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AUTO MODULE - III

AUTO MODULE - III. Module III Objectives . Review Module II Mid-Century Auto (MCA) Review Module III Homework Assignment. Module II - Review. 1.Explain what is covered under the E523 Rental Reimbursement endorsement?

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AUTO MODULE - III

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  1. AUTO MODULE - III

  2. Module III Objectives • Review Module II • Mid-Century Auto (MCA) • Review Module III • Homework Assignment

  3. Module II - Review 1.Explain what is covered under the E523 Rental Reimbursement endorsement? 2.Explain who is eligible for an E515A Named Excluded driver endorsement. 3.How much coverage does the E521A Sound Receiving and Transmitting Equipment endorsement provide? 4.What type of factors can insurance companies use to determine premium rating?

  4. Module II - Review 5. Determine the proper rate class for the following drivers: Sex Age Married? Prin Driver? Use M 40 Y Y To work F 18 N Y To school M 18 N N To school F 16 Y Y Housewife M 24 Y Y Pleasure M 26 N Y Carpool

  5. Module II - Review 6. In our last module, I mentioned that you as an agent are the “eyes and ears” of the Company. What is the significance of this statement? 7. What is field underwriting? 8. What is the difference between subjective and objective underwriting? 9. What are the two auto companies that Farmers uses to place auto risks?

  6. Module II - Review 11. What is a DIP point? 12. How many DIP points are assigned to a TCM policy for: a. 1 speed cite 24 months ago b. 1 negligent accident 38 months ago c. 1 OTC claim 6 months ago d. 1 DWI 15 months ago with accident on same occurrence.

  7. Ultra Preferred Rating Plan Policies are written through Texas County Mutual, with the most competitive rates Farmers offers: The Requirements are as follows: * 12 months prior liability insurance * Accident free for the past 3 years. One Fault Free Accident per policy will be acceptable for certain FARA scores No more than one Comprehensive Claim per policy, with a maximum of 2 Comp losses per household.

  8. Ultra Preferred Rating Plan Additional requirements: * Maximum of one Total Theft loss allowed per household * Windshield repair and Towing losses will not be counted * No more than 1 minor citation for the past 3 years * Age 30 and above * FARA score of A,B, C, D, F, or G ** There are NO Exceptions to these guidelines

  9. Mid-Century Insurance Company Mid-Century Insurance Company (MCA) is our preferred Company. In this Company, we will place our prospective insureds who will be the least likely to have claims in the future. Because our rates in this Company are some of the best we have to offer, the Underwriting requirements are very stringent.

  10. MCA Underwriting Guidelines AGE:Persons under 25 are ineligible. DRIVING ACTIVITY: All drivers must have three years verifiable driving experience with no accidents in the past 12 months. No more than one non-chargeable accident. One minor violation is allowed with appropriate FARA score (age 25-29). CLAIM ACTIVITY:No non-weather related losses (excluding glass losses). No more than one weather related loss. VEHICLES: High Performance and sports cars must be driven by persons 30 years and over. FARA SCORE-Acceptable score must be attained

  11. MCA Underwriting Guidelines LIABILITY LIMITS: LEASED VEHICLE: When higher limits are required, all vehicles for the same named insured must carry same limits. PRIOR INSURANCE:Must have 12 months continuous liability. *Also additional underwriting requirements for TCM

  12. MCA Experience Period The experience period shall be the 36 months ending three months prior to the effective date of the policy or renewal. Because we cannot charge for accidents in MCA until the accident has been at least 90 days old, we add this 90 days on to the end of the chargability period. REASON: All promulgated companies follow the State ruling which gives the insured 90 days to determine fault before the insurance company can increase the premium. County Mutual companies are not promulgated by the State; thus, do not follow this ruling..

  13. MCA Point Rules/Surcharges One point shall be assigned for each auto accident occurring within the three year experience period involving the Insured, or any operator of the auto currently in the same household resulting in damage in excess of $1000 to any property including his own or bodily injury or death.In TCM, charge is 2 points. MAJOR CITATIONS: When an insured who has a policy in MCA receives a major citation, charge 3 points and set-up to non-renew to TCM.. TCM charged 4 points. NOTE: You must figure in the deductible when determining the total damage amount. Also, just because an accident may be under the $1000 threshold does not make it a non-chargeable accident concerning underwriting requirements.

  14. MCA Point Rules/Surcharges Exceptions - No points shall be assigned for accidents under the following circumstances: 1) If only Med or PIP was paid. 2) Legally parked, standing or stopped when struck. 3) Unattended auto. 4) Reimbursed by or on behalf of the person responsible for the accident or has a judgement against such person. 5) Auto struck in rear by another vehicle and operator was not given a moving violation.

  15. MCA Point Rules/Surcharges Exceptions - No points shall be assigned for accidents under the following circumstances: 6) Other party charged with a moving violation and our applicant was not. 7) Hit-in-run: applicant/household member must have reported accident to the proper authority within 24 hours. 8) Accident with bird or animal; damage caused by flying objects or gravel. 9) Accidents on premises owned by applicant.

  16. MCA Available Discounts Multi- Car Credit: Two or more autos on policy gives 20% of Liability, 15% of Collision (Youthful rate classes do not qualify for discount). Driver Credits: Driver credits are applicable to Liability, Med/PIP and Collision coverage's only. A 10% credit is given for Driver Training and 5% credit for Drug and Alcohol Awareness courses. Passive Restraint Discount: When a policy has Med/PIP coverage: a. Air Bags, Category (1) 15%, Category (2) 30% b. Passive Seat belts (1) 15%, (2) 30%. Anti-Theft Device: 2% - 30% discount when OTC coverage is taken. A signed Warranty of Acceptability form must be retained by the agent. Auto/Home- 5% Discount for Farmers Homeowners

  17. Target Theft Vehicles Because of the rapidly increasing number of vehicles that are stolen in the Houston and San Antonio areas, Farmers began to promote public awareness by enacting several programs to combat this increasing exposure. Among these programs included: 1) working with local law enforcement agencies (H.E.A.T.), 2) a VIN etching program, and 3) enacted new underwriting restrictions for “target-theft” vehicles. After gathering data to determine the vehicles that were more likely to be stolen, Farmers incorporated a list of “Target-Theft” vehicles and required that these vehicles have an anti-theft system before OTC coverage could be written.

  18. Target Theft Vehicles TRUCKS All Foreign/Domestic 4X4 Trucks/Vans - no age limit Chevrolet Trucks/Vans/Suburbans Ford Trucks/Vans - GMC Trucks/Vans -

  19. Target Theft Vehicles CARS All Models High Performance - No age limit BMW ‘5’ Series Chevrolet All Camaros Ford Mustang Mercedes-Benz SDL/SEL series - Pontiac Grand Am, Firebird

  20. Miscellaneous Vehicles- TCM ANTIQUE, COLLECTIBLE OR SPECIAL INTEREST AUTO: Auto’s of any type used solely in exhibitions, club activities, parades, and other functions of public interest, and which are not used primarily for transportation of passengers over any public street or highway, and have been restored to or maintained in its original condition. There is a 2,500 annual mile limitation on this type of policy.

  21. Miscellaneous Vehicles- TCM MOTORHOMES: A self-propelled vehicle which is used primarily for recreational use. NOTE: Removable or slip-in-campers or trucks equipped with camper shells are not acceptable for rating under this rule. 1. All insureds must meet the TFIC requirements. 2. Application must be sent with photo. 3. No business use or converted buses or vans. 4. Must have a value of $10-$80K if PD written 5. Not rented over 4 weeks per year.

  22. Split Household Rules Policies in multiple car households may be split between MCA and TCM under the following conditions: 1) All operators of cars placed in MCA cannot have an accident or cite in the past 3 years. 2) When there is only one operator in a multi-car household, and he/she qualifies only for TCM, all vehicles must be written in TCM.

  23. Module III - Review • What is the minimum age a driver must be to be issued in MCA without his/her parents policy being issued? • What is the minimum age for: • a. A high performance car in MCA? • b. A sports car in MCA?

  24. Module III - Review 3. What are the additional requirements which would allow a person under 25 to be eligible for coverage in MCA? 4. What is the rule concerning accidents in MCA? 5. What is the rule concerning non-weather related losses in MCA? 6. What is the rule concerning prior insurance requirements for MCA? 7. Can a liability only 20/40/15 policy be written in MCA? 8. What is a target theft vehicle?

  25. Module III - Review 9. What is the experience period for MCA? 10. In MCA, how many points would you charge for: a. “A” received a speed citation. b. “A” hit “B” in rear. c. “A” hit a deer. d. “A” vehicle stolen. e. “A” received DWI after involved in a chargeable accident. f. “A” received 3 speeding tickets and had one accident.

  26. Module III - Review 11. What are the accident exceptions in which no points will be charged in MCA? 12. What discounts are available in MCA? 13. Concerning split-households, determine the following: (all citation/accident activity less than 12 months old) a. Husband 1 accident, wife clear, two vehicles. b. Husband 1 DWI, wife clear, three vehicles. c. Wife 2 accidents, husband clear, two vehicles. d. Husband/wife clear, son speed, two vehicles.

  27. Profitable Risk Selection The function of Underwriting, in basic terms, is selecting the appropriate group of insureds. The goal of the selection process is to control loss frequency. What makes a risk acceptable are the attributes of the individual and the characteristics of the property subject to insurance. Obviously, we do not want to issue a policy to an individual we are certain will have a loss, but this is not to say we are trying to choose only those who will not have losses, we merely want to be within a range for which we have planned and rated. After all, if people did not have losses, they would have no need to purchase insurance.

  28. Profitable Risk Selection In theory, it should be possible to identify certain characteristics of each insured that predicts future loss frequency. For instance, it has always been assumed that the more miles one drives, the more likely one will be involved in an automobile accident. In fact, we have identified quite a few characteristics that affect automobile loss frequency. These include: miles driven, age and experience of driver, the type of car, citations and prior accidents, prior insurance coverage, and so on.

  29. Profitable Risk Selection One of the proven principles of auto insurance is that people who have accidents in the past tend to have more accidents in the future. Another way to say this is: Prior losses predict future losses. Research from our own book of business tells us that insureds who have had losses in the last three years are more likely to have another in the fourth. What is not shown in this study is the higher frequency of those same policies in the following years. This means the selection of this year’s new business will have a dramatic impact on our loss results for the next several years.

  30. Becoming a Good Underwriter Becoming a good Underwriter is a formidable challenge which requires enthusiasm and determination. You will quickly discover how your attitude affects your ability to meet the demands placed upon you by your new position. Your professional integrity will be vital to the success of your agency and the ultimate success of the Company.

  31. Managing for Profitable Growth What can you do as an agent to have a profitable book of business? 1. You have to make a mental decision that profitability is important to your agency and to the Company. 2. Always re-underwrite your existing book of business. 3. Be in control of your office. Review all applications and make your staff aware of office goals. 4. Review all claims. 5. Inspect ALL automobiles at issue!

  32. Managing for Profitable Growth What can you do as an agent to have a profitable book of business? 6. Educating your clients on: a. The purpose of insurance to pay for those losses that they can not financially handle. b. The benefits of carrying higher deductibles. c. Make youthful drivers aware of the responsibility of driving safely (Y.E.S. program).

  33. Managing for Profitable Growth What can you do as an agent to have a profitable book of business? 7. Use the Farmers Friendly Review (FFR) to your advantage. It helps you sell additional lines of insurance, retains your existing business and educates your customers about the insurance products they own. Think about it; if your clients like you and believe you have given them a valuable service, they are far less likely to: 1. have fraudulent claims, 2. try to inflate claim expenses, or 3. retain an attorney to collect claim monies.

  34. Managing for Profitable Growth What can you do as an agent to have a profitable book of business? • 8. One of the most important things you as a new agent can do is to concentrate your marketing program in areas where people: • Own their own home • Have well maintained homes • Have families • Have professional and steady jobs • Have newer, well maintained vehicles

  35. Managing for Profitable Growth What can you do as an agent to have a profitable book of business? Handling Walk-Ins and Phone-Ins: Use extra caution when evaluating phone-ins and walk-ins. Avoid quoting rates over the phone; until you meet a person and talk to them face to face you really won’t know which company to quote. People are more likely to give you the truth about their driving activity, smoking etc. when they’re in a face to face interview. It does not mean that these types of customers are not good prospects, it simply means you need to screen them more carefully.

  36. Managing for Profitable Growth Explain How Driving Activity Affects Premium This is perhaps one of the most important discussions you’ll have with your prospective client. If you lay down the ground work now, that is, explain to the applicant exactly how their driving activity, coverage's, deductibles and claim frequency determines the premium, you will not have to face an uncomfortable situation later. The object is to educate your insured’s on the purpose of insurance. If your insured’s see the benefit of driving safely, we all benefit.

  37. Managing for Profitable Growth “Unprofitability does not have to catch you by surprise.” The tendency for new Agents is to concentrate on writing volume. Concentrate on writing quality business. Everyone recognizes how tough it is to start your own Agency. But remember, it’s much easier to start off with and maintain a profitable Agency in the years to come than it is to try to turn an unprofitable Agency around.

  38. Quote of the Day.. “These ten little two-letter words -- If it is to be it is up to me -- are absolutely valid. The solution is to do it now.” Zig Ziglar

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