Best’s News Service – March 16, 2012 12:42 PM

Michigan Passes Auto Fraud Law Aimed at Cracking Down on Staged Accidents

LANSING, Mich. – Michigan has passed a new law that gives more ammunition to insurance companies and prosecutors looking to crack down on fraud in the automobile insurance market.

The bill, S.B. 298, is aimed at criminals who are paid to recruit people for staged auto accidents or who submit false insurance claims. The bill makes it a felony to act as or employ what are commonly known as runners, cappers or steerers; a crime punishable by up to 10 years in prison and a $50,000 fine. Michigan Gov. Rick Snyder last week signed the bill into law.

 Peter Kuhnmuench, executive director of the Insurance Institute of Michigan, said in a written statement all state residents help to pick up the tab from insurance fraud becauseit leads to higher insurance rates. He said insurance fraud is one of the most costly whitecollar crimes in the country, second only to tax evasion.

 ”Providing law enforcement with the right tools to fight this abuse helps keep costs downfor everyone,” Kuhnmuench said.

Runners, cappers and steerers typically help medical practitioners procure clients, patients or customers, according to the bill. The IIM said fraud can be committed at several points in an insurance transaction. Common fraud schemes include padding or inflating the actual claim, misrepresenting facts on insurance papers, submitting claims for injuries or claims that never happened, or billing for unnecessary or phony medical services, according to the IIM.

 The law has no effect on medical practitioners who use advertising or public media to get clients or patients, according to the bill.

Like many other states, Michigan has a personal injury protection no-fault auto insurance system. But, Michigan’s is unique in that it provides unlimited lifetime benefits to people injured in auto accidents. State lawmakers have been mulling reform and those in the insurance industry say the current system has no long-term viability (Best’s News Service, Feb. 27, 2012).

 Some states that mandate personal injury no-fault protection have been plagued by fraud in recent years, leading authorities to crack down on the practices or reform laws. In New York, federal authorities recently charged 36 people in a massive $279 million scheme to bilk New York insurers out of the PIP benefits (Best’s News Service, March 1, 2012). Florida lawmakers recently reformed their PIP laws to help combat rampant fraud (Best’s News Service, March 12, 2012).

The top five writers of private passenger auto in 2010 in Michigan, according to BestLink, were: Auto Club Group, with market share of 18.8%; State Farm Group, with 18.5%; Auto -Owners Insurance Group, with 10.1%; Progressive Insurance Group, with 8.3%; and The Hanover Insurance Group Property/Casualty Cos., with 7.4%.

 (By Michael Buck, senior associate editor, BestWeek: Michael.Buck@ambest.com) BNNJ-03-16-2012 1242 ET #

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Top 10 Most Stolen Vehicles in U.S.

Two Honda models top the list of U.S. thieves’ favorite vehicles.

The National Insurance Crime Bureau examined vehicle theft data submitted by law enforcement to the National Crime Information

Center (NCIC) and determined the vehicle make, model, and model year most reported stolen in 2010.

For 2010, the most stolen vehicles in the nation were:

1. 1994 Honda Accord

2. 1995 Honda Civic

3. 1991 Toyota Camry

4. 1999 Chevrolet Pickup (Full Size)

5. 1997 Ford F150 Series/Pickup

6. 2004 Dodge Ram

7. 2000 Dodge Caravan

8. 1994 Acura Integra

9. 2002 Ford Explorer

10. 1999 Ford Taurus

The NICB report, called Hot Wheels, examines all theft data without regard to a vehicle’s insured status. The NICB says that certain

models of older cars and trucks are popular with thieves because of the value of their parts—but many are not insured against theft.

Whereas newer, more expensive and insured vehicles are often stolen to be resold intact with counterfeit vehicle identification numbers or shipped out of the country.

Nationally—and NICB says for the first time since 2002—thieves preferred domestic makes over foreign brands. Ford took three spots, Dodge two and Chevrolet held one while the remaining four were held by Honda, Toyota and Acura. However, the top three positions continue to be held by Honda and Toyota models, a trend that has been consistent since 2000.

Overall, vehicle thefts continue their decline. Preliminary 2010 FBI crime statistics point to a further 7.2 percent reduction over the thefts posted in 2009. Should the preliminary numbers hold when the FBI produces its final statistics later this year, 2010 will post the fewest vehicle thefts since 1967. The report shows that improved technology is one of the keys to lower theft rates. Of the nearly 52,000 Honda Accords stolen in 2010, over 44,000 were models made in the 1990s, compared with fewer than 5,700 that were produced since the year 2000.

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More than 150 million people across the United States are affected by relentless heat that has caused the National Weather Service to issue severe heat warnings in 24 states. Since the beginning of July, more than 670 record temperatures have either been matched or broken. Even worse, the heat wave has claimed 39 lives, mostly young children and the elderly, with more expected in the coming weeks.

With the heat and humidity pushing the heat index well past 100 degrees in many areas of the Midwest, it’s important to understand what you can do to keep the children in your care safe. These resources have been hand-selected by West Bend’s child care loss prevention specialists.

Vehicular Hyperthermia

On average, 38 children die each year after being left in vehicles by their parents or caregivers. This year alone, 21 children have lost their lives. Learn more about Vehicular Hyperthermia so you can protect the children in your care.

Heat Stroke and Heat Exhaustion

We also encourage you to read our Extreme Heat Preparedness Safety Guide to learn how to identify and treat heat stroke and other heat-related illnesses in children.

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When Your Home is Vacant

Phyllis Van Wyhe, CPCU, CIC, CSP

When a home is unoccupied or vacant, there are two primary problems.

The house can become a target for vandalismand theft; in addition, a

water loss will often go undetected for a longer period of time causing

more extensive damage. The insurance industry experiences more frequent

 and severe losses on dwellings that are vacant or unoccupied.

Impact on Coverage

Your Homeowners insurance policy will respond differently if your home is vacant

at the time of loss. Most Homeowners policies exclude vandalismcoverage after

a home is vacant for longer than 60 days. The policy also does not cover frozen

pipes if you have not maintained the heat or drained the pipes.

Coverage Denial

Even worse, some insurance companies deny a claimentirely when a home is

unoccupied or vacant. The policy states, .We cover the dwelling where you

reside.. The insurance company may contend that coverage ceased the day you

stopped living there on a regular basis. Many courts have upheld such a denial of

coverage when the policyholder is no longer living in the home, even if belongings

were left there.

Seasonal Dwellings

Increased loss exposures also exist on seasonal dwellings, but the insurance

industry looks at those homes differently. A company is usually willing to insure

the summer cottage up north as long as they knowyou have someone checking

on the building when you are not there. However at the time of loss with a

seasonal dwelling, your insurance company may ask for documentation as to the

number of days you have spent there over the past fewyears to determine

whether the dwelling is actually used as a seasonal residence or is actually an

unoccupied dwelling that is not used. In the later case, the company may deny

coverage on the basis that you no longer reside there.

If your home is vacant or unoccupied, notify your agent promptly, disclosing all details. Some companies may permit the situation for a short period of time; most will send out direct notice of cancellation. Your agent can offer you a specialty policy covering a vacant dwelling; unfortunately, the terms of that policy are never as good as those of the Homeowners policy. When discussing the occupancy of your home, you should be totally candid about the circumstances. If an insurance company denies a claim, you may end up paying for an attorney to challenge their decision. That can be expensive and time consuming and you may lose. It is much better to simply have the proper coverage.

The Van Wyhe Group, 2009

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When Your Commercial Building is Vacant

Phyllis Van Wyhe, CPCU, CIC, CSP

When a commercial building is vacant or unoccupied, there are generally

two problems. The property is exposed to an increased amount of risk;

for example, it becomes a target for vandals. In addition, discovery of a

loss may be delayed; a water pipe can burst and go undetected for days. As a result of the increased risk and delay in detection, insurance policies are not as broad when a property is considered vacant.

Defining Vacancy

In the mid 1990.s, commercial property policies started defining exactly when a building is

considered vacant. The definition is found in the Conditions section of the policy. With each

newedition of the policy, the definition has been revised. Today, you must reviewthe actual

policy covering a building in order to determine which definition of vacancy will apply. Some

policies state that a building is considered vacant unless at least 31%of the total square footage

is being used to conduct customary operations. This would mean that if only one floor of a four

story building is being used, the vacancy restrictions of the policy would apply.

The Threshold

For a short period of time, vacancy is not a problembecause the vacancy condition in a

commercial property policy contains a threshold. Usually after the building has been .vacant.

for either 30 or 60 days, the restrictions on coverage are activated.

Restrictions on Coverage

When a building has been vacant for longer than the policy threshold, there are two changes in

coverage:

Excluded Perils

There is no coverage for six causes of loss: theft, attempted theft,

vandalism, glass breakage, water damage, and sprinkler leakage.

Reduced Coverage

For other covered perils, payment of a loss is reduced by 15%. With a

$100,000 fire loss, the policy will only pay $85,000.

When your building is unoccupied or vacant, be certain to check the vacancy condition in your property policy. If you are not certain howthe provision will apply, get it cleared up before the loss and get it in writing. When your building is vacant check with your agent and ask himyour options. He/she should be able to negotiate coverage through an endorsement, vacancy permit, or special vacancy policy. Remember, most carriers do not hesitate to activate the vacancy provisions of a policy if the conditions at the time of claimwarrant it.

The Van Wyhe Group, 2009

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“Black Ice” results when the air temperature is warmer than that of the pavement. This causes moisture to rapidly freeze and create a thin, transparent layer of ice on the roadway, sidewalk or other surface. “Black Ice” is clear and appears to be black as the dark asphalt surface underneath shows through. It will often form on heavily congested highways, but it may also form on roads or walkways that are situated in shaded areas, near lakes and rivers, in tunnels and on overpasses. As a result, vehicle collisions can occur along with slip and fall conditions for pedestrians. Injury and even death can result. “Black Ice” can result from snow, freezing rain, sleet, freezing fog, residual rainwater and/or groundwater, hail, man-made icy roads from breaks in outdoor sprinkler systems and water mains, and frost. “Black Ice” can be treated with both salting and sanding, however, salt will lose its effectiveness at about 15 degrees and colder. For temperatures below 15 degrees, sand and de-icing liquids can be utilized to neutralize this condition. From a statistical standpoint, freezing rain and resulting “Black Ice” kills more people than tornadoes, hurricanes, lightning and floods.  

Safety Tips  

• Wait for conditions to improve. The best way to avoid an accident or mishap is to stay off the roads and walkways until the threat passes. 

• Pay attention to weather forecasts. An awareness of conditions will help you to be better prepared.

• Keep aware that “Black Ice” is nearly invisible.  

• Exercise extreme care on bridges, overpasses and tunnels. Be particularly cautious during the early morning when the air temperature rises faster than the pavement temperature.  

• Maintain an adequate distance when driving. Maintain at least a three-car length distance from the vehicle directly in front of you. Use greater lengths at faster speeds.  

• Never brake while driving on ice – this will cause your vehicle to skid. Brake only during your approach to a length of road that is iced over. ABS (anti-lock brakes) does not work well on ice and will often lock up your wheels as well.  

• Turn into a slide – turn your wheels in the direction that the rear of your car is sliding. Look with your eyes where you want the vehicle to go and turn the steering wheel in that direction. 

• Be aware of other out-of-control vehicles in your immediate area.  

Being cautious around and aware of “Black Ice” is no accident. Be safe. Take note of the topics and recommendations discussed in this bulletin. We encourage you to put them into practice – doing so helps ensure your safety. It is the philosophy of Frankenmuth Insurance and your Independent Insurance Agent to provide services that give policyholders peace of mind. At Frankenmuth Insurance, we truly are with you all the way.

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As winter precipitation starts falling again in the Midwest, it becomes important to remind drivers about the hazards of the season and how to be ready for them.  

Being prepared for winter conditions

When preparing to drive in winter conditions, it is critical to keep lights, mirrors and windshields clean due to the extended hours of darkness. Drivers should also equip themselves with a “winter kit” including such items as basic tools (hammer, crowbar, wrenches, screwdriver, and a small shovel) deicer, some form of traction aid (salt, sand, kitty litter), warm clothes, heavy bedding, food and something to drink. A driver may never have to use this kit, but it is better to have it and never need it than to need it and not have it. Make sure your vehicle is in good working order. First, keep current on all preventive maintenance. Drivers should also be conducting inspections of the tires, brakes, heating and defrosting systems, and exhaust systems. It is also advisable to keep the fuel tank above half full at all times. Additionally, due to the extended hours of darkness, drivers should be well rested. A fatigued driver will not generally hold up well under the stress of night driving in winter weather conditions.

Driving in winter conditions

Drivers need to be aware of the loss of visibility and traction realized when winter precipitation falls. To avoid accidents, drivers need to see, decide and act. It takes roughly two seconds to see, decide and react to a situation – in favorable conditions! If driving at a speed that allows two seconds of visibility, the driver is likely to have little or no hope of avoiding an accident in poor conditions. It is recommended 12 to 15 seconds of forward visibility be accounted for in winter driving situations. Once a driver reacts, he or she will be relying on traction, and traction is based on friction. The ability of the brake linings to get friction with the drums or rotors is what allows braking to begin. The ability of the tires to maintain friction with the roadway is what provides the driver with the necessary traction to control the vehicle. If any precipitation gets either into the brake area or between the tires and the pavement, the driver may have difficulty controlling the vehicle. To compensate for this the driver will need to reduce speed.

It’s not just you out there

One key winter driving concept drivers must be reminded of is they are not the only ones on the road. When selecting a safe speed, the ability to avoid accidents must be considered. If a driver operates at a speed that keeps the vehicle“ on the edge of control,” what happens when the vehicle in front of the driver slides out of control? Hitting the brakes or steering to avoid will more than likely result in loss of control. When conditions deteriorate, drivers should reduce their speed to allow them to control their vehicle – regardless of what happens around them.

After the precipitation stops

Just because the snow or freezing rain has stopped, it does not mean there will be smooth sailing. The severity of the storm, the ability of road crews to clear the roadways during and immediately after the storm, and the weather conditions that follow the storm are going to be factors in how long it will take to see “bare pavement” again. One dangerous situation drivers need to be alert for during this period is only parts of a roadway may be back to bare pavement. This situation can be caused by shade (the sun is not heating the pavement to help clear it), differences in the performance of road maintenance efforts, or localized blowing of snow. The big danger with these areas is ending up at a speed far too fast for the road conditions. Cautious and conscientious winter weather driving is no accident. Be safe. Take note of the topics and recommendations discussed in this bulletin. We encourage you to put them into practice – doing so helps ensure your safety. It is the philosophy of Frankenmuth Insurance and your Independent Insurance Agent to provide services that give policyholders peace of mind. At Frankenmuth Insurance, we truly are with you all the way.

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2010 Health Savings Accounts (HSA) maximum contribution

WASHINGTON-The maximum contributions that can be made to health savings accounts in 2010 will increase as will the minimum deductible imposed by health insurance plans linked to HSAs and the maximum out-of-pocket expenses that employees can be required to pay, the Internal Revenue Service said.

The maximum contribution that can be made to an HSA in 2010 for employees with single coverage will be $3,050, up from $3,000 in 2009. The maximum HSA contribution for those with family coverage will rise to $6,150, up from $5,950.

Additionally, the maximum out-of-pocket expense, including deductibles, that employees can be required to pay next year will rise to $5,950 for single coverage, up from $5,800 this year, and $11,900 for family coverage, up from $11,600.

The minimum deductible of the high-deductible health insurance plan to which HSAs must be linked will increase next year to $1,200 for single coverage and $2,400 for family coverage. The current minimum deductibles are $1,150 for single coverage and $2,300 for family coverage.

The maximum “Catch-Up” contributions for each spouse age 55 or older is $1,000.

The new limits that the IRS announced Thursday reflect increases in the cost of living

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Michigan Catastrophic Claims Association (MCCA)

What is the Michigan Catastrophic Claims Association (MCCA)?

Michigan is the only state that offers unlimited personal injury protection benefits.  These benefits are offered through no-fault auto insurance policies.  The Michigan Catastrophic Claims Association (MCCA) reimburses no-fault auto insurers for benefits that exceed $460,000, as of July 1, 2009.  MCCA was created by the legislature a means of spreading costs across all Michigan motorists for providing these unique unlimited benefits.

Although created by statute, the MCCA is a private, nonprofit association.  All of its dealings are with insurance companies, not the general public.  The MCCA has a Board of Directors that consists of 5 representatives from insurance companies, appointed by the Commissioner of the Office of Financial and Insurance Regulation (OIFR) according to statute.  The insurance companies appointed to serve on this board are among the top writers, by volume of business, of auto insurance in Michigan.  The Commissioner of OFIR serves as an ex-officio member of the board without a vote.

How is the MCCA assessment determined?

Each year, the MCCA analyzes the amount needed to cover the lifetime claims of all people catastrophically injured in a car accident.  This analysis includes review of the investment return that the fund receives, medical cost inflation, and any changes to coverages.  The analysis yields an amount needed to pay those lifetime claims and a per vehicle assessment is set based on that amount.

Since 1979, 23,100 catastrophic claims have been reported to the MCCA.  Based on current estimates, 11,408 claims remain active, resulting in future lifetime payments in excess of $70 billion.  This figure assumes inflating costs for products, services, and accommodations necessary for the care, recovery and rehabilitation of injured persons throughout their lives.  The MCCA further estimates that an additional 1,050 Michigan insureds will be catastrophically injured in auto accidents next year.  It is the cost of providing these medical benefits that influences the MCCA assessment.

How is the MCCA funded?

An MCCA assessment is charged to every Michigan auto insurance premium.  The assessment funds a pool of money for medical costs exceeding $460,000, as of July 1, 2009, resulting from an auto accident.

Do I pay this assessment?

Although the MCCA assessment technically is made to the insurance company, companies typically pass the assessment on to policyholders.  Some insurance companies include the MCCA assessment in the Personal Injury Protection (PIP) portion of your insurance premium.  Other companies sometimes list this as a “statutory assessment” of “MCCA assessment” on the declarations page of your policy.

Even though the amount assessed each insurer by the MCCA is the same, each company may include administrative and other miscellaneous costs in the amount it assesses policyholders for this coverage.  Therefore, the amount assessed by the MCCA may affect each policyholder’s premium differently.  If you have questions about the amount being assessed, you may wish to contact your insurance agent or insurance company.

What is the assessment for 2009?

The MCCA announced that the 2009 assessment will be $124.89.  The pure premium (the actual cost for each vehicle in the state of Michigan to fund the MCCA pool) is $100.78 and the deficit adjustment is $23.89, with a $.22 administrative expense, setting the assessment at $124.89.

What will happen to the assessment in the future?

The MCCA Board meets every spring to set the assessment for the year beginning July 1^st.  The assessment is set using the same criteria – by analyzing the amount needed to cover the lifetime claims of all people catastrophically injured in a car accident.  Investment return, medical cost inflation, and any changes to coverages will again be considered.

Do I pay the full assessment if I own a historic vehicle?

Public Act 662 of 2002 reduced the MCCA assessment for historic vehicles to 20 percent for the full assessment charged for vehicles effective July 1, 2003.  The assessment for historic vehicles beginning July 1, 2009 will be $24.98.

*This article was updated April 2, 2009 by the State of Michigan Office of Financial and Insurance Regulation.

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Investing in Michigan

Annuities, the safe investment!

Basically, most annuities are a fixed interest investment, similar to a CD.  The advantages of an annuity are that the interest is guaranteed and tax deferred.  In addition, you can access a portion of the money right away and you can use it as a conservative part of an investment or estate portfolio.  You can even set up annuities on your children or grandchildren for payment of tuition or other events in the future.  When purchased as part of an estate, the annuity avoids probate and goes directly to the beneficiary!

Why is it smart to purchase your annuity from Auto Owners Insurance Company?   Auto Owners is financially sound, are one of the top twenty “strongest” annuity providers in America, and of those twenty; are the only company based in Michigan.  If you are ready to purchase an annuity, purchase it from a company you can trust, and a company that you know will invest your dollars locally.

Why is it smart to purchase your Auto Owners annuity from First Independent?  Auto Owners only sells their products thru the Independent Agency system.  They recognize that a good independent agent doesn’t “steer” his / her client for profit reasons.  In fact, Auto Owners typically pays a lower commission to the selling agency, and utilizes that savings in their products to the benefit of the client.  A good Independent Agent works on their client’s side, shopping many options for the most competitive products.  Make First Independent Insurance Agency “Your First Choice!” for all your insurance and retirement needs.

Have questions?  Contact Bryant at bgoodreau@fiiains.com or any of our other licensed professionals for more information

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