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AUTO MODULE - III Module III Objectives Review Module II Mid-Century Auto (MCA) Review Module III Homework Assignment Module II - Review 1.Explain what is covered ... – PowerPoint PPT presentation

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

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

Module II - Review
5. Determine the proper rate class for the
following drivers Sex Age Married? Prin
Driver? Use M 40 Y Y To work
F 18 N Y To school M 18
N N To school F 16 Y
Y Housewife M 24 Y
Y Pleasure M 26 N Y Carpool
Module II - Review
6. In our last module, I mentioned that you as an
agent are the eyes and ears of the Company.
What is the significance of this
statement? 7. What is field underwriting? 8. What
is the difference between subjective and
objective underwriting? 9. What are the two auto
companies that Farmers uses to place auto risks?
Module II - Review
11. What is a DIP point? 12. How many DIP points
are assigned to a TCM policy for a. 1 speed
cite 24 months ago b. 1 negligent accident 38
months ago c. 1 OTC claim 6 months ago d. 1 DWI
15 months ago with accident on same occurrence.
Ultra Preferred Rating Plan
Policies are written through Texas County Mutual,
with the most competitive rates Farmers
offers The Requirements are as follows 12
months prior liability insurance Accident free
for the past 3 years. One Fault Free Accident
per policy will be acceptable for certain FARA
scores No more than one Comprehensive Claim per
policy, with a maximum of 2 Comp losses per
Ultra Preferred Rating Plan Additional
requirements Maximum of one Total Theft loss
allowed per household Windshield repair
and Towing losses will not be counted No more
than 1 minor citation for the past 3 years Age
30 and above FARA score of A,B, C, D, F, or
G There are NO Exceptions to these guidelines
Mid-Century Insurance Company
Mid-Century Insurance Company (MCA) is our
preferred Company. In this Company, we will
place our prospective insureds who will be the
least likely to have claims in the future.
Because our rates in this Company are some of the
best we have to offer, the Underwriting
requirements are very stringent.
MCA Underwriting Guidelines
AGE Persons under 25 are ineligible. DRIVING
ACTIVITY All drivers must have three years
verifiable driving experience with no accidents
in the past 12 months. No more than one
non-chargeable accident. One minor violation is
allowed with appropriate FARA score (age
25-29). CLAIM ACTIVITY No non-weather related
losses (excluding glass losses). No more than one
weather related loss. VEHICLES High Performance
and sports cars must be driven by persons 30
years and over. FARA SCORE-Acceptable score must
be attained
MCA Underwriting Guidelines
limits are required, all vehicles for the same
named insured must carry same limits. PRIOR
INSURANCE Must have 12 months continuous
liability. Also additional underwriting
requirements for TCM
MCA Experience Period
The experience period shall be the 36 months
ending three months prior to the effective date
of the policy or renewal. Because we cannot
charge for accidents in MCA until the accident
has been at least 90 days old, we add this 90
days on to the end of the chargability period.
REASON All promulgated companies follow the
State ruling which gives the insured 90 days to
determine fault before the insurance company can
increase the premium. County Mutual companies
are not promulgated by the State thus, do not
follow this ruling..
MCA Point Rules/Surcharges
One point shall be assigned for each auto
accident occurring within the three year
experience period involving the Insured, or any
operator of the auto currently in the same
household resulting in damage in excess of 1000
to any property including his own or bodily
injury or death.In TCM, charge is 2 points.
MAJOR CITATIONS When an insured who has a
policy in MCA receives a major citation, charge 3
points and set-up to non-renew to TCM.. TCM
charged 4 points. NOTE You must figure in the
deductible when determining the total damage
amount. Also, just because an accident may be
under the 1000 threshold does not make it a
non-chargeable accident concerning underwriting
MCA Point Rules/Surcharges
Exceptions - No points shall be assigned for
accidents under the following circumstances 1) If
only Med or PIP was paid. 2) Legally parked,
standing or stopped when struck. 3) Unattended
auto. 4) Reimbursed by or on behalf of the person
responsible for the accident or has a judgement
against such person. 5) Auto struck in rear by
another vehicle and operator was not given a
moving violation.
MCA Point Rules/Surcharges
Exceptions - No points shall be assigned for
accidents under the following circumstances 6) Ot
her party charged with a moving violation and our
applicant was not. 7) Hit-in-run
applicant/household member must have reported
accident to the proper authority within 24
hours. 8) Accident with bird or animal damage
caused by flying objects or gravel. 9) Accidents
on premises owned by applicant.
MCA Available Discounts
Multi- Car Credit Two or more autos on policy
gives 20 of Liability, 15 of Collision
(Youthful rate classes do not qualify for
discount). Driver Credits Driver credits are
applicable to Liability, Med/PIP and Collision
coverage's only. A 10 credit is given for Driver
Training and 5 credit for Drug and Alcohol
Awareness courses. Passive Restraint Discount
When a policy has Med/PIP coverage a. Air Bags,
Category (1) 15, Category (2) 30 b. Passive
Seat belts (1) 15, (2) 30. Anti-Theft Device
2 - 30 discount when OTC coverage is taken. A
signed Warranty of Acceptability form must be
retained by the agent. Auto/Home- 5 Discount for
Farmers Homeowners

Target Theft Vehicles
Because of the rapidly increasing number of
vehicles that are stolen in the Houston and San
Antonio areas, Farmers began to promote public
awareness by enacting several programs to combat
this increasing exposure. Among these programs
included 1) working with local law enforcement
agencies (H.E.A.T.), 2) a VIN etching program,
and 3) enacted new underwriting restrictions for
target-theft vehicles. After gathering data to
determine the vehicles that were more likely to
be stolen, Farmers incorporated a list of
Target-Theft vehicles and required that these
vehicles have an anti-theft system before OTC
coverage could be written.
Target Theft Vehicles
TRUCKS All Foreign/Domestic 4X4 Trucks/Vans - no
age limit Chevrolet Trucks/Vans/Suburbans
Ford Trucks/Vans
- GMC Trucks/Vans -
Target Theft Vehicles
CARS All Models High Performance - No age
limit BMW 5 Series Chevrolet All Camaros
Ford Mustang Mercedes-Benz SDL/SEL series
- Pontiac Grand Am, Firebird
Miscellaneous Vehicles- TCM
Autos of any type used solely in exhibitions,
club activities, parades, and other functions of
public interest, and which are not used primarily
for transportation of passengers over any public
street or highway, and have been restored to or
maintained in its original condition. There is a
2,500 annual mile limitation on this type of
Miscellaneous Vehicles- TCM
MOTORHOMES A self-propelled vehicle which is
used primarily for recreational use. NOTE
Removable or slip-in-campers or trucks equipped
with camper shells are not acceptable for rating
under this rule. 1. All insureds must meet the
TFIC requirements. 2. Application must be sent
with photo. 3. No business use or converted buses
or vans. 4. Must have a value of 10-80K if PD
written 5. Not rented over 4 weeks per year.
Split Household Rules
Policies in multiple car households may be split
between MCA and TCM under the following
conditions 1) All operators of cars placed in
MCA cannot have an accident or cite in the past
3 years. 2) When there is only one operator in a
multi-car household, and he/she qualifies only
for TCM, all vehicles must be written in TCM.
Module III - Review
  • What is the minimum age a driver must be to be
    issued in MCA without his/her parents policy
    being issued?
  • What is the minimum age for
  • a. A high performance car in MCA?
  • b. A sports car in MCA?

Module III - Review
3. What are the additional requirements which
would allow a person under 25 to be eligible for
coverage in MCA? 4. What is the rule concerning
accidents in MCA? 5. What is the rule concerning
non-weather related losses in MCA? 6. What is
the rule concerning prior insurance requirements
for MCA? 7. Can a liability only 20/40/15 policy
be written in MCA? 8. What is a target theft
Module III - Review
9. What is the experience period for MCA? 10. In
MCA, how many points would you charge
for a. A received a speed citation. b. A
hit B in rear. c. A hit a deer. d. A
vehicle stolen. e. A received DWI after
involved in a chargeable accident. f. A
received 3 speeding tickets and had one
Module III - Review
11. What are the accident exceptions in which no
points will be charged in MCA? 12. What
discounts are available in MCA? 13. Concerning
split-households, determine the following (all
citation/accident activity less than 12 months
old) a. Husband 1 accident, wife clear, two
vehicles. b. Husband 1 DWI, wife clear, three
vehicles. c. Wife 2 accidents, husband clear,
two vehicles. d. Husband/wife clear, son speed,
two vehicles.
Profitable Risk Selection
The function of Underwriting, in basic terms, is
selecting the appropriate group of insureds. The
goal of the selection process is to control loss
frequency. What makes a risk acceptable are the
attributes of the individual and the
characteristics of the property subject to
insurance. Obviously, we do not want to issue a
policy to an individual we are certain will have
a loss, but this is not to say we are trying to
choose only those who will not have losses, we
merely want to be within a range for which we
have planned and rated. After all, if people did
not have losses, they would have no need to
purchase insurance.
Profitable Risk Selection
In theory, it should be possible to identify
certain characteristics of each insured that
predicts future loss frequency. For instance, it
has always been assumed that the more miles one
drives, the more likely one will be involved in
an automobile accident. In fact, we have
identified quite a few characteristics that
affect automobile loss frequency. These include
miles driven, age and experience of driver, the
type of car, citations and prior accidents, prior
insurance coverage, and so on.
Profitable Risk Selection
One of the proven principles of auto insurance is
that people who have accidents in the past tend
to have more accidents in the future. Another
way to say this is Prior losses predict future
losses. Research from our own book of business
tells us that insureds who have had losses in the
last three years are more likely to have another
in the fourth. What is not shown in this study
is the higher frequency of those same policies in
the following years. This means the selection of
this years new business will have a dramatic
impact on our loss results for the next several
Becoming a Good Underwriter
Becoming a good Underwriter is a formidable
challenge which requires enthusiasm and
determination. You will quickly discover how
your attitude affects your ability to meet the
demands placed upon you by your new
position. Your professional integrity will be
vital to the success of your agency and the
ultimate success of the Company.
Managing for Profitable Growth
What can you do as an agent to have a profitable
book of business?
1. You have to make a mental decision that
profitability is important to your agency and to
the Company. 2. Always re-underwrite your
existing book of business. 3. Be in control of
your office. Review all applications and make
your staff aware of office goals. 4. Review all
claims. 5. Inspect ALL automobiles at issue!
Managing for Profitable Growth
What can you do as an agent to have a profitable
book of business?
6. Educating your clients on a. The purpose
of insurance to pay for those losses that they
can not financially handle. b. The benefits of
carrying higher deductibles. c. Make youthful
drivers aware of the responsibility of
driving safely (Y.E.S. program).
Managing for Profitable Growth
What can you do as an agent to have a profitable
book of business?
7. Use the Farmers Friendly Review (FFR) to your
advantage. It helps you sell additional lines of
insurance, retains your existing business and
educates your customers about the insurance
products they own. Think about it if your
clients like you and believe you have given them
a valuable service, they are far less likely
to 1. have fraudulent claims, 2. try to
inflate claim expenses, or 3. retain an
attorney to collect claim monies.
Managing for Profitable Growth
What can you do as an agent to have a profitable
book of business?
  • 8. One of the most important things you as a new
    agent can do is to concentrate your marketing
    program in areas where people
  • Own their own home
  • Have well maintained homes
  • Have families
  • Have professional and steady jobs
  • Have newer, well maintained vehicles

Managing for Profitable Growth
What can you do as an agent to have a profitable
book of business?
Handling Walk-Ins and Phone-Ins Use extra
caution when evaluating phone-ins and walk-ins.
Avoid quoting rates over the phone until you
meet a person and talk to them face to face you
really wont know which company to quote. People
are more likely to give you the truth about their
driving activity, smoking etc. when theyre in a
face to face interview. It does not mean that
these types of customers are not good prospects,
it simply means you need to screen them more
Managing for Profitable Growth
Explain How Driving Activity Affects Premium This
is perhaps one of the most important discussions
youll have with your prospective client. If you
lay down the ground work now, that is, explain to
the applicant exactly how their driving activity,
coverage's, deductibles and claim frequency
determines the premium, you will not have to face
an uncomfortable situation later. The object is
to educate your insureds on the purpose of
insurance. If your insureds see the benefit of
driving safely, we all benefit.
Managing for Profitable Growth
Unprofitability does not have to catch you by
surprise. The tendency for new Agents is to
concentrate on writing volume. Concentrate on
writing quality business. Everyone recognizes
how tough it is to start your own Agency. But
remember, its much easier to start off with and
maintain a profitable Agency in the years to come
than it is to try to turn an unprofitable Agency
Quote of the Day..
These ten little two-letter words -- If it is
to be it is up to me -- are absolutely valid.
The solution is to do it now. Zig Ziglar