2010-06-15
RealtyJoin - New Social Media for Real Estate Investors...and FREE!
I am a member now, so please accept my invitation by clicking this link:
http://www.realtyjoin.com/affinityNREIG
???.and ???friend??? me (join my network on RealtyJoin.com)
RealtyJoin ??? A Free Tool to Help You Get More Business
Some of the leading real estate gurus in the country have teamed up with a group of the top software developers and Web designers in Silicon Valley and have just launched RealtyJoin, a social networking site for the real estate industry. RealtyJoin will make it easier for you to find great deals, opportunities, and vendors, and make more money???. and membership is free!
RealtyJoin is designed to help you all connect with deals and new clients. Think of RealtyJoin as Facebook for the real estate industry. How valuable would it be to you if everyone on Facebook could bring you deals and opportunities?
You may fall in one (or maybe two) of the 3 categories below:
I AM A INVESTOR
RealtyJoin can help you:
??? Find Deals and Partners
??? Locate Financing Sources
??? Find the Super Agents
??? Find Great Vendors
I AM A AGENT
RealtyJoin can help you:
??? Find Investor Clients
??? Increase your Profile within your Community
??? Advertise your Properties (get your
own RealtyJoin page FOR FREE)
I AM A VENDOR
RealtyJoin can help you:
??? Find new Clients
??? Find new Partners
??? Increase your profile in your community
RealtyJoin IS NOT a niche site designed for just networking and information. It is a site specifically designed for REAL ESTATE INVESTOR MATCHMAKING, and will help you all make more MONEY. All you need to do is register, create a profile, and start joining groups, and you will immediately learn about great people and opportunities.
Become a member today, and start using RealtyJoin to find deals and opportunities!
http://www.realtyjoin.com/affinityNREIG
2010-06-10
Housing Bubble Yet to Burst?
The housing-market recession is not over
Why you shouldn't be overly optimistic about real estate right now
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) -- After years of hearing how home prices are plummeting and foreclosures are mounting, consumers want to feel hopeful about the housing market -- but maybe they're being too optimistic.
In a presentation to the National Association of Real Estate Editors in Austin, Texas, last week, Stan Humphries, Zillow.com's chief economist, pointed to four myths he said consumers are latching on to as they try to make sense of recent housing statistics.
The four myths:
1. The housing recession is over. It's not, Humphries said. He estimates the bottom in home prices won't come until the third quarter, at least from a national perspective. Doug Duncan, chief economist at Fannie Mae and also a speaker at the conference, agreed with that estimation.
2. After markets hit bottom, prices will rebound to boom levels. Not going to happen, at least for a while, Humphries said. "Once we hit bottom, the bottom is going to be a long and flat affair across the markets," he said. "What we're going to see once we hit bottom is the second phase of the housing recession... that second phase is one of being flat."
3. The worst of the foreclosure mess is behind us. More wishful thinking, according to Humphries. He estimates foreclosures will peak later this year, then remain elevated for a while. Rick Sharga, senior vice president of RealtyTrac, an online marketplace for foreclosure properties, said he doesn't envision foreclosure activity stabilizing until late 2011.
4. The tax credits saved the housing market. With or without a tax credit, those who bought would have done so anyway, Humphries said. "The biggest impact [in home sales] we believe were low prices... low interest rates and the unsung factor here is the ramped up lending by the Federal Housing Administration."
Still, it's easy to understand why many homeowners want look on the bright side.
"They went from what everyone thought was a lucrative asset to something worth a lot less than they owed on it," said Douglas Culkin, president of the National Apartment Association, in a phone interview. "We all want it to get better," he said.
Some want to finally sell their homes and move on with their plans. And homeowners are tired of thinking their houses are bleeding equity, losing value like a new car driving off the dealership lot.
As for prospective home buyers, even if consumers are feeling confident enough to take an extra trip to Wal-Mart these days, many are not going to jump in and spend on a large-ticket item like a house, said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.
"The reality of the situation in which we find ourselves today has sunk in with people," she said in a phone interview. "If a foreclosure hasn't been a part of their life, it has been a part of someone else's life... and they've seen the pain that inflicts on the family."
That perception isn't going to fade quickly.
It makes sense to be gloomy
Despite statistics showing some housing-market improvement, there's still good reason for pessimism.
The most recent Case-Shiller report showed prices rose 2.3% in March, compared with March 2009. The National Association of Realtors recently reported that in April the median existing home price rose 4% in the past year; existing home sales were up 7.6% in April to a seasonally adjusted annual rate of 5.77 million. Read about Case-Shiller's March home-price figures. See story on April sales of new and existing homes.
While it's too soon to quantify the degree of the effect, the deadline for the home-buyer tax credit likely played into the numbers. Contracts needed to be in place by April 30 to qualify, and some economists say that incentive made buyers move earlier than they would have otherwise. Any bump from a temporary credit is soon over.
But there is another important reason to take improving numbers with a grain of salt: What people are calling "shadow" inventory.
That's primarily inventory that banks are holding, homes that have been foreclosed on but haven't yet hit the market. There are also severely delinquent homeowners who haven't entered foreclosure yet, but who will eventually get there. Right now, many of them are trying to work out some sort of mortgage modification.
Then there's this: The group of "sidelined sellers," or people who want to sell their homes but have waited for the storms to pass, Humphries said. About 7% of homeowners -- representing more than 5 million homes -- fall into this category, and are very likely to try and sell their home in the next year if there are signs of improvement, according to Zillow estimates.
Additional inventory on the market slows any housing recovery.
Personal economies
Despite Humphries' theory that Americans are too optimistic on housing, there are plenty who still remain cautious. And if they're not looking at housing statistics with a skeptical eye, their personal economies are providing a reality check.
Most obviously, salaries for many Americans have been frozen or cut, and then there are the large numbers of people completely out of work, Culkin said.
According to a recent NFCC survey of more than 2,000 consumers, 49% said that if they were to attempt buying a home today they'd never be able to save enough money for a down payment. Coming up with a down payment has traditionally been problematic for first-time buyers, but it has spread to those who have owned before; many people are underwater in their mortgages, making it harder for them to get funds to move to another house.
Plus, today's buyers aren't only concerned about the ability to get a home but also their ability to keep it, said Duncan, of Fannie Mae. In the long run, that attitude is a good thing for the economy, he said.
"It's not just that we want a house," Duncan said, "but we will delay getting that house until we can afford to get it and afford to keep it."
2010-05-03
Homeowner Mistakes...
Buying a home is the biggest purchase most people will ever make, yet many go into it blind. Here are the 6 most common -- and costly -- mistakes homebuyers make.
1. Not knowing your credit score
If you're even toying with the idea of buying a home, you must find out exactly what your FICO score is. If you find it is less than ideal, wage a systematic campaign to raise it. Too many borrowers ignore this step and get surprised when they get interest rate quotes.
Once you've pored over your credit history and corrected any errors, your next step is to pay down revolving debt balances to no more than 30% usage. That will help raise your score significantly.
Why does it matter?
The lower your score, the higher your costs of borrowing. Fannie Mae and Freddie Mac, for example, charge higher up-front fees to borrowers with credit scores below 740.
Learn How foreclosure impacts your credit score
Don???t Miss: Homebuilder stocks on fire
For a buyer with a credit score between 680 and 700, the fee comes to 1.5% of the mortgage principal. On a $200,000 mortgage, that adds up to $3,000. Someone with a 740 score pays nothing.
Lower-score borrowers also get saddled with higher interest rates, about 0.4 percentage point more for the below 700 borrower. That costs an extra $62 a month -- $744 a year -- on a $200,000, 30-year, fixed rate loan.
2. Buying a car before a house
Anytime consumers open new credit accounts -- credit card, auto loan, etc. -- their FICO score could drop, according to Craig Watts, a spokesman for Fair Isaac, the creator of FICO scores.
"Hence the admonition to not open other new accounts while your mortgage application is in process," he said.
A big purchase would use up a considerable proportion of a borrower's total credit limit, which results in a drop in the score. Lenders often continue to check credit scores in the weeks before closing.
"The lender will likely slam on the brakes if the applicant's credit scores have suddenly dropped below the minimum required for the requested loan rate," Watts said.
3. Skimping on home inspection
Buying a pig in a poke can cost buyers big bucks -- just when they can least afford it. So It's vital to find all the costly flaws before you buy.
Many homes on the market today are distressed properties -- foreclosures and short sales -- and that only increases the importance of good inspections, according to David Tamny, president of the American Society of Home Inspectors.
"The owners usually didn't have the money to keep up these homes," he said. "There's a lot of deferred maintenance."
A home inspection can find problems with the foundation, electrical, plumbing, roof, attic insulation, and heating and air conditioning. In some states, separate licensed inspectors offer mold or termite inspections.
Often homebuyers, who may be strapped for cash, stint on inspections and look for the cheapest way to go. That can lead to disaster.
"The cost of repairs far exceeds the cost of inspection," said Tamny.
4. No lawyer
Nearly everyone involved in a real estate transaction -- the seller, the buyer's real estate agent, the seller's agent and the mortgage broker -- has a vested interest in getting the deal done because they only get paid when the house is sold. So they may push a deal even if it's not in the best interest of the buyer.
One of the best defenses against making am expensive purchase you'll regret is to hire a real estate attorney -- even in cities where it's not standard practice. These professionals charge flat fees and their advice is objective.
It's nice to have someone on your side.
5. No contingencies
When signing a sales contract, buyers usually have to put up 1% to 3% in "earnest money," which they don't get back if they pull out of the deal except under certain conditions spelled out in the contract.
Sellers try to limit the grounds for canceling, and inexperienced buyers may sign contracts that don't include common exceptions, such as uncovering major problems during the home inspection, failing to obtain financing and failure of the house to appraise.
Failure to obtain financing is common these days because lenders have become very picky; underwriting is very strict.
Even if your mortgage company is still willing to finance your purchase, the house itself may be worth less than you've contracted to pay for it, and the lender will pull its approval.
With residential real estate markets still slow, sellers usually accept contingency clauses, but if they resist, it may be better to rethink the deal. Losing a deposit of $2,000 to $6,000 on a $200,000 home hurts.
6. Not budgeting for insurance
Don't underestimate insurance costs and fail to budget for them.
Many homebuyers don't understand just what is -- and what is not -- covered. Standard policies pay for theft and wind, fire, lightning, hail and explosion damage. Not covered is flooding, earthquake damage or problems caused by neglect of routine maintenance, according to Jeanne Salvatore, spokeswoman for the Insurance Information Institute, an industry-sponsored educational group.
"The most important thing is before you buy a home, find out what it will cost to insure it," she said. "Insurance needs to be calculated into the cost of owning a home. Unlike a mortgage, which you can pay off, you'll be responsible for the insurance costs forever."
For flood insurance, most buyers use the National Flood Insurance Program. Earthquake coverage may be available through a state authority or some private companies.
Depending on location, flood insurance can run into a lot of money. The cost of $250,000 worth of government flood coverage on the building and $100,000 of its contents can go as high as $5,714 in high-risk, coastal areas.
CNNMoney.com
Apr 20th, 2010
http://nreinsurance.com
2010-04-12
When NOT to File a Claim!
The Basics
When NOT to file a claim
Some insurers are dumping consumers who file too many or the wrong type of claims. Here are four scenarios when you should pay out of pocket.
By Liz Pulliam Weston
You've just crunched your fender in a parking lot. Or your washing machine overflowed, flooding your laundry room. Should you call your insurer?
Probably not.
These days, insurance companies are quicker to raise premiums or drop coverage entirely when customers make too many claims -- or just one of the wrong kind of claim. Some people have even found themselves without coverage after simply consulting with their agent over whether or not to file a claim.
Unfortunately, there's no cut-and-dried formula for determining when to involve your insurance company and when to keep your problems to yourself. The following are some situations where you should at least think twice before picking up the phone:
The damage is under $1,000
Here's a basic fact about insurance: It's meant to cover the big disasters that could cripple you financially, not small stuff that just stings a bit.
With that in mind, smart consumers have long kept their home and auto premium costs down by raising their deductibles to $500, $1,000 or higher and not making claims unless the damage exceeds that limit. These days, such an approach can not only save money, it can also save your coverage. In some cases, it may be better to raid your emergency fund or use a credit card than to risk higher premiums or not having your policy renewed.
This is true even if your state or insurer provides some protection for consumers. While some insurers, including State Farm and USAA, "forgive" longtime customers by not counting the first at-fault accident, the real problem with filing a small claim is that it can count against you if you ever need to file a bigger claim later.
No (bodily) harm, no foul
Most accidents don't involve injuries. If you're in a one-car mishap or you hit an unoccupied vehicle, you might consider paying for the damage yourself if you can afford the tab. Especially if your driving history is less than pristine -- you've already had an accident or ticket in the last three years -- paying for an accident out-of-pocket may be cheaper than facing the higher premiums that are likely to result.
Not telling your insurance company about an accident you've caused is a risky maneuver, however, if another driver was involved, there were injuries, or you had a passenger. While you're legally not required to make an insurance claim, you probably should notify your insurer of what happened if there's a chance someone else could make a claim on your policy. Insurers don't like to be surprised, and you'll want to have your version of events on the record. In a worst-case scenario, your company could use your failure to report the accident as a reason not to pay your defense costs if you are sued.
Video: Is high deductible health insurance a smart move?
Your insurer also may find out about the accident if your state or local laws require a police report be filed. (Such reports are usually mandatory if injuries or significant property damage is involved.) Most insurers comb Department of Motor Vehicle records looking for unreported incidents. You can find out if a police report is required by calling your local law enforcement agency.
Continued: If the damage involves water or mold
The damage involves water or mold
Insurers are seriously spooked by a rising number of water damage and mold claims in several states. Consumers who make water damage claims risk losing their coverage, and may even find their homes blackballed, meaning that coverage is unavailable at any price.
That's because insurers are trying to steer clear of "problem" properties, using a central database known as the Comprehensive Loss Underwriting Exchange or CLUE. Nearly all insurers share claims information through CLUE, and they use the information in the database to decide whether or not to insure a home. Some companies are so sensitive about mold losses that even a single water damage claim on a house is enough for them to refuse coverage.
That does more than make it tough to buy a policy. It can also be a red flag for future buyers. If they have trouble getting a policy because of past claims, you may have a tough time selling your home.
The damage resulted from your neglect
You open your front door, step into your home -- and the floor collapses underneath your feet, thanks to termite damage.
This might seem the perfect time to use your insurance. But homeowners policies specifically exclude problems that result from pest infestations, rot and other indications that you've failed to properly maintain your home.
The insurer's viewpoint is that you should have detected the termites and had them exterminated long before they could eat through the structure of your home. Likewise, long-term damage from leaking roofs and faucets is usually considered preventable and not covered.
Video: Is high deductible health insurance a smart move?
You're also on the hook if you make a bad problem worse. If a windstorm blows off part of your roof and you leave the hole uncovered, you might lose coverage for contents that were exposed to further damage.
All this doesn't mean you can never use your insurance coverage. But using prudently, especially these days, will ensure it's there when you really need.
Liz Pulliam Weston is the Web's most-read personal-finance writer. She is the author of several books, most recently "Your Credit Score: Your Money & What's at Stake." Weston's award-winning columns appear every Monday and Thursday, exclusively on MSN Money. She also answers reader questions on the Your Money message board and helps middle-class families cope at Building a Brighter Future.
Updated Nov. 4, 2009
2010-04-03
Commercial Mortgage Bust?
What Happened to the Commercial Real Estate Collapse Everyone Expected?
Posted Apr 01, 2010 03:30pm EDT by Heesun Wee in Investing, Recession, Banking, Housing
There's a growing suspicion among investors that the gulf between the soaring stock market and sideways action in housing can't go on much longer. Housing expert, notably Robert Shiller of Yale University, a Tech Ticker guest, is warning about the possibility of a double-dip in housing.
But another potential real-estate crisis is looming -- this time in the commercial sector. About half of all commercial mortgages will be underwater by the end of 2010, posing a "very serious problem" for the economy over the next three years, Elizabeth Warren, chairwoman of the TARP Congressional Oversight Panel, told CNBC this week.
So why hasn't commercial real estate collapsed yet?
In part the sector has been able to access the unsecured bond markets, says our guest Jeung Hyun, portfolio manager for Adelante Capital, which has over $2 billion of domestic REITs under management. "Clearly there's lending still available for these companies that's allowed them to survive," Hyun tells Aaron and Henry in the accompanying clip.
Another trend that's helping commercial real estate -- few, new office space buildings. "To a certain extent people are assuming that the recovery is going to be sharper than normal" because of the lower inventory, Hyun says.
Are banks extending credit & pretending?
Hold on. Clearly there are whispers and anecdotes of excess inventory and even "shadow" inventory. In other words, banks that are extending credit and hoping all will be OK by the time the loans come due.
Hyun argues there's clarity in details. More stand-alone retailers have been built than regional malls. And without a doubt, there's concern about the wave of secured mortgages coming due. Plus, the Fed this week ended its program of buying mortgage-backed and agency securities. Can housing stand on its own two feet?
But Hyun argues not all mortgages will be problematic. Some were inked -- well before the height of the housing bubble in 2007-08 -- when underwriting standards were still high.
2010-02-25
Another great piece by Karen Decoster...
http://karendecoster.com/why-a-strategic-mortgage-default-may-be-your-best-option.html
2010-01-24
Apple's Newest Gamble...
Though not "insurance-related", those of you who know me well, technology is always enticing to me---especially if it HELPS efficiency. Therefore, I thought I'd share this interesting piece from Yahoo News on Apples new "device" to be announced soon:
How do you solve a problem like tablet PCs?
Fri Jan 22, 8:38 pm ET YahooNews
By Ben Patterson: The Gadget Hound
We know what desktops are for, we know what laptops are for, we know what smartphones are for. All-purpose tablet PCs, though, have never really taken off, namely because ... well, save for niche uses (like in hospitals, hard-hat job sites, or as e-readers), it's not all that obvious how they might fit into our day-to-day lives. That's the problem Apple hopes to solve this coming Wednesday.
Now, you'll have to indulge me here, because I've taken quite the roundabout way to framing Apple's all-but-certain announcement Wednesday of an all-purpose, $1,000-ish touchscreen tablet that (if the Wall Street Journal's reporting is correct) is intended to be shared by the entire family.
Here's the plan: I'm going to go through each of the main PC categories and tick off their key characteristics, advantages and disadvantages (as I see them, anyway), finishing up with tablet PCs. The grades I've assigned are relative to the respective categories, and of course, broad generalizations are the name of the game here.
Most of the pros and cons I've listed below will be obvious, but something interesting starts to happen when we get to tablet PCs: the advantage and disadvantages begin to get pretty nebulous, and that's the challenge and/or opportunity that Apple will face in a few days.
All set? Then here we go ...
Desktop
Portability: None, zero, nada; it sits on your desk, and that's about it. Grade: F
Display: As big as you can stand, and you could even add a second (or a third) display if you like. Grade: A+
Input: Again, you can get as big and roomy of a keyboard as you wish, complete with dedicated function keys and a numeric keypad, plus your favorite ergonomic mouse. Grade: A+
Performance: Bleeding edge, provided you can afford it. Grade: A+
Best for: Heavy-duty number crunchers. Hard-core gamers who crave cranking up their graphics settings to the max. Music and video editors dealing with gargantuan files.
Laptop
Portability: Your average 4- to 5-pound laptop will fit nicely in a small backpack, perfect for toting to the office or surfing on the sofa. But take it on, say, a three-hour hike, and your 5-pound notebook will feel more like 15 at the end; also, using a 15-inch laptop in coach on an airplane could be an awkward proposition. Grade C+
Display: A 13- to 14-inch laptop display will do the job just fine nine times out of 10, but starts to feel cramped once you've opened more than a couple of windows; you could always add a second display, but if you do, there goes the portability factor. Grade: B
Input: Laptop keyboards are, for the most part, nearly as comfortable and roomy as desktop keyboards, but typically the function keys must buddy-up with the numeric keys, and unless you're prepared to bring along (and have the space for) an external mouse, you'll have to make do with a touch-sensitive trackpad or those little, eraser-sized nubs in the center of the keyboard (ugh). Grade: B
Performance: The smaller the size, the more compromised the performance: that's the inherent trade-off when it comes to tech. Don't get me wrong; there are some wicked-fast laptops out there (although you may have to pay more or prepare to lug around more weight to get one), and if you're simply surfing, watching a streaming Netflix movie, or working on your Master's thesis, a laptop will meet your needs with speed to spare. That said, a desktop PC will almost always be more powerful than a similarly priced laptop, and if you're editing a three-hour HD movie, you're gonna want a desktop to do it. Grade: B+
Best for: Almost anyone performing day-to-day surfing, multimedia, and/or Office duties, from executives and corporate road warriors to students and casual, lounging-on-the-couch home users. In short: they're great, all-purpose devices, which is why almost every home has one.
Netbook PC
Portability: There's a world of difference between carrying around a 5-pound, 13-inch laptop and a 10-inch, 2.5-pound netbook, believe me. No, you can't fit a netbook in your pocket, but the smaller and thinner ones will fit in a (largish) purse, no problem, and they're also perfect for use on the seat-back tray table on a jetliner. Grade: B-
Display: While a 13-inch laptop screen feels pretty much like a desktop display, a 10-inch netbook screen looks like, well ... half of one. For on-the-go info snacking or checking e-mail, netbook displays will do the job, but you'll have to do a lot more scrolling on your Web browser, and working on a big Excel spreadsheet would be a royal pain. Grade: C
Input: You'll still get a full QWERTY keyboard on a netbook PC, but they're typically slightly smaller than a full-sized laptop keyboard, and they take getting used to. Again, a netbook QWERTY is fine for tapping out a quick e-mail or updating your Facebook status, but I wouldn't want to write a novel on one. Grade: C
Performance: Once again, the size-to-performance ratio comes into play. Yes, there are some impossibly-small netbooks out there, but they're often powered by smartphone-calibre processors that'll start wheezing the moment you tee up a YouTube video. That's the trade-off. Grade: C-
Best for: Road warriors and tech fashionistas who want to surf, fire off a few e-mails, and perform some light Office chores on the go, all in a compact, 2- to 3-pound package.
Smartphone
Portability: Small enough to fit in a pocket; goes anywhere and everywhere (well, besides underwater). Grade: A+
Display: Even with the latest, high-resolution 3.5-inch displays on newer handsets, the screens on smartphones are???let's face it???awfully small. They work in a pinch for mobile-optimized apps and Web pages or the odd YouTube video, but watching a full-length movie or scrolling around a lengthy PDF can be pushing it. Grade: D
Input: Those tiny BlackBerry keypads and virtual QWERTY keyboards come in handy for firing off text messages, updating Facebook, or tapping in a username and password, but if you need to compose a lengthy e-mail, well ... kill me now. Grade: D
Performance: Smartphone processors have come a long way in the past few years; indeed, have you played one of those new 3D games on an iPhone 3GS lately? That said, it's not like the processors in laptops and desktops have been standing still, and the smaller you go with a gadget, the more you sacrifice in performance. Grade: D
Best for: Almost anyone who wants to check e-mail, zap off some tweets, watch a quick video, or play a teeny, tiny game without having to lug a laptop around. (Oh, right???you can make voice calls on it, too.)
Tablet PCs
Portability: Most tablet-sized devices fall somewhere between laptops and netbooks in terms of size, with dedicated, single-purpose tablets (like the Kindle or the Sony E-Reader) considerably smaller and cheaper than all-purpose, full-power tablets (such as those made by the likes of HP). In general, though, tablets aren't as hefty as your average laptop, but they won't fit in your pocket, either; you've still got another gadget to carry around. Grade: B to B+
Display: Again, there's a wide range here, depending on whether you're talking about a single-purpose device or an all-purpose tablet. An e-reader tablet with a 5- to 10-inch display might be perfect for reading a book or flipping through a virtual magazine, but for all-pupose use, a 10- to 11-inch screen on a tablet can be as limiting as it is on a netbook. Grade: B to C
Input: Well, once again ... it depends. If you're a doctor on your rounds and you've got the right interface software running, a touchscreen tablet PC might be even better than an actual keyboard. But for the average user trying to perform average, day-to-day desktop duties, tapping on a display with your fingertip or a stylus can't hold a candle to a tried-and-true keyboard-and-mouse combo ... that is, short of some kind of revolution in tablet interface design (which we may or may not see from Apple come Wednesday). Grade: A+ (for "vertical" applications in medicine, architecture, design, and so on) to D (for everyday use ... as of today, anyway).
Performance: Sorry to repeat myself, but ... it depends. For single-purpose e-readers, tablet performance might be pretty limited, but that's perfectly fine when it comes to perusing a book. On the other hand, some all-purpose tablet PCs have the same power under the hood as a laptop ... but the same girth, as well. Grade: C- to B+ (but, depending on what you're using it for, C- -level performance might be all you need).
Best for: Well, here's where things get interesting. Tablet PCs have never really taken off as a category, and it's easy to see why. For general, all-purpose use???and absent a truly remarkable touchscreen user interface???there's practically nothing a tablet can do that a laptop PC can't do better. But for specific, niche uses (or "vertical markets," as we call them in the biz), a tablet PC might be just the thing; say, for an architect that's making notes and sketching designs on a job site with a stylus, a doctor tapping checkboxes during rounds (as I mentioned above), an exec delivering an impromptu presentation at Starbucks, or a sunbather reading the latest John Grisham thriller poolside, well ... in those specific cases, it's hard to beat a tablet.
And that's precisely the problem ...
... that Apple is facing on Wednesday morning. From what we've been reading (Apple iself, of course, has been mute up to this point), the big brains in Cupertino want to position the iSlate/iPad/iTablet (or whatever it'll be called) as a device for the entire family, to be shared in the living room, and apparently for all-purpose uses like flipping through virtual magazines, checking e-mail, surfing the Web, and watching videos???all of which you can do perfectly well on a garden-variety laptop (or on an iPhone, for that matter).
So ... given that, why would anyone want to cough up $1,000 (if the speculation is right) for an all-purpose touchscreen tablet (rather than, say, a $250- to $500-ish, specific-use tablet or e-reader, like the Kindle), in addition to our existing desktops, laptops, and smartphones?
That's the question Apple must answer Wednesday morning, and as a long-time tech enthusiast, the suspense is killing me. How will Apple try to solve the tablet problem? Are we about to lay our eyes on something that'll do for tablet PCs what the iPod did for MP3s, or what the iPhone did for phones ... or, going back even further, what the original Macintosh did for personal computers? Or are we in for a big belly flop, like the infamous Cube, the iPod Hi-Fi, or (gulp) that PDA/tablet combo from the early 90s, the Newton? Will the almost-certain Apple tablet change everything, or nothing?
Personally, I think Apple's got a 50-50 shot. If anyone can re-invent a category, it's Steve Jobs & Co. (heck, he's done it at least three times already). But the tablet PC is a tough nut to crack.
Alright ... now that I'm done with my novel-sized post here, what do you think: Will Apple succeed in turning the tablet PC from a terrific niche product into an essential, every-day device? Are we about to see a tablet-sized device on the order of an iPhone, or is an iFlop in store? Place your bets right here.
http://nreinsurance.com
2009-12-27
From Yahoo/CNNMoney.com: Renovating Doesn't Pay Off Like It Used To
NEW YORK (CNNMoney.com) -- Home remodelers are getting less bang for their bucks. For the fourth straight year, renovation jobs have added less to resale values relative to their costs, according to an annual Remodeling Cost vs. Value Report released this week by the National Association of Realtors.
The average remodeling job cost $50,908 in 2009 and added $32,497 to the value of the home, a ratio of 63.8%. That was down from a cost-to-value ratio of 67.3% in 2008, when the average was $49,866 and the added value was $33,568.
yahoo_renovating.jpg
One common renovation, a mid-priced bath remodel, for example, runs an average of $16,142 and adds only $11,454 to the resale value of a house -- recouping just 71% of its cost. In 2008, the same job cost less -- $15,899 -- and typically added $11,857 to the home's value, recouping 74.6%.
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* See Cher's paradise home: It's for sale
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The most financially successful jobs are smaller-scale, lower-cost renovations that improve the exterior appearance of homes. In this down real estate market, curb appeal is king.
"Once again, this year's report highlights the importance of a home's first impression," said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz.
Ron Phipps, a real estate broker in Rhode Island, said how the house looks from the outside is more important than ever.
"If you're driving down the street and the house doesn't have great appeal, it doesn't matter how nice it is inside," he said.
But here's the kicker: Clients are savvier than ever in their shopping. Even though the costs of home improvements are less likely to be returned on resale than they have been in prior years, sellers may still have to bite the bullet and do the remodeling if they want their house to sell at all, he said.
"It's kind of intriguing," said Phipps. "Buyers are using the unimproved houses to negotiate lower prices, but they wind up buying the remodeled homes."
So, if there are two similar houses in the area, buyers will use the listing price of the one that has not gone through a metamorphosis to get the seller of the renovated house to slash their price. Buyers want to pay for the caterpillar but get the butterfly.
Seller must play along if they want to make deals. "You get to sell the house more quickly if you do the renovations," Phipps said.
Biggest pay-offs
The major job that returns most in resale value is an upscale replacement of siding using fiber-cement. The job costs an average of $13,287 but increases home value by $11,112, or 83.6%. A vinyl siding replacement returns 79.9% of costs.
Adding a basement bedroom is also fairly cost effective, averaging $49,346 but adding $40,992 in value, an 83.1% return.
"Increasing livable square footage with a new deck or an attic bedroom is usually more valuable than just remodeling existing space," Phipps said.
The return on investment for some jobs varies greatly by region.
In New England, where winter are long and cold, vinyl window replacements reap a better return than they do in the warm South Atlantic region, where poorly insulated windows don't mean as much expensive heat leaking away.
So, although replacement windows cost more in New England -- an average of $11,155 -- they add $9,152 to home values there, recouping 82.3% of their cost. In the South Atlantic states, they cost $9,705 but add just $7,417 to home values, 76.4% of their cost.
On the other hand, buyers in the South Atlantic seem to reward sellers for adding living space more than they do in New England. Maybe thrifty Yankees hate having to heat those extra rooms.
Finishing a basement returns 84.4% of its $55,357 cost in the South Atlantic and only 64% of the $65,715 New Englanders spend for the job.
Among the remodeling jobs faring the worst in return on investment were large, upscale kitchen remodels. They cost an average of $111,794 in 2009 and added $70,641 in recoupable value, just 63.2%.
That was down a whopping 7.5 percentage points from their 70.7% return on investment in 2008 . At the height of the housing boom, in 2005, upscale kitchen renovations returned more than 80% of their costs.
"A lot of the things that, historically, had huge value, don't have as much today," said Phipps. "If you want to redo a kitchen, it may no longer make as much sense to use upscale appliances -- Viking ranges, Sub-Zero refrigerator. Buyers may not pay any more than they would for a home with GE appliances instead."
Of course, most remodeling jobs are done to please homeowners. Any increase in home value is a bonus, not an end in itself. But for anyone thinking of selling in the near term, keeping an eye on the bottom line is always a good idea.
http://nreinsurance.com
2009-11-04
Things Never to Say to Your Insurer(s)...
From CNNMoney.com...not that I agree with all of it, this article raises some good points, especially the "F-word"! : )
http://finance.yahoo.com/insurance/article/108074/5-things-never-to-say-to-your-insurers?mod=insurance
Some words are red flags to insurers and using them could mean that your claim might be delayed or even denied.
1. "I Think ..."
Never begin a statement regarding a claim with these words. If you aren't sure, don't guess. What you say could cause your claim to be delayed or denied, says attorney Vedica Puri. And if you're wrong -- say, you report driving at 30 miles per hour before an accident but police later prove you were going 50 -- it could hurt your credibility.
Particularly beware of speculating on blame or causation. For example, if you suggest that a water leak is due to a construction defect, you could give the insurer an out if that's a policy exclusion.
Stick to the facts. Should the insurance rep ask you a question you can't answer, simply say, "I don't know." If the person is taking a written or recorded statement, ask for a transcript to review for misstatements.
2. "I Got Whiplash"
Fraud costs auto insurers up to $6.8 billion a year, reports the Insurance Research Council. And suing for damages caused by whiplash is a fraudster favorite ("Oh, my neck!"). Merely mentioning the term is likely to get your claim flagged for further investigation, says Amy Danise of Insure.com.
Whiplash is a specific diagnosis. If a doctor says that you have it, then you should report it as such. Other wise, if you feel neck pain, just refer to it that way.
3. "It's an Experimental Treatment"
Truly experimental or investigational medical procedures are typically not eligible for health insurance coverage. So if a doctor tells you he wants to experiment with a treatment, don't represent it using those words. "In medical terms it may not actually be experimental or investigational," explains Danise. "If it's proven effective, your doctor deems it medically necessary, and it's not an exclusion, it should be covered." Verify with your doctor that it meets the above litmus tests before going to the insurer.
4. "My Basement Flooded"
With homeowners insurance, "flood" is a red flag. "The word refers to an act of weather or an overflow from a nearby body of water," says Danise. "And a standard homeowners policy doesn't cover it. You'd need flood insurance."
So don't use the f-word if your basement is knee-deep in water because of a burst pipe. Damages from such an incident should be covered by a homeowners policy. But calling it a "flood" could muddy the waters, so to speak.
5. "Just Send Me a Check"
When filing a home or auto claim, don't emphasize that you're just looking for the cash.
"If you were to say, 'I don't care about the roof leak, I just need the money,' that admission could slow things to a halt," says Puri. Technically, you're supposed to use the payout to make the repair for which you filed. While it's true that most insurance companies aren't going to check up on you, you'll certainly raise the fraud unit's suspicions if you imply that you won't. And then you might lose out on the money altogether.
Copyrighted, CNNMoney. All Rights Reserved.
2009-08-21
Biking through the Drive-through?
From Hank Stern: http://insureblog.blogspot.com/2009/08/two-wheeled-risk-you-want-fries-with.html
Friday, August 21, 2009
Two-wheeled Risk (You Want Fries With That?)
[Welcome Industry Radar readers!]
While not strictly an insurance issue, this story does pose some interesting risk-management questions:
"Sarah Gilbert stepped off her bicycle long enough to send one angry tweet via Twitter ??? and it's changed the way one fast-growing burger chain treats bike riders ... after biking last week into the drive-through of the local Burgerville ??? an eco-conscious burger chain that even recycles its used cooking oil into biodiesel ??? she tried to order four cheeseburgers ... She was refused service at the drive-through for, of all things, ordering from a bike."
[ed: we'll table the discussion about the seeming contradiction between eschewing a car for a bike but ordering a cheeseburger instead of a salad]
The gist of the story is that this particular chain, known for its "green policies," banned bike riders from using the drive-through, citing safety concerns. Other national chains also do this, but Burgerville has decided, as a result of Ms Gilbert's experience and response, to delete (or at least modify) that policy. One supposes that's good news, at least for the bicyclists.
But is it sound risk management?
Here's why I ask: if you're on a bike going through the drive-through, aren't you at greater risk of being run-over than if you simply parked the bike out front and walked on in? I don't know the answer to that, and I spent quite some time Googling around trying to find stats to prove the case either way.
No luck; perhaps one of our resourceful readers has access to this info and would be willing to share it?
Of course, this same principle would apply to drive-up ATM's [ed: and BTW, what is it with braille markings on drive-up ATM's? Isn't that oxymoronic?], and I didn't see any stats on that either.
While I understand how riders must feel when they find themselves barred from the drive-up, how big is that lawsuit going to be the first time one gets creamed by a Caddy? Which also begs the question: is this policy driven by insurance company rules as much as common sense?
It's funny how things snowball: when I began to write this post, I had two questions that were still unanswered: one, stats on bikes and drive-throughs and two, whether or not insurance carriers played a role in the "no bike" rule. Since this falls under the general aegis of "P&C," I called on my colleagues in that field. There seems to be a mixed bag of answers: it doesn't appear to be a general industry rule that Wendy's et al post and enforce a "no bikes" rule. There may well be carriers which include that verbiage, but it doesn't seem to be a standard policy clause.
One colleague suggested that it may have to do with the inherent risk of letting people walk up to the window: if they pull a gun and ask for money, they can be gone pretty quickly. If they're in a car, they're likely blocked front and rear (and, of course there's the license plates). There's also a slippery slope here: in my research, I noted that there were at least a few incidents where folks on "Rascals" (motorized wheelchairs) were also turned away, presumably for the same "safety concerns" as the bikers. If Burgerville lets bikers use the drive-through, what can they say to Granny in her Rascal. Or Joe in his "regular" wheelchair?
The other concern regarding safety is this: at drive-through speeds, if my Honda hits your Buick, there are some scrapes and dents, but no one's getting care-flighted. But if my Ford hits you on your Schwinn, there could be some major injuries.
The bottom line, such as one exists here, is that this really isn't as cut-and-dried as it might at first appear. Risk management means taking into account all the variables (or at least as many as possible), and sometimes we don't like the answers.
2009-08-18
Hurricane-Proof your Roof!
Hurricane-Proof your Roof: Insurance, Inventories and Adjusters
Roof after Hurricane
It goes without saying that hurricanes are one of the most destructive and deadly of forces on the planet. In 2005, Hurricane Katrina alone accounted for more than 1,500 deaths and $81 billion in damage; the repercussions of Katrina are still being felt today throughout the Gulf States and particularly in New Orleans.
It is also true that hurricanes can hit with devastating force nearly anywhere in the Gulf States and Atlantic seaboard as far north as New England (many on Long Island, NY, remember the deadly hurricane of 1938). And even if you live in a state such as Florida, which has some of the strongest building standards when it comes to hurricanes of anywhere in the U.S. and the world, homes are routinely damaged and destroyed by these massive storms.
Therefore, being prepared is about making sure your roof is sound -- it is the key that holds the rest of the house together (see Building a Better Roof for more information) -- and that you are properly insured before clouds even darken the horizon. In this story we will look at insurance-related issues you need to address before a storm strikes -- how do I find a good company and how can I be sure I have enough coverage, among others -- as well as what to do after the weather has cleared and it's time to put your insurance policy into action.
Insurance: Am I Covered?
While any insurance coverage you purchase needs to match your unique needs and your home, there are a handful of questions that should be asked by anyone worried that a hurricane or other large storm might damage their property. They are:
How do I find a good company?
Finding the right insurance company requires doing some research on the companies offering policies in your state. In addition, it is a good idea to gain an understanding of the different requirements and limitations imposed by government regulators in your state.
There are, of course, quite a few resources to help find insurers in your area, but perhaps the best places to start are the American Insurance Association, the Insurance Information Institute and the Independent Insurance Agents Association. All three of these sites will provide useful information as well as tools to help you find a reliable insurer near you.
AM Best Company and the Better Business Bureau are also great resources. AM Best will provide you with ratings and pertinent information while the Better Business Bureau provides an online tool to help search for an agent with a BBB rating.
"Companies are typically rated by AM Best based on their financial strength," said Julie Pulliam, public affairs director for the American Insurance Association. "You can go onto their website and find out the financial strength of your insurance company, which is important because you don't want somebody that comes by and offers the lowest premium. You want to do your homework."
There are also issues related to the state and region of the state you live in. "Coverage could be different in Florida from North Carolina or South Carolina or Alabama," said Pulliam. "In Florida, for example, some people may have insurance from company X, but company X may not offer wind and hail [e.g. hurricane coverage] in Florida or certain parts of the state. Companies are constantly readjusting their exposure in a state or area, so some insurers have pulled back because Florida is at such high risk for hurricanes."
If you live in an area where coverage may not be offered or its terms are limited, Pulliam said you should then be able to purchase a policy in your state's residual market (a state insurer of last resort). In Florida this would be Citizens Property Insurance Corporation.
Will homeowner's insurance alone cover wind and water damage?
Hurricane Damage
The answer depends on whether your insurance company considers certain types of water damage as being primarily caused by wind or flood, said Pulliam, because damage caused by a hurricane is part wind and part flood. "Is it wind-driven water or[flooding]? It really depends on the way your policy is written and there are a lot of independent variables there," she said. "After Hurricane Katrina, there was a lot of education that had to go on because a number of homeowners assumed that their policies would cover wind driven water damage. For example, if the wind started blowing and you are starting to get storm surge due to the wind, and it comes into your house, no matter where it comes from -- ground floor, soffits, and so on -- people assumed that since it was from the wind that they would be covered, but that is not the case."
What your homeowner's will cover, Pulliam added, is damage to the roof caused by wind that then enables rain water to harm the interior of the home. "It is important to talk to your agent as to exactly what coverage you would have for wind damage and all other perils, as it is called in the industry," said Pulliam.
Loretta L. Worters, vice president of the Insurance Information Institute agrees that water damage can be tricky. "Homeowner's covers wind," she said. "There is some coverage for water, but that depends on the circumstances."
Therefore, it is important to not only determine the type of water damage that is covered by your policy, but whether or not you have flood insurance as well. This type of insurance is generally provided by the federal government's National Flood Insurance Programs (go to FloodSmart.gov for more info), which is administered by many insurance companies offering homeowner's coverage. "Flood policies are fairly plain vanilla," said Pulliam. "They cover the water issues for the most part."
Worters adds that it is also very important to make sure that you have the right amount of coverage. "You need enough insurance to rebuild your home and to replace all of your personal belongings," she said. "If you have made a major alteration or improvement to your home or have made significant purchases, notify your insurance agent so that the increased value is reflected in your policy."
What documentation do I need now to be prepared for the worse?
Both Pulliam and Worters said it is important to create some accounting of the value of your home and the possessions in it. This could be as simple as a list written on a legal pad with some photos, but probably should be more detailed and kept in a remote and/or safe place.
"A home inventory will help ensure that you have purchased enough insurance to replace your personal possessions," said Worters. "It can also speed the claims process and substantiate losses for income tax purposes. A detailed home inventory is also helpful should you need to apply for disaster aid."
The Insurance Information Institute provides free Web-based software at KnowYourStuff.org, which allows users to create organized lists of possessions, include digital photos, and save scanned receipts.
What about the Deductable?
It is also important to understand your policy's deductable (e.g. the amount you will pay before your insurance kicks in). Generally, said Worters, most people living in coastal areas, especially those prone to large storms, will have percentage deductibles for storm damage rather than traditional deductibles of a set amount.
Pulliam adds that these vary and can range from one to two and even ten percent of the cost of the damages. "It really depends on how much risk you want to take on," she said. "If the consumer is going to take on a higher deductible it will allow the company to write more policies because they know the policyholder is going to pay more themselves."
Both Pulliam and Worters said that selecting the right deductable should be based on a balance of your home, belongings, and income.
barometer
What If a Storm Hits?
No matter how well prepared you may be for the storm -- the strongest roof and best insurance coverage available -- there is little you can do if a storm tracks over your community and hits close to home. The following should help you understand how to react so that you are covered and can quickly find temporary shelter, if you need it, and protect your home from further damage.
What do I do after the Storm?
According to Worters, it is important to call your insurance company as soon as possible after the storm as many companies place a time limit on filing claims and state laws on deadlines differ by state.
Once you have called, adds Pulliam, the process insurers go by can vary, but the company will likely send an adjuster out immediately to document the damage and file the necessary paperwork. If there has been widespread damage, it may take a few more days, which means you should try and take your own photos of the damage to show the adjuster when s/he arrives.
Worters and Pulliam add that the insurer will pay for alternative housing at a hotel or motel and will even issue a check a debit card on the spot in order to get money in your hands so you can purchase accommodations, food, and take care of other immediate expenses. "If your home is severely damaged and you need to find other accommodations while repairs are made," said Worters, "keep records of all additional expenses incurred. Homeowner's insurance policies provide coverage for the loss of use of your home if it is damaged by an insured disaster."
Worters and Pulliam also said you should attempt to make temporary repairs to your roof if it is safe to do so. "If it is something you can do safely and it will prevent further damage, then by all means do that," said Pulliam. "For example, if you can safely get up on your roof and put a tarp up to protect your property; then yes do it."
As with any thing you do prior to the arrival of an adjustor, save any receipts for items you have purchased.
Can I be sued if my roof comes apart and damages someone else's property?
The answer to this question may vary on certain circumstances, but the best means to prevent and protect yourself is to ensure that all roof maintenance is up to date. "In today's litigious society, anything is possible," said Worters. "It is more likely that if roof tiles fly off and hit someone, you might be sued for negligence if your roof needed repair. That's why it is important to maintain your home and to carry liability insurance to protect you and your neighbor's property."
In all, ensuring that your insurance will cover you if a storm should damage your home requires due diligence on your part. However, there is nothing like a good night's rest knowing that if the worst should happen, you and your family will be financially protected.
Chris Brooks
http://www.roofery.com/hurricanes-and-insurance.html
2009-07-05
10 Things Your Home Insurer Won't Tell You...
Very good article:
http://www.smartmoney.com/personal-finance/insurance/10-things-your-home-insurer-wont-tell-you/
2009-06-28
Worker's Comp Issues for the Real Estate Investor
Worker's Compensation Issues for the Real Estate Investor
Though frequently overlooked by many real estate investors, worker's compensation (WC) and related issues should certainly be addressed early in your business planning stages. Bear in mind, that advice from your attorney, accountant and/or from the State Department of WC (if applicable) certainly trumps what I communicate here.
The most important consideration is to understand that how you compensate your labor may or may not excuse you from carrying WC coverage on them. In effect, just because you pay them on a 1099/independent contractor basis, doesn't mean that the courts or WC commission will agree. Be sure you understand (seek legal advice) on what constitutes an ???independent contractor??? relationship. It may not be what you think (and may vary from state to state, as well).
Be wary not to create an unintentional employer-employee relationship, which could create a WC exposure for your business. Having tenants do odd jobs, such as clean-up, grass-cutting, or landscaping as a way to reduce rent may be construed as ???consideration??? and potentially subject you to carrying WC insurance. Do not confuse this with upkeep and maintenance requirements of your lease. What I am addressing here is the reduction, discount, or even waiver of rent in exchange for labor provided by a tenant, especially when such labor takes place on/at locations other than the tenant's residence. The last thing you want/need is this tenant to be injured while doing such work, only to find your liability insurance will deny the claim based upon such an ???arrangement???.
Pertaining to hiring contractors and third-party service providers, be certain that they carry not only ???General Liability??? (GL) coverage, but also current WC coverage, whether State-sponsored or from a private insurer. The best time to obtain such validation of coverage is at the onset of the bidding process. Once Certificate(s) of Insurance (COI) are secured from the contractor or service provider a quick phone call (or email, which I prefer as it creates a ???paper trail???) to the carrier or Agent can confirm the coverage(s) are current and valid. Being named a ???certificate holder??? is typically sufficient for most scenarios, especially when you do not utilize a contractor more than a few times a year. For larger/longer term jobs and projects, being named as an ???additional insured??? may be preferred. Put simply, a certificate holder is simply notified in the event the policy cancels. An additional insured not only is notified when the policy cancels, they are actually protected by the coverage/policy. Review with your legal advisor, and be advised that being named as an additional insured may cost the contractor some additional premium, usually no more than $50-100 per year. Depending on the situation, it may behoove you to pay this additional premium, if the contractor ???balks???. My attitude is ???no insurance, no project award???. If the contractor or service provider decides to cut expenses by sacrificing these vital coverages, then I do not want them doing any work for my business.
Understanding that the relationship between you/your business and those that provide labor and services is not simply a by-product of how you compensate them is the first step in making sure your real estate (and any other business) is protected appropriately from WC (and GL) exposures. Securing and confirming coverages is a must when dealing with any and all contractors and service providers. Unfortunately, in today's litigious world, the risk of using uninsured ???spot labor??? far outweighs any short-term time or financial benefit. If you are currently using and satisfied with such labor, review with your legal and accounting advisors and consider securing coverage for them, in the most appropriate and efficient manner they/you decide. It only takes one uninsured claim to put you out-of-business.
2009-05-25
Kiyosaki coming to Cincinnati this week...
http://www.myeducationnetwork.com/learn_to_be_rich/OH/cincinnati/46639/
2009-05-09
"Business" Insurance for Vehicle(s) Utilized in your Real Estate Endeavors...
If you are a real estate investor and use your personal vehicle to service your properties, make sure your insurance is "correct" for it. Many insurers may consider the vehicle used in the course of your real estate business to be just that: "business use" (regardless of whether it is titled to you OR your business entity). Check with your agent to ensure the coverage you have in place is appropriate. The trips to the hardware/improvement store and the hauling of equipment and materials may merit a commercial policy. Don't fret, many times the commercial policy for such usage is less expensive than typical "personal" auto insurance...
tim@nreinsurance.com
http://nreinsurance.com
http://reiainsurance.com
2009-04-23
Premium fairness...
Fairer Premiums Proven by VortexDNA and Leading US Auto Insurer
VortexDNA, Christchurch, NZ April 22, 2009. VortexDNA technology has
just been proven to offer fairer insurance premiums to the consumer. The
Christchurch-based predictive modeling company has successfully
completed a case study in partnership with a leading US auto insurer,
using the insurer???s actual data to demonstrate potential underwriting
ratio improvements worth more than US$50 million.
The study showcases the effectiveness of VortexDNA???s proprietary system,
which uses a mathematical algorithm to generate numeric profiles of each
customer. The profiles are not personally identifying in any way, are
not unique to the user, and don't contain any demographic or historical
information???yet by the end of the study, they had generated an
improvement in prediction accuracy of almost US$10 per policy per annum,
translating to a total improvement greater than US$50m for the insurer
in question.
???This type of algorithm represents the next generation of behavioral
modeling,??? says Branton Kenton-Dau, VortexDNA???s CEO. ???Systems that rely
on the color of your car or the neighborhood you live in only capture
part of the story. The more accurately insurers can predict behavior,
the fairer your premiums will be.???
VortexDNA???s technology looked at six different claim categories across
all customers. VortexDNA's predictions of who will make a claim were
then compared with the predictions currently used by the insurance
company.
While the study took place with a leading US insurer for whom data on
the customer, including credit history, is widely available, VortexDNA
may also offer benefit in data-poor environments such as China, India
and Brazil.
VortexDNA???s predictions can also be used to better target
claims-prevention programs. By knowing who is likely to make a claim,
insurers can help customers take proactive steps to avoid accidents and
prevent loss.
The company is raising capital to expand its insurance operations. The
analysis demonstrated that by adding VortexDNA risk adjustment data to
the underwriting mix, insurers can achieve a more precise assessment of
risk than when they use their own data in isolation. The bottom line?
Fairer premiums for drivers.
- END -
ABOUT VortexDNA
VortexDNA offers a unique system for profiling users without retaining
personal information, and the ability to map and codify that profile.
Its predictive modeling algorithm has applications for online services,
insurance, and health care.
http://nreinsurance.com
http://reiainsurance.com
2009-04-21
Twitter, Facebook, LinkedIn, etc... worth the time?
I am actually getting the hang of all these "social networking sites" and have generated client relationships as well. It's not as difficult as you may think to "keep up", and there is a ton of information and free sites to help you. If intersted in linking, face-booking, or tweeting, have at it!
http://profile.to/timnorris20
http://www.linkedin.com/in/timnorris
Twitter: @timnorris20
2009-03-29
RESPA Reforms
Interesting article I picked up at Blog Carnival:
http://www.raincityguide.com/2008/03/15/proposed-respa-reform/
When I read the news on HUD???s proposed reform of the Real Estate Settlement and Procedures Act (RESPA) I was skeptical. Cathy from Sequim challenged me to read the 96-page federal register document so we could all figure out what???s going on. I am here to tell you that there is one very good change coming out of this proposal. In fact, it???s so good that I am borderline hopeful that this change might do what legislation is suppose to do and what HUD forgot to do when they signed the original version of RESPA in 1974. But first, the changes that will have many, but not all mortgage brokers screaming bloody murder:
HUD wants to make the Good Faith Estimate (GFE) look the same, no matter where homebuyers apply. Right now there are many off-the-shelf (OTS) software systems that make the GFE look different from company to company. Also, some OTS software can be modified. Some fees, for example, the Yield Spread Premium (YSP), are shown down at the bottom of the form, below the ???total costs??? line, even though HUD currently directs brokers and LOs to quote their YSP in the 800 series. My opinion of any required government form is that it is not helpful for the consumer if the loan originator did not properly complete the form or consciously plans to use the government forms to deceive. This describes your basic sociopathic loan originator.
RESPAreform 1The new GFE would display closing costs in categories to prevent ???junk fees.??? I???m sorry to have to be the bearer of bad news, HUD but this won???t prevent junk fees. The total fees will be shown on the first page so the consumer can easily compare loan offers, yet total estimated fees are already shown on the GFE. By the way, the new proposed GFE is 4 pages long and combines elements of the existing GFE and the mandatory Truth-in-Lending disclosure form. Take a look at the proposed GFE here.
???The Good Faith Estimate would also require that lender payments to mortgage brokers (often called Yield Spread Premiums) be disclosed. It is HUD???s belief that these payments are directly dependent on the interest rates that consumers agree to and therefore ought to be disclosed.???
Okay, hold on a minute. Disclosing lender-paid YSPs to brokers is already required under RESPA. So what???s new?
The proposed changes would ???specify the charges that can and cannot change at settlement. If a fee changes, HUD proposes to limit the amount it can change.??? In regards to YSP, the proposal mirrors similar proposed state legislation. I had been wondering why the state legislation on YSPs had stalled in the house. Now I know why: It would just be preempted by federal law. HUD is proposing that the YSP disclosed on the GFE must match the YSP paid at closing. Any YSP earned over and above what was quoted on the GFE must be refunded to the consumer at closing (see page 10 of the federal register doc.)
Now I suppose a sociopath would think, ???How can I get around this???? Some LOs are already planning on how to circumvent this such as cancelling the file and issuing the required Adverse Action form, preparing a new GFE with the new, higher YSP and explaining this to the client in a smooth way such as, ???these are just standard government required forms.???
However, if mortgage LOs were all fiduciaries, they would not be able to do this without seriously violating the duties to their client. But that???s another topic for another day.
Also, maybe I???ve just been reading too much but I don???t see where we would disclose YSP on the proposed GFE. Since the YSP is paid to the broker by the lender, it wouldn???t show up anywhere as part of a borrower???s ???settlement costs.??? Perhaps it will go in Section 2 ???Your charge for the interest rate you choose.??? The words ???Yield Spread Premium??? are nowhere on the proposed GFE.
So as not be accused of directly targeting mortgage brokers with these changes, HUD conducted some consumer tests using the newly proposed GFE document. They used GFEs from brokers as well as banks and found that consumers selected the lowest cost loan more than 90 percent of the time. Cathy, I???d really like to read the transcriptions from the interviews but this time the SUMMARY of the report is 261 pages. I think I???ll go see Funny Games this weekend, instead.
Question for escrow closers: Can I see a show of hands for how many of you have seen homebuyers or refinancing homeowners become the victims of predatory lenders but you have felt powerless to do anything during the signing due to escrow???s neutral position? Well HUD has some plans for you. Closers will read a ???closing script??? to borrowers that will ensure that you, the closer, compare the borrower???s estimated and actual charges and also explain the key terms of the loan. Here is your 10-page script with instructions.
I always thought it was the loan originator???s job to explain the costs and key terms of the loan. New business model idea: Why don???t we save everyone a whole lot of money and let escrow closers originate loans.
The following is the only real change that matters. If the proposed RESPA reform is enacted, banks will be forced to make sure their employees LOs as well as their third party originators (brokers) comply.
To further bolster consumer protection and to ensure uniform and consistent enforcement of RESPA, HUD intends to seek legislative changes to the Act that will complement the regulatory improvements made by the rule. Currently, RESPA does not provide HUD with enforcement mechanisms for some of the most important consumer disclosures and protections. A lack of enforcement authority and clear remedies for violations of critical sections of RESPA negatively impact consumers and diminish the effectiveness of the statute.
HUD will seek the authority to impose penalties for violations of specific sections of RESPA, including Section 4 (provision of uniform settlement statement); Section 5 (GFE and settlement costs booklet); Section 6 (loan servicing); Section 8 (prohibition against kickbacks, referral fees, and unearned fees); Section 9 (title insurance); and portions of Section 10 (regarding escrow accounts). In addition, HUD proposes the authority for the Secretary and State regulators to seek injunctive and equitable relief for violations of RESPA; require delivery of the HUD-1 to the borrower three days prior to closing; and establish a uniform statute of limitations applicable to governmental and private actions under RESPA.
One of the main problems with RESPA is that there has been little if any enforcement. HUD basically anticipated voluntary compliance back in the 1970s. HUD has only recently been enforcing RESPA and has been busy targeting sham affiliated business arrangements and investigating complex mortgage fraud schemes. Maybe they could get busy investigating the huge number of LOs who are originating FHA loans who aren???t working for an FHA approved lender.
If we have enforcement, we should reasonably expect some measure of justice to arrive on the doorsteps of homebuyers and refinancing homeowners. Much of the enforcement of third-party originators will be left up to the states which will translate into higher state licensing fees and should probably translate into higher fines and investigation fees.
Many have tried to reform RESPA and many have failed. We were right in the middle of major RESPA reform when the subprime meltdown hit in the spring of 2007 and that reform went nowhere. This time, I predict the proposed rules will be approved.
RESPA reform from the HUD website.
RESPA reform from the Federal Register
Jillayne???s suggestions on additions to the proposed GFE form:
Add a line on the front page for the loan originator???s license number
Add a line at the end for the loan originator to sign.
Make a separate, clearly identifiable section for YSP or just make all YSPs benefit the consumer and make the LOs compete based on their ???mortgage broker fee??? and/or ???loan origination fee.???
Make it a federal law that borrowers are given their final HUD 1 Settlement Statement 3 days prior to SIGNING instead of closing, but I know I???m dreaming with this one.
Posted: March 15th, 2008 under General Real Estate.
Tags: loan-originators, mortgage-brokers, Proposed-RESPA-reform, yield-spread-premium, YSP
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About the Author: Jillayne Schlicke
* Author's website: http://www.ceforward.com
* More posts by Jillayne Schlicke
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Jillayne Schlicke researches, writes, and instructs continuing education courses, convention workshops and keynote presentations for the real estate and mortgage industries on a wide variety of topics as CEO of CE Forward, Inc. Jillayne is also the Founder and Executive Director for The National Association of Mortgage Fiduciaries, which serves the mortgage lending industry by raising ethical standards, creating a framework for industry self regulation, providing continuing education classes, and helping the industry prepare for the emergence of fiduciary duties. Jillayne received an M.A. in Psych from Antioch University in Seattle where she studied moral psychology, philosophy, and business ethics and received a B.S. in Business and Systems from the University of Phoenix. Jillayne presents hundreds of classes and workshops each year, has published numerous articles for various publications, is a contributing author and editor on Rain City Guide, has been appointed to 38 professional association chair positions or committees and has received 13 industry awards including "2008 Instructor of the Year" from the Seattle King County Association of Realtors. Contact Jillayne at 206... Read Jillayne's stuff on Rain City Guide...
http://nreinsurance.com
http://reiainsurance.com
2009-03-18
The Catastrophe Claims Process---from the source!
From DocuDamage:
http://docudamage.com/catastrophe_claims.html
The Catastrophe Claims Process
As you may already know, the claims process following a catastrophe can be unnerving at best. Most people understand that there are potentially hundreds of thousands of insurance claims and only a fraction of that amount of claims adjusters to attend to them. Further complicating things are lack of electricity, lodging, road access, etc.
Once the claims adjuster does arrive and a settlement offer is made, many of you may have felt that the adjuster overlooked damage or did not pay enough for the damaged items. This is when the claims process can really become frustrating. The good news is that the claims process can be overcome and a fair settlement of your damage can be reached if you know a few things about how the process really works.
The claims adjuster usually wants to pay every dime it takes to have your home repaired!
Nothing makes an adjuster happier than to be able to pay everything it takes to repair your home and satisfy you. There are, however, a few hurdles that must be overcome for this to be possible. There are also things you can do to help.
Claim documentation
This is the single most important & most neglected step in the claims process. Your adjuster wants to spend the time necessary to document every damaged item in your home. Unfortunately, this does not always happen. For a number of reasons, including a massive work load & little sleep, things do occasionally get overlooked or under-measured. Remember, adjusters are people too and will respond the same way you probably would to a massive work overload.
If you feel that damaged areas of your home or business were either overlooked or under-measured then you can help your adjuster by getting detailed estimates of the damaged areas. This, however, is where most people get really discouraged. Claims adjusters base their estimates of damage off of two things; quantity & cost. Their estimate will typically have the measurements for each damaged area with a line by line breakdown of every item, quantity of the items and cost for the items.
Click on the example estimate link on the right of this page. This is the kind of detail your claims adjuster typically provides to the insurance company prior to making payment. If you have clicked on the link and examined the estimate and diagrams I am sure you can see how much work can be involved in properly documenting a claim and writing the estimate (6 to 20 hours).
In the example estimate there was damage to the walls, but not to the ceiling. Thus, in the estimate provided by the claims adjuster it was clear that payment was being made for the cost of repairs to the walls and nothing for the ceiling. It is this clarity of what items are being paid for and what items are not that the claims adjuster requires to be able to compare his estimate to yours. The more detailed the estimate you give to your adjuster, and the easier it is to compare apples to apples, the better.
Contractor Estimates
Unfortunately, during catastrophe situations most contractors will not spend the time necessary to measure and compile such an estimate for a project they might or might not be awarded. In fact they usually provide very little written detail as to what they are estimating. In some cases it is as bad as "Fix house - $85,000.00" written on a blank estimate sheet with a handwritten company name. This is understandable from the contractors' point of view. In catastrophe situations many contractors have literally gone bankrupt writing estimates - and then not getting any of the work. This is because even though there is plenty of work to be done, a large percentage of the people will work contractors to death giving "free" estimates (you get what you pay for) to give their insurance company and then waiting to do the work until prices come down (thereby requiring more contractor estimates).
Having trouble even getting estimates?
After a catastrophe, contractors quickly figure out their losing money by donating their time to give people free estimates. The construction market quickly develops a 180 degree turn in procedure. Instead of giving a bid in hopes of winning a contract, the contractors now want you to sign a contract in hopes of getting a bid. In actuality they are asking you to definitively hire them as "your contractor" and assign them the full insurance benefits of the portion of the work they are addressing. In return, the contractor will spend the time necessary to personally negotiate with your claims adjuster.
The people who seem to have the most problems getting a contractor to repair their home or business are those that are, in some way, attempting to profit from their claim settlement. These people are either attempting to get the work done for less than their adjuster has allowed (pocketing the difference) or they are trying to get more work done or better quality materials (upgrades)than that which was paid for by their claims adjuster - without paying anything additional.
Also, be aware that the cost of the upgrades you have your contractor estimate may be one of the reasons you can not come to a settlement with your claims adjuster. Certainly when already performing a large construction project, it is the perfect time to perform upgrades and additional remodeling. However, the insurance company only owes you for what you had, not for what you want.
Usually, even in a catastrophe situation, a quality contractor can be found quickly if they know their time spent working on your estimate will result in the contract for the full amount the claims adjuster pays. In the industry this is known as a "contract for insurance proceeds" and has become the "norm" after catastrophes.
Public Insurance Adjusters
For the most accurate and speedy settlements, these are people to see. These are professional claims adjusters that have no affiliation with insurance companies and work directly for you. Basically, they represent you to your insurance company alleviating you of the headaches involved in the claim settlement process. They write all of the estimates and meet with your adjuster at your home or business to negotiate the best settlement possible. Public Adjusters work on a contingency and are paid a commission of your claims settlement. If they don't produce anything additional to what you have already received then you owe them nothing. Inherently, this causes them to be extremely thorough and detailed. Proportionately, however, there are not many people licensed in this profession. If you are lucky enough to come across one after a storm, hire him quickly before he is no longer accepting new clients.
We at Docu-Damage sincerely hope that we have been able to shed some light on the catastrophe claims documentation process. If you have any individual questions please email us and we will do our best to guide you in the right direction.
http://www.nreinsurance.com/linksMain.aspx
2009-03-05
Nice insurance blog related to health and other issues...
Thought I would share a nice blog offered by Hank Stern, mostly related to health insurance issues. Great info, consistently updated:
http://insureblog.blogspot.com/
2009-02-22
Don't sacrifice coverage for premium savings....
As tight as finances are, scrimping on your insurance coverages may seem to be an easy target to save money. Without a strategy to obtain "smart value", however, simply dropping important coverages could really cost you (especially when you need them most)! The most overlooked premium-saving mechanisms is increasing your deductibles. I still see way too many families and businesses with $500 and $1000 deductibles on any/all their policies. Check with your adviser(s) and/or agent to determine how much TOTAL premium savings that an increase in ALL deductibles to $2500, $5000, and yes, even $10,000 would generate. Depending on the number of exposures you have insured, the overall savings such a strategy generates may merit implementation. Certainly compare the different levels to determine the point of diminishing return...
2009-02-07
Personal Umbrella? Commercial Umbrella? Neither or both?
Here is a recent concern from a client, who was considering a personal umbrella policy:
Would you please take a look at this proposal and tell me if you think it is the proper coverage for me. It all looked OK to me until I saw the Exclusions of Business Property Not Covered.
Our response:
A personal umbrella is not designed to cover a business exposure. In other words, a business exposure merits a business policy. Also, as I have always stated, your asset protection plan starts with the legal advice first, then let the insurance "fill in the blanks".
Think of your personal exposures as your home, your vehicles, etc... An umbrella is a more cost-effective way to garner increased liability coverage (versus simply increasing the coverage in each underlying policy). Your business exposures are "separate", in a sense, or at least they should be, if you have a solid plan in place initiated by a legal advisor. If you have one exposure type (such as rental property), you may not need a commercial umbrella as it may make more sense to increase underlying limits. However, since commercial umbrellas are usually fairly reasonable (comparatively), even if you don't have a second business exposure (such as a truck used to service properties), it still may make sense to get/have one. Think personal as one need and business as another...
2009-01-17
Why a commercial policy is BETTER than a "personal" one for your properties!
Reasons A Commercial Policy Is Better
Many commercial forms will include coverages such as rental loss and additions and alterations coverage.
To increase liability on a commercial form from the typical $300,000 to even $2,000,000 is minimal (around $50 per year for the entire contract---regardless of number of units) with most carriers
The generic pollution exclusion found on most personal type contracts is addressed by some commercial policies to consider/cover pollution that emanates from a heating source (i.e. carbon monoxide).
On a master (AKA ???blanket???) policy, as you grow and add properties, the rate drops proportionately. Personal policies only insure one property per policy.
Related to #4, in the event of a catastrophe, such as a tornado, the deductible applies once for the occurrence, not per location.
The deviations to carry higher deductibles are cost-effective under a commercial policy much more so than most personal contracts. In other words, carrying a $2500 deductible on the commercial policy may save 15% of premium versus a $1000 deductible. On a personal policy, the same change my only generate half the savings???gives some food for thought on consideration of catastrophic deductibles such as a $5000 or more especially as you add more units.
Many insurers limit the number of units they will insure under personal contracts, and as you???ve discovered, will not consider non-personally owned properties for coverage. I don???t like the idea of the insurance company limiting my asset protection options in this manner.
The ???fire and hazard??? policy you have may be a named-peril policy only. The commercial policy can and should be written on an ???all-risk??? form. ???All-risk??? simply means that unless a peril is excluded, it is covered.
With many commercial policies, you have the ability to add newly acquired properties up to $250,000 automatically for 90 days. You many times have up to 90 days to call and add the location to the policy.
Tim Norris
http://nreinsurance.com
http://reiainsurance.com
http://NREIG.info
2009-01-10
For my insurance agent "peers"...
Introduction
Change is a pain. I know. I own an insurance agency. Commission cuts (gashes, in some cases), the Internet, underwriting processes, the direct writers???you get the point. Insurance carriers (whether you are a ???captive??? or an ???independent???) try to understand and react to the change, well after the change has occurred. The wheels of corporate America turn ever so slowly. I write this to convince you why we should embrace these and other challenges we face as Agency Owners.
To this, I unfortunately have to ask you to do that which we have already agreed is a pain???to change. Not change in a physical sense, as our companies seem to continuously force on us, but change in a mental sense. In order to thrive in our business today, it is absolutely vital that you as an Agency Owner (not an Agent-there is a huge difference!), must have an open mind and not turn away any opportunity for agency growth without first fully investigating its??? merits and detriments. Not every suggestion or idea presented here is for everyone. That???s OK. You must realize however, that unless you are swimming, you are simply treading water. Those that tread water, eventually:
Drown (go out of business, etc.) or;
Get rescued (are forced to sell or merge).
The headline carried on the National Underwriter a few years ago basically forecast that by 2003, 20% of the Independent Agency force would disappear. Now that it is 2009...how far off do you think it was? They would quit, sell, or merge. I know I didn???t like any of those three options, especially if forced to do any of them. If I wanted to thrive, let alone survive, I knew the ???same old way??? of doing business wasn???t going to work anymore. You may agree or disagree with individual points, but all in all, each of my ???secrets??? is driven by three caveats:
1.
Pro-activity
2.
Positive Mental Attitude
3.
Keeping it Simple
I write this with the intention of preserving and perpetuating the Agency system of insurance distribution. If you do not fully believe that our way or life (goodness knows, it???s not a job!) is just as important to our clients lives as their doctors, attorneys, and accountants, then stop reading here. I do not believe that we will be replaced by the Internet or the direct writing companies. I do believe, however, that if we do not do a better job of satisfying more of our clients needs and desires, someone else will. Insurance, especially personal lines property and casualty is becoming a commodity. We cannot let this happen. As soon as our customers think of their auto and fire coverage as a commodity, we as agents are expendable. We need to give people reasons to need an Agent/Agency. If we do not, we are doomed.
Secret #1
You are not an insurance Agent.
I repeat, you are not an insurance Agent. Yes, according to the state in which you are licensed you may be, but I am not writing of the technical definition. You are the owner of an Insurance Agency. Preferably, you are a business owner. If someone asks me what I do for a living, I answer in that way. If an application or form requires that I write-in my ???employer??? or ???employment???, I complete the blank with ???business owner???, not Agent, or self-employed for that matter. ???Self-employed??? connotes that you work for yourself (and your income). ???Business owner??? relates that your business (even it is only you presently) works for you to generate income. The difference is far greater than simply the syntax.
THIS IS A MINDSET CHANGE
Simply stated, the self-fulfilling prophecy dictates that you are what you think you are. You must believe in yourself and your abilities, or nothing I can relate to you will make a difference.
Many of us who are also life insurance Agents, have heard some version of the ???money making machine??? anecdote as an illustration of the necessity of life insurance to a skeptical prospect. If you haven???t, it goes to the effect as follows: ??? If you owned a machine in your garage or basement, that each year turned, whirled, and clicked and eventually spit out $40,000 (or an amount relative to the respective prospect) you would surely insure it as you would your home or your cars, wouldn???t you? Of course you would. Then why don???t you believe in life insurance? You are that money making machine, Mr. or Mrs. Prospect. The point as it pertains to this chapter is two-fold. First, and most obvious, is the fact that you, as an Agency/Business Owner, have the same ???machine??? in you. Secondly, to thrive in our industry today and tomorrow, not only must you insure the machine but you must also feed the machine. This is your business. You have two investment vehicles to feed your business, time and money. If you are not willing or able to invest money to help your business, then for goodness sake, invest the time! The time you spend on developing your business, or your store (s), if you will, will always be returned to you, with interest, assuming it is good time and conducive to the pro-activity caveat. We all realize that time is money, but efficiency is profit. We all also know that it is better to work than to work hard. I, however, believe that working hard is just as good, depending on your perspective. What I mean by this is simply that you should work smart to ensure that your business works hard. I would rather make $500,000 working on my business at a self-determined level of direct involvement, than 2, 3 or 4 times that in a situation where my business ???runs??? me! This is your business, treat it and nurture it as such.
Secret #2
Give your Agency a ???check-up???.
One of the first steps to working as an ???Agency Owner??? and not an ???Agent??? is to tighten or oil the service ???engine??? of your machine and possibly overhaul it. The biggest reason that we, as an Agency force, are able to even maintain, let alone grow our client bases, is our service. If you are losing more clients than you are adding, it is time for some diagnostics and possibly an overhaul at the very least! Think about it for a moment, if price were the sole determining factor in our Agencies, most of us would be out of business, or at best, struggling to constantly align ourselves with the lowest carriers at the given time. We???ve all heard it before??????service sells???. If service sells, then ???sell service???. The statistics I have read or heard indicate that it is ten times easier to keep or retain a customer than it is to get a new one. I have acquired many clients in my career, even though our price may have been higher. I do this by simply educating the prospect, not to the point of expertise, but at least with a working knowledge of why a higher deductible may be better for them in the long run statistically, or why insuring the value is vital. They won???t get this personal attention from a direct writer or the Internet-based insurers. We have, as I am sure many of you have as well, lost clients to these distribution systems, only to have them return for that personal service.
I did an informal survey a few years ago of our new clients. I wanted to know why they switched their coverages to our Agency. Surprisingly, though not to me, price was rarely one of the reasons. In order, the top three reasons were:
1.
??? I haven???t heard from my agent in ten years???.
2.
??? I called the Agent???s office at 2:30 in the afternoon three days ago, got their answering machine, left a message and still have not heard back from them???.
3.
???We had a claim so we called the Agent???s office, only to be given an 800 number to call???.
Granted, money does indeed talk, especially if customers can look at triple-digit savings on their insurance premiums. However, our mini-survey confirmed one vital thing: People value service. I would also like to add that people embrace personal service. Everyone in your Agency has to realize this every time the phone rings. The most valuable asset to your business is your customer. I realize how basic this is, but it never hurts to state it again. Customers appreciate quality service. My next secret tells you how to use appreciation of your satisfied customers to help grow your business.
Secret #3
Leverage your clients via referrals.
I do not mean reactive referrals, where you wait for the phone to ring. You must pro-actively pursue referrals by initiating a formal referral program in your Agency. Promulgate it. You have to let your client know about it or it won???t work! Our program is simple: ???Send us 5 referrals and dinner (or a gift card) is on us???! Here is how it works: When a client sends us a referral, we log it in the computer and send them a thank-you note indicating how many they have sent. At the 5th referral, we call and thank them and then send them a gift card. We don???t require 5 sold leads, just 5 referrals. We don???t limit it either. My attitude is that we???ll sell at least 2 of the 5, sometimes 3. (Our records reveal it eventually turns out to be 3.5 of 5). Depending on the location of your Agency, you can do the math on the value of 3 sales. I am sure you will agree it is much greater, not even considering renewals, than the $25 gift card.
In 4 years of existence, our program has generated nearly 700 referrals, resulting in nearly $23,000 of new commissions. We have paid out $650 in gift cards. A very solid return on investment I would say. Admittedly, we could do as everyone else could, a better job of letting our clients know about the program. We include the phrase ???send us 5 referrals and dinner is on us??? in almost all of our correspondence. It is stated on our ???on-hold??? message (which I highly recommend). We should always mention it at the end of sales appointments, but sometimes forget. We also really need to improve on mentioning it at the end of a service call. We all know referrals build a strong foundation for an Agency. With this in mind, formalizing the referral process will position your Agency for further client leverage. This leads in to my next secret.
Secret #4
Diversify your income streams by leveraging your clients into other services.
Your client base, when looked upon as a referral generating entity, is very powerful. Once you have established a formal system of referral perpetuation, it is time to look again at the client base for other sources of revenue to your Agency. Obviously, you clients have insurance and protection needs that your Agency can provide. For a moment, stop thinking of your Agency as an ???insurance??? Agency and picture it as a turnkey operation for any type of financial need or service. Depending on your mindset, this may be tough to do. Remember to open your mind and you???ll be amazed at the possibilities. Your clients also need services such as: mortgage loans, auto financing, legal services (including estate planning), tax and/or accounting services, retirement planning, financial planning, even college-funding help. They are going to buy these services somewhere. Why not at their convenient ???insurance ??? Agency. Our Agency is currently working on establishing departments (or Profit Centers, as I call them internally) that assist clients in all of these above areas. Some departments, such as our Mortgage Loan and College Funding Departments are physically separate stand-alone operations. Some are simply relationships with other businesses such as we ???plug??? our customers into contacts with an Estate Planning Attorney or a trustworthy local accountant. Technically, no revenue is exchanged, but referrals are genuinely reciprocated. In addition, our Financial Service Center, which is a part of the Agency itself, routinely will coordinate meetings with the ???legal??? and ???tax??? Departments with mutual clients.
Outside departments such as these are pre-screened as they pertain to our Agency goals. Before we send any client to them, we are comfortable with their respective abilities to ensure that they nurture and enhance our relationship with that customer, and not detract from this relationship in any way. Other services, such as College Funding, we offer to our clients on a direct referral basis to a company that offers services such as financial aid planning and assistance. We contract with the company for a referral fee per buying customer. All we do is send the lead. Initially, you may think that all of these ancillary services may create too much administrative headaches for the Agency. On the contrary, considering each of these services has natural lead-ins to one or more of the other, it is quite simple to record and track activity not only in hard copy files, but also in our computer???s client management software.
Since each Agency is different, it would not be effective to give examples of how you should embrace the ???Profit Center??? or departmental approach to increasing Agency revenue. Keep in mind that there is no magic answer. I would advise that you don???t add more than service at a time. I would also advise that if you are thinking of adding another service line other than mentioned here, make sure that it is conducive to producing leads and therefore, income to at least one of the others. In other words, I don???t think selling donuts would be good for a ???Profit Center???. It would detract too much from the main goal of the Agency: to provide quality financial services and products all under one roof. By the way, don???t try to be the expert in all of these areas. There is simply too much to know. It???s better to work at developing the Departments and letting them worry about the details. What a great lead-in to Secret #5.
Secret #5
Don???t work IN your Agency, work ON your Agency.
How much money did you make last year?
How many hours a week do you work?
Multiply the hours by 52 weeks per year???
Divide the dollar amount made last year by the total hours worked last year???
Your hourly wage is the total: _______________________
Remember this wage every time you do the filing, answer the phone, process a piece of business, handle paperwork, etc. Chances are you could pay someone a lot less than this wage to handle these types of duties in your office. I am not in any way suggesting that these tasks are unimportant. They are vital to the operations of the Agency. I am simply pointing out that your time is very valuable. Your ???job??? as the business owner is to grow the business. It is significantly more effective to grow the business by working ON it and not IN it. In other words, how effective can you be at driving income into the Agency when you are doing work that you can pay ?? of your hourly wage to have done for you? You can???t! Many ???one-person show??? Agents will say that they can???t afford to hire a staff person. My answer to that is that you cannot afford NOT to! If you truly want to thrive let alone survive, invest in quality people by paying them a fair wage, training (or paying someone to train them), is step one.
No one succeeds alone. A quality, solid team will out perform the best loner every time. Our staff is paid about 20% more than their peers in the industry. I know it is a clich??, but you really do get that for which you pay. Attitudes are better, turnover is less, and most importantly, my ???job??? as the business owner is immensely simplified knowing that my team handles 99% of the daily operations. This allows me to do many things to help the business grow. From nurturing our Profit Centers to hiring quality sales people, to selling when I want to sell???our team makes it happen. The business basically runs itself. Sure I need to tighten a belt here, squirt some oil there, but overall it runs itself. How? Well that is Secret #6!
Secret #6
Simply systematize. It is the only way to fly!
When I first started as an Agent, I did it all; answer phones, file, quote, process, handle claims, etc???we all do. As my business started to grow, I realized that we had to grow efficiently or risk alienating our existing customers due to service concerns. The only way to accomplish efficient growth is by systematizing your processes. We have simple, easy-to-duplicate systems for nearly every process in the office. For instance, when a prospect calls the office for a quote, every staff person knows exactly what to do, from completing the initial fact finder, to checking driving records, to quoting and to setting the appointment. They are trained to handle any question or objection. Another great example is how the Agency handles a claim. We have a designated Claims Liaison, who quite simply, serves as the liaison between the customer and the handling company. This allows for the customer to contact the Agency before submitting the claim to determine if the claim should be submitted in the first place. The liaison is then able to assist the customer with the filing, handling and completion of the claim.
If this is your one moment to shine, to make that delivery on the promise the customer purchased a while ago, then it deserves the time and attention a liaison can provide.
Our day-to-day activities are planned in advance by the follow-ups on our automated calendar system. There are a plethora of these on the market today.
Each member of our staff has their own calendar, which they log and follow up with on a daily basis. We also have a team calendar, which allows for the same idea, just on an Agency basis. We plan our work and work our plan. You simply cannot grow without systematization. Organization is one thing, systematization is another. As I see it, you can organize and still not get anything accomplished. Systematizing forces things to happen in an organized way!
Secret #7
Remember: Everyone is a customer (or client)!
Your customers (I prefer ???client???, as it indicates a relationship, whereas ???customer??? tends to relate ???transaction???) are not just those who pay premiums. Your customers are also your staff, your underwriting team, company management, even claims personnel. Every entity that comes in contact with your Agency is a customer.
You treat each ???paying??? customer with respect and quality service. They in turn pay the premiums, which drive income into your Agency. However, your Agency deals with the other aforementioned ???non-paying??? customers just as frequently. By treating these non-paying customers just as well, you not only demonstrate the positive mental attitude that is vital for your success, you also make it a heck of a lot easier to get things done. In other words, it never hurts to be thought of in a positive manner by the underwriting department, the claims department, or any entity that also interacts with your ???paying??? customers. Even a third party claimant, who may have been involved in an accident with one of your customers, is a great opportunity to turn a trying time in to a buying time, depending on how your Agency treats this person. Respect and empathy will go a long way in not only assisting the claimant, but also in potentially making this claimant a paying customer. The proverbial ???Golden Rule??? is by far the easiest way to summarize Secret #7???do unto others as you would have done to you. Life would be a whole lot better, and easier, if we all adhered to the Golden Rule. Imagine how applying it to your Agency everyday would impact your bottom line. Do the right thing!
Hopefully, the secrets I have shared will assist you in your Agency???s endeavor of growth. Remember, to survive is to live, to thrive is to grow. Stay focused, be proactive and keep it simple. And always have a positive mental attitude. With these benchmarks of performance, anything you desire is possible.
Tim Norris
2002, 2009
http://nreinsurance.com
http://reiainsurance.com
http://NREIG.info
tim@nreinsurance.com
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