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Wednesday, December 28, 2011

Federal Flood Insurance Reauthorized Until May 2012

The federal flood insurance program has been extended until May 31, 2012 under another short-term consolidated appropriations bill (H.R. 2055) passed by the House and Senate and signed into law by President Obama on Dec. 23.

Had the appropriations bill not passed, the National Flood Insurance Program’s authority to issue new or renewal flood insurance policies would have expired at midnight on Dec. 23.

Insurance agents— the Independent Insurance Agents & Brokers of America (Big “I”) — applauded the reauthorization while continuing to press for a longer term authorization and program reforms.

“It is important to note that our work on this important issue is far from over and the next few months provide ample opportunity for Congress to pass long-term extension and reform legislation that provides the necessary certainty for consumers,” said Charles E. Symington Jr., Big “I” senior vice president for government affairs.

Symington noted that Congress has traditionally extended the program for five year periods in order to provide stability for the marketplace; however, for the last few years Congress had only extended the program for short periods, mostly from 30 days to six months.

“Today’s extension, although greatly appreciated, is just a temporary patch,” said John Prible, Big “I” vice president for federal government affairs.

Auto Insurance Claim Costs Rising Again

Auto insurance claim costs countrywide have recently increased, reversing previous trends of declining or relatively stable costs.

A new report from the Insurance Research Council (IRC), “Trends in Auto Injury Claims, 2011 Edition,” documents auto injury claim trends, both countrywide and by state, using private passenger auto claim data from national and state-level statistical reporting agencies.

Although injury claim severity (the average cost of injury claims) has been increasing steadily in the last several years, much of the increase has been offset by declining claim frequency, which produced relatively stable injury claim costs per insured vehicle, according to the report.

However, recent data indicate that claim frequency, on a countrywide basis, is no longer decreasing. In the case of personal injury protection (PIP) claims, the effect of rising claim severity has been magnified by a simultaneous increase in claim frequency. PIP claim costs per insured vehicle countrywide increased more than 18 percent from 2008 to 2010.

For bodily injury (BI) liability claims, the effect of rising claim severity has been mitigated somewhat by stabilization, rather than an increase, in claim frequency. However, 2010 marks the first year since 1994 that BI claim frequency did not decline.

The report says that much of the deterioration in PIP trends has been concentrated in three of the largest states with no-fault approaches to compensating auto injuries—Florida, Michigan, and New York. In Florida, the average PIP claim cost per insured vehicle in the state jumped 62 percent in just two years (2008-2010). PIP costs per vehicle in Michigan have been increasing rapidly for several years now—rising more than 120 percent over the last decade. The New York system has been on a roller coaster of rising and falling costs driven by a surge in suspected claim abuse in the New York City area, according to IRC.

“These are not encouraging findings for insurers or drivers,” said Elizabeth Sprinkel, senior vice president of The Institutes. “While we hope these findings represent temporary conditions, we can’t be sure that is the case and can’t afford to ignore the factors driving rising claim costs.”

Friday, December 9, 2011

To buy or lease?

If you’re interested in a new car, the question typically arises: Should I lease or buy? As is often the case, it depends on your individual situation. Many people equate leasing with renting but it may be more useful to consider leasing as financing the use of a vehicle whereas buying with a loan finances the purchase of a vehicle.

Your lifestyle, your priorities
As you think about whether to lease or buy a new vehicle, it’s important to make financial comparisons but it’s also important to consider your lifestyle, your objectives and personal priorities — what’s important to you.

If you …
Enjoy driving a new car every three or four years; want lower monthly payments; want a car that is always under warranty; don’t want to trade or sell used cars; don’t care about building equity in your vehicle; have a predictable lifestyle and drive an average number of miles per year1; properly maintain your cars and are willing to pay more over the long haul to get these benefits, then you may want to consider leasing.

On the other hand, if you …
Value long-term cost savings over lower monthly payments; enjoy owning your vehicle and would like to pay it off and be payment-free for a while; don’t mind the unexpected cost of repairs after the warranty has expired; like to customize your vehicle; drive more than the average number of miles per year and don’t mind higher monthly payments, then you may want to consider buying your vehicle.

Caveat: Lack of flexibility
Some consider the inflexibility of the lease agreement a significant drawback of leasing. If you want or need to terminate your agreement before maturity, you will likely pay a significant penalty for early termination. In many cases, the penalty may equal the remainder of payments due under the agreement. So before you enter into a lease make sure your lifestyle and ability-to-pay are predictable and stable.

Contact me at 713-688-8669 or visit

Visit for more information about leasing. When you decide which option you feel is appropriate for your situation, call me. We can sit down and review your coverage and options so you can be sure you have the insurance you want to go with your new ride.

1According to SmartMoney, the average American driver puts about 12,000 miles per year on his or her car. (

The Case for Leasing

Allows you to get a new car frequently
Provides short-term affordability
Results in fewer repair bills
Avoids upside-down loans

The Case against Leasing

You don’t own the vehicle
Penalties for early lease termination
Additional charges for excessive mileage and any damage to the vehicle
Must buy or return car at end of lease