Continuing Insurance Education – Origins of Personal Auto Insurance

Gilbert Loomis, a Westerfield, Massachusetts auto mechanic, sparked the auto insurance industry in 1897 as the first recorded me­chanic who had built his own one-cylinder car. The premi­um was $7.50 for $1,000 worth of Liability Insurance. Accidents involving autos and horses were not uncommon because driving was treacherous, the roads initially were unpaved without street signs and stop lights. Had Mr. Loomis been injured in an accident, no ambulance could have brought medi­cal attention to him, as that service did not come about until three years later. In the beginning, auto policies were not even desig­nated for such pur­pose but were the liability policies that were used to insure liability arising out of collision with horses.

This beginning was followed by an era of total confusion as the industry saw each company design its own unique policy. Every company has their own policy, rating manual and their own way of providing auto coverage. This created a major problem for those who pur­chased such coverage. They seldom really knew exactly what coverage they had paid for. The policy was quite difficult to read and, since every company had their own policy specifications, compar­ing became quite difficult.

The insurance companies also had diffi­culty with the new coverage. Since these were new policies, the law of large numbers (loss statis­tics become more predictable as the number of similar exposures to loss increase) was not prevalent. Unless an insurance company can predict losses accurately, it cannot set rates that are both compet­itive and adequate to make a profit after paying for claims and operating expens­es.

In the early years, most companies did not have enough of their own insurers to set accu­rate rates, so they cooperated with one another and shared their statis­tics.

Diversity of auto policies created a problem for auto insurers. Each policy was open to a different legal interpreta­tion. An insurance company could not be positive that the courts would inter­pret its policy in the same way that they had (interpreted another insurance comp­any’s policy). Of course, this led to uncer­tainty in rate making.

By the end of the 1920’s, the insurance compa­nies realized that the use of one standard automobile policy, by all those insurers mar­keting auto insurance, would be in the best interests of both themselves and the consumer. This idea developed into the drafting of the Basic Standard Automobile Policy, com­pleted in 1935. At the same time, a standard Garage Liability Policy was developed and included, under one form, all of the major liability insurance cov­erage. It included auto, auto repair garages, parking lots, dealerships and service stations. The Standard Auto Policy stood for 20 years. The Garage Policy was used for business only but the Basic Policy was used for individu­als and businesses alike.

The following years saw the introduc­tion of two other Standard Auto Policies. The Com­prehensive Automobile Policy (1940) and the Family Automobile Poli­cy (1956). The Com­prehensive Policy was designed for business entities such as corporations or partnerships, while the family policy was designed strictly for use by individual or families in the per­sonal market.

These developments were important. Both policies expanded coverage initial­ly seen in the Basic Standard Policy. The two new policies emphasized the division of Auto Insurance into a business side and personal side. This division was further enhanced in 1959 when a rating organization introduced the Pack­age Automobile Policy. Another rating organization introduced the identical “Special” Automobile Policy. Like the Family and Personal Policy, these two new standard policies were only for cars owned by individu­als or families.

In 1963, the Special and Package Poli­cies were combined into the Special Package Automobile Policy. In the late 1970’s, the states began to mandate clearer language in policies and request­ed insurance companies to become more contemporary. The Personal Auto Policy was introduced, replacing the Family and Special Package Policies. The Business Auto Policy replaced the Basic and Comprehensive Policies which covered auto exposures of corpo­rations, partnerships and other organi­zations.

The Personal Automobile Policy was devel­oped by Insurance Services Office (ISO), the largest insurance rating and advisory organiza­tion in the U.S. If any of the insurance compa­nies choose to deviate from the ISO policy language or rates, it is free to do so. It is quite common for ISO sub­scribers to deviate from ISO rates but tend to leave the ISO policy wording intact. Many insurance companies not affiliated with ISO (independent fil­ers) use policies similar to the ISO stan­dards.

Continuing Legal Education (CLE) – Disarming a Judge’s Verbal Attack

This Continuing Legal Education for attorney-client relationships is going to show how to communicate with your client in a way that builds trust and communication quickly, effectively, and efficiently. These skills also work with hostile witnesses, judges, juries, and even your office staff.

There is a story that one attorney told me after taking one of my classes. He used the skills that I taught on one of the judges. The judge was arguing with him about a case and the attorneys lack of preparation. Being embarrassed in front of the client and court, eventually the attorney remembered some of the skills that he’d learned in the communication class.

As he tried the skills on the judge. The judge looked surprised, immediately stopped arguing and looked over at the opposing attorney and started arguing with him. The attorney goes on to tell me that he received everything that he asked from the judge and more. Even the attorney was amazed how he had calmed the judge so quickly and disarmed the judge from verbally attacking him and helping to side with his case.

How Could this Happen?

This Continuing Legal Education article will offer any attorney a giant advantage as you will have just read. Can you imagine the comments I receive when I tell people that I teach Attorney Continuing Legal Education communication skills.

Then I explain the benefits of what I teach to the attorney and client. The comments and laughing stop and now they are intrigued. Learn to build instant trust in minutes, maybe seconds and help your client to be calmer, go deeper, faster with more confidence because they are feeling understood. This communication skills series can also be helpful to build connection with clients, hostile witnesses, juries, and even your office staff.

Parts of The Skills

1. Set the Intention:

The attorney set his intention to want to understand what the judge was really wanting and not taking it personally. Before learning the skills and using them, the attorney would argue back with the judge or being scared, not say anything. By setting his intention to want to be calm and to want to understand the judge, anything the judge would say would be heard. Not as criticism. yet as what the judge would like to know. So, setting the intention before you even walk into a courtroom or your office is really important, before you start your day..

2. Set the Focus:

Another step that the attorney performed was to place the focus back on the judge. Again, easier said than done. Yet as the judge was admonishing the attorney, the attorney was calming himself by preparing to put the focus back on the judge. So instead of arguing with the judge or not saying anything, the attorney asked the judge a couple of questions.

3. The Magical Questions:

The questions were very simple. They start as: Are you wanting __________? The blank refers to the judges values or needs. So the attorney asked the judge, are you wanting authenticity of what you are hearing? Authenticity is a value that we all have. The attorney also asked, are you wanting to keep the integrity of the courts?

Again the word integrity is the value of the judge. These values are the magic words to connecting with another person, whether it be with the judge, a client, a hostile witness, or even the jury. This question template is the magic formula for connecting and building trust with other people.

Continuing Insurance Education – History-Development of the Auto Industry

Americans have always loved their automo­bile. Whether an individual used the shining mode of transportation as a status symbol to impress neighbors or value its safety and reliability, the auto industry has been one important economic foundation of our society. Throughout this book we will not only focus on the elements of the Personal Auto Policy but also the history, devel­opment and impact the automobile had on our society. We will also discuss the legal nature of automobile insur­ance, along with the rating of automo­bile drivers. We will conclude our discussion with ways to navigate the car insurance waters and how to be sure such Personal Auto Policies are best for our clients.

When John Frank and Charles Durye pro­duced their gas-powered auto in Spring­field, Massachusetts in 1896 they could not have envisioned the industry they gave “birth” to. Before 1886, the horse was the transportation mode of most. Like all good ideas, the new­ness of the new form of transporta­tion would take awhile for total accep­tance. After all, the horse was used for years and had a loyal following.

A Detroit pioneer, Ransom E. Olds, real­ized that mass production was the key. By 1904, he was mass-producing 4,000 cars a year using hundreds of skilled craftsmen.

Finally, in 1913, Henry Ford adapted the moving assembly line from other industries (basically, the meat packing industry). Mr. Ford insisted that engine blocks and other complex parts be cut to precise dimensions in order that the parts are inter­changeable,

thus making it much easier to install such parts. This was a tremendous breakthrough because it elimi­nated the need for many skilled craftsmen. This was also critically important as Mr. Ford mass-produced 321,000 “tin Lizzies” at his Highland Park, Michigan Plant. He was mass-producing autos at an efficient, afford­able price that the masses could afford, $290 per vehicle! Now for the first time, the aver­age individual could af­ford a Model T.

Before Mr. Ford, the auto was marketed to doctors, farmers, businessmen and the police. This group was more likely to try a new in­vention that would make life simpler. The initial purchasers of these “horse­less car­riages” were a purveyor of public transporta­tion. The U.S. Postal Service began using cars in 1899 in large cities to speed up mail delivery and three years later the first bus was introduced, which enlarged travel routes beyond trolley lines and railroads. Of course, the popularity of the railroads and streetcars suffered.

By the “roaring 20’s”, middle class America was able to purchase an auto. Soon, the auto became a symbol of status, sex appeal, health and wealth. Many people believed the two most important days in a person’s life was the wedding day and the day one pur­chased their first car!

In the 1920’s General Motors Corpora­tion, under the leadership of Alfred R. Sloan, fur­ther revolutionized the indus­try by offering choice to the consumers. GM’s Car Division assembled a differ­ent model in different price ranges. This was truly a “style for every purse and purpose”. GM also allowed car buyers to use an easy installment plan called “Drive Now, Pay Later” to make purchasing that much more simple. The result was that GM replaced Ford as the leader in auto sales, a position that it still maintains.

Automakers stopped building cars during the war years (1942-46) but by the 1950’s busi­ness was again booming in the United States. The 1960’s and 70’s saw new foreign competi­tion, particularly from the German and the Japanese. These foreign cars were much smaller than the large, lumbering vehicles built by the U.S. automakers. The first shock wave came from West Germany’s Volkswagen Beetle, which encouraged the U.S. consumer to think “small”. Another big wave arrived from Asia with Toyota Motor Corps, Honda Motor Co. and Nissan Motor Co., all taking market shares from the American big three.

As we move to­ward the new century, the auto industry is attempting to revamp the car. The weight of the vehicle will become lighter; today’s average vehicle weighs 3,200 pounds but the goal is to reduce its weight to 2,000 pounds. Also, the car of the future will em­ploy a form of energy storage to recapture expended energy and recycle it. “The car of the future is not going to have an internal combustion as we know it today”, says Bob Chapman, Chairman of the PNGU Technical Task Force at the U.S. Department of Commerce.

Styling, which has become rounder and sleeker over the last 100 years, contin­ues to evolve. The cars likely will be shorter and more aerodynamic in design. Vehicles will also act different­ly. The car of the future will have as standard equipment: obstacle detec­tion on the road, collision warning and traffic information devices. Also stan­dard will be sophisticated technology that will allow driv­ers to summon help in an emergency. Voice-activated instrum­ent panels will replace con­ventional buttons and knobs. In addition, the “heads-up-display”, a technology primar­ily used in aircraft will expand to au­tos project­ing information such as speed and fuel levels in the driver’s line-of-vision.

Legal Process Outsourcing (LPO): Addressing Security Concerns

A major concern for law firms that are considering whether or not to take the legal process outsourcing (LPO) plunge is that of data protection. Client confidentiality is so rooted in the legal culture, and is such a fundamental aspect of professional legal ethics, that the mere notion of a pair of eyes glimpsing data from across the Atlantic and Pacific oceans sends shivers up the spines of many lawyers. Yet the ironic part is that there is a group of entities whose obsession with security issues may make that of attorneys seem a trivial thing – the outsourcing companies themselves. The building and maintaining of relationships with current and future clients is the lifeblood for service providers.

As outsourcing becomes more widespread and competition in the marketplace grows, the ability to illustrate the existence (and continued use) of powerful safeguards will increasingly become one of the significant factors for companies that are deciding which provider to link up with. Consequently, the leading outsourcing companies take security concerns extremely seriously, which may explain why many domestic studies have shown that the outsourcing process is no less secure, and may in fact be even more secure, than having the same services performed in-house.

Process fidelity is definitely necessary in the legal arena, but this needs to be placed in perspective. While legal documentation does sometimes consist of sensitive information, the sensitivity often stems from the defining characteristics of litigation and practice procedures. Law firms are no different from other companies in that they do not like to have their business practices broadcasted to the general public. However, concerning the type of damage that can be caused by leaking of information, legal data is in general substantially less sensitive than other types of data that have been outsourced for years on a massive scale. When the fact that large banks, financial institutions, and even the IRS are outsourcing on an extended basis, the entire issue of data protection insofar as LPO is concerned is put into clearer perspective. Suddenly, summons and complaints and discovery materials take on a whole new light when attorneys digest the fact that extensive credit histories, records of financial transactions and tax forms are being processed by the millions overseas.

However, this is not to say that legal information should not be afforded the highest degree of protection, especially regarding issues of conflict of interest. The legal community is one that is tightly bound together and thrives on the flow of information between affiliates and adversaries. On a regular basis, members of the defense bars network with members of the plaintiff bars. Moreover, many of the same lawyers frequent the same courtrooms in the same venues, and attend the same continued legal education courses and alumni events. Thus in order to be supremely effective, outsourcing models must place great emphasis on separation of competing interests.

The question therefore becomes: How can a law firm be assured that they are not outsourcing work to a company that is also working on the same matter for opposing counsel? While the chances of this happening may be somewhat slim, it is still a viable concern. The fact that most providers are obligated to keep the identity of their clients confidential makes it difficult for a firm to ascertain whether a current adversary is outsourcing work to the same provider.

Protections for the outsourcing firms can certainly be put into place. First and foremost, the contract between provider and client should make it absolutely clear that the provider must inform the client as soon as it learns of any possible conflict issues.

Second, the firm should make sure that the provider it chooses is able to clearly articulate – and, if possible, demonstrate – the security safeguards it has implemented to ensure the validity of the process. These safeguards should be included in the statement of work agreement, in list format, along with the additional provision that the security devices must be maintained for the breadth of the contract. Thus determination of liability of the contracting parties for any security breach that results in measurable damages will be easier to ascertain.

Third, due to the fact that technology and business procedures must often become intertwined in order for the outsourcing process to run efficiently, the security program used by the vendor should exist on both the physical and virtual levels for it to be as comprehensive as possible. It would be somewhat contradictory for an outsourcing company to rely on the fact that the production staff for two adverse law firms exists in separate offices, on separate floors or even in different cities. The very premise behind the outsourcing process is that physical separation is not a complete bar to the sharing of information – as such, a company cannot on one hand praise the concept that geographical differences are no longer barriers to the exchange of information and data, while relying strictly on geographical barriers as the only security measures put in place by the company. There is no doubt that physical separation of the production staff for adverse businesses is a good step; however, virtual separation is needed as well in order to create a robust security model.

Important questions that law firms may need answered before an outsourcing program is initiated include: How does the provider structure their production units? Are these units separated, and if they are, along what lines does the separation occur? What is the architecture of the physical premises where the work takes place? What kind of office equipment exists in that location? What types of things are prohibited from being brought to the work site? What tracking and auditing features are used in the technology that allows the process to take place? Who is responsible for the tracking and auditing? The general rule of thumb is that if the question is important enough for the attorney to ask, then it should be included in the written contract.

Once the above questions and issues are addressed to the inquiring firm’s satisfaction, the ties can be loosened and the dress shoes put on the desk, because one major aspect of the outsourcing phenomenon has been resolved. True, other issues do abound, but this one is a biggie. If the security concerns can be alleviated, then one huge step has been taken towards reaching the ultimate goal of commencing a mutually beneficial business relationship.