The Future of Insurance – Pt. II
Information storage occurs in bytes. First there were bytes, then kilobytes. Now? We have moved through terabytes and exabytes and we now measure data storage in yottabytes. What does all of this mean for insurance? Insurance loves the science of actuary. Actuary is the theory of large numbers. Give an actuary a sample with 1 million or more records, and they can reasonably predict things. They can tell you how many people will die, how many people will be in car accidents, and how many fires will occur. Historically, the theory of large numbers could tell you how many of these events would occur, but not to whom they would occur. Enter data storage and actuaries have more data around to plumb and review. They have determined new factors about traits we possess to better predict not only what will happen, but to whom.
When I first started to drive, car insurance was based on my age, where I lived, what I drove, and what my motor vehicle report looked like. Those are still important factors, but all of this additional data that can be mined allows carriers to understand characteristics that will make me more, or less, likely to have a loss. I call these “stability factors.’ The longer I go without a claim, the less likely I am to have a claim. This allows for carriers to provide “safe driver” and “accident forgiveness.” Some carriers provide renewal discounts the longer you are with them. Changing insurance carriers? Some carriers give discounts for the time you were with you prior carrier. Insurance companies love stability. Some give discounts if you review your insurance more than 8 days before the policy renews. Why? People who handle things before they are due are the same people who service their cars regularly, change the windshield wipers regularly, and that all translates to fewer claims and fewer claims means a lower premium.
Some carriers use credit while others use education. The average credit score has 350 unique aspects to it. Approximately 10 of those unique aspects tell whether I pay my bills on time. Paying your bills on time indicates stability and stability indicates the possibility of being involved in fewer accidents. On the other hand, some of these don’t make sense to me. I do not understand how I drive changes on whether I went to college. (Some of the brightest people I know didn’t go to college. Some of the dumbest people I know went to college.)
In the end, what we pay gets determined by an ever changing set of “underwriting” characteristics. The more we know about people, the more accurately what we pay will become. Prior to figuring out that smoking causes cancer, life insurance rates were all the same. Once they figured out the impact of smoking, non-smoker rates fell and smoker rates climbed. Those same things will continue as insurance companies continue to gather, store, and utilize all of the information that is available to them.
Stay tuned for the next installment that will deal with the smart house and accident avoidance technologies.
The Future of Insurance – Pt. I
It’s 1984 and little has changed in the insurance world. We still use manual typewriters. Insurance policies have $50 deductibles for home insurance and replacement cost protection for houses and contents doesn’t exist yet. Fast forward 35 years and the insurance world is entirely different. The fax machine has come and gone. Regular mail is almost a thing of the past and if it cannot be done on an app, one had better be in the design phase to correct that immediately.
The speed at which things used to get done was, by today’s standards, unbearably slow. Insurance is complex though. It is more complicated now, more than ever before. When I first started, if it wasn’t wind, fire, or lightning, there was a pretty good chance there was no coverage. Now? ID Theft is an increasingly important protection. You can buy coverage for a broken utility line. You can even get a car from Volvo on a subscription basis that has the insurance built right into the subscription. All of society’s changes create the expectation that everything can and should be done faster, yet all of these changes make the process of review and buying insurance more complicated than ever before.
In a series of upcoming blogs, we will address the ever changing landscape of available coverages. We will spend some time reviewing the concept of an insurance score, and I will discuss how technology, like the smart house, the internet of things, and accident avoidance tech will change everything… and nothing.
Safety Features Don’t Always Mean Savings
“But they said it would save me money….”
There are such fascinating technological changes occurring. Each day brings something new. I am old enough to remember when you actually had to wind up a window and if it was cold, you actually had to scrape the ice off your mirror. Now? The average American car is over $35,000. Why? Technology.
Bumpers that used to cost $400 now cost $2,400 with all of the sensors and built in safety features. Mirrors that used to cost $75 now cost $1,800. Why? Heaters, motors, blind spot detectors. Windshields used to cost $375, and we just paid $4,400 for one that needed to be at the dealer for 3 days to adjust the accident avoidance sensors in the new windshield.
If the you are told that all of this new technology will save you money on your car insurance, it may not be accurate. Some of this technology makes our lives easier like a mirror with a heater and motor in it. This doesn’t save you any money, it just increases the cost of the repair.
Insurance, like baseball, loves statistics. Some of this technology is so new, there just isn’t enough information for any insurance company to gauge its effectiveness at helping to avoid accidents. Even then, the technology doesn’t prevent the deer from running into you, the tree or hail from falling on the car, and it certainly doesn’t prevent the car without the technology from causing the accident.
Will all of this help in the future? Probably. Will it help right now? Not all of it, and in some cases it is just going to make insuring cars more expensive. Questions about the impact to the cost of your insurance when buying a new car? Just call us and we can review all of that for you.
The Trouble With Passwords…
I remember my best friend Butch’s home phone number from when I was eight. I remember my wedding anniversary and my children’s dates of birth. I cannot ever keep track of my passwords and user names. My solution? A password app on my phone. In fact, I make that app available to everyone in my office and in my family.
In addition, we all use the same family passwords to access phones. Why?
In insurance, we deal with the worst case scenarios all the time. What if you need to access banking records, your phone plan, or other electronic portals like credit cards? When my mother passed suddenly, we were unable to access her laptop or phone which meant we couldn’t get to her online banking, credit card statements, and all sorts of other portals. I thought my mom was “old school” and she would have at least written them down if she didn’t have a management app, but no such luck. She was so “old school” she just kept the information in her head.
Be sure to create a family system for password and user name storage. Make sure someone knows how to access your electronic information. You don’t need to show everyone every detail of your life, but make sure they know how to access your information if you cannot help in the process.
Cyber Monday & Online Safety
I remember a time when things were simpler. Phishing was what you did with your dad and granddad and, if you were lucky, it meant you had a delicious dinner that evening. No? Phishing is when nefarious people pretend to be legitimate business and cheat people. The use of what appear to be real emails from real companies bombard us all. The allure of these electronic communications are designed to catch us off guard and supply criminals with our personal information like credit card numbers, passwords, and login information.
What can we do to protect ourselves? Whether it is an email or phone call, never provide this information to anyone where you have not initiated the contact. Even when you are using your online portals, be sure to activate AND use two step verifications. (2SV) This 2SV will make sure that even if someone does get your information, they will not be able to complete the second step. This is important for anyone who uses Google Docs or Drop Box.
Pay attention to the login site and be sure to only access sites with the proper HTTPS-protected sites. For organizations, be sure to put a policy in place so that no one can authorize a financial transaction via email. Avoid publishing sensitive information on social media. While it seems basic, remember to review URL’s to make sure they do not direct you to an unknown site. Also, pay attention to generic salutations and grammatical mistakes.
There is an old adage that if it’s too good to be true, it probably is. Common sense goes a long way toward keeping you safe.
Online Safety & Protecting Passwords
One capital letter. One lower case letter. One “special” character and a number. Does all of that sound too familiar? Anyone with one-line access has had to create a unique user name and password for everything from Facebook to on-line banking. Keeping track of all of these is becoming increasingly harder, especially when some sites require that you constantly change the password. Making sure that you keep track of user names and ever-changing passwords is imperative. Writing down your passwords is particularly dangerous but you need to make sure that someone else can access these passwords if you are sick or worse.
In our office, we use a password management application on our phones. This allows everyone access to a system in which you can create a file including the user name and password for all of our electronic portals. Me? I have over 160 unique entries. While this is a challenge in the business world, it is equally challenging in people’s personal lives. One of the solutions would be to do what we do as a family. Like at work, we all use the same password storage app. We all use the same unique user name and password. If my wife needs a password from my app, she knows the user name and password and can easily access the information.
No entity will release a user name or password to anyone. Think you know all of the security questions to gain access? Be prepared. Take some time to sort out the best way for you to handle this important information AND make sure those around you, who you trust, can also access this information in the event you cannot due to sickness or death.
Space Heater Safety Tips
As a volunteer firefighter and insurance agent, I am not a huge fan of space heaters. Used improperly, there is a high likelihood of a malfunction and fire. We have banned space heaters from our office. We recommend that you do the same in both your home and office. If you do plan to use a space heater, we have compiled a list of important tips for safe use:
- Select the Right One: When you purchase a portable heater, be sure to buy one that is rated for your need. An electric space heater that is too large for a certain area will consume lots of energy and lead to higher utility bills. On the contrary, buying a portable gas or electric heater rated for a small space and expecting it to cover a large area will make it work harder to heat the space. Look for a portable space heater with overheat protection and fits your space.
- Over Heat Protection: Today’s portable heater models include a variety of safety features that help take a lot of the worry out of using them. A heater equipped with a tip- or tilt-over switch will automatically shut off if it’s tipped over for any reason. This is a useful control, particularly in areas with active children or pets. Room heaters with overheat protection switches function in nearly the same manner. It uses a temperature sensor, detecting when internal components become too hot. When an unsafe temperature is detected, the switch automatically shuts off the unit to prevent overheating.
- Safety Certifications: Portable space heaters that are listed by Nationally Recognized Testing Laboratories (NRTLs) have been tested, proven, and certified to meet specific safety standards. The manufacturers of these heaters are also required to provide important information about the safe usage and care of their products. Some common testing laboratory certifications to look for include UL (Underwriters Laboratories), CSA (Canadian Standards Association), and ETL (Intertek Group). If your product has one of these certifications, you can be confident it’s safe to use at home using the manufacturer’s instructions.
- Plug Directly into an Outlet: As a rule of thumb, plug a portable electric heater directly into an outlet with sufficient power capacity. Attaching an extension cord to the unit increases the chance of overheating, fires, and electrical shock injuries. If an extension cord must be attached, use one that is properly rated and sized for the portable heater appliance.
- Shut off and Unplug: Upon leaving an area, turn off the portable space heater and unplug it. Many models feature programmable timers that can be used to program automatic on and off times for when you sleep or head to work.
- Keep away from Water: Unless it is specifically designed for use in damp spaces, refrain from running a heater in a bathroom or a humid basement. Moreover, do not touch the heater if you are wet or have wet hands, as this increases the risk of electrical shock.
Phone A Friend: Lauren Coy
Frees Insurance is happy to introduce “Phone A Friend.” This series highlights friends and leaders of the Phoenixville community. Our phones have become part of our identities, so we got an inside look as to how these people utilize their phones in and out of the office.
Lauren Coy is the Director of Development for the Phoenixville Public Library. Most recently, she played an instrumental role in the Phoenixville Beer & Wine Festival, benefiting the Phoenixville Public Library.
Let’s Phone A Friend…
What is your most-used app?
Most essential app while traveling:
DuoLingo and AroundMe
Craziest place you ever lost or left your phone?
Nowhere. I’d be lost without it.
App you wish someone would invent?
Best books to read to match your mood
Favorite new app?
KEEP – the best variety of things to shop for and it alerts you when your wish list items are on sale.
Most recent Uber ride?
To Ardmore train station, to take the train to NYC.
Last app checked at night:
Twitter, always and forever.
Siri user? Most common command?
Yes, as I usually inquire about the weather and directions.
Cities listed on your weather app:
Phoenixville, Ocean City, NJ and Paris
Monday – Friday: 6:07am. No alarm for the weekend because why bother?
App/Game you wish you could delete?
I love deleting apps I no longer use.
Favorite Instagram user?
Actress Retta – @unforettable
Favorite Twitter user?
Writer Lauren Duca – @laurenduca
Favorite fitness app?
PocketYoga or My Fitness Pal
Number of unread emails:
Zero. I’d be far too stressed to not check and clear out daily.
Favorite song right now:
“HUMBLE” by Kendrick Lamar
Best productivity app:
None, because I use my handwritten lists.
What’s your phone case?
That’s Bananas case by Kate Spade
Big grin, wink face, salsa dancer, wine glass
‘My Favorite Murder’ or ‘Pod Save America’
Netflix: The 13th, Master of None, Grace and Frankie; Hulu: The Handmaid’s Tale, Seinfeld
If you would like more information about the services that the Phoenixville public Library offers, or if you would like to support the library, please click here.
Thinking About Driving For Uber?
Flexible hours and a “guaranteed” first month’s pay of $5000?! It seems too good to be true. It is. Don’t get me wrong, I am huge fan of Uber. I regularly use the taxi service in New York CIty, Washington DC, and even West Chester, PA.
For those of you who have yet to hear of Uber, it is essentially a taxi service run from your smartphone. You use the app on your phone to request a driver; they pick you up, take you wherever you want and you get out. The app securely stores your payment information and pays the driver. There is never a need to exchange money. It is safe, secure and convenient. One of the most unique aspects of Uber is that each driver works for themselves. Almost anyone can install the app and, assuming they pass safety rules and regulations, can begin driving for Uber and work as little or as much as they’d like.
But, and there’s always a but, who is responsible for liability and damage coverage for the driver, their car, and their passengers? Well, that is a very good question. Most insurance companies are trying to determine the answers to those questions too. There are three “phases” of coverage when driving with Uber. The first phase is the time when you do not have the app open. This is considered “offline” and you are required to carry personal auto insurance. The second phase occurs as soon as you open the app and in between trips. As soon as you open the app, your personal insurance policy will no longer provide coverage. Uber will provide bodily injury up to $50,000/individual/accident with a total of $100,000/accident and up to $25,000 for property damage. There is no coverage under your personal auto policy or Uber for damage to your car during this period. The final phase is while you are on a trip. Uber provides $1 million of liability coverage for drivers. Uber also provides coverage for physical damage to the vehicle as long as the driver has collision or comprehensive coverage on their personal insurance. Uber provides great coverage while “on a trip” but be careful when you do not have a rider.
At the end of the day, driving for Uber can be a great way to make some money. It is very important that you speak with your agent or insurance company to ensure that you are protected during all periods of driving. The last thing you want is to injure someone in phase one and be on the hook for a thousands of dollars.