rainwater came in first. The water level in your house may have risen and then stopped. A second wave of water then entered the house. This may indicate that the first wave was rainwater and the second surge was floodwater. The insurance company has to pay for damage caused by the rainwater.

2. There was floodwater, but only a little. If the amount of floodwater was minimal/insignificant compared to the volume of rainwater, the insurance company may still be required to pay.

Standard cover

The insurance company didn’t give me a copy of the policy
The law says that the insurance company is required to tell you:
a) whether or not it is prepared to cover your home against flood damage; and b) it must do this before the policy is taken out or before it is renewed. If this was not done, then the insurance company must pay for flood damage. This is called Standard Cover.
For example, Standard Cover will apply if you paid the premium at the office and the policy was mailed afterwards.
However, if you receive the policy document in the mail and a year later renew the policy, Standard Cover will not apply on renewal. You have received documents advising you that the insurance company did not cover you for flood before renewing the policy.

What can I do if my claim is rejected?

If your claim is rejected by your insurance company, you can have it reviewed for free by an independent body called the Insurance Ombudsman Service (IOS). Any decision of the IOS will be binding on your insurance company but will not prevent you from taking other action if you are not happy with the decision.
The scheme has two steps:
1. Firstly, you need to apply to the insurance company for an internal review.
According to the current General Insurance Code of Practice, insurance companies will respond to your request for internal review within 15 business days if they receive all necessary information and have completed any investigation required. Insurance companies will also keep you informed of the progress of the internal review at least every 10 business days.

2. If the claim is still rejected after the internal review, you should apply to the IOS within three months of the internal review decision. The IOS will investigate the complaint, gather the relevant information to determine the claim and will then refer the complaint to an Adjudicator (claims up to $5000) or the Panel (claims up to $280,000) for a final decision. If you are unsuccessful at IOS you can still take your matter to Court. You must commence your claim within six years from when the cause of action accrues (which may be six years from the date of the ‘insured event’ – ie the storm or flood -depending on what your policy says).
Your policy may also say that you need to notify your insurer as soon as possible of the damage. It may be that a failure to notify an insurer within a reasonable time may be a basis for refusal of the claim – so it is better not to delay.

Summary

Getting organised:

Evidence about the cause of the damage

Collect detailed evidence about the damage. The more detail you obtain, the easier it is to establish the cause of the loss. You should try to gather evidence such as:

• Eyewitness accounts about the time the water entered the house, the level it rose to, where it came from, how it first entered the house (for example, through toilets and showers or over land) and whether the water level increased in stages or at a steady and uniform rate.

• Maps showing rainwater drains in the area (copies maybe obtained from councils).

• Information about when any river levels peaked.

• Photos, videos and other records of the flood, including home videos and, if possible, news footage.

Do I need a lawyer?

The IOS is designed for people who do not have lawyers. However, some flood insurance cases are difficult and may require the assistance of a lawyer. Legal Aid can provide further advice and will provide a lawyer to represent you if you meet our means and merit tests and come within our policy guidelines. The National Insurance Hotline maybe able to provide free advice and assistance with running matters at IOS for people who are not eligible for legal aid.

Contacts

Free legal advice is available by appointment from the following Legal Aid civil offices. Please ring the office nearest to where the storm or flood damage occurred or our central office:

Bankstown (02) 9707 4555
Liverpool (02) 9601 1200
Campbelltown (02) 4628 2922
Newcastle (02) 4929 5482
Central Sydney (02) 9219 5000
Gosford (02) 4324 5611
Lismore (02) 6621 2082
Nowra (02) 4422 4351
Coffs Harbour (02) 6651 7899
Parramatta (02) 9891 1600
Dubbo (02) 6885 4233
Penrith (02) 4732 3077
Fairfield (02) 9727 3777
Wagga Wagga (02) 6921 6588
Wollongong (02) 4288 8299

Other helpful information services:

Insurance Law Service: 1300 663 464

Insurance Ombudsman Service (IOS): National Toll Free: 1300 78 08 08.

Email: ios@insuranceombudsman.com.au

Web: http://www.insuranceombudsman.com.au

LawAccess NSW gives free information and referral, including information on community legal centres who maybe able to assist on 1300 888 529

This is a short summary of a more detailed guide called Turning the Tide: Storms, Floods, Insurance and You, which can be downloaded or ordered by clicking here. You can also contact the Publication Unit on 9219 5028.

April 09

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City of Santa Monica Cultural Affairs Division

2011-07-22T06:40:00.000-07:00

City of Santa Monica Cultural Affairs Division

Grantee Insurance Requirements

Prior to commencing work, Grantee shall procure and maintain at Grantee’s own cost and expense for the duration of this Agreement insurance against claims for injuries to persons or damage to property which may arise from or in connection with the performance of the work or services hereunder by the Grantee and its agents, representatives, employees, or subcontractors. The cost of such insurance shall be included in Grantee’s bid.

Without in any way affecting the indemnity provided, the Grantee shall secure before commencement of the work and throughout the Agreement the following types and amounts of insurance:

Minimum Limits of Insurance

Grantee shall obtain insurance of the types and in the amounts described below:

1) Commercial General Liability Insurance

Grantee shall maintain commercial general liability insurance (CGL) with a limit of not less than $1,000,000 each occurrence/$2,000,000 in the annual aggregate.

Minimum Scope of Insurance

1) CGL insurance shall be written on Insurance Services Office form CG 00 01 (or a substitute form providing equivalent coverage) and shall cover liability arising from premises, operations, independent Contractors, products-completed operations, personal injury and advertising injury liability assumed under an insured contract (including the tort liability of another assumed in a business contract), and explosion, collapse and underground hazards.

Deductibles and Self-Insured Retentions

Any deductibles or self-insured retentions must be declared to and approved by the City of Santa Monica. At the option of the City of Santa Monica, either: the insurer shall reduce or eliminate such deductibles or self-insured retentions as respects the City of Santa Monica, its officers, officials, employees, or volunteers; or the Grantee shall provide a financial guarantee satisfactory to the City of Santa Monica guaranteeing payment of losses and related investigation, claim administration and defense expenses.

Other Insurance Provisions

The general liability ~~and automobile liability~~ policy is to contain, or be endorsed to contain, the following provisions:

1) The City of Santa Monica, its officers, officials, employees, and volunteers are to be covered as additional insureds ~~with respect to liability arising out of automobiles owned, leased, hired, or borrowed by or on behalf of the Contractor; and~~ with respect to liability arising out of work or operations performed by or on behalf of the Grantee including materials, parts or equipment furnished in connection with such work or operations. Under the CGL policy, the Grantee shall provide an additional insured endorsement using the Insurance Services Office additional insured endorsement form CG 20 26, or a substitute providing equivalent coverage. The additional insured endorsement is also required if Grantee possesses a commercial umbrella policy or an excess policy. City and other additional insureds mentioned in this paragraph shall not, by reason of their inclusion as additional insureds, become liable for any payment of premiums to carriers for such coverage.

2) For any claims related to this program, the Grantee’s insurance coverage shall be primary as respects the City of Santa Monica, its officers, officials, employees, and volunteers. Any insurance or self-insurance maintained by the City of Santa Monica, its officers, officials, employees, or volunteers shall be in excess of the Grantee’s insurance and shall not contribute with it.

3) Coverage shall not extend to any indemnity coverage for the active negligence of the additional insured in any case where an agreement to indemnify the additional insured would be invalid under subdivision (b) of Section 2782 of the Civil Code.

General Liability

The insurer shall agree to waive all rights of subrogation against the City of Santa Monica, its officers, officials, employees, and volunteers for losses arising from activities and operations of Grantee in the performance of services under this Agreement.

All Coverages

1) Each insurance required by this Agreement shall be endorsed to state that coverage shall not be canceled except after at least thirty (30) days’ prior written notice by certified mail, return receipt requested, has been given to the City as set forth in the notice requirement of this Agreement.

2) If Grantee, for any reason, fails to maintain insurance coverage which is required pursuant to this Agreement, the same shall be deemed a material breach of contract. City, at its sole option, may terminate this Agreement and obtain damages from the Grantee resulting from said breach. Alternatively, City may purchase such coverage (but has no special obligation to do so), and without further notice to the Grantee, City may deduct from sums due to the Grantee any premium costs advanced by the City for such insurance.

Acceptability of Insurers

Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:6, unless otherwise approved by the City’s Risk Manager.

Verification of Coverage

Grantee shall furnish the City of Santa Monica with original certificates and amendatory endorsements effecting coverage required by this section. The certificates and endorsements for each policy are to be signed by a person authorized by the insurer to bind coverage on its behalf. The certificates and endorsements should be on forms provided by the City of Santa Monica or on other than the City of Santa Monica’s forms, provided those forms and endorsements conform to the requirements. All certificates and endorsements are to be received and approved by the City of Santa Monica before work commences. The City of Santa Monica reserves the right to require complete, certified copies of all required insurance policies, including endorsements affecting the coverage required by these specifications at any time.

Subcontractors

Grantee shall include all subcontractors as insureds under its policies or shall furnish separate certificates and endorsements for each subcontractor. All coverages for subcontractors shall be subject to all of the requirements stated herein.

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Grand Prix Automobile Insurance Company

2011-07-22T06:39:00.000-07:00

Grand Prix Automobile Insurance Company

Company Background

Grand Prix Automobile Insurance Company (GPAIC) is a company that sells automobile insurance policies to licensed drivers in the state of Indiana. The company headquarters are located in Speedway, Indiana. GPAIC employs about 200 people, most of which are insurance agents located at several different offices throughout the state. The company was established in 1991, and has had steady grown to about 50,000 policyholders now.

Selected Financial Data ($000)

Revenues from premiums

46,250

Revenues from investment activities

7,425

Expenditures on claims

23,325

Total operating expenses

26,050

Taxes

Net Income

1,520

2,780

Industry Trends

Automobile insurance has emerged as a highly competitive industry. Most customers recognize insurance for what it is – a fallback in case of an accident and they're always looking to cut insurance expenses. However, their demands in terms of services rendered by an insurance company have multiplied. Several new agencies have emerged in recent years which target niche markets and offer services tailor made to those market needs. Due to changes in state and federal regulations requiring minimum liability insurance, the number of policyholders is expected to increase drastically in the next several years.

Insurance Management System Project

Jonathan Dewar, president of GPAIC, is concerned that his company may be ill prepared to handle the challenges of such industry trends. He is concerned that the old way of doing business is no longer adequate, and feels that information technologies can help GPAIC gain a competitive advantage over its rivals. Therefore, he has contacted you, the brilliant systems analyst you are, to lead a consulting team to determine the requirements of an insurance management system. He has arranged for you to meet with him and several employees to gain an understanding of GPAICs operations.

Interviews with GPAIC Employees

John Dewar, President

“Good morning! It’s a pleasure to have you here. I’m really excited about getting some new technology in here; I think it can really make this company more profitable. If you’ve done your homework, you know that the insurance industry is really a cutthroat place, with no room for losers. And we here at GPAIC are no losers, no sireee. Here, have a cigar. They’re Cubans – nothing but the best!”

You squirm nervously in your chair.

“So anyway, we’ve got a nasty problem here. See, I need to cut costs but also provide more service. My customers want more value for their dollar – everyone does! It disturbs me greatly when I hear that it takes us 90 days to process a claim. Why, even those morons with the rock can do things faster than that. I didn’t name this company Grand Prix because we were slow!”

“We’ve grown a lot, too. Used to run this place in my basement; now we’ve got 50,000 customers. We’ve got some kind of computer system that helps, but I’ve been told that we’re running out of space or something. You’ll have to check into that – I can’t afford not to be able to take more customers. “

“Now, I don’t much care how the rest of the system works, so long as it works right and gives me what I need. “ He holds up a sheaf of papers. “These here are reports that tell me everything about the company. All the policyholders, all the invoices, all the agents, and all the claims. “

You ask if he uses a computer to generate such reports.

“Hell, no! My wonderful secretary, Katherine, does all this work for me. I’m too busy to be bothered to use a machine. I just ask her for whatever I need, and she gets it for me. Sometimes I need some other information, if there is some kind of problem with a claim, for example, and she gets me whatever info I ask for.”

“One other thing I do want to do is to identify just who my customers are so I can offer some kind of discounts to just certain people. You know, low-risk ones like old people driving Plymouth Reliants and people with good driving records who drive less than 100 miles per week. I think that could really be good for business.”

“I know we probably aren’t doing things the best ways, so I want you to tell me how to do them better. I understand information systems can offer big returns on investments. Remember, I want to be able to do more for less, so if you see any scope for doing away with wasteful activities, you just let me know! I would like to eliminate these activities…” He smiles and chuckles to himself.

You ask if there is anything else.

“Nope, that’s all I can think of for now. Katherine will take you around to meet some of the key players here; I’ve got a tee time in 15 minutes. If there’s anything you need, you just let me know. I’ll be looking forward to your results!”

Katherine Talisker, personal assistant to John Dewar

“Greetings! I see you survived his meeting. John can be a little intimidating at times, but he’s relatively harmless. Besides, I’m really the one who does all the work around here. He gave me this list of people he wants you to talk to. If you’re ready to go…”

You ask her if she has a few minutes to discuss what she does.

“Oh, sure. Well, I basically spend most of my day looking up information for John. Those master reports he showed you are pretty easy; each department generates them once a week or on request. But it’s the special requests that are tough. Usually I have to walk down to the Policy Department, on the first floor, look through their computer system or the filing cabinets to find the policy info, then walk up a floor to Claims and do the same thing all over again. I usually have to talk to the policy agent, but they’re never in the office so I wind up waiting a while for that. If it’s a personnel or payroll issue, they’re in Waterloo, which is about 100 miles away, so that’s usually a phone or fax. Legal is in Corydon, about twice as far away, but fortunately I don’t have to talk to them as much.”

“Sometimes he asks for things I just can’t find out! Like the other day he wanted to see all the claims processed in the past year from 18-24 year old drivers who were found to be at fault. I told him that would take a while, because I would have to match up all the claims to all the policy records. John is so impatient sometimes, and I wish I could get these answers faster, but I just can’t! There’s just too much information, and it’s all over the place.”

Colleen MacCallan, Policy Department Supervisor

“Hello! Welcome to GPAIC. As you can no doubt see, things are a little busy here. It’s always like this. We do a few things in this department, all related to policy applications and records of course. I’ve worked here since it was founded, so I know this department inside and out. Even now that I’m supervisor, I still wind up helping out when it is really busy. Most of our time is probably spent handling new policy applications. We also have to generate reports for…”

You interrupt and ask if she could explain how an application is handled.

“Oh, sure! Well, customers fill out one of these application forms, usually with an agent. Sometimes they are faxed in, sometimes mailed, and sometimes the agents drop them off when they get back into the office. At any rate, we stamp them the day they come in, and enter that information into our computers. That way we can store the original in a file cabinet and cut down on paper. Sometimes we need to contact the applicant if information was missing or illegible. Then, we need to check with the Department of Motor Vehicles to validate that the applicant really does own the vehicle. The Indiana DMV is tied directly into our computers by a modem, so we don’t need to send them any paper. That is pretty new, about a year old, this is much faster than what we were doing before! John Dewar came up with the idea originally. So far it has worked pretty well, and the DMV seems to like it too. Later that day they'll send us back a copy of the vehicle registration that we requested.”

“So once we have that, the registered owner is compared to the applicant. If they don’t match, we send a rejection letter to the applicant and update the application status in our system. If the info matches, we send a driving record request to the local police department to obtain information about arrests, citations, accidents, etc. That usually takes a day or two for them to send the record back. Once we get it, it’s evaluated against a set of company standards and is either acceptable or unacceptable. You ought to see some of these records – there are some real winners with lists of accidents as long as my arm! Those get the reject notice real fast. But sometimes I get a request from above to go ahead and approve an applicant anyway; I don’t ask why, I just do it. If all that goes OK, then we issue a policy and update our computer records again. We also notify the agent of the status. All the policies are on a billing cycle, so every week we run a report to generate policy invoices that get sent to the customers.”

You ask "how many applications do you handle in a day"

"It depends, we receive about 100 to 150 new applications a day. Of course, all of them do not get accepted and some 15% are rejected after we verify their driving record and other details. In addition, we do have a lot of modification requests - you know people move or buy a new car. I'd say 25% of our policyholders modify their policy each year.

You interrupt "How long dos it take to process a policy application?"

Well, from the time we receive an application we take about a week to complete the processing. But you know most of the time is waiting for information from the DMV or the police department. For us it takes around 30 minutes to process a new policy application and set it up in our system- if all the information is clearly filled out in the application. If not, we have to call up the person and get the details - if we cannot reach the person when we call, we notify the agent who handled the case and wait for them to get back to us with the necessary information.

“But that is just part of what we do! We also update payment information, process cancellation requests, and modify the policy data in other ways. Sometimes, the policyholder requests a change, like a different coverage limit, and sometimes the requests come from management or from an agent. For example, an agent can meet with a customer to change the limits of coverage on a policy and the agent contacts us with the changes. Either way, we first have to verify all the policy data, then sometimes we have to calculate a refund or balance due and send either a refund or an invoice to the customer. For cancellations we also record a reason for cancellation”

"How long does it take to process these policy modifications?"

It depends on what the customer wants. If it something simple like change of address it doesn't take much time. If the modification involves including a new driver the process takes as much time as a new policy application, changes in policy options take somewhat lesser time than adding a new driver. By the way, 80% of the modifications involve address change and change to policy options.

“We also generate a lot of reports. Once a month, we generate detailed reports: a policy master listing, an invoice master listing, a policyholder master listing, and an agent master listing. There are monthly summary reports that the president likes to see: policies by agent, invoices by policy, and policy by vehicle type. The monthly exception reports list policy invoices past due, rejected policy applications, and canceled policies. We also handle special requests from Legal, Claims, or Agents requesting policy data, invoices for a policy, and policy payments, just to name a few. Since we’re the only ones who have all the policy data, they have to come talk to us. It takes a lot of time to answer some of these queries, but since we know where all the information is, it’s much quicker for us to do it that to let them poke around.”

You ask if the other departments have access to the policy computer system.

“Oh, no! We don’t want anyone changing the data in there! We work very hard to keep it correct, and we want to keep it that way. Even so, sometimes we still have problems with agents who like to do everything themselves. They keep copies of policy information in their office, but never bother to check if it is current, and sometimes make some mistakes when talking to customers. “

“I understand that John wants to improve efficiency and cut time and money with some sort of new computer system, but I don’t see how things can be made much faster here. After all, we are already using computers to type in a lot of information. The real problem is in claims! They’re the ones taking 90 days to process a simple claim!”

Michael Chivas, Claims manager

“Oh, you just came from Colleen!” Michael rolls his eyes. “She thinks that Policy is always right and never causes any problems. Far from it! They probably cause most of the problems around here. I’ll bet she gloated over her computer system.”

You cautiously nod your head in agreement.

“Anyway, you’re not here to listen to all my complaints. As far as customers are concerned, this is the most important department. After all, when you wrap your car around a tree, you want us to respond fast, right? So that’s why our response time is a problem. I’ve been spending most of my time trying to fix the problem, and I think that if I show you what we need to do everyday, you may be able to help us.”

“We’ve got room for a dozen phone operators here to answer calls from people who got in accidents, and from our agents. We also have a couple of fax machines. Usually, a customer or agent calls us to report an accident. If they have a fax machine, we fax them an automobile loss notice; if not, mail has to suffice or an agent visits them. We average twenty new claims per day, but we hate bad weather here – the phones sometimes ring off the hook! ”

“Anyway, the customer fills out the form and sends it back. We have a computer system, too, and we punch in all the information from the form and save the original paper. The next step is to head over to Policy to pull the person’s policy information. Once we have the matching policy, we determine whether the claim is covered under that policy. If at least two damage estimates are included and the claim is covered, we mark it as pending and can continue. We enter information off the damage estimates such as the company name, description of the damage, and the amount. If estimates are missing, we generate a notice to send to the customer, and the claim is marked as pending until we receive the estimates. If it is not covered, the claim is rejected, the claim status modified, and the customer notified of the claim rejection. ”

"How long does this process take?"

Well the whole process takes about one and a half-hours for each claim. We spend a lot of time trying to get the matching policy information and making comparisons to see if the claims are covered. This is an important step - if we mess up, we could be coughing up a lot of money on bad claims. We try to do our best, but I suspect that some bad claims slip through. Sometimes, the agent might press us to process a claim quickly and we hurriedly okay the claim. My guess is we could probably cut down our claims payment by 5% if we are more diligent. But we are already under fire for taking 90 days - I am sure John would have highlighted that to you by now..

What do you do when the claim involves collision with another vehicle?

“If this accident involved a collision with another vehicle, a police accident request is sent to the DMV, and the status of the claim is modified as pending. The DMV gets the accident report from the police officer at the scene, then they do their own processing before sending us a copy. They are usually pretty good about things – maybe two or three days. Once we get the accident report, it is determined whether the customer was at fault.”

“If they were not at fault or not in a collision, a claim payment is generated and sent to the policyholder, and the claim is updated to include the payment date and amount. If the policyholder was charged, a claim payment is still made, but we notify Policy to update the policy records with the date and amount, and give the person a higher rate. If there are too many accidents, I guess they'll drop the person. After we get the accident report it takes another 2 hours to process each claim”

You ask what would help speed up the process.

“That’s really what we’ve been trying to find out! Some of these actions are really out of our control, like waiting for the claim form, estimates, policy info, and accident report. Once we have them, the process is pretty quick. I think if we could get instantaneous access to policy information, we could send out estimate and accident report requests as soon as we get the claim form. Right now, my staff spends most of their time hunting down information, so we have a backlog of claims forms to process. That is wasted time, to me – a claim form should never have to wait to be processed; we should be able to request the accident reports and estimates as soon as a claim comes in. Part of that 90 day figure is spent just waiting for the claim form to come in; not everyone faxes them.”

“We also have to generate some reports once a month: a master listing of claims, and a listing of claims by vehicle type and claims by policy. There are some monthly exception reports, too, rejected claims, and claims without estimates. Quite often we get special requests from management, legal, or Policy about claims against a policy, claim payments, or estimates for claims. So another portion of our time is spent answering other people’s questions. Agents also bother us a lot with questions, since their customers ask them about the status of a claim, why their rates are high, etc.”

“I hope you have some good ideas to help shorten this processing time; from what I know of John, he’ll be really disappointed if you can’t!”

Rob Glenlivet, agent

“I’m afraid I only have a few minutes to spare, so we’ll have to make this quick. Like all other agents, I’m responsible for a 75-mile radius. I’m based out of Speedway, but we also have agents in Corydon and Waterloo who have to travel as much as I do. Most of my day is spent on the road talking with customers. I get paid on commission; time is money to me!”

“The biggest problem I have is the inconvenience of not being at the office – I can’t look up all the information that I need when I’m talking with a customer. And if a policyholder calls me with a specific question, I usually have to call headquarters, get someone to look up the info, then call the policyholder back. I can tell that they are sometimes annoyed that I can’t respond instantly.”

“And all the forms are getting tiresome, too. If they have to be entered into a computer once I send them in, why do I have to fill out a paper copy with a customer anyway? Wouldn’t it be possible for me to just enter it directly in and save a lot of time that way? I also wish it were easier for me to check on the status of a customer’s policy application or claim request. I understand that it will take some time to process these things, but people are impatient! It really would help if I could tell them the exact status of their request when they call me; most people are reasonable if you can explain what is occurring.”

“Well, sorry this was so short, but I have to run. Let me know what you can come up with!”

Austin J. Laphroig, network administrator

“So you’re the poor sap who gets to fix these systems? Good luck! … I’ve only been here four months, and I’m already sick of this place. I mean, this is ancient stuff – we’re talking 486s and customized Paradox applications for the front ends in some cases! We, me and my assistants have been hounding John to buy into a new system and it seems that he has finally realized the importance of investing in IT. So I imagine you've come to me to get all the dirt on this place. You should understand that I've worked here in Speedway all the time I've been here, so I can only give you the info on the systems here. If you want to know anything about the satellite branches, I can hook you up with those guys."

You empathize with him and say, "Yes, what is the computing infrastructure that you're currently using?"

"Well, the policy department has an AS400 server with ten PCs networked to it. They also have 2 standalone systems that are used for word processing and other secretarial work. Basically, everything is traditional client-server, with SQL Server as the back end, and custom apps on the front. We use 802.3 Ethernet with a bus topology to keep costs low."

You interrupt "How about claims processing?"

"The claims system in on separate server - they have their own system that is not linked with the policy system. We have an NT server with about a dozen clients. They're all on a TCP/IP 802.3 Ethernet network, which is primarily on 10BaseT cabling. All the clients are NT Workstation (4.0) terminals - we recently upgraded the machines in claims. We completed that back in 1997."

The phone rings. “Excuse me, let me get this call. Hello, AJ here. Hey Mark. … No kidding? Great! That sounds like an awesome position, but you know how I feel about NYC. Listen, let me call you back later. … The end of the week? OK, I’ll decide by then. Yeah, bye.”

Austin looks at you with a smirk. “Damn headhunters … I can’t get anything done around here. Anyway, where were we? Oh yeah…most of my time is spent tuning the server, making backups of the policy and claims databases, and troubleshooting minor network problems. I've got some grunts workin' for me doing the core trouble shooting. So there's nothing exciting or cool – that’s the problem!”

You smile and ask "Do you have any other computing infrastructure in the organization?"

"Yes, we do, but you perhaps may not be interested in them. From what John told me you folks are going to focus more on policy and claims. Anyway, the human resources department has an old VAX machine on which they run their payroll. Most employee personal records are also stored in the system. The HR folks have got used to it, but it is a nightmare to get tech support for these machines. I personally don't think it is up to spec for Y2K, but no one has made that a priority here. Anyway, Finance and legal also have their separate systems. The finance and HR people exchange tapes to transfer data between their applications." Austin says under his breath, "A sneaker net for god sakes."

You inquire, "Can you tell me any more about the systems at your field offices at Corydon and Waterloo?"

"Nothing much, I only hear of what's there through our departmental meetings and their complaints'. Nonetheless, I think they have standalone desktops to take care of routine office functions. Corydon has something like four PCs and Waterloo has five PCs. They're a little more advanced since they've been setup later than this office complex. Still, all data processing is done here at the head office, but we're not directly linked to the field offices."

Eric Lagavulin, general counsel, Legal Department

“Well, it’s not often we get someone here who wants to talk with us! You can probably guess what we do, handle lawsuits, damage settlements, and various sundry legal tasks. Sometimes we are called in to handle personnel issues – you must have seen how Dewar likes to fire people! We clean up his messes quite often. We usually never deal directly with the customers, generally most of our work is between GPAIC and other insurance companies in a multiple-accident situation, or a no-fault accident. What we need from the rest of the company is complete and accurate information about an individual – their policy information, claims, driving record, everything we’ve got.”

“Usually, we get this by phoning the departments, since we are 90 miles from them, and 240 away from human resources. Most of the time they do it right the first time and give us everything we need, but sometimes there is information obviously missing and we need to go talk to them to straighten things out. For legal purposes, we need certified copies of the original documents; I’m afraid computer generated reports don’t hold up in court.”

“One concern we have about the computerization is the accuracy of the data in the systems. Since the original forms are the legally binding contract, it is important that the information on them is transcribed exactly as it appears into the system. We’ve had numerous cases where the data was not verified, was found to be incorrect, and GPAIC had to absorb a loss.”

Judy Aberlow, Human Resources

“Well, it’s nice to see someone trying to make the company more efficient in a manner other than firing people! I guess John has finally realized that employees need to have certain tools to do their jobs. Most of the work here is handling employee benefits, hiring, and firings. Nothing much exciting, unless we have a problem with an employee. In that case, we usually call up Legal first thing and they send an expert to deal with it. Sometimes I talk with the other departments to handle employee transfers, bonuses, promotions, and so on. Then I fill out and employee information modification form and send it over to payroll so the monetary end gets adjusted.”

“We have all the human resources records computerized; it’s much easier that way. All their benefits, performance appraisals, and personal information are entered in here and maintained by us. I’ve heard that some companies are allowing employees to check and modify their benefits online. That would save us some time!”

Conclusion

You return back to Dewar’s office, where he was relaxing, scratching a sunburn from his long day of golf. “So, I gather you had a busy day talking with everyone here! Scotch?” He offers you a glass from his decanter. “Hopefully you can see the extent of the problems here and why I think information technology can make this place run more efficiently. I want you to make sure our core business functions can take full advantage of computerized systems. By the way, how much do you think it will cost us for the whole project?”

You say, “We do not have a magic figure yet….. We got a fairly good picture of the activities here and what you expect us to do. We will work with this information and submit a proposal in a week’s time…”

Dewar interjects, “That seems like a plan, but keep in mind that I do not want to spend more than $400K on the whole project. That includes the computers and whatever you may need to implement the system. Can you handle that?”

“I think so,” you manage to gasp, the sip of amber liquid burning a path to your stomach.

Dewar leans over the desk, staring you straight in the eyes. “You better do more than ‘think so’ if you want to get your fees!”

Appendix A: Map of Indiana

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The importance of insurance

2011-07-22T06:36:00.000-07:00

The importance of insurance

Insurance is used as financial protection for a variety of personal and business purposes – for example, to protect income, repay debts, or provide for dependants. To minimize the loss that may result from your death or serious disability, it’s important to implement suitable protection strategies.

Protect your greatest asset – your income

What is your greatest asset? Your home and its contents? Your car? Your life? Many people insure these assets, yet, all too often they don’t adequately protect what is potentially their greatest asset – their ability to earn an income.

Take a moment to consider what could happen to your lifestyle if you were unable to work for an extended period due to illness or injury. Your expenses could quickly run down your savings. You may even need to sell your investments to make ends meet.

By taking out income protection insurance you can protect your greatest asset and avoid putting your family’s lifestyle at risk.

If you suffer an illness or injury and are unable to work, income protection insurance can pay you a monthly benefit (usually 75% of your pre-tax income) to replace lost earnings. You can generally claim these premiums as a tax deduction.

You can choose a range of benefit payment periods, with maximum cover usually up to age 65. You can also choose a range of waiting periods normally between 14 days and 2 years.

Eliminate Debt

If you’re like most people, you’ve used debt to finance a range of lifestyle purchases, including the family home. However, if you die, the loan repayments will still need to be made, even though the salary your family has relied upon is no longer available.

Your loan documents may even contain a clause that requires immediate repayment if you die or become disabled. However, sometimes this is not feasible, and the only option may be to sell the underlying asset to repay the lender. When this asset is your family home, your dependants could be in the unenviable position of either having to re-finance the loan or sell and downgrade their residence.

Maintain your family’s lifestyle

You also need to consider whether your family will be able to meet their ongoing expenses.

Death, permanent disability or a serious medical condition can have a big impact on a family’s finances and standard of living. If something should happen to the main breadwinner, the emotional strain could be significant.

Protect the homemaker

It’s also potentially dangerous to overlook the insurance needs of the person who predominantly takes care of the home and the children.

If something should happen to the homemaker, the family can suffer financially, as well as emotionally. Despite advances of modern technology, there are still plenty of things that need to be done around the house and hiring someone to provide home help and child care services can cost a lot of money.

To protect your household (and avoid putting a big dent in the budget) it’s important to include the homemaker when developing suitable insurance strategies for your family.

Keep your business running

While income protection insurance should still be considered, it’s also important to protect the very thing that generates your income – your business.

By taking out business expenses insurance, you can cover certain ongoing expenses and keep your business running while you recover.

If you are self-employed or in a small partnership, business expenses insurance can help you meet 100% of your share of eligible business overheads, should you be unable to work due to illness or injury.

This can help keep your business afloat and ensure that, in the worst case scenario, there is still a business to sell should the need arise.

Expenses that can be covered with this type of insurance typically include, amongst other things, office rent and mortgage payments, equipment or vehicle leasing costs and utility bills such as electricity, heating and water.

Cover the key person in your business

The most valuable business asset is the one that produces the most profit – your staff. Material assets can be easily replaced, staff can not.

The loss of a key staff member can have a substantial impact on profitability, operational management and the goodwill of your business. Many businesses also find there are no suitable candidates readily available within the organization and it can take substantial time and money to recruit and train an external replacement.

By covering your key person, you can help fund the loss of a valuable employee by providing an injection of cash for a revenue or capital purpose.

Establish a Will for your Business

Establish a Will for your business by creating what is known as a Buy / Sell Agreement.

A Buy / Sell Agreement is a legal contract which can facilitate the orderly transfer of a person’s share in a business to the remaining owners when certain trigger events occur (such as death or serious disability).

To help fund the transfer, the agreement normally uses life insurance so that sufficient capital becomes available to buy out the departing owner’s share in the business.

The advice contained herein does not take into account any persons particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a Financial Product persons should assess whether the advice is appropriate to their objectives, needs or financial situation. Persons may wish to make this assessment themselves or seek the help of an adviser. No responsibility is taken for persons acting on the information provided. Persons doing so, do so at their own risk. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.

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Teaching resources prepared by Soochen Low and Suzanne Benn

2011-07-22T06:35:00.000-07:00

Teaching resources prepared by Soochen Low and Suzanne Benn

Learning Objective/Requirement:

Whose responsibility is it to ensure the sustainability of the workforce?

Are large companies who promote their human sustainability programs addressing all forms of human sustainability?

Summary of Resources:

IAG case excerpts

Compilation of newspaper articles about the Preferred Smash Repairers dilemma

List of suggested questions for class critique and discussions

Attachments:

Complete version of IAG case

SUSTAINABILITY AT IAG[1]

Suzanne Benn and Louise Wilson

March 2006

Overview of IAG

IAG is currently Australasia’s largest general insurance group – in 2004 it insured more than $800 billion worth of property. In 2004- 2005 the net profit attributable to shareholders was $760 million, up $95 million from the previous year. The Group owns the following insurance brands: NRMA Insurance, SGIO, SGIC, CGU and Swann Insurance in Australia, and State Insurance and NZI in New Zealand and CAA and RSA in Asia.

The organisation has been through significant change and growth since 2000. Mike Hawker became CEO of NRMA Insurance Group Ltd (NIGL) in September 2001. In November 2001, shareholders of NIGL approved a change in name (to Insurance Australia Group Limited) to better reflect its size, diversity, geographical distribution and its aspirations. In January 2003 IAG acquired CGU and NZI. IAG has grown from 6,500 staff in 2002 to 12,000 in 2005 and over this period the share price has risen from $2.80 to $5.40.

Sustainability at IAG is defined as being about ensuring the organisation is around in the future for its customers, employees, community and shareholders. That involves:

economic sustainability (building value for shareholders),

human sustainability (safety, work-life balance, diversity),

environmental sustainability (advocating climate change, reducing impact on environment),

social sustainability (reducing risk in the community such as crime, fires, car accidents etc).

The IAG Sustainability Report (2005) states that the company has made significant achievements towards becoming a sustainable organization. These achievements include:

Significant advancement in the firm’s risk reduction community initiatives, in the areas of road and home safety, crime prevention, workplace safety and climate change.

Dramatically improving the firm’s Occupational Health and Safety (OH&S) performance.

Employees feeling positive about working at IAG, with 73 percent of respondents to the annual survey saying they value IAG’s focus on balancing social, environmental and financial responsibilities.

The firm is very prominent in the corporate sustainability discourse in Australia and plays a strong advocacy role. For instance, in 2004 the firm was awarded the ‘Sustainable Company of the Year’ by Ethical Investment Magazine. Its Sustainability Strategy and Objectives include: Development and Board endorsement of company wide ‘Commitment to Sustainability’ incorporating IAG’s handling of human rights, stakeholder engagement, employee protection and environmental considerations’ (IAG 2004). It has published two Sustainability Reports (IAG 2004b; IAG 2005).

However IAG faces challenges in the following areas:

Although IAG has implemented strong initiatives to improve its own environmental performance, it did not meet all of its environmental targets for the 2005 financial year.

Uncertainty and debate with some smash repairer groups about reform in the smash repair industry in New South Wales.

Changing the supply chain

The sustainability of the smash repair industry is essential to IAG’s business. This industry is currently at a crossroads with more than twice as many repair shops per vehicle in Australia than in the United Kingdom. IAG has taken steps to help the industry by investing $10 million over four years in apprenticeships, traineeships, business management training and succession planning courses. In 2005 IAG introduced a new Care & Repair service in NSW, a system that successfully operates in Queensland, Western Australia and South Australia. This service allows customers to take their damaged vehicle to one of IAG’s assessment centres. However there has been uncertainty and debate in NSW with the repairer groups about this system.

As part of the broader industry reform agenda, IAG established a network of Preferred Smash Repairers (PSRs) and although it encountered some criticism, the PSR strategy does enable management and control of environmental sustainability performance along the supply chain. The PSRs are selected based on factors such as operational performance and IAG’s business needs, and are assisted by IAG to improve their operating efficiency, including their environmental and safety performance. The PSRs are also being assisted to develop a waste strategy which will reduce both operating costs and environmental damage.

Another tool designed to align IAG’s environmental and economic goals through supply chain management is the Risk Radar tool. This online training tool aimed at building safe, environmentally sound workplaces is the first sustainability product for the IAG Group. Members of the PSRs network can obtain a discount on commercial insurance if the training plan is implemented and safety and environmental standards are met. The key idea is to offer financial incentives for behavioral changes which will reduce insurance risk. The tool is targeted at smash repairers, but it is currently being modified for use by farms and other businesses and has recently won the United Nations Association of Australia Triple Bottom Line Award.

Reducing Risk in the Community - Community Programs

A shared understanding of the central importance of safety is crucial to achieving IAG’s aim of adding stakeholder value through enabling a safer community, roads and workplace. To further this aim IAG has developed partnerships with community groups at a local, state and national level. One such partnership is with St John Ambulance. This is the first time St John Ambulance, initially reluctant to partner with a corporate, has taken part in such an initiative. The partnership involves St John becoming the primary supplier of First Aid training to IAG with free four hour First Aid training sessions being made available to all IAG staff. The long-term aim is to offer free First Aid training to all policyholders in order to reduce personal and community risk. The two organisations often put out co-branded communications and have commenced work on a number of other awareness raising and mentoring programs.

IAG also funds community grants with the aim of increasing staff involvement with the community. Over $10 million per year is spent on community programs. In one example, a community grant supported a young crime offenders’ program in Newcastle where indigenous community leaders and elders work with the police running cultural camps. The local managers of NRMA Insurance and the IAG employee who nominated the grant went to the camp. The feedback from this program has generated staff engagement and an awareness in the organisation of community based problems. Links have now been developed with the Newcastle Police who have recently approached the organisation to offer ‘drink drive’ and other education programs.

Another program has entailed the purchase of a crime prevention van for the NSW Police Service, staffed by an IAG employee and a police education officer. The van is fitted out with demonstrated ways of reducing risk in the home and is being piloted in three regional areas. The value added to the community is being assessed through reported number of burglaries. Moving forward, the NRMA Insurance data bank will be used to identify priority areas for this vehicle.

The role of the Flexibility and Diversity Team

The role of the Flexibility and Diversity team is to raise the sustainability profile, seen through the lens of work-life balance and diversity. The team is charged with lifting the awareness levels of management about diversity. One result has been a doubling in the number of indigenous employees. A key step in raising awareness is consideration and support of the initiatives at the local level.

Rather than the corporate view on sustainability, this IAG team has the responsibility to interpret sustainability through frameworks that establish a flexible working environment for the individual employee. The goal is to create a flexible workplace to enable work-life balance and a diverse workforce to facilitate equality. Primary drivers are higher rates of attraction and retention.

While the IAG Enterprise Agreement has a suite of flexibility options such as career breaks, work from home, flexi-time, childcare, emergency personal leave, childcare leave on top of parental leave, the issue for the team has been implementing these goals in a smaller department. A current initiative aims to develop a more flexible work-pool focus in the highly structured work environment of Customer Service. There is strong commitment across the organization to improve the representation of women in senior management. In 2005 women occupied 15 percent of executive and 30 percent of senior management positions. A mentoring program has been established involving four senior women in a Chief Executive Senior Women Mentoring Program. The focus is on raising awareness rather than structural change. At an operational level, all managers are required to attend Equal Employment Opportunity training (with a focus on legislative and practical implications). The underpinning message is that workplace equality is essential.

Monitoring Occupational Health and Safety (OHS)

The first internal annual OHS report (2002) showed IAG’s OHS performance was considerably poorer than the average insurance company. It stated:

· Number of claims per 1000 employees is around five times the industry average

· Average claim cost is 44 percent of the industry average

· Total claims cost per employee is around 2.2 times the industry average (Workplace Health and Safety IAG 2002)

This indicates that IAG experienced a greater number of smaller claims than similar organisations with the total cost per employee being slightly above double the industry average.

The report also stated that IAG systems may encourage a greater rate of reporting than other organisations (although still under-reporting of actual occurrence) and may reflect more pro-active management of claims. This revelation shocked the organisation into instigating governance measures designed to monitor and measure safety. The OHS Management system was structured to align with AS/NZS 4801 capturing the elements of policy, planning, implementation, measurement and evaluation, management review and continued improvement; with a focus on a number of underpinning key priority areas:

· Leadership

· Communication

· Use of technology

· Decentralizing management of risk

In implementing the safety management program, IAG made the link between cultural change and safety, as well as using results and data to continue to drive motivation forward.

The safety program at IAG is led by an organisation-wide Steering Committee composed of the CEO and ten executive/senior managers from across the organisation. To support the Steering Committee is a specialist OHS team. This team includes psychologists, nurses, and business risk managers, who are provided with data analysis support. Under a consultation framework developed with the Finance Sector Union, agreement has been reached to have at least one representative, trained in OHS consultation, at each site as point of contact and as a technical resource. This has resulted in a network of more than 300 OHS Representatives and 20 building OHS Committees consulting on local and corporate OHS issues.

As a large workers compensation insurer, IAG recognises that it must practice what it preaches to maintain credibility of its sustainability profile. The besafe program was instigated to work right throughout the organisation to reduce workplace harm and foster a safety culture. The besafe initiative was complemented by a range of other OHS process-based initiatives including the development of online OHS training for all employees (currently completed by 84 percent of all employees), compulsory manager training, the introduction of an electronic accident and incident reporting process, and Risk Radar (an online OHS self-assessment process for all worksites). These technical improvements assisted in generating awareness, promoting leadership and decentralising risk.

The initiatives resulted in a 20 percent reduction of workplace accidents in the 2003-2004 period, with a further 22 percent reduction in LTIFR (Lost Time Injury Frequency Rate) in 2004-2005. IAG has also realised a 57 percent reduction in workers compensation claims costs in the 2004-2005 year. Outstanding improvements in the annual culture survey confirmed the clear link back to employee engagement.

Further internal processes such as a timely reporting rate, timely follow up, OHS training rates, quality of managers’ comments as well as types and costs of incidents, are collated and reported internally on a monthly basis. This information helps to maintain and drive the commitment to cultural change, as well as highlighting potential issues that may arise. The main injuries are slips, trips and falls which involve smaller cost claims. However, the big causes of concern are the increase in stress and over-use injuries. The safety program is currently targeting ergonomics, stress and driver safety, where the potential for injury is very high. Local health and wellbeing initiatives are also helping to address the main causes of concern. Safety and community work are linked through the IAG relationship with St John Ambulance, a relationship which is unique to the insurance sector, with corporate leadership now being demonstrated through success in a number of awards (including the NSW WorkCover 2005 Safe Work Award for Best OHS Management System).

REFERENCES

Carruthers, F. and Cornell, A. (2005) ‘End of the Dry Argument’, Australian Financial Review, 9 December.

IAG Pty Ltd, (2004) We’re Listening …, Summary of results – Community Issues and Priorities Survey 2004, IAG. Available HTTP: (accessed 10 August 2005).

IAG Sustainability Report (2004) The Fewer the Risks the Better for Everyone, IAG. Available HTTP: (accessed 15 September 2005).

IAG Sustainability Report (2005) Its Just Good Business, IAG. Available HTTP: <http://www.iag.com.au/pub/iag/sustainability/publications/report/2005/index.shtml> (accessed 4 December 2005).

IAG Stakeholder Relations (2004) Improving the community’s understanding of insurance, IAG Community Education Strategy Discussion Paper.

Jaques, E. (1986) The Requisite Organization, Arlington: Cason Hall and Co.

Workplace Health and Safety IAG (2002) 2001-2002 Workplace Incidents and Occupational Compensation Claims Report.

Compilation of Newspaper articles documenting the situation with the Preferred Smash Repairers

You can access these stories directly from the publisher’s websites, or through your libraries, or databases that your institution may subscribe to. You might also try running the titles through a search engine. Unfortunately we can’t provide them to you here because they’re copyrighted.

Danks, Katherine. 10 August 2005. Insurer gets approval for web system. p.3. The Age. www.theage.com.au.

Baden, Samantha & Jean, Peter. 23 August 2005. NSW: Anti-steering legislation proposed for NSW. Australian Associated Press General News. http://aap.com.au/index.asp.

25 August 2005. NRMA action cripples an industry. p.1-12. Manly Daily. http://www.news.com.au/archives/.

Lampe, Anne. 22 November 2005. The great divide. The Sydney Morning Herald. p.13. www.smh.com.au.

Moullakis, Joyce. 13 December 2005. IAG presses for Staysafe report. Australian Financial Review. p.47. www.afr.com.

CLASS DISCUSSION

Review the IAG case study and the series of newspaper articles documenting IAG’s challenges with the Preferred Smash Repairers.

After reading the IAG case study, what are your impressions of the company with regards to its HR policies?

After reading the newspaper articles about the Preferred Smash Repairers, has that changed your initial impressions of the company? Why/why not?

Do you think that IAG’s policies or actions where it concerns the Preferred Smash Repairers are consistent with its sustainability policies? Why or why not?

Whose responsibility is it to ensure the sustainability of the workforce? Discuss.

Should an organization include in its policies to look after its external work force? How would you monitor this (what measures) to ensure that this is sustainable?

What kinds of conflict does IAG face in trying to put their human sustainability policies into practice?

Reflect on the challenges facing companies regarding internal and external HR issues- are the external HR issues part of their corporate social responsibility or does it end at a certain point?

[1] Please note that this case version has been modified for the purpose of this exercise. For the complete version, please see your lecturer for a copy. All information has been supplied and approved by IAG.

Articles, ideas, think, remind motto, story, article I, article and think, article,poem, short stories, novels, stories, travel, life insurance, health insurance

Frequently Asked Questions

2011-07-22T06:33:00.000-07:00

Frequently Asked Questions:

1. My child is covered under both parent’s policies, how do I know which insurance is primary?

If you are lucky enough to have two insurance policies covering your children it is easy to determine which one is considered primary…..The insurance companies all agree on the “Birthday Rule”….

Whichever parent’s birthday falls first in the year…That insurance is primary…. They use the month as the determining factor…. NOT the year. For example: If Mom’s date of birth is 6/1/63 and Dad’s is 12/1/62…Mom’s insurance would be considered primary and Dad’s is secondary.

Exceptions to this rule:

If your child is covered by any other insurance in addition to Tricare ….That insurance will be primary and Tricare will be secondary regardless of the “Birthday rule”.

If your child has an individual policy but is also covered under a parent or guardian’s policy…The child’s individual policy would be primary.

If your child is covered by Medicaid or a Medicaid HMO, this insurance will be secondary to any private or commercial policy including Tricare.

2. If my child has Medicaid, do I HAVE to give you any commercial policy information that they may have?

Yes….We MUST file any commercial insurance prior to filing any Medicaid policy…It is considered insurance fraud if you do not disclose that information…Medicaid is ALWAYS considered a secondary policy if any private or commercial insurance is owned.

3. Will you bill my secondary insurance?

Yes… we will file your secondary insurance after we have received payment and/or the Explanation of Benefits from your primary insurance.

Articles, ideas, think, remind motto, story, article I, article and think, article,poem, short stories, novels, stories, travel, life insurance, health insurance

Revenues from premiums	46,250
Revenues from investment activities	7,425
Expenditures on claims	23,325
Total operating expenses	26,050
Taxes Net Income	1,520 2,780

Teaching resources prepared by Soochen Low and Suzanne Benn


Learning Objective/Requirement:	Whose responsibility is it to ensure the sustainability of the workforce? Are large companies who promote their human sustainability programs addressing all forms of human sustainability?
Summary of Resources:	IAG case excerpts Compilation of newspaper articles about the Preferred Smash Repairers dilemma List of suggested questions for class critique and discussions
Attachments:	Complete version of IAG case