Predictive modeling describes how insurance companies develop rates that match individual risk traits to expected losses. Companies utilizing good predictive models have a distinct advantage over those who don't. For consumers, expect to be asked more questions about homes, cars, and other aspects of your lives; businesses have unique rating characteristics as well. We're headed to a world where rates are unique to every consumer.
Predictive modeling is the insurance industry's take-away from the data mining work that is occurring throughout a broad cross-section of businesses today. Many industries benefit from data mining: bar coded discount tags from the grocery store, pharmacy, sporting goods store, and other places we shop are providing companies we use more information about our buying habits. Data mining yields benefits to many industries.
In insurance, the large volume of data today allows actuaries (insurance statisticians) to seek and test new factors for correlation to insurance losses, then weigh these factors in rating algorithms. Insurance companies have always shared some industry data on losses, though larger companies collect and analyze their own data, and now in many new ways. Mining data for factors that contribute to predictability makes sense.
As an example, "account credits" are a new rating factor here in Massachusetts home and auto insurance, popular since the fix-and-establish system with rates by the Insurance Commissioner changed to a market based system. These account credits provide significant savings off both auto insurance and home insurance. Why? Is it because consumers who buy their home and auto insurance with the same carrier tend to remain customers longer? Or because there are cost savings with billing or other account maintenance items? Or is one indicative of a decent credit score? "Yes" to all of the above. Because it means "yes" to all of these factors, it becomes even more powerful. Mathematically, it's akin to the magic of compound interest. Credits on credits on credits make for deep discounting.
There are other credits (and charges) that are less obvious but contribute to a final rate. One predictive factor that is NOT permitted for rating Massachusetts auto insurance is credit history. But the owners of homes generally have good credit. The bank already knew that when they lent the money. Companies and their actuaries have discovered other indicators of good credit: including buying higher liability limits, shopping and buying ahead of an existing policy's expiration, and paying in full. These proxies for credit are the industry's way of developing a leaner rate while still following the law. Other rating factors contribute too: if you're a member of a motor club, if you've graduated from college, how long you've lived at your current address, if you've had (even) not-at-fault accidents, and other questions that you'd think have nothing to do with auto insurance rates. Combine these with traditional metrics such as annual mileage, years of driving experience, moving violations and at-fault accidents, and auto insurance rates become unique to every driver.
For homeowners, some of the unexpected rating factors include gun ownership, dog ownership (broken down further to breed), existence of home generators, and credit history (which is permitted in home insurance). Combine those with expected rating factors such as age of home, existence of alarms, and proximity to the ocean, and models become more predictive with every piece of relevant information. Businesses are increasingly subject to additional questions for rate development: what insurance professionals know as 'supplemental applications'. These collect more details to find the most competitve and accurate rate. Companies using these have a distinct pricing and product advantage those who don't, and they know it.
The old methods of calculating an insurance rate with a pencil and a calculator are out; multi-variant rating is in.
At Gordon Insurance, we use a library of checklists to aggregate the rating factors from our many companies to ensure you're getting the best rate possible. Many questions we ask will result in: "why do they need to know that?" We don't always know. But some actuary somewhere found a correlation to expected claims. Privacy laws and our national tradition of privacy will push back against this trend. But the trend toward pricing based on multi-variant models is accelerating, as a combination of proprietary calculations and quickly secured public information makes more data available. So to the question, "does it affect me?": Absolutely. By working with Gordon Insurance, you'll find the best fit with the company that likes your profile better than anyone else.
If you have any questions about how insurance works and how it is determined, feel free to contact us. We love answering insurance questions and helping customers find the best possible rates to meet their insurance needs.
In Massachusetts in 1999, over 42% of 16 year old drivers had an accident resulting in over $1,000 of reported damage before turning age 17 (this was 47% in 1997, before the Junior Operator’s Law took effect) ! 23% of 17 year olds had a reported accident; for 18 year olds, the rate dropped to 18%. Experience matters. So does observance of the Junior Operators Law.
One of the steps you can take towards safety is to sign this “New Driver-Parent Contract” along with your new driver. The contract outlines responsible driving practices and parent actions. See the contract here, or load a copy to print out.
||Click to Download the New Driver-Parent Contract
Safety is always a vital aspect of life for us at A. G. Gordon, Inc., and we encourage you to check out some of our features at our website, or get a web quote.
Use of credit cards, bank accounts, and other electronic monetary transactions are a convenience and a necessity in today’s world. An unfortunate side-effect of this otherwise wonderful technology is the prevalence of identity theft. Previously a small and isolated type of crime, this type of theft has become ubiquitous in a world where money is wired from account to account, and most personal information is handled digitally. News of medical records ending up in landfills reminds us of that our privacy is not always within our control. Let’s face it. No one keeps all their money under their mattress, and safe-crackers are facing a tough employment market.
But just because this is a problem does not mean you can’t be vigilant and prepared. Here’s a great checklist from reader’s digest developed by former ID thieves to show you discreet ways that thieves can help themselves to your money.
(For the full story and webpage, click here)
“13 Things an Identity Thief Won’t Tell You”
- Watch your back. In line at the grocery store, I’ll hold my phone like I’m looking at the screen and snap your card as you’re using it. Next thing you know, I’m ordering things online—on your dime.
- That red flag tells the mail carrier—and me—that you have outgoing mail. And that can mean credit card numbers and checks I can reproduce.
- Check your bank and credit card balances at least once a week. I can do a lot of damage in the 30 days between statements.
- In Europe, credit cards have an embedded chip and require a PIN, which makes them a lot harder to hack. Here, I can duplicate the magnetic stripe technology with a $50 machine.
- If a bill doesn’t show up when it’s supposed to, don’t breathe a sigh of relief. Start to wonder if your mail has been stolen.
- That’s me driving through your neighborhood at 3 a.m. on trash day. I fill my trunk with bags of garbage from different houses, then sort later.
- You throw away the darnedest things—preapproved credit card applications, old bills, expired credit cards, checking account deposit slips, and crumpled-up job or loan applications with all your personal information.
- If you see something that looks like it doesn’t belong on the ATM or sticks out from the card slot, walk away. That’s the skimmer I attached to capture your card information and PIN.
- Why don’t more of you call 888-5-OPTOUT to stop banks from sending you preapproved credit offers? You’re making it way too easy for me.
- I use your credit cards all the time, and I never get asked for ID. A helpful hint: I’d never use a credit card with a picture on it.
- I can call the electric company, pose as you, and say, “Hey, I thought I paid this bill. I can’t remember—did I use my Visa or MasterCard? Can you read me back that number?” I have to be in character, but it’s unbelievable what they’ll tell me.
- Thanks for using your debit card instead of your credit card. Hackers are constantly breaking into retail databases, and debit cards give me direct access to your banking account.
- Love that new credit card that showed up in your mailbox. If I can’t talk someone at your bank into activating it (and I usually can), I write down the number and put it back. After you’ve activated the card, I start using it.Sources: Former identity thieves in Kentucky, Florida, Indiana, Virginia, and New York.
From Reader’s Digest – September 2010
If you should become a victim of identity theft, be sure to contact your financial institutions to report the problem. Many insurance companies offer ID Theft Recovery coverage either as an automatic coverage or for a small charge.
“13 Things An Identity Thief Won’t Tell You | 13 Things | Reader’s Digest.” Reader’s Digest Magazine Articles. Sept. 2010. Web. 31 Aug. 2010. <http://www.rd.com/your-america-inspiring-people-and-stories/13-things-an-identity-thief-wont-tell-you/article184109.html?epid=F73D5CA1-13D0-4289-9BFE-AA9047516F64&trkid=ERDI22938-1>.
Even if all these steps are noted and taken advantage of, there is a chance you may still become a victim. Fortunately, many homeowners’ insurance companies offer assistance in reclaiming your identity. If you’re not sure that your homeowners insurance includes ID theft coverage, contact us. It isn’t expensive and will save you a ton of time and money if some sly thief absconds in the middle of the night with your identity.
For insurance resources and relevant information, visit the A. G. Gordon Website.
Put your car keys beside your bed at night.
Tell your spouse, your children, your neighbors, your parents, your Dr’s office, the check-out girl at the market, and everyone you run across. Put your car keys beside your bed at night.
Why keep keys next to my bed?
If you hear a noise outside your home or someone trying to get in your house, just press the panic button for your car. The alarm will be set off, and the horn will continue to sound until either you turn it off or the car battery dies. This tip came from a neighborhood watch Coordinator. Next time you come home for the night and you start to put your keys away, Think of this: It’s a security alarm system that you probably already have and requires no installation.
How do I know if my keys will scare an intruder?
Test it. It will go off from most everywhere inside your house and will keep honking until your battery runs down or until you reset it with the button on the key fob chain. It works if you park in your driveway or garage.. If your car alarm goes off when someone is trying to break into your house, odds are the burglar/rapist won’t stick around.. After a few seconds all the neighbors will be looking out their windows to see who’s out there and the criminal won’t want that.
Can my car alarm work anywhere else?
And remember to carry your keys while walking to your car in a parking lot. The alarm can work the same way there. This is something that should really be shared with everyone; it could save a life or prevent a sexual abuse crime.
For more relevant insurance information and practical tips, visit the A. G. Gordon, Inc. website. Look for our Insurance Resources and Whiteboard Videos.
Most of us have never heard of a puff back. A puff back occurs when an oil burner backfires, sending soot throughout your home or business. It can happen all at once (like a balloon popping) or more gradually (as if someone was holding the end of a balloon and letting the air seep out slowly). It is usually easy to tell when a puff back has occurred. Soot covers all areas of the home or business and may range from light to very heavy. Sometimes the disbursement of soot is so light and fine it appears to be ordinary dust. This “dust” however reappears hours after being cleaned. There is often a strong odor of oil accompanying a puff back.
How can I clean a puff back?
If you try to wash the film of soot off of your furniture & walls with ordinary soap & water, it actually smears the soot around without removing it, leaving you (and your walls) rubbed the wrong way. Home restoration companies have to use special chemicals to remove the soot; a washcloth and some warm water is not going to be effective. But as they say, an ounce of prevention is worth a pound of soot not on your walls: having your oil furnace checked and cleaned annually be a service technician will prevent even the grimiest furnaces from spewing into your home. Best done before winter! Gas furnaces burn cleaner and do not pose this type of peril.
And for more insurance information, as well as topical and relevant insurance resources like our whiteboard videos, visit the A G Gordon Website. If you would like a free homeowner's quote from us, want to learn more about homeowner's insurance, or have any other questions and would like to contact us, click the buttons below.
We tend to think of the more common types of Homeowners claims such as fire, theft, wind damage etc. My dad always called his Homeowners policy his “Fire policy”. “If it’s not a fire, I’m not putting in a claim”. Times have changed since then and homeowners look to their policy to help them share the burden of loss.
As an agent, one of my most memorable claims involved a pet pig. Hilarious- but true! My clients were awakened by lightning damage at their home. It seems that a lightning bolt hit the side of their car, knocking off both hub caps. According to the fire department, the lightning bolt then traveled underneath the paved driveway and knocked off the hub caps on the other side of the car. The bolt then proceeded to travel over to the gate of the Smith’s metal fence, hitting the electric lock and causing the gate to open. Fenced inside was the Smith’s pet pig. The pig became spooked and ran across the street and in the neighbor’s back yard. The pig then ran across the covered in ground pool and fell through the cover. The fire department successfully rescued the pig from drowning.
- Replacement of the damaged electric lock, replacement for the neighbor’s pool cover, and the fire department service charge were covered on the Homeowners policy.
- Replacement of damaged hub caps were covered on the auto policy.
- Rescued & consoled pig…………………Priceless!
Sometimes, it’s good to sit back and laugh at insurance, which is usually a serious matter. Check out our website for more insurance information and resources, like our whiteboard video series.
Have you ever wondered how your car insurance rates are calculated? What affects that number on the bottom of the page? Here’s the answer:
- What type of car you drive- some cars cost more to insure than others do. Your rate can be affected by how likely your car is to be stolen, its age, the cost of any future repairs, and how safe it is (or isn’t).
- Your driving record- your driving record largely determines how well you drive (at least in the eyes of your insurance provider). The fewer incidents you’ve been involved in, the lower your premium will be. If you have a slew of accidents and driving violations on your road resume, expect to pay significantly more than if you have a clean record.
- Where you live- Outside of your own driving ability, some areas are simply safer to drive in than others, both in terms of crime and accident statistics. Your rate can vary depending upon where you garage your car as well.
- The number of miles you drive each year- Statistics says by the law of large numbers that the probability of an accident increases with the amount that you drive. Therefore expect a higher rate if you put hefty mileage onto your vehicle each year.
- Your age- Young drivers (especially males) will have to pay augmented rates. Generally insurance providers divide the “steps” into drivers who have been on the road for under three years, three to six years, and more than six years.
- Your credit- for many insurance providers, your credit score can have an impact on your insurance rates.
- Coverage- like any other insurance rate, the price is partially determined by the coverage you already have. Make sure you shop around and get the best possible price for the coverage you need.
The good news: There are a variety of auto insurance discounts available to insurence customers. Learn more about our auto insurance policies and watch whiteboard videos for more information. Here’s one video made by our agency that explains the various discounts you may be eligible for:
One of the great things about living in this country is the incredible independence with which we live our lives. For many people, this independence revolves around being able to travel in a car. It’s not easy to give that freedom up, even if you shouldn’t be driving. The facts speak for themselves: in an NHTSA study, it was found that senior citizens over 70 represent 9% of all drivers, but are responsible for 18% of pedestrian fatalities.
Mandatory Driving Tests For The Elderly
Driving tests for the elderly are becoming mandatory across the country, but not quickly enough. Moreover, most states only require tests at age 75 when chances are the damage has already been done. It is infinitely better for an elderly driver to hang up the keys on their own terms rather than being forced to by a state mandate or court order.
How to Approach "The Talk":
One of the hardest things to do is to confront an elderly loved one about driving. Hold the conversation face-to-face rather than through the phone. Remember to be non-accusatory and objective; use “I” instead of “you” (“I wouldn’t want you to hurt someone innocent” rather than “You’re going to hurt someone”).
The AARP has a list of 10 warning signs that should lead to the discontinuation of elderly driving; use these as resources to back up your argument if they apply.
- Almost crashing, with frequent “close calls”
- Finding dents and scrapes on the car, on fences, mailboxes, garage doors, curbs, or the like
- Getting lost
- Having trouble seeing or following traffic signals, road signs, and pavement markings
- Responding more slowly to unexpected situations, or having trouble moving your foot from the gas to the brake pedal; confusing the two pedals
- Misjudging gaps in traffic at intersections and on highway entrance and exit ramps
- Experiencing road rage or having other drivers frequently honk at you
- Easily becoming distracted or having difficulty concentrating while driving
- Having a hard time turning around to check over your shoulder while backing up or changing lanes
- Receiving traffic tickets or “warnings” from traffic or law enforcement officers in the last year or two
Even if your loved ones will not give up their keys, hopefully they will modify their driving to less their chances of an accident (no more road trips, night driving, etc.). But whatever they do or do not agree to, start planning alternative transportation so a plan is in place should they need it. That might also facilitate a successful key-hang-up later down the road.
Contact us at agordon.com for quotes and insurance information. Check out our whiteboard video series for more information about insurance.
With the colder weather approaching us, now is an excellent time to learn more about how to avoid frozen pipes, and the subsequent water damage that can occur should those pipes expand and burst. Although sudden and accidental discharge of water from plumbing is covered under most homeowners’ insurance policies, it is always better to avoid this occurrence entirely.
To prevent frozen pipes:
- Leave the heat on in your home to a minimum of
55ºF during bitterly cold conditions.
- Remember to use all of your plumbing fixtures
at some point during the day.
- Drain and then cover all external faucets.
- During extreme cold, keep the indoor faucets
running at a slow drip to maintain water flow.
- Should you experience a loss resulting in water damage,
turn off the water supply as soon as possible. Homeowners
should also contact a water mitigation specialist, such as
SERVPRO, to dry out your home properly before mold
or mildew can set in.
And for more tips, resources, and for competitive quotes, visit the rest of our website.
A short story, from real life:
A lawyer in Charlotte, NC purchased an extremely expensive box of cigars that he thought he could get for free by ‘beating the system.’ He had the cigars insured against floods, storm damage, and fire (I think you see where this is going).
The lawyer smoked the expensive cigars over the course of a month and then contacted his insurance company. According to him, the cigars had ‘been lost in a series of small fires.’ Of course, his insurer refused to pay him, assuming (correctly) that he had just smoked the cigars. The lawyer brought the insurance company to court where he used legalese to convince the judge that the insurer had never stated a condition for an ‘unacceptable’ fire. He was awarded $15,000 in order to replace his property.
He must not have paid very close attention in law school, because the insurance company brought him back to court, where he was found guilty of over 20 instances of arson and thus insurance fraud. He was sentenced to 2 years in prison and paid $24,000 in insurance fraud fines.
It’s astounding to me that despite the incredible security that insurance policies offer people (give that a moment of thought; what would you do in a catastrophe if uninsured?), there are some who are convinced that they have the right to manipulate the system to make money.
There seems to be a pervasive sentiment that insurance companies are the ‘bad guys,’ looking to pay as little as possible for the tragedies of their clients. While I can’t speak for all insurance agencies, as far as ours is concerned, the insurer is batting for the same team as the insured. Our job is to protect our clients, not rob them.
Yes, Insurance is a business; and our philosophy is that the most successful businesses are the ones that work for their customers.