KANAAN'S FAMILY EXPANDS, SO DOES IRL'S FOR 2008

Tony Kanaan is becoming familiar with fatherhood -- and not only because his wife, Dani, gave birth to their first child, Leonardo, in September.

After the departure of longtime teammate and close friend Dario Franchitti, Kanaan enters his sixth IRL IndyCar Series season feeling like a single parent at Andretti Green Racing.

"I have four kids, three on the team and one at home," the 2004 IRL champion said, laughing.

The IRL family also is burgeoning as the curtain rises on 2008 with Saturday's Gainsco Auto Insurance Indy 300 at Homestead-Miami Speedway, the first Indy-car race contested under a unified banner since 1995.

The absorption of the Champ Car World Series will match new drivers such as Graham Rahal, Justin Wilson and Bruno Junqueira against IRL veterans such as Kanaan, Scott Dixon, Dan Wheldon and Helio Castroneves. The latter four enter the season as title favorites, particularly with the NASCAR defections of defending series and Indianapolis 500 champion Franchitti and three-time IndyCar champ Sam Hornish Jr.

But battling a trio of title rivals might be just as challenging as mentoring three teammates for Kanaan, whose 81 IRL starts (plus five seasons in Champ Car) are two more than the career total of AGR drivers Marco Andretti, Hideki Mutoh and Danica Patrick.

Kanaan has compiled 12 victories and 55 top-five finishes while scoring more points (2,126,24more than Wheldon) than anyone else since 2004, and he attributed much of the success to setups he developed in lockstep with Franchitti, who had a year more of experience in Indy cars.

"It's a big challenge and a big loss for me," the 34-year-old said. "Marco and Danica will have to move into Dario's position, because that's how a company works. The CEO retires, and they bring the next guy in. So I guess I'm going to have to be Dario, and I need Marco to be me and Danica to be Marco."

The best example of the Kanaan-Franchitti partnership came last year in the Indy 500 when the pair cooked up a setup that dominated the race (Kanaan led 83 of the 166 laps, and Franchitti won). During an early practice, Kanaan drove the Dallara-Hondas of Andretti and Patrick in addition to his own while divvying up a list of mechanical tricks to tackle with Franchitti.

"We used to say, 'I'll do this, you do that,'" Kanaan said. "Now I have to think about talking to Marco and Danica that way. It takes time to adjust."

Patrick plans on playing a larger role in contributing setup data, particularly on short ovals and at Indianapolis Motor Speedway. "It's an honor when people decide to just bolt on your whole setup and use it for qualifying or the race," she said. "We all contribute, and it's not like Tony's only role is to produce a setup. We all help.

"There are definitely more times that the guys with experience can prevail and produce a good solid setup. Sometimes more often than not it's about trusting that person because they've been around so long. But it's not like Tony's the only one on the team; I'd be surprised if he didn't feel like he could rely on us."

Mutoh probably won't be contributing quite as much. The Japanese graduate of the Indy Pro Series (second in 2007 points) has one IRL start and made his debut Monday on a high-banked superspeedway by testing at Texas Motor Speedway -- under the watchful eye of Kanaan. "Tony is always a good teacher," he said.

It helps that the Brazilian had a six-month offseason to adapt to a newborn at home. Leonardo recently began sleeping through the night, pleasing his father.

"He was very kind to time himself so I had a break to catch up on all the sleep I didn't get," Kanaan said, laughing. "I'll be going into the season rested for my other kids."

TEXT OF INFO BOX BEGINS HERE

IRL IndyCar Series opener

*What: Gainsco Auto Insurance Indy 300, first of

19 IRL IndyCar Series events

*When: Saturday, 8 p.m. ET, ESPN2

*Where: Homestead-Miami Speedway,

a 1.5-mile oval with 18- to 20-degree variable

banking in turns; 200 laps/300 miles

*2007 winner: Dan Wheldon

*Quick hit: Wheldon becomes the first driver

to win four consecutive races at one track if

he wins at Homestead on Saturday.

(c) USA TODAY, 2008

PREVIOUS RULINGS ON PUNITIVE DAMAGES

Latest Supreme Court decisions curtailing punitive damages awards:

Philip Morris USA v. Williams (2007) -- The court threw out a $79.5 million award to a smoker's widow, saying jurors were not properly limited in their consideration of harm caused to people who were not part of the lawsuit.

State Farm Mutual Auto Insurance v. Campbell (2003) -- Any punitive damages award more than 10 times the actual damages for an injury is presumed excessive, and juries may not consider out-of-state wrongdoing when weighing a company's actions. The court tossed out a $145 million award against State Farm for acting in bad faith by not settling claims against a policyholder involved in a fatal accident.

BMW v. Gore (1996) -- Punitive damages may not be "grossly out of proportion to the severity of the offense," the court said as it invalidated a $2 million award to the owner of a BMW for a flawed paint job.

Honda Motor Co. v. Oberg (1994) -- States may not prohibit judges from reviewing and reducing juries' punitive damages awards. The court struck down an Oregon law that gave juries the final say on such awards.

(c) USA TODAY, 2008

BUFFETT'S MUNI MOVE: NOTHING RISKED, SOMETHING GAINED

Warren Buffett's offer to stand behind municipal bond payments is like offering auto insurance to a driver with a perfect record. Municipal bonds, or munis, are one of largest and safest corners of the bond market. There are about $1.7 trillion worth of such bonds outstanding, says the Securities Industry and Financial Markets Association. Munis are sold mainly by state and local governments to pay for projects such as roads, schools and hospitals. Munis are popular with high-income investors because the payments are often tax-exempt. But they're also relatively safe. If a city gets into financial trouble, it can charge higher taxes, close libraries or parks. There have been some high-profile muni bond debacles, including Orange County in the 1990s. Still, only about one muni bond a year, on average, has gone into default over the past 40 years, says Bill Larkin, a bond investor at Cabot Money Management. Less than 0.25% of muni bonds historically go into default, says Michael Decker at SIFMA. There are 2 million munis outstanding. Excluding riskier muni bonds issued for special purposes in partnership with outside companies, such as some toll road projects, the muni default rate is essentially zero, Decker says. Compare that with the 35,000 business bankruptcy filings each year on average this decade, according to BankruptcyData.com. Buffett may not be taking a giant risk in offering insurance to the three main insurers that stand behind muni payments. Even so, the offer exposes vulnerabilities in the muni market, including: •Stress on some lower-rated munis. Thanks to their relative safety and preferred tax status, cities and states can borrow inexpensively: Muni bonds are yielding roughly 3.4% for a bond maturing in 10 years, S&P says. That's even cheaper than the 3.78% 10-year Treasury yield. But where there is some strain is among munis issued by government-backed entities with low credit ratings, Larkin says. Most professional investors will only buy these m unis if they are guaranteed by insurers like MBIA, Ambac Financial and Financial Guaranty Insurance. That guarantee may give a lower-rated muni a AA or higher rating. But the insurers also guaranteed some mortgage loans. If the insurers are hit with an avalanche of mortgage claims, investors worry there may not be enough left to back the insured munis. Consider a San Jose, Calif., redevelopment muni that matures in 2028, Larkin says. The muni is yielding 5.04%, despite being insured, because investors doubt the insurance has any value. •Potential for a ripple effect. If the insurers backing the riskier munis lose their top credit ratings, the riskier munis themselves will lose their high ratings, too. That could cause investors who can only own highly rated munis to sell some of the riskier munis, setting off a selling spree. "My biggest concern is with the insured muni bonds," says Bill Hornbarger, bond strategist at A.G. Edwards. •Exposure to recession. States and cities may come un der pressure as the economy slows. At least 20 states are facing spending cutbacks, says Allen Sinai of Decision Economics. Local governments that counted on rising tax receipts due to rising property values now have budget shortfalls, says Dean Baker of the Center for Economic and Policy Research. Having Buffett ready to cover losses will reassure investors there is a safety net in the market, he says. That would be critical if the slowdown causes more cities to struggle. "It's hard to believe we're not going to have more (muni defaults) than that would normally be the case," Baker says.

TEXT OF INFO BOX BEGINS HERE

Municipal bonds by the numbers

$1.7 trillion

value owned by investors

$11 billion

daily trading volume

5.1 million

households that own them directly or indirectly

50,000

state and local governments that sell them

Source: The Securities Industry and Financial Markets Association

(c) USA TODAY, 2008

DEBATE REVS UP OVER HIGHER AUTO INSURANCE IN LOUISIANA

Gov. Kathleen Babineaux Blanco must soon decide whether to veto a bill raising Louisiana's minimum liability auto insurance coverage — and driver premiums — or sign it into law, which insurance industry experts say would increase the number of uninsured motorists. Senate Bill 223 by State Sen. Mike Michot, R-Lafayette, raises the minimum liability auto insurance policy from 10-20-10 levels ($10,000 for bodily injury for one person, $20,000 for all injuries and $10,000 for property damage) to 25-50-25. Blanco has until July 18 to decide. Blanco's special counsel Kimberly Robinson said the governor has not decided whether to sign the bill. "She is considering the requests, the legislation and the impact on vehicle owners," Robinson said. Proponents say the minimum liability increase is long overdue as it has not been adjusted since 1983 and the cost of replacing automobiles has significantly increased. Opponents, including a national insurance industry trade group, say more than doubling the minimum coverage levels will add another exorbitant expense to post-Katrina budgets and force many drivers who can't afford the increase to forgo insurance. "We think it's a pretty dramatic increase and it's going to ultimately raise rates on about 40 percent of the drivers in the state," said Jeff Brewer, spokesman for the Property Casualty Insurers Association of America. PCIAA represents more than 1,000 companies writing 41 percent of all U.S. automobile, homeowners, business and workers compensation insurance. The association wants Blanco to veto the bill. The National Association of Insurance Commissioners estimates the state had 350,000 uninsured drivers and 2.5 million insured drivers in 2004. "The cost increase could be $100 to $200 per (six-month policy) for drivers," Brewer said. "We're concerned that kind of increase, particularly at this time, could result in a lot of people being in a position where they drop their insurance." "There is an insurance crisis right now and we're hurting," said state Sen. Francis Heitmeier, D-Algiers, who voted against the bill. "With all that poor, working-class folks are going through right now, this wasn't the proper timing. We need to give people time to put money away. The people who can least afford it will be hurt the most." Increase ‘long overdue' Supporters acknowledge poor people will be significantly affected by the increase but say the hike is necessary to cover accidents where liable drivers have insufficient coverage. "The time is long overdue for an increase," said Michot. "More and more people are being left short as a result of this (minimum). It is meant to bring a little more fairness with claims as a result. Uninsured motorists ... are a huge problem but it's unrelated. Enforcement needs to be stepped up." "The value of automobiles has substantially increased since (the state) established that law," said state Sen. Tom Schedler, R-Mandeville. "I felt it was time we looked at it and addressed it." Brewer said most auto claims don't top $10,000. "If you make the assumption that every accident you end up with a totaled vehicle, then the cost of vehicles increasing does enter into it. But the fact of the matter is the vast majority of auto accidents don't rise above the $10,000 limit, which is what it was," Brewer said. Michot said the timing of the increase can't be helped. "When is the timing ever good?" he asked. Michot and Schedler also cite Louisiana as "one of the states with the lowest minimum requirement." If so, Louisiana is far from alone. Insurance.com, an independent agency based in Ohio, names Louisiana as one of 29 states at or below the $10,000 minimum requirement, including four with a $5,000 minimum. Premium increases questioned Supporters claim premiums will not increase significantly. "I ran my own policy limits with State Farm and (the increase) would only be $5 a month," Michot said. "Between $40 and $50 was the number I heard," said Schedler. PCIAA analyst Diana Lee questions those estimated increases. "It would be really hard to see how you would only pay $5 more when you're getting twice the coverage," said Lee. Lee analyzed the average cost of the current minimum liability policy, which is roughly $400 for six months. "Add on the 10-20 uninsured motorists and the total is $440," said Lee. "If we were going to 25-50-25, the new base rate would be $470 and the uninsured motorist rate would be $75 ... for a total of $545," she said. Schedler said if premium increases reach the $200 range, "maybe I would have felt differently." Brewer said consumers have the right to increase their under-insured motorist protection if concerned about being left in the lurch. "Most accidents are going to be covered even with the minimum limits," he said. "If you want to protect yourself more, you always have that option." Blanco conferred with Insurance Commissioner Jim Donelon before deciding what to do. Donelon introduced a similar bill in the Legislature six years ago. "No doubt the burden of higher costs will fall on the poorest drivers who purchase the minimum (policy)," said Donelon. "The insurers ... are unanimously opposed to it, the reasoning being it will drive people out of the market. This will help people protect themselves from the negligent actions (of drivers) even though that person is poor. This helps make their costs cheaper." Donelon was scheduled to report to the governor last Friday.

by Jaime Guillet

MASSACHUSETTS HOUSE BILLS WOULD PROVIDE ‘NON-TORT' AUTO INSURANCE ALTERNATIVE

While attention is focused on whether Massachusetts will change the way it regulates auto insurance, a battle over other issues related to the industry may be brewing. Bills that could significantly shape the future of auto tort claims have been reported favorably by the House Committee on Financial Services One bill, House 914, would allow consumers to opt out of the current tort system in exchange for what the bill's sponsor calls a "full no-fault option." Rep. William N. Brownsberger, D-Belmont, says the legislation would "give consumers the choice to have a streamlined recovery, at a lower cost, in return for giving up the right to sue for pain and suffering. They could still [recover] the actual costs of the accident, but they'd get out of the litigation business."

In exchange for giving up their right to sue, consumers could benefit from lower premiums, Brownsberger said "The idea is that people who are not a part of [the tort system] wouldn't have to pay for it," explained Brownsberger, who is a lawyer. But Michael C. Najjar, a Lowell attorney who testified against the bill on behalf of the Massachusetts Academy of Trial Attorneys, said there is no evidence that the bill would save consumers money . Najjar pointed to recent decreases in the state's auto insurance rates and noted that premiums in New Jersey skyrocketed when a similar "choice" bill was made law in that state. He also warned that consumers would sign up for the lower premiums without truly understanding the rights they were giving up, "People will just buy the cheapest insurance, and no one will tell them they can't collect," he said. Asked how such a bill would impact trial attorneys, Najjar said it would probably "decrease the number of personal-injury claims where we're taking a fee out for pain and suffering."

Another bill reported favorably, House 915, would discourage motorists from driving uninsured by limiting their ability to collect pain-and-suffering damages, even if the other party in an accident is at fault.

"This targets a standing problem" said Brownsberger. But Najjar said uninsured drivers already face significant criminal penalties and that the number of uninsured drivers has been shrinking in recent yearsl. A third bill, House 916, was also reported favorably and would create a commission to study increased auto insurance competition. Brownsberger predicted that the bill will be more of an initial priority to legislative leaders than the more dramatic concept of allowing consumers to opt out of the tort system. "You've got the insurance commissioner expressing serious interest in competition. That's where the first move would be. Once people get used to the idea of having a choice, they would start to inquire more about how their insurance works, and you'll get a variety of choices," said Brownsberger.

Noah Schaffer

COMMENTARY: FIRST-SESSION KIBITZING, AND WHY COURTS SHOULD BE LIKE THE RMV

Another installment in my quest to visit 100 Massachusetts courthouses before the year is out. "I hope you enjoyed your dinner last night," the judge says to a jury in Concord District Court. "Did you stay up to watch the Red Sox last night? It went 11 innings before they blew it." The jury sits in a single row of chairs framed by a thin wooden railing and waits for the trial to resume. This courtroom provides a terrific perch from which to observe a trial. It's got a layout with elements of theater-in-the-round. The attorneys do their work in a sunken circle so that observers look down on all the action. Waves of tall brick walls spiral throughout this building, tying together courtrooms and making the building a quaint place to be. The attorneys in this case are arguing an auto-insurance matter. The claimants want cash for their stolen vehicle; the insurance company is suggesting that something fishy is going on. "You can't get to the bottom of things unless people give you honest information," says the lawyer for the insurance company in his closing argument. "And they have not provided it." The lawyer for the claimants then has his turn. "My clients have blemishes, but we all have blemishes," says the attorney. "How many molehills does it take to make a mountain? The emperor has no clothes. ... Or does he have clothes?" I'm confused, but then again, I tuned in late. In Newton District Court, there is an intercom announcement to alert people to the fact that the first session is beginning "in three minutes." Only a few courts seem to use the intercom system, and I wonder why. (This seems to come under the "makes-too-much-sense" category.) Is everyone aware that the Registry of Motor Vehicles has an electronic update-board system to alert "customers" as to when they will be helped? Is everyone aware you can monitor the wait times on the Internet? I mean, how terrific is that? Do you think maybe the courts have a bit of catching up to do? For all the earnest work that goes on in courts, let's face it: We are a system of primitive note-passing and nodding and whispering and searching for people who may or may not be in the building. Any of this sound familiar? Is attorney Parker here? Does anyone know? Put it on for second call. You haven't signed a waiver of counsel? Do that, then wait on a bench over there and the District Attorney's Office will find you. Victor Sanchez? Victor Sanchez? Victor Sanchez? Cripes. The Newton court provides another comfortable place for court business. The décor is colorful, with blue, brown and beige elements mixed with wood paneling in the main courtroom. In the row of seats in front of me, there are several seniors, and they are chatting in hushed tones. They seem to have no connection to any specific case and don't seem to be in a hurry to get anywhere. I mean, they're just sort of kibitzing. I start to wonder if they are simply spectators, fans of the court. There's a woman in custody who is here to answer charges of operating without a license and failure to wear a seatbelt. So, I'm umm wondering why she is in shackles. She appears behind the glass-windowed dock, looking weathered in something that appears to be a state-issued kimono kind of thing. It soon becomes clear. "Are you aware that the Taunton court is looking for you?" asks Judge Margaret A. Zaleski. "Yes," she says. "And the Fall River court?" the judge asks. "Yes," she says faintly. "How old are you?" asks the judge. I can't hear the answer, but man, she's young. "And you have three kids?" the judge laments. "I'm going to send you to Taunton to take care of that case," Zaleski says. The woman sinks in her seat and starts to cry. Later, I have the chance to sit down with Clerk-Magistrate Henry Shultz, who tells me that the Newton court is a "small but intellectual court." So, are those seniors sitting in the gallery really just there to watch all day? "Probably not," laughs Shultz. "But we do have our regulars here, a big senior-citizen population, retired people. We have to call for 'The Ride' a lot." The city's well-heeled population is reflected here in the court, says Shultz. "In Lowell, a small-claims dispute might be a dispute over a grocery bill," he explains. "In Newton, it's more likely a dispute over the custom-made drapes." Shultz has been at this for 37 years. "Every day is exciting," he says, his ear-to-ear smile appearing after every sentence. "I see the grandchildren of police officers I used to work with reporting for work. Sometimes I see the grandchildren of defendants as defendants." "Nothing is more important than the family," says Shultz, as if all of the court's business somehow comes down to that. "Nothing."

IN BRIEF: IN MICHIGAN IF YOU WERE TO ALLOW MOTORISTS ...

In Michigan if you were to allow motorists to choose less medical coverage on their auto insurance , they could save 10%. Also, they'd spend 90% more when they get hurt in a car. [ Detroit News ]

http://feeds.gawker.com/~r/jalopnik/full/~3/134701963/-279413.php

The views expressed on blogs distributed by Newstex and its re-distributors ("Blogs via Newstex") are solely the author's and not necessarily the views of Newstex or its re-distributors. Posts from such authors are provided "AS IS", with no warranties, and confer no rights. The material and information provided in Blogs via Newstex are for general information only and should not, in any respect, be relied on as professional advice. No content on such Blogs via Newstex is "read and approved" before it is posted. Accordingly, neither Newstex nor its re-distributors make any claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained therein or linked to from such blogs, nor take responsibility for any aspect of such blog content. All content on Blogs via Newstex shall be construed as author-based content and commentary. Accordingly, no warranties or other guarantees will be offered as to the quality of the opinions, commentary or anything else offered on such Blogs via Newstex. Reader's comments reflect their individual opinion and their publication within Blogs via Newstex shall not infer or connote an endorsement by Newstex or its re-distributors of such reader's comments or views. Newstex and its re-distributors expressly reserve the right to delete posts and comments at its and their sole discretion.

~~~~~~~~

By Ray Wert

COMMENTARY: SO MUCH FOR PROGRESSIVE INSURANCE COMPANIES

Progressive Direct issued a news release earlier this month touting the fact that it was lowering auto insurance rates in Colorado for the seventh time since 2003. Of course not every Colorado driver will see a decrease in their premiums — including me. Imagine my surprise when after reading the news release I realized that the company had increased my premium by more than $100 from what it was six months ago. I haven't had any wrecks. I haven't made any claims. I haven't received any moving violations. So why the out-of-the-blue rate increase? I called Progressive's customer service number to find out. The first person I talked with was very pleasant, but readily admitted that he couldn't answer my question. The woman I spoke with next responded to my questions, but didn't really have any good answers (at least in my opinion). My premium had increased, I was told, because my credit report was showing that in 2004 I was more than 30 days late (one time) in making a payment to some company that I've never even heard of. Heck, even if I had heard of it, I can't remember whether I was late paying a bill three years ago. My revolving credit balance also was "too high" on the day that Progressive decided to do the calculation and jack up my rate. When I mentioned my FICO score, I was told that it didn't matter because Progressive doesn't care about it when setting (jacking up) premiums. I was told that because of my 3-year-old late payment and my "too high" revolving credit balance (which often fluctuates depending on whether I'm waiting for an expense reimbursement check from work) I was a greater risk for missing a payment or making a claim and thus deserved a higher premium. I asked whether I had ever been late making a payment to Progressive (who I've had insurance with since 2004). The answer was no. I asked if I had had any claims or any moving violations. Again, the answer was no. I asked why my premium wasn't based on actual empirical data and my history with the company instead of on some screwed up algorithm. The answer was that's the way Progressive does business. Well, that's not the way that the right reverend's No. 2 son does business. And to say that I was overflowing with righteous indignation at that point would be an understatement. So, I asked to talk with someone who could actually resolve my problem and was told that there was nothing I could do, that I would have to live with the consequences of my less-than-stellar creditworthiness and that the company had every right to lump me into any category it wanted. To be really honest, I've never much liked insurance companies. They seem to love taking in premiums, but you'd better never ask for any of that money back in the form of a claim or they scream bloody murder, cancel your policy or cry that they aren't making enough profit. I still can't figure out how I suddenly became such an increased risk. But I am hopeful that there's another insurance company out there that will happily take my money every month without feeling the need to gouge me because some algorithm tells it to. Good deeds unrewarded Some of the latest news from Office Team was titled, "Don't let good deeds go unrewarded" (somehow I'm thinking Progressive is probably one of these companies, but maybe they do pass out bonuses and atta-boys to employers who stringently follow their silly edicts and run off paying customers). The gist of the OT survey was that more than a third (35 percent) of professionals polled said that businesses are ineffective at rewarding their employees' strong performance and that 30 percent of managers agreed. Diane Domeyer, executive director of Office Team said that businesses need to make retention a priority. "Rewarding employees for their accomplishments enhances productivity, reinforces positive behavior and builds staff morale and loyalty," she said. "Firms that fail to reward great work risk losing employees to businesses that do invest in recognition programs." And those rewards don't necessarily have to be monetary. Here a few other meaningful ways that OT says you can recognize good work: *Say thanks. Don't underestimate the power of saying "thank you," either in writing or in person. *Celebrate achievements. Honor employees' accomplishments in front of their peers. Staff events recognizing individuals or groups can enhance morale while highlighting exemplary behavior. *Give the gift of time. Reward staff accomplishments with extra days off or extended lunch breaks. Time away from the office allows staff members to recharge after major projects. *Provide plum assignments. Give strong performers the option of working on desirable projects. Doing so improves their motivation and enthusiasm for their work and encourages others to excel in their positions. Of course not having to jack up the employee portion of health care premiums also might be nice, but I'd be foolish to think that I was the only victim of the out-of-control insurance industry.

(c) 2007 Dolan Media

THIS AND THAT

While you should have a portion of your equity portfolio in emerging markets, Money magazine’s Jason Zweig explains why now is the wrong time to jump into these volatile stocks . An article in The New York Times points out why you should rebalance your portfolio . Ellen Roseman tackles some frequently asked questions on auto insurance . The Bank of Canada’s model suggests that the Canadian dollar is 3 cents higher than where it should be, reports The Star . Soaring auto insurance rates were an election issue the last time around in Ontario. James Daw writes in The Star that premiums have dropped 14% to 16% since 2003, but some brokers are anticipating an increase later this year. The federal government has launched a review of pooled RESPs following numerous complaints from Canadians over unexpected fees and restrictions on withdrawals for part-time students.

Financial

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The views expressed on blogs distributed by Newstex and its re-distributors ("Blogs via Newstex") are solely the author's and not necessarily the views of Newstex or its re-distributors. Posts from such authors are provided "AS IS", with no warranties, and confer no rights. The material and information provided in Blogs via Newstex are for general information only and should not, in any respect, be relied on as professional advice. No content on such Blogs via Newstex is "read and approved" before it is posted. Accordingly, neither Newstex nor its re-distributors make any claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained therein or linked to from such blogs, nor take responsibility for any aspect of such blog content. All content on Blogs via Newstex shall be construed as author-based content and commentary. Accordingly, no warranties or other guarantees will be offered as to the quality of the opinions, commentary or anything else offered on such Blogs via Newstex. Reader's comments reflect their individual opinion and their publication within Blogs via Newstex shall not infer or connote an endorsement by Newstex or its re-distributors of such reader's comments or views. Newstex and its re-distributors expressly reserve the right to delete posts and comments at its and their sole discretion.

AUTO RATES PRICE WAR

New Allstate CEO vows to hold the line as competitors slash Auto insurers engage in price warfare

No rate cuts: That's Allstate Corp. CEO Thomas Wilson's stand.

As its fiercest competitors begin reducing auto insurance prices in earnest, Mr. Wilson and Allstate are sticking to their guns, vowing they won't join a price war. Instead, Mr. Wilson, who succeeded Edward Liddy this year as CEO of the Northbrook-based insurance giant, continues to insist that better products and service will trump price cuts in the notoriously boom-and-bust insurance business.

That has been Allstate's position since the last round of industry price-cutting sent its profits plunging eight years ago. But it is about to face its greatest test from surprisingly deep cuts, backed with heavy marketing, by competitors like Bloomington-based State Farm Insurance Cos.

The latest marketshare battle, which industry experts expect will continue at least through next year, hasn't given Mr. Wilson, 49, the luxury of growing into the CEO job. He's already in the tricky position of defending his company's robust profit margins while still coaxing growth from auto insurance premiums even though his product in many cases will be more expensive than his competitors'.

"It's clearly more competitive now than it was last year," Mr. Wilson acknowledged to analysts on a conference call last month. But, he added, "we're not going to trade off profits for growth. We're going to try to get both."

Indeed, Allstate has raised prices an average of 3.8% in the 15 states where it changed rates in the first half of 2007. By contrast, State Farm has cut rates this year in every state except Rhode Island. In four states, those cuts exceeded 9%. Illinois, where State Farm reduced rates by 6% in May, is one of 12 states where prices were trimmed by 6% to 9%.

What's more, Illinois-for decades dominated by State Farm and Allstate, which together insure two of every five drivers here-is getting new attention from the nation's third- and fourth-largest auto insurers, Ohio-based Progressive Corp. and Washington, D.C.-based Geico Corp. Both have dropped their rates here by about 6% in the last few months. Geico recently blanketed train stations with ads and has flown giant banners along the lakefront on weekends. State Farm, too, is running Chicago television and radio ads touting the rate cuts.

"Every insurance company is trying to create value for consumers, but price is clearly a part of that," says Mark Gibson, State Farm assistant vice-president for advertising. "There's just no doubt about it."

The Insurance Information Institute, an industry-funded information clearinghouse, projected a 0.5% decline in annual car insurance expenses this year, the first decrease since 1999. President Robert Hartwig says the organization underestimated the price-cutting and will publish a revised, lower projection for 2007 soon. He expects to project a further decline in 2008.

Mr. Hartwig says the price cuts thus far largely reflect insurers' healthy underwriting profit margins, but notes that past price wars have wiped out profits altogether. The last such war resulted in most insurers paying out more in claims and expenses than they were collecting in premiums. "The $64,000 question for all insurers today is: Will this be different from the past?" he says.

Mr. Wilson is determined that it will be, at least for Allstate. He has maintained that Allstate's innovative products like Your Choice Auto, which allows drivers to pay extra for services like keeping their rates steady even if they have an accident, will continue to win new customers even as competitors' rates fall.

Others are skeptical that Allstate can ignore the price cuts. Insurance "is a commodity," says Tim Wagner, Nebraska's insurance director. "You can disguise it with a lot of bells and whistles. The reality is people are buying insurance based on price and service."

Wall Street seems dubious as well. Allstate's shares have fallen 18% this year. If competitors keep dropping their rates, it could force Mr. Wilson to cave on price cuts.

"Allstate will eventually have to follow the crowd," says Adam Klauber, analyst with Cochran Caronia Waller in Chicago.

"IT'S CLEARLY MORE COMPETITIVE NOW THAN IT WAS LAST YEAR….(BUT) WE'RE NOT GOING TO TRADE OFF PROFITS FOR GROWTH."

[Thomas Wilson, CEO, Allstate]

standing pat: While other top auto insurers have cut rates in Illinois in recent months, Allstate has not

Geico                            -5.7%

State Farm                  -6.0%

Progressive                -6.7%

Source: Companies

pieces of the pie: Marketshare in Illinois: Auto liability for top four national insurers in 2005

Other                           54.1%

State Farm                 29.7%

Allstate                        10.1%

Progressive                 3.6%

Geico                             2.5%

Source: Illinois Division of Insurance

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By Steve Daniels

THE ABROGATION OF MARKETS IN BRITISH COLUMBIA

Jack is spending some time in British Columbia. He writes that the provincially operated auto insurance is, far pricier than the private Ontario system, in part because of subsidies to bad drivers who wouldn't be insurable there. This is to be expected. If the risk pool includes people who impose high costs on the system, and if they cannot be charged premia to match those costs (probablistically), then everyone else will have to bear a share of those costs. It is inefficient because the system tends to encourage too many risky drivers to be on the roads; it also, because of the higher insurance premia, tends to discourage some very low risk drivers from driving.Jack continues,Privatized alcohol businesses compete with the Provincial outlets. Prices about 25% higher than Ontario though, flying in the face of the usual predictions. This seems unlikely to me. I know from nothing about the BC retail liquor business, but here are my suspicions:It is extremely unlikely that gubmnt and private retail liquor outlets compete head-to-head. One way the gubmnt stores can survive is if they are subsidized, directly or indirectly. More likely in this instance is that the prices are regulated and kept above the Ontario levels to guarantee the survival of the gubmnt stores. Otherwise the private outlets would compete the snot out of them.

http://econoclectic.powerblogs.com/posts/1191547058.shtml

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By EclectEcon

NEW YORK MULLS LICENSES FOR ILLEGALS

Spitzer sees plan exposing group, lowering insurance rates

A new program designed to grant driver's licenses to illegal aliens will actually lower the amount New York residents pay for auto insurance, state and industry officials say.

Allowing illegal aliens access to a driver's license bucks the national trend. Forty-two states do not grant licenses to illegals, citing the need to curb identity theft and to increase airport security.

New York Gov. Eliot Spitzer, a Democrat, is touting the policy change as a way of bringing a hidden population into the open.

The governor has run into trouble in the state Senate, which voted last week to reject the plan, saying it places state security in jeopardy. But Mr. Spitzer's office says it does not need approval from the state Legislature to proceed.

On Saturday, Mr. Spitzer made a deal with the Bush administration that would allow New York to carry out its plan to issue licenses to illegal aliens - although their licenses would be clearly marked to indicate they are not valid federal ID. The deal put New York in compliance with the federal Real ID Act, which will require secure driver's licenses to be used for purposes such as opening a bank account, buying an airline ticket, receiving Social Security benefits or visiting a federal building.

The state agency overseeing auto insurance estimates that 600,000 uninsured vehicles are on the road in New York. About 200,000 fewer uninsured vehicles will be on the road as a result of the new licensing program, the agency predicts.

"We've assumed they won't get insurance at the same rate as current drivers do, but the program will still drive down the number of uninsured motorists out there," said Hampton Finer, deputy superintendent for rates and competition at the New York State Insurance Department.

Under New York's car-insurance rules, Mr. Spitzer's program will decrease the portion of the auto-insurance premium that covers accidents involving uninsured vehicles by 34 percent. Overall, Mr. Finer predicts a 1 percent to 2 percent decrease in auto-insurance premiums for New York drivers after the program takes effect.

New Yorkers pay some of the highest insurance premiums in the country, so they might not notice any difference in their bills, said Mike Barry, spokesman for the Insurance Information Institute. The typical New York resident pays more than $1,000 a year for auto insurance, he said.

Dick Luedke, a spokesman for State Farm Insurance, said the premiums his company charges New Yorkers will not change one way or the other until the effect of the program is known. One thing is for sure, according to Mr. Luedke: The program is likely to increase the number of insured drivers.

"There are a lot people out there right now driving who cannot get a driver's license and therefore can't get auto insurance," he said. "Now they can get both."

In Maryland, where illegal aliens have been allowed to obtain driver's license permits since 2003, state officials say they cannot determine whether the cost of auto insurance has swayed one way or the other.

"An unlicensed driver may not own a motor vehicle and thus would not have a reason to purchase motor vehicle liability insurance," said Karen Barrow, spokeswoman for the Maryland Insurance Administration. "Persons who do own motor vehicles may fail to purchase the required liability insurance for numerous personal and financial reasons," she explained.

"While decreasing the number of uninsured motorists would result in decreasing the cost of motor vehicle liability insurance in Maryland, the Maryland Insurance Administration has not determined that licensing illegal immigrants has lowered insurance rates in the state," Ms. Barrow said.

Most states require driver's license applicants to show two or three forms of identification, but eight states including Maryland allow some form of driver's license to illegal aliens. The other states are Hawaii, Maine, Michigan, New Mexico, Oregon, Utah and Washington.

Mr. Spitzer's decision to proceed with his insurance plan could hit a big pothole in a few years when a new federal ID program goes into effect.

Under the Real ID legislation, passed in 2005, ID cards will be required for people to obtain a driver's license. The system will be phased in beginning in December 2009.

To get a new approved license, or make an old one conform to the new requirements, motorists will have to produce several types of documentation to prove their name, date of birth and that they are lawfully in the United States.

Maryland's licensing program is also likely to be forced to make adjustments when the standards go into effect.

"In order for Maryland to come into complete compliance with the federal law, it would take some changes in the [state] law," said Buel Young, a spokesman for the Maryland Motor Vehicle Administration.

"Leadership in Maryland needs to take a stand, and they haven't made any final decisions," he said.

By : Gregory Lopes

LOW RATES ON CAR INSURANCE

If you haven't comparison shopped for auto insurance lately, do it now. In fact, do it even if you looked around as recently as a year ago. Price wars are raging in many states and among many companies, especially for drivers with clean records. In 1998, the average cost of auto insurance declined for the first time in more than 20 years, according to the Insurance Information Institute in New York City.

What's bringing rates down? Cars have gotten safer. More people are using seat belts and air bags. States have passed tougher drunk-driving laws.The number of ante thefts is down. Medical costs are rising more slowly. Demographically, there's a bulge of middle-age drivers, who have fewer accidents than younger ones. All these changes reduce the number and severity of accident claims. Not surprisingly, insurance-company profits have soared. Now competition is forcing many premiums down.

"Ho hum," you may be saying. "My company already dropped my premium by five percent." Or maybe it refunded part of your money. But so what? A competitor might sell you a similar policy for 15 to 30 percent less, with better customer service. Generally speaking, you get the largest savings when you find a different insurer with lower prices across the board.

In some parts of the country, average prices haven't declined yet-and in those places, it's even more important to comparison shop. Everywhere, some insurer is offering policies for less.

There's something else you have to shop for besides a rate: That's a risk classification. The best rates go to drivers with good records, generally known as preferred risks--but in recent years, it has been tough to make the grade. Insurers were demoting drivers with minor violations To the standard-risk category, where coverage can cost 30 to 60 percent more. Drivers formerly slotted as low-standard risks were tossed into the nonstandard pool. Dropping people down in class meant higher profits for insurers, even when rates stayed the same.

Insurers use elaborate computer programs to calculate risk, factoring in not only a driver's age, driving record, type of ear, and number of past accidents, but also her credit history and whether she has a cell phone in her car. (To paraphrase the old saying, Stay alive, don't phone and drive.)

Many insurers are starting to reclassify people back up, says Robert Wallach, head of The Robert Plan Corporation in Bethpage, NY. Here's how he describes the risk categories today: preferred--no underage drivers in the family, no high-performance vehicles (like sports cars), no accidents, maybe one violation; standard--a young driver in the family, a slightly higher-performance car, maybe a single accident, one other violation; nonstandard--teenage driver, tickets, accidents.

But insurers differ in how they evaluate risk. Always ask how you're classified. A good driver offered a standard-risk policy should look elsewhere. Some other insurer might put you on its preferred list.

Those identified as nonstandard risks, including people in state high-risk pools, should also shop around. In past years, you might have landed in this category after a couple of accidents, or even just a couple of speeding tickets. Now you're more likely to be accepted as a standard risk. Your premium will still be relatively high, but not as high as before.

To find lower rates, call an independent insurance agent and ask her to shop for you; check with companies like State Farm that sell through their own agents; or call insurers that sell by phone and mail (such as Geico Direct at 800-8413000, in all states except Massachusetts and New Jersey; Progressive at 800-AUTO PRO, in all states except Massachusetts, New Jersey, and South Carolina; or Reliance-Direct, 800-619-1600, in a number of states). If you apply for new insurance, hang on to your current policy until you're sure the new company has accepted you (up to 60 days).

Also ask the insurer about any discounts you might qualify for. There might be price breaks for: nonsmokers, graduates of defensive-driving courses, senior citizens, students with good grades, families whose teenage drivers attend school more than 100 miles away (so they can't get at the car!), low-mileage cars, cars with air bags or scat belts that wrap around automatically, cars with four-wheel antilock-braking systems, and cars with built-in antitheft devices.

Some other ways to lower your rate:

• Tell your insurance company or agent about any changes in your life that affect risk. You should pay less when the young driver in your family graduates and leaves home, or when you retire and stop using your car for commuting.
• Raise the deductible on your collision insurance from $250 to $500, or from $500 to $1,000. Odds are, you'll save more in premiums than you'll ever pay out of pocket for collision costs.
• Buy a car that's cheap to repair. Your insurance agent can tell you which cars are money-eaters and which aren't.
• Insure all your cars with the same company, and buy your homeowner's or tenant's insurance there too.
• Share your car with your teenager. When teens have their own cars, or drive yours more than half the time, they're considered principal drivers and cost more to insure.

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By Jane Bryant Quinn and Kate O''Brien Ahlers

TRILOGY SPINS EMPLOYEE IDEAS INTO GOLD

The start-up factory at Trilogy Software is set to churn out another Internet business this week, this time aimed at the multi-billion-dollar insurance industry.

Trilogy will announce the launch of insuranceOrder.com, a Web site that will allow consumers and businesses to compare car insurance offerings and make purchases online. While the site is initially limited to car insurance, the firm plans to quickly expand into other areas, such as home, life and health insurance.

The start-up will be in direct competition with several other established players, most notably InsWeb (www.insweb.com), but Trilogy (www.trilogy.com) is looking to leverage its experience at operating large-scale electronic commerce marketplaces.

"The key advantage that our site will provide is the ability to offer consumers a binding price quote based on their personal information and credit histories," said insuranceOrder President Andy Weitz. "Other [insurance] sites act like referral services: They pass your information along, or provide you with an estimated quote and tell you someone will get back to you. The rate we give buyers at the end of the process is a binding offer."

Encouraging new ideas

Trilogy is well known for its policy of encouraging employees to dream up business ideas, and then providing them with the financing and resources to bring them to fruition. Some of the companies already launched by the Austin, Texas-based company, include PcOrder.com, applianceOrder.com and carOrder.com. PcOrder was spun off a little more than a year ago, and now has a market cap of about $362 million, although in December 1999 it was valued at more than $1 billion.

Weitz is another product of Trilogy's entrepreneurial spirit. He joined the company out of college just nine months ago, and a few months into the job, proposed launching a dot com for purchasing insurance. He got the idea after moving to Texas and trying unsuccessfully to use the Internet to purchase his own car insurance.

Now, at only 23 years old, he is the head of his own venture.

"It's been an amazing experience," Weitz said. "But that's what attracted me to Trilogy in the first place."

InsuranceOrder has initially signed on two insurance providers to launch the service: Atlanta Casualty Insurance and Reliance Personal Insurance.

Paul Wilmore, vice president of marketing at Cleveland, Ohio-based Reliance, said the company spent a lot of time working with Trilogy to make sure that adequate checks were being used to qualify applicants. The software automatically runs a credit check against the applicant, and plugs into Reliance's own back-end systems to check the applicant's driving record.

Wilmore acknowledged that consumers have been slow to use the Internet to purchase insurance, but he believes it's only a matter of time before it becomes a big sales channel. "We really believe it's the delivery method of the future," he said.

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By Mel Duvall

INSURANCE BY THE MINUTE

One of the nation's biggest auto insurers is using satellites to track its customers at the wheel. Is this the future of auto insurance?

IF DRIVERS PAID FOR gasoline the way they pay for auto insurance, they would pay a flat fee to a gas station every few months. After that they could pump all the gas they wanted. Sound silly? Of course. Under such a system, low-mileage drivers would subsidize high-mileage drivers. Everyone would spend more time on the road since the added cost of doing so would be zero.

All-you-can-pump gas isn't about to catch on. But all-you-can-drive auto insurance is here. It's the norm. An experiment by Ohio-based Progressive Corp., however, could eventually change that.

Progressive has fitted the cars of some of its Texas drivers with videocassette-size Global Positioning Satellite (GPS) devices. The devices, which sit behind the dashboard, track the number of minutes customers drive, as well as where they drive and when. The insurer then uses this information to set each customer's premium. If this doesn't prove too costly-and if regulators don't block it-it could reshape the auto insurance industry.

For Progressive, the nation's fourth-largest auto insurer, with revenue of $6 billion, the benefits are clear. If it can assess the risks of different drivers more precisely than the next insurer, it will be in a position to price coverage in a way to attract low-risk customers and chase away high-risk ones. The Progressive rating system doesn't displace traditional criteria (like age, address, vehicle model and accident history) but rather supplements them. You pay more in the Progressive GPS plan for driving a lot, driving at night or driving in cities.

While other insurers typically ask their drivers about mileage, the answers don't have much effect on premiums, says James Barrett of the Economic Policy Institute in Washington, D.C. "They assume that you lie, because it is in your interest to do so," he says. "And so they give very little weight to those insurance forms that you fill out."

Progressive's experiment avoids this problem. And it's not just the insurer, which can charge drivers more accurately, that sees benefits. So, too, do drivers and possibly society at large.

According to Progressive, customers in Houston, where tests of the program began in 1998, have saved an average of 25%, with some saving 50% or more. Just how much of that savings is due to people altering their driving habits is .unclear. But transportation experts say that making premiums fully variable-Progressive makes them mostly variable-would lower the number of miles people drive by 10% or more.

Liberals are going to be twisted into knots trying to decide whether to oppose this kind of insurance. On one hand Progressive is discriminating among customers far more than most insurers do, and discrimination sounds bad. On the other hand the reduction in miles driven would make the air cleaner. The U.S. Environmental Protection Agency has signed an agreement with Progressive to monitor the program's environmental benefits.

A big drop in miles driven would, of course, also lower the number of traffic jams and accidents. Progressive's program could also help women-who drive about 40% less than men-and the poor, who drive only about half as much as the better-off. Then there are the losers: people who drive a great many miles or who drive late at night or in areas that are heavily congested. If Progressive's program grows in popularity, such drivers could end up paying more even if they don't sign up for GPS monitoring. Why? Because simply by declining to sign up, they reveal they ought to be paying more.

You can imagine the squawks that will come from people who believe that prices ought to be set by government decree rather than by the free market. Listen to former Texas insurance commissioner Robert Hunter, now insurance director at the Consumer Federation of America. "For example, the swing-shift guy who may be a laborer or the lady who cleans the offices who's probably driving home at 2:00 A.M. Are you going to start charging her for that? That doesn't seem fair," he says.

Hunter also raises another big worry: privacy. "With GPS you can tell where people are stopping and going," Hunter says. "So if I stop on a corner and do that every night on the way home from work, am I going into the bar or across the street to the health club? Will they use that kind of information?"

Progressive promises that it won't. Todd Litman of the Victoria Transport Policy Institute says that any privacy concern can be solved. "You could have it structured so that the data are not retained one day to the next," he says. "So the only thing the computer does is track your bill. It's impossible for somebody to come back later and demand the information."

What about Progressive's competitors? Will they want the regulators to outlaw GPS pricing? Not necessarily. If the plan tends to keep Progressive's customers off the road, it will leave fewer targets for other cars to collide with. "Progressive is going to reduce the accident costs for all the other insurance companies in Texas by a lot," says Aaron Edlin, an economist and law professor at the University of California at Berkeley.

Competitors probably won't copycat Progressive right away. Not even Progressive has the data in hand that will enable it to accurately price a minute of driving by a given customer. Should the company get the pricing wrong, say, by charging good drivers too much, it will create opportunities for the competition.

Another issue is the cost of the GPS technology. Buying and then installing GPS devices in cars once they're on the road costs several hundred dollars. But costs should drop over the next couple of years as GPS devices grow more popular and as automakers begin installing them at the factory. Despite the obstacles, Progressive seems dead serious about making this system work. "Innovating is really part of our culture," says Glenn Renwick, Progressive's boss of insurance operations. While the company isn't enrolling new per-minute drivers right now in Texas, it has talked to regulators in other states, including Ohio, Illinois and California. It has also obtained two patents.

Is Progressive's high-tech pricing the future of auto insurance? Could be. "Automobile-insurance pricing has hardly changed at all in the past 50 years," says transportation expert Litman. "And it's astounding, because there is every reason that it should be priced differently."

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By Ira Carnahan

AUTO INSURANCE/BE PREPARED

YOU'LL REPLY TO A BOATLOAD OF QUESTIONS BEFORE GETTING ANY QUOTES

WE FILLED OUT quote forms at more than a dozen sites for a variety of hypothetical people in a variety of places: a 30-year-old single woman with a 1997 Jaguar XK8 coupe, in Ohio and California; a 40- and 41-year-old couple who drive a 1999 Volvo S70 and a 1997 Toyota Corolla, in Maryland and California; and the same family with a 16-year-old son.

We quickly noted a problem: The company that offered the lowest quotes for one family offered some of the highest for the others. And the site with the lowest quote also produced the highest quote for the same family. The leaders change if you live in a different city, have a different car, or have a record of accidents and tickets. And the number of quotes you can get varies a lot from . state to state.

The two major on-line marketplaces, QuickenInsurance and InsWeb, give you the greatest number of accurate quotes in the least amount of time. But be prepared: You can't get accurate auto-insurance quotes without answering a boatload of questions.

QuickenInsurance makes it as painless as possible. After spending about 15 minutes typing in information about your cars, your driving record and the amount of coverage you want--helped by excellent "advice" buttons, which explain how each variable can affect your rate--you'll get immediate quotes from up to five insurance companies.

One of the best things about QuickenInsurance is the accuracy of its quotes. Its information comes directly from the insurance' companies, so you'll get the price you were quoted, as long as everything about your motor-vehicle and claims records checks out. Click on the "compare details" button for a table that shows how each insurer stacks up in terms of claims-processing time, financial-strength ratings, which discounts are included in your quote and other details. It's easy to fiddle around with different variations to see how much your rates will change if you raise your deductible or increase your liability coverage.

You remain anonymous until you apply for a policy, which you can also do online. Several companies even activate your coverage immediately if you submit your credit card number.

QuickenInsurance's biggest weakness is the limited number of companies it quotes. In some states, you'll go through the entire process and get prices from only one.

So if you still have energy left and want more quotes, you should also go to InsWeb and see how many companies it offers in your area (click on the "quoting companies in your state" link at the bottom of the state page). In some states, InsWeb came up with almost the same results as QuickenInsurance did. But in others, such as California, it included immediate quotes from 12 companies and emailed a 13th within minutes. (InsWeb insurance quotes are offered through many partner Web sites, including Kiplinger.com.)

The biggest annoyance with InsWeb is the lack of anonymity. After you spend about a half-hour filling out all the forms, you must type in your name, address and phone number before you're allowed to see any quotes. And you can't buy a policy online--an agent will contact you.

A few of the biggest providers don't appear on either site. Check out Geico, and call USAA (800-365-8722) if you're in the military or a dependent. You can get a State Farm quote at the company's own site.

Also take a look at eCoverage, an online-only auto-insurance company that offers low rates because its brand-new technology cuts down on administrative costs (and on your time answering questions). The company sells policies in fewer than 20 states right now but is quickly adding more. You can buy a policy immediately, and even submit claims online.

By Kimberly Landlord