Nonstandard Auto Insurance
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
When a driver buys auto insurance, the insurance provider will make a calculated risk by agreeing to cover them. In exchange for coverage, the driver pays the insurance company an insurance premium (typically monthly, semiannually or annually). This premium is based on various risk factors, including age, marital status, credit history, vehicle type and driving history. Sometimes, if a driver has significant operating risks, they may not be able to be covered as part of standard, low-risk insurance pools. As a result, they may be required to buy nonstandard auto insurance.
However, needing nonstandard auto insurance isn’t as uncommon as you might think. According to research from Verisk, a data and analytics company, 20% of premiums paid for auto insurance are for nonstandard policies. Other industry experts say this number could be as high as 40%.
While the average nonstandard auto policy won’t look much different from a standard plan, it often costs more overall. Nonstandard policyholders often find it a bit more challenging to find affordable coverage. Keep the following general guidelines in mind when getting coverage.
Who Typically Needs a Nonstandard Auto Policy?
There are a handful of groups of people who would typically need to purchase a nonstandard auto policy. One group includes drivers with major traffic violations or other significant operating risks on their records. A driver might earn this designation if they:
- Are under 25 years old
- Carry an SR-22 certificate, which certain states impose on drivers who commit certain driving offenses
- Have a tarnished driving record with numerous infractions for reckless driving
- Have had a DUI or OWI charge
- Drive a vehicle with a salvage title
- Have previously driven uninsured or underinsured
- Have a poor credit rating (most states allow insurers to consider credits when setting your rates)
- Carry a foreign license or have no driving record in the United States
- Have a high risk of accidents
Outside of this group of high-risk drivers, other individuals may need to purchase a nonstandard auto policy if they have a luxury vehicle, racecar or another type of vehicle that has a higher risk of theft or large losses.
These indicators show an insurer that, statistically, this driver may be more likely to have another high-cost claim or accident that the insurer would need to pay for on the driver’s behalf. Since the driver is now a greater cost risk to the insurer, they will have to compensate for that risk by charging the driver a higher premium. Every insurance company is different, which is why it’s important to work with a qualified agent to determine what type of coverage may be necessary.
Differences Between Standard and Nonstandard Policies
The primary difference between standard and nonstandard auto insurance policies is their cost. Nonstandard policies are offered only to drivers with the highest risk of causing accidents or filing significant claims on their policies. The higher cost that comes with the policy is designed to cover the additional cost and more frequent claims filed by these drivers, on average.
Some insurers don’t offer nonstandard policies, which might force drivers who have been newly classified as nonstandard to look for coverage from an entirely new insurance carrier. Still, nonstandard auto policies will generally contain all the coverage options available to regular drivers, and an agent can help a driver customize a policy to fit their needs.
Residual Market Auto Insurance Policies – Coverage for the Highest Risk Drivers
At times, some drivers will have such high operating risks that they will be unable to obtain insurance through even a nonstandard plan. To still get the coverage you are required to carry, they will have to obtain coverage through the residual market. The residual market is a pool of drivers managed by state regulators. When you apply for coverage through the residual market, your state’s Department of Insurance will then require one of the insurers operating in their borders to issue you a plan. Residual market plans are often among the most expensive policies available and should only be considered as a last resort.
- Published in Blog
Ring-Ring, Your Future Career Calling
By Tiffany Stock, Director of Marketing & Client Relations | Employee Benefits Consultant | Partner
I know it may be hard to believe, but there isn’t a never-ending flow of resumes and applications coming in for people looking to get their foot in the door to start a career in insurance. In my almost 14 years in this industry, I can say I have only met one person who said they knew they wanted to work in insurance when they were growing up – I know, again, hard to believe [insert sarcastic face here]. I mean, I went through a few phases and thought I wanted to be a doctor, a graphic artist, or work in advertising – but never once did I think I’d work for an insurance brokerage and consulting firm.
Back in 2008, I had just had my second daughter and was working for an advertising and consulting firm. It was a small agency owned by a husband and wife, which was perfect for that time in my life. Being a small agency, I had my hands in a little bit of everything and got to meet a lot of people. But once I had two young children at home, I started to feel like if I was going to be away from them for forty+ hours per week, then I needed a job with more of a career path, room for growth, and new opportunities to learn. I hate to say it, but I was BORED. So, I updated my resume and started surfing the internet looking for open positions (I know that statement just dated me😊).
I came across an ad on Craigslist for an administrative position, no company name shown, and it was posted by a staffing agency saying something like, “Are you looking for a new career? Do you like creating presentations and working with a team? Opportunities for growth…” you get the picture. So, I submitted by resume and got through a few rounds of interviews, one of them ended up being a lunch interview at Pizza Plaza! Well, I got the job! I remember many times in the first few years, the then President of the company would check in with me to make sure I wasn’t “bored.” And I can say, there is not one time since I started in this industry where boredom has set in!
There are many different types of insurance, so I’m going to narrow down the focus to where my experience and opinions lie, in the Employee Benefits realm. Think of all the types of benefits you might look to an employer to provide you with (or at least provide access to). All types of insurance are highly regulated, and employee benefits is no exception. Both from the state and federal level, Health & Human Services, Department of Labor, Internal Revenue Service, State Divisions of Insurance, etc. all have a part in the rules and regulations surrounding the benefits you can get from your employer. There is so much to learn and just when you think you may have “mastered” something, a new piece of legislation gets passed, or a new product is introduced – there are never-ending learning opportunities in this field. And if you find a particular type of product or program that interests you, there is plenty of room to become a “specialist” in that topic.
You get to meet A LOT of different people, from local family-owned business owners, to boards of directors, people representing all sectors of our economy, from Presidents and CEOs, down to entry-level staff. At the end of the day, my job is to help employers know what their options are and help them evaluate those options to ensure those benefits align with their goals and objectives. Then, I facilitate making sure that their employees know what is available to them and be there as a resource to help them make the most of it.
One of the best things about my job is when I know I have helped someone. Insurance is a tool to help with financial protection. In the case of health or life insurance, you hope people never have to use it, but if they do or think they may, I hope I’ve made sure all my clients and their employees know we are here to help them navigate those difficult times.
It’s not all great, but I’m not sure of any job that doesn’t have its fair share of ups and downs. Let’s get real, it can be tough working in an industry that is so highly regulated, especially in a state that has some of the highest healthcare costs in the country. Things don’t always go the way we want or the way we hope, so during those times it’s so important to make sure you have a great work-family. Having an awesome team that supports you and an employer that has your back is crucial when those tough times come along. When I think of my team and the traits that make us successful, like being intellectually curious, self-motivated, a team player, and always looking for ways to make things better, the sky is the limit.
So, if you know of someone looking for a new career path, send them our way. Retirement is still in the distant future for me, but there is no better time than now to start looking for the person who can fill my shoes when that time comes. It may not be the career most kids dream of, but it certainly enables me to live the life most adults dream of!
- Published in Blog
What You Need to Know About the Biden-Harris Administration’s Actions to Prevent Surprise Billing
This article is from RISQ Consulting’s Zywave client portal, a resource available to all RISQ Consulting clients. Please contact your Benefits Consultant or Account Executive for more information or for help setting up your own login.
On July 1, 2021, the Biden-Harris Administration, through the U.S. Departments of Health and Human Services (HHS), Labor, and the Treasury, as well as the Office of Personnel Management, issued “Requirements Related to Surprise Billing; Part I,” an interim final rule with comment period that will restrict surprise billing for patients in job-based and individual health plans and who get emergency care, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers.
This first rule implements several important requirements for group health plans, group and individual health insurance issuers, carriers under the Federal Employees Health Benefits (FEHB) Program, health care providers and facilities, and providers of air ambulance services.
What is a surprise medical bill?
When a person with a group health plan or health insurance coverage gets care from an out-of-network provider, their health plan or issuer usually does not cover the entire out-of-network cost, leaving them with higher costs than if they had been seen by an in-network provider. In many cases, the out-of-network provider can bill the person for the difference between the billed charge and the amount paid by their plan or insurance, unless prohibited by state law. This is known as “balance billing.” An unexpected balance bill is called a surprise bill.
This rule protects patients from surprise bills under certain circumstances.
Who will benefit from this rule?
These surprise billing protections apply to you if you get your coverage through your employer (including a federal, state or local government) or through the federal Marketplaces, state-based Marketplaces or directly through an individual market health insurance issuer.
The rule does not apply to people with coverage through programs such as Medicare, Medicaid, Indian Health Services, Veterans Affairs Health Care or TRICARE. These programs already prohibit balance billing.
Who is affected by surprise bills?
Surprise medical bills and balance bills affect many Americans, particularly when people with health insurance unknowingly get medical care from a provider or facility outside their health plan’s network. This can be very common in emergency situations, where people usually go (or are taken) to the nearest emergency department without considering their health plan’s network.
An in-network hospital still might have out-of-network providers, and patients in emergency situations may have little or no choice when it comes to who provides their care.
For non-emergency care, an individual might choose an in-network facility or an in-network provider but not know that a provider involved in their care (for example, an anesthesiologist or radiologist) is an out-of-network provider.
How does this rule help?
If your health plan provides or covers any benefits for emergency services, this rule requires emergency services to be covered:
- Without any prior authorization (meaning you do not need to get approval beforehand)
- Regardless of whether a provider or facility is in-network
This rule also protects people from excessive out-of-pocket costs by limiting cost sharing for out-of-network services to in-network levels, requiring cost sharing for these services to count toward any in-network deductibles and out-of-pocket maximums, and prohibiting balance billing under certain circumstances. Cost sharing is what you pay out of your own pocket when you have insurance, such as deductibles, coinsurance and copayments when you get medical care.
The protections in this rule apply to most emergency services, air ambulance services from out-of-network providers and non-emergency care from out-of-network providers at certain in-network facilities, including in-network hospitals and ambulatory surgical centers.
Additionally, this rule requires certain health care providers and facilities to furnish patients with a one-page notice on:
- The requirements and prohibitions applicable to the provider or facility regarding balance billing
- Any applicable state balance billing prohibitions or limitations
- How to contact appropriate state and federal agencies if the patient believes the provider or facility has violated the requirements described in the notice
This information must be publicly available from the provider or facility, too.
When does the rule take effect?
Consumer protections in the rule will take effect beginning on Jan. 1, 2022.
The regulations are generally applicable to group health plans and health insurance issuers for plan years beginning on or after Jan. 1, 2022, and to FEHB program carriers for contract years beginning on or after Jan. 1, 2022. They are applicable to providers and facilities beginning on Jan. 1, 2022.
- Published in Blog
Getting Smart About Your Risk
By Joshua Weinstein, Employee Benefits President
Without risk, life would be a drab. Without the opportunity to fail, success, and even life, loses its luster and meaning. For example, if a cliff dive ensured absolutely no harm, would it be quite as thrilling or appealing? If presenting in front of others had a 100% chance of going flawlessly, what significance would your preparation and “learning from mistakes” have? Life is not defined by the easy, but rather by slogging through some suffering. That being said, humanity can generally plan toward good outcomes by acknowledging and addressing life’s unseen, “slippery banana peels” as best as possible. Risk isn’t an inherent problem. It’s not unexpected. It’s quite manageable, and it can teach all of us boatloads. The best run businesses have figured out how to manage risks so they can focus on growth and not on threats.
RISQ Consulting will help you be smart about risks through our proprietary Business HealthIQ™ (BHIQ) process. The BHIQ is a collaborative journey that assesses and inventories your organizations risks across key areas, such as: workforce, compliance, technology, employee benefits, and general risk management. You will be working with a strategic consultant, and a plan will be constructed that encompasses the goals of your organization in conjunction with the most suitable approaches to address risk wisely.
Want to learn more? Try out a mini, self guided, version of the BHIQ to see how the planning begins. You’ll get a summary in a few minutes that provides some tangible next steps on how to be strategic with your risks.
Short samples:
We can mutually decide how best to prevent the unwanted things from happening, such as high rates of employee turnover.
We can mitigate risks such as data loss and errors by advising on consolidated technology platforms and tools that are right for your industry and mission.
We might choose to transfer risks, to a third-party, when doing so adds efficiencies, reduces exposures and costs, and improves your ability to focus on your business’ core mission
Sometimes, retaining or assuming risk is the smart play, even up to a specified amount. Keeping some liability on your financials can reduce premium costs and often improves leadership involvement in creating great outcomes for your business.
- Published in Blog
Why Considering the Housing Market Should Make You Want to Benchmark Your Employee Benefits Plan
By Ashley Snodgrass, Executive Account Manager
Have you ever wanted to peek over your neighbor’s fence to get a better view of their garden? Maybe look at their blossoming peonies, size up their tomato plants, or get a clue as to why their grass is always the greenest? There’s something similar that happens in the world of employee benefits; one of the most asked questions by my clients is, “How do my company’s employee benefits compare to what other companies are offering?” In today’s environment where the battle for qualified talent is raging, knowledge of how your benefits stack up is crucial, because the stakes are much higher than neighborhood gardening.
In 2021, we’ve all felt the impact of the worker shortage in several industries. I think it’s helpful to compare the worker shortage to the housing market. As the housing market fluctuates, the market fluctuates between a seller’s market and a buyer’s market. This is all driven by supply and demand. When the inventory (supply) of homes is high, and there are fewer buyers (low demand), sellers are more likely to drop price, pay closing costs for buyers, and make upgrades to meet the buyer’s needs. Oppositely, when the supply of homes is low and there are more buyers (high demand), there is strong competition for homes. Buyers must be aggressive by paying higher prices, offering flexible terms, and accepting homes in “as is” condition.
Let’s consider how this is similar to the employment market. When there are fewer qualified workers searching for jobs, companies must consider raising wages, offering more flexibility, better benefits, and more educational and mentorship opportunities. Compare this to times of the past when the number of job seekers was higher; employees would accept long commutes, sub-par benefits, or a lower salary just to have a chance at any job, and hopefully move up sometime in the future. Some economists view labor as a commodity, which is why the labor market is subject to the fluctuations of supply and demand.
While this is perhaps an oversimplified explanation, and doesn’t account for a variables that impact the market such as COVID-19 related safety concerns, available unemployment benefits, and childcare challenges, it helps to demonstrate that hiring in 2021 is different than prior to the COVID-19 pandemic. This is why employers must know how their employee benefits compare to other options employees may find when exploring benefits packages that come with employment offers.
Benchmarking is the industry term for comparing what an employer offers to employers in similar industries and geographies. Benchmarking data can be provided by insurance brokerages, insurance companies, and third-party research firms. Most studies look at common plan facets like deductibles, coinsurance, out of pocket maximums, employee cost, employer costs, and types of benefits offered. Some surveys expand beyond insurance benefits and focus on other employee rewards such as Paid Time Off, Parental Leave, Retirement, and Wellness Benefits.
Looking to get an insight into your own health plan? Data isn’t always “Apples to Apples”. Here are a few points to consider when comparing data to what your own company offers:
- Geography – Insurance premium pricing is based on the cost of healthcare in that region (Example: Premiums in Alaska are higher than average because healthcare costs are higher than average, and therefore it wouldn’t be correct to compare Alaska costs to a low cost state like Arkansas, and draw any meaningful conclusions).
- Industry – In sectors where there is greater competition for talent, benefits are more generous. Employees in highly technical industries will demand richer benefits.
- Company Size – Size of company aligns with purchasing power, so be aware that larger companies may be able to offer more benefits or special programs than smaller employers. Additionally, groups under 50 employees are provided rates strictly based on the age of the employees, whereas larger companies pay costs based on claims. Costs for smaller companies may be higher simply if the population is older.
- Employer Type (Meaning Private vs. Public Entities or Union vs. Non-Union benefits) – Different types of employers may have different rules to abide by, or other options available to them, that aren’t available to all employers. Try to compare your company with employers who are most similar to your own to control for variables like high-quality Government benefits, or Collectively Bargained benefits
- Funding Mechanism – Fully Insured plan costs are not comparable to Self-Funded plan costs. Fully Insured rates come from the insurance carriers and the rates are set. Self-Funded plans have additional options to implement cost controls and care management programs.
Ask your RISQ Consulting Team to help provide you with some information that can help your own organization. Brokerages typically have access to reports beyond what is available for free online. Here are a couple great resources to check out to get started:
State Health Access Data Assistance Center (SHADAC)
Society for Human Resource Management
- Published in Blog
Workers’ Compensation Trends to Watch in 2021
By Dena Lythgoe, Senior Account Executive & Partner
I can hardly believe it but 2020 has finally come to a very long awaited and welcomed close. With the new year upon us professionals of all industries are offering predictions, trends and opportunities for 2021 and the insurance industry is no different. All business owners need to keep an eye out for the anticipated workers compensation claims trends for this upcoming year and get ahead by implementing changes to their risk management programs to avoid certain types of losses.
Read the article Workers’ Compensation Trends to Watch in 2021 below!
- Published in Blog