The Return of Whole Life Insurance

Over the last few decades, term life insurance has seemed to be the best way to provide for your family if you were to pass. 

It is affordable and pays out well, but after years of renewing policies that did not guarantee any benefits, people have started to turn back to whole life insurance coverage.

Whole life coverage had gotten a reputation for being a little expensive when compared to term life plans, but then again, your money remains yours with a whole life plan.

There are many reasons why these life insurance policies have recently become so popular.

First of all, interest rates are still ultra-low, but whole life policies pay out guaranteed rates that go far beyond what could be earned in a savings account or certificate of deposit with a similar duration. Better yet, taxes do not apply to the cash value growth of a whole life policy. 

Also, insurance companies offer a variety of different whole life plans that can help policyholders reinvest dividends and increase interest on the cash value, further protecting the investment.

Moreover, although taxes on capital gains and dividends have been recently reduced, the proceeds of whole life policies are generally not taxed, even when the benefactor dies.

In all, whole life policies can do things that term life coverage just cannot offer. For instance, once premium payments accrue enough cash value in the policy, premium costs may be reduced or even eliminated, without affecting the benefits or coverage terms.

Policyholders can even borrow money from their whole life policy’s cash value without needing to go through a lengthy loan approval process. And since it’s actually the policyholder’s money, there’s no rush to pay it back.

 

The takeaway

There are few guarantees in life, but people can count on the guaranteed benefits of whole life coverage. 

Every time a term life policy gets renewed, the process of investing begins anew, not to mention that term life coverage can be canceled if a payment is missed or late. But you can watch your money grow and rest assured that it will be there during times of need with whole life insurance.

 

Safety Tips That You May Not Have Considered

It’s always a good time to double down on your workplace safety efforts to see if there are any areas that you may be overlooking.

While your safety regimen may be top notch, there is always room for improvement and you can consider these options as recommended by EHS Today:

Use a 10-second rule

Workers should consider using the 10-second rule before resuming a task after a break or disruption. During this time before resumption, the worker can conduct a mental hazard check, which EHS Today refers to as STEP:
S – Stop before resuming a job or beginning a new task.
T – Think about the task you are about to do.
E – Ensure that any potential hazards have been identified and mitigated.
P – Perform the job.

Take advantage of OSHA training

The OSHA Outreach Training Program provides training for workers and employers on the recognition, avoidance, abatement and prevention of safety and health hazards in workplaces. The program also provides information regarding workers’ rights, employer responsibilities, and how to file a complaint.

Through this program, workers can attend 10-hour or 30-hour classes delivered by OSHA-authorized trainers. The 10-hour class is intended for entry-level workers, while the 30-hour class is more appropriate for workers with some safety responsibility.

Through this training, OSHA helps to ensure that workers are more knowledgeable about workplace hazards and their rights.

Reward employees for attention to safety

Many companies reward individual employees who are especially mindful of safety procedures. Rewards don’t have to be extravagant. Low-cost rewards such as $10 gift cards for everyday necessities (gas, groceries, fast food) are perfect for on-the-spot rewards or as redemption options in a point-accumulation program.

Communicate with non-English speaking workers

Non-English speaking laborers have more workplace accidents than their peers. Some safety experts blame this on the language barrier that may exist. The language barrier may keep them from reporting workplace hazards and they may not understand your safety instructions.

If you have non-English speaking workers:

• Ensure that training is fully understood.
• Try to get any safety training materials also printed up in Spanish, and other languages prevalent in your workplace.
• If you have one, provide them contact in your organization that speaks their language, so that they can get answers to any questions they may have or to report concerns.

Urge your employees to speak up

Let your workers know that there will be no retribution for reporting perceived workplace hazards, no matter how minor. You can also implement the third suggestion above and reward employees that point out safety issues.

Temp workers need safety awareness too

Temporary workers often slip through the cracks when companies are training staff on safety. And it’s easy to forget when you get a temp that comes in for a day or two that they need to be aware of the hazards in the workplace and how to avoid getting injured.

The issue is especially important in terms of your company getting cited. Federal OSHA has made the safety of temporary workers one of its priorities. OSHA in 2014 published a guide for protecting temporary workers. To access the guide and for tips, check out: http://www.osha.gov/temp_workers/

Make your training engaging

The best safety training programs are those that employees remember. Some good ways to make sure the information is retained include using real-life examples, story-telling, skits and strong video presentations.

Do more than OSHA requires

OSHA’s regulations are meant to be comprehensive, but every workplace is different and for a truly effective safety program you should fine-tune your safety requirement specifically for your workplace. In other words, you can go a step beyond what OSHA requires.

Watching each other’s back

You should also instill a sense of responsibility among your staff to look out for each other. If a worker sees another performing a job in an unsafe manner, the worker should step in to offer assistance. This can be done without being intrusive or confrontational.

Some good approaches include: “Hey, would you like me to watch out for your safety?” and “As you know, you need to be wearing cut-resistant gloves to perform that task.”

Establish a leadership-driven safety culture

A safe workplace starts from the top. The company’s leadership needs to buy into its safety culture. “If your employees see leadership investing time and money into workplace safety, they’ll understand that it’s a priority for your company. And ultimately, they’ll make it a priority for themselves as well,” EHS Today writes.

Making your Smart Phone “Insurance Smart”

Using your smartphone to manage all of your insurance affairs is not only smart, it will put you ahead of the game if you need to access your insurance information or if you end up having a claim.

There is no better place than having all the information and tools on your smartphone because it is likely with you at all times. The best news is, the resources are there and putting in place what you need is a snap.

 

Insurance company app

The first thing you should do is to see if your insurance company has an application for your phone. These are available as a free added-value service.

The best part is that most of these apps have a number of capabilities. This includes nearly everything from accessing your policy information to submitting a claim, and everything else in between. 

For example, if you get into an accident, some apps include the capability to take photos and submit them along with a claims form you complete right on your phone. This means you can submit a claim within minutes after the accident happened, along with all the photos documenting the incident.

While reporting a claims incident is probably the most valuable advantage of these apps, another plus point is having access to your policy information anytime you need it.

What is your policy number? When does your policy renew? When is your next payment due? How much coverage do you have? All of this is right at the tip of your fingers

For example, if you need your policy number and information for your job or you are driving kids on a field trip and the school needs it, these apps make it easy to access all this information.

Even if your insurance company doesn’t have an app, the phone itself can be a valuable resource. For claims situations, the phone’s camera is just about the best mobile documentation tool you can have.

Also, if you are away from home, the ability to connect to the internet to look up resources such as the nearest towing company, the insurance company’s website, and of course your agent’s phone number, can be your greatest asset.

Another really useful benefit is that you can use the phone’s map to get directions to the closest place you may need to get to.

 

Off-the-shelf apps

In addition to insurance company apps, there are a number of other applications that are available.

One example is a home inventory app that will help you to set up and organize photos or video of your entire inventory. This can come in handy in the unfortunate event that you have a fire or are burglarized, as insurance companies will need an entire inventory to complete forms when processing the claim. 

Another example of a helpful app is a document storage and sharing app such as box.net or dropbox.com. These apps allow you to store and share documents and images on the cloud, which makes them easily accessible on your smartphone.

This basically means that you can upload and save images from a computer to the cloud, and then you will have access to those images from your smartphone, tablet or any other computer.

 

The takeaway

Investing a little initial time to download and set up apps and other resources to make your phone insurance-smart is well worth it. It will not only save you time when you need this information, it will allow you to be significantly ahead of the game – even possibly being able to provide enough evidence to prove you are not at fault in an auto accident.

You are 95% there by having a smartphone already, and the benefits are too great not to take that next step in using the insurance-ready resources that are available.  ACBI has our own, proprietary App.  If you have any questions about installing it, please contact our office. 

Five Smart Things You Can Do with Life Insurance Cash Value

If you have accumulated significant cash value within a permanent life insurance policy, congratulations. Your planning and decision to save within such a policy is likely paying off.

Thanks to the tremendous tax advantages that Congress has given to provide for incentives for families to protect themselves with life insurance, and to the protection aspect itself, a life policy is a great place to keep money.

That said, let’s look at some of the most common options for dealing with your policy’s cash value:

Stay put -Let life insurance be life insurance. Your money is growing tax-deferred within the policy. And in the event of your death, an amount much greater than your current cash value will generally pass to your heirs, tax-free.

That’s a significant benefit right there, and a compelling reason not just to let your policy grow, but to add more premium to it if you can.

Borrow against the death benefit – You can withdraw accumulated dividends, and then borrow against the rest of it, generally with no tax consequence, as long as you don’t completely surrender the policy.

Interest will accrue, but you don’t have to repay the loan yourself unless you want to. If you don’t pay it back, the insurance carrier will simply subtract the balance due from any death benefit they pay to your beneficiaries.

Cash out the policy altogether – This option lets you get substantially all the cash in your policy. However, you may be subject to capital gains tax to the extent your cash value exceeds the amount you paid in.

Exchange for another life insurance policy – If you choose, you can execute a Section 1035 exchange of one life policy for another, tax-free.

You may opt to do this if you find ongoing premiums at a new carrier are lower for some reason, or if you want some specific protections or riders you can’t get from your old carrier.

For example, you may be able to exchange a straight-ahead universal or whole life insurance policy for a policy that also provides a benefit in the event you need long-term care insurance.

Exchange for an annuity – You can also exchange a life insurance policy for an annuity, tax-free, under Section 1035.

You might choose to do this if you decide you no longer want the life insurance protection, but you do want regular and reliable income.

For example, if your beneficiaries are grown up and no longer rely on your life insurance death benefit, you may execute a 1035 exchange to a lifetime income annuity – maximizing your income over your expected lifetime, rather than paying a large death benefit.

You can choose a joint and survivor annuity to guarantee income to your spouse as well.

 

The takeaway

Life insurance is among the most flexible and powerful resources you can have in your portfolio as you grow more established. But to have all of the above options later in life, you must plan ahead now.

Talk to us today. We can help you develop a plan that meets your needs and financial objectives.

How to Keep Your Safety Meetings Engaging and Fun

Are your safety meetings a drag for your workers? Are they shifting in their seats as they sit through yet another presentation on slip and fall hazards?

Safety meetings are a key part of a safety awareness program and are one of the best methods to motivate workers to take safety out of the classroom and into the field. But they don’t have to be boring. You need to keep your employees’ attention and make sure they retain what you teach them, because their lives could depend on it.

But, it’s not easy to keep the meetings motivating and interesting to your workers. Here are some tips to keep your workers engaged while also making them more aware of safety in the workplace.

1. Have people with management experience organize your safety meetings. Too often, people leading the meetings are certified in safety, but have no experience in management. In other words, safety engineers may get too wonkish for your workers, who can then lose interest. To be most effective, have a manager conduct the meeting with the safety expert, who can answer the technical questions.
2. Build an agenda and circulate it before the meeting. Work with a small group. Focus on the specific. Define what success will mean. Create an expectation of value and participation. Anticipation is a powerful emotion.
3. Don’t look backward. Don’t make the meeting all about reliving one bad accident that happened in the workplace. Instead, review the accident or close call and what led up to it in the first place, so you can discuss with participants ways to make sure the incident is not repeated in the future.
4. Vary your techniques. Individuals learn differently. If you must use Power Point slides, use them sparingly with one idea or image per slide. Videos can be helpful in combination with discussions and games. Involving people helps them retain the message.
5. Tell stories and use real life examples. Have a story or an example to illustrate every point. The best safety meeting is just hanging out and talking about a subject and telling stories. Talking about the individuals involved in the story helps personalize it.
6. Use games and competitions, but be sure they have a purpose to either educate or inspire. Think “Safety Bingo” or “At-Risk Jeopardy.” You can hold competitions between teams of workers to see who knows the most about a certain safety issue that is typical in the workplace. Competition really brings out the best in people and helps them learn.
7. Have fun. Fun during safety meetings can help people feel like they are part of a team and create a sense of belonging. It also helps create a shared company culture. Try something unique, like a Shakespeare play that turns on safety.
8. Follow up. Reinforce the key points of the meeting by getting back to the participants. Send them articles, bullet lists, and links with resources, as appropriate, a few weeks after giving a safety talk.

 

The most successful safety meetings are well-planned, with management involvement  and documented.

 

Fresh ideas

Selecting a topic for a safety meeting is not always easy. Sometimes you may be wondering what to feature, especially when you have covered some topics many times. If you are fresh out of ideas, consider your topic by:

1. Reviewing new laws and industry standards,
2. Reviewing new company policies and procedures,
3. Evaluating existing safety hazards in the workplace,
4. Considering future industry events that may impact specific work procedures,
5. Asking your employees for issues they would like to see discussed at the meeting.

 

The best time to schedule a safety meeting is the start of the work shift. Before you start a safety meeting (on time), have the participants sign in.

 

Sample meeting agenda

• State the primary purpose of the meeting.
• Review old business from previous safety meetings.
• Ask for suggestions for future meetings.
• Present material for the current safety meeting, using visual aids, such as video, overhead transparencies, slides or printed handouts to stimulate the employees’ interest.
• Review or give a quiz to participants.
• Present an agenda for the next meeting.

 

The takeaway

You should do all you can to ensure your workers’ safety, and a key part of that is to train them properly in the safety issues that confront them at work.

Employees have often sat through several safety meetings, so the key to driving home the point effectively is to make them engaging, stimulating and above all, memorable.

Second-to-Die Life Insurance: Ideal for Estate Tax Planning and More

Federal estate tax generally applies when a person’s assets exceed a certain level, $11.4 million in 2019 and $11.58 million in 2020, at the time of death. The tax rate can be up to 40%. On top of that, some states also assess estate taxes.

That’s where survivorship life insurance – also called “second-to-die” life insurance – comes in. A second-to-die life insurance policy pays out an immediate cash benefit, tax-free, upon the death of the second spouse – not the first.

One common purpose for second-to-die life insurance is to provide a large amount of liquidity to pay estate taxes.

This can be important when a family’s wealth is tied up in illiquid assets that are difficult to sell. With a second-to-die life policy in place, the family or estate executors receive the tax-free cash death benefit right away, and can use that to pay estate taxes, rather than be forced to sell off assets like small businesses and real estate to raise the cash.

Otherwise, heirs may be forced to sell assets in the estate at heavily discounted prices, or at a very poor time in the market to sell, to meet the estate tax deadline.

Second-to-die policies also typically have lower premiums for a given death benefit than standard single-insured life insurance policies.

 

Use of trusts to move life insurance out of the taxable estate

Who owns the insurance policy itself? It may be prudent to set up an irrevocable trust, and have the trust own the life policy, rather than own it directly in your own name.

Otherwise, the life insurance policy would be considered part of the taxable estate, which would increase your tax bill. Setting up a properly constructed irrevocable trust will help you avoid this problem.

To set up the trust, speak with a qualified attorney and your tax advisor. Only a licensed attorney can write the documents required to set up the trust and ensure that it meets the requirements necessary for the assets in the trust to be considered separate from the taxable estate of the deceased.

Once the trust is established, the trust can then become the owner of the life insurance policy.

But, the applications of the second-to-die life insurance policy don’t stop there. Even if you don’t expect your estate to be big enough to be subject to federal estate tax, there are a number of other uses for this type of life insurance:

• Funding for buy-sell agreements, where married couples operate their interests in a company together.
• To provide for equal distribution of an illiquid estate to children. For example, one child may be able to run an inherited family business or farm, while other children may not have the interest or aptitude. Life insurance allows one child to receive the business and the others to receive cash, rather than forcing them all to liquidate a viable family-owned business.
• Funding for special-needs children, who will still require support even after the death of the second parent. The parents can set up a special-needs trust to support the child – now an adult in many cases. This provides for their support without compromising their ability to qualify for Medicaid, food stamps or other need-based assistance.
• To provide funding for the education of grandchildren.

 

There are other specialized applications where second-to-die life insurance works extremely well as a planning tool. To see if this type of policy would benefit your family, call us.

Coverage Disputes Over Online Attacks Grow

A federal court has ruled that an insurer’s professional liability policy must pay out $6 million for a company’s losses from a business e-mail compromise scam, even though the business lacked cyber coverage.

The ruling is part of a growing trend of businesses that haven’t purchased cyber insurance seeking coverage for cyber-related losses from other policies they do have, such as business liability, professional liability, and directors & officers (D&O) coverage.

Seeking coverage for cyber losses and for e-mail compromise scams from other than cyber policies is not often successful, and whether the insurer will pay out can depend on the nature of the loss.

In this latest case however, a judge in the U.S. District Court in the Southern District of New York ruled that American International Group must cover $5.9 million that a company had been duped out of by Chinese hackers in 2016.

AIG had disputed the claim saying that the professional liability policy the business had does not cover “criminal acts,” adding that it had never sold the company a cyber policy.

These disputes are becoming more common and you should pay attention to your policy exclusions, as well as consider cyber insurance, if you have assets that could be exposed through a cyber attack or fraud.

 

How was the business scammed?

SS&C Technologies received spoof e-mails that purported to come from one of the company’s clients, Tillage Commodities Fund, a commodities investment firm. The e-mails instructed the company to make six wire transfers to a bank account in Hong Kong.

The scammers masqueraded as Tillage employees with e-mail addresses that spelled “Tillage” as “Tilllage.”

But according to court documents, there were telltale warning signs that the e-mails were fishy:

• One e-mail asking SS&C to wire $3 million contained only the words “How was your weekend?” and then the wire transfer details.
• E-mails included grammatical errors and unusual syntax like “Let’s round up business today.”

 

Based on the above, staff at SS&C were not too diligent in looking out for possible

business e-mail compromise scams involving a third party hacker posing as someone else (a client, a vendor or even a manager or president of the targeted company) via e-mail and requesting a wire transfer into a bank account.

This type of scam, which cost organizations $300 million every month in 2018, according to the U.S. Department of Treasury, is covered by a standard cyber insurance policy.

SS&C did not have a cyber policy, so it sought coverage under its professional liability policy for the losses it sustained when transferring those funds. AIG did pay for SS&C’s legal defense costs after Tillage Commodities sued, but refused to cover the $5.9 million in stolen funds.

According to court documents, AIG’s policy included a clause that it would not provide indemnity coverage for losses arising from “dishonest, fraudulent or criminal acts.”

 

What this means for your firm

While this case worked out for the insured party, businesses should not rely on their non-cyber insurance policies to continue paying claims. As costs for cyber attacks like ransomware, malware, stolen data and business e-mail compromise scams grow, insurers are increasingly including clauses that explicitly exclude coverage for those risks.

If you have any important company assets in digital form and/or make or receive payments online, it would be wise to secure a cyber insurance policy.

If you don’t, you can try to seek coverage under other policies. That it may be difficult to obtain, but not impossible.

For example, if your company has D&O liability insurance and/or crime insurance, it may be able to seek coverage for any ransomware events since those policies will typically include coverage for kidnapping and ransom.

Some insurers are now providing – either deliberately or unintentionally – kidnapping and ransom coverage that applies to ransoms paid in response to cyber extortion. Among the events that these policies may consider cyber extortion are:

• Threats to poison a computer system with malware.
• Threats to change, damage or destroy programs or data stored on a system if the owner does not pay a ransom.

 

That said, many insurers who provide this coverage likely did not anticipate covering ransomware losses and have started changing their D&O and crime policies to specifically exclude ransomware.

Other insurers have added deductibles to the coverage, mirroring the terms of cyber policies, while others have capped the amount of business interruption coverage they will provide for cyber-extortion losses.

Getting All the Facts for Your Estate Planning

Estate planning laws change from one year to the next. Anyone who is doing estate planning for the first time in 2020 should especially be aware of the current laws, and it is also helpful for people who have planned before but are not sure about current rules to update their knowledge.

These are some of the most important tips to remember for 2020.

The threshold for lifetime gift and estate tax increased – In 2020, the amount has risen to $11.58 million for individuals; it is $22.8 million for couples. This is the maximum amount of gifting via money or asset transfer allowed during a person’s lifetime without tax consequences. The limit more than doubled in 2019 after tax legislation was signed into law by President Trump.

The annual gift exclusion amount is $15,000 – The annual federal gift tax exclusion allows you to give away up to $15,000 ($30,000 for couples) in 2019 to as many people as you wish, without those gifts counting against your $11.58 million lifetime exemption.

Some types of gifts are not subject to this limit. For example, gifts to a spouse, a medical fund or an education fund are not included. Also, education and medical gifts are not taxable. When making medical or education gifts, transfer the funds directly to the institution rather than sending them to an individual recipient.

Lifetime exclusion amount portability is still an option – Estate tax laws started allowing surviving spouses to use remaining lifetime exclusion amounts of their deceased spouses in 2011. In addition to simplifying estate planning, this gave couples a way to access exclusion amounts.

Couples can transfer up to $22.8 million of their taxable property to their heirs without estate tax penalties. However, transfers must be made by election in the estate.

The gift and estate tax effective rate is 40% – If your estate is under $11.8 million, congratulations: The federal estate tax will not apply to your estate. Any amounts over that threshold will be taxed at marginal tax rates that cap out at 40% for an estate worth more than $1 million over the cap.

Remember state gift tax laws – While the rules covered in the previous sections apply to federal laws, they do not apply to state laws. Many states have laws that require estate and gift taxes. If the taxes include lifetime exclusion limits, they will be lower than the federal limits.

To learn about individual state laws, discuss concerns with an agent. It is not possible to avoid these taxes in the states where they are required.

The takeaway

While estate planning is not something most people think about often, it should be considered every year – and when any major life changes happen.

A new addition to a family, a marriage, a death in the family, getting a major promotion and big health changes are just a few examples of times when estate plans should be reviewed and changed as necessary.

Neglecting these changes can cost a person’s heirs a considerable amount of time and money. Stay on top of these issues to keep plans running smoothly. Call us to learn more about optimizing estate planning.

Struggling for Survival: Businesses That Went Thin on Insurance

Imagine several small businesses located around the country. Each is well-established and profitable. Each of them bought business insurance – property, liability, automobile and workers’ compensation.

They told their agents they wanted the lowest possible price for coverage, and the agents came through. But they didn’t also take their agents’ recommendations to purchase additional coverage.

Unfortunately, they each suffered losses that threatened the very survival of their businesses. This is how they each got into such a fix:

The underwater restaurateur

The owner of a restaurant on the south shore of Long Island, NY, rejects his agent’s offer of flood insurance when he sees the price.

He relies on property insurance instead. Superstorm Sandy hits in 2012, and the restaurant has 38 inches of water in it, causing tens of thousands of dollars in damage.

That’s when he learns that his property insurance provides no coverage for flood losses.

 

Sofa seller on shaky ground

A furniture wholesaler in Modesto, California, buys an “all risks” property insurance policy at a low premium. 

One day, a major earthquake shakes his building, breaking internal water pipes, collapsing racks of furniture, and damaging several high-priced pieces and some forklifts.

He has to close until city engineers can certify the building as safe. The losses from water damage and breakage are well into six figures, not including the lost sales.

But, when he submits an insurance claim, he learns that his policy does not provide any coverage for earthquake damage.

 

Tech trouble

A Pennsylvania contractor does work for a national chain of retail stores. Employees in the contractor’s office receive e-mails from what they believe are trusted sources.

However, the e-mails contain malicious software that steals network passwords. The perpetrators of the e-mails use the stolen passwords to log in to the retailer’s networks.

Credit card and personal information records on 110 million people are exposed. The contractor never even considered buying cyber liability insurance.

 

Tragedy on the grounds

The owner of a small apartment complex in Kentucky considers himself well-insured with commercial general liability insurance limits of $1 million for each occurrence, and an umbrella policy with another $1 million limit.

One night, a 29-year-old woman visiting a friend is attacked in a dark parking lot. Because of her injuries, she will never be able to resume her practice as a hospital pediatrician. She sues the apartment complex for more than $20 million, including medical costs, pain and suffering, and lost future earnings. 

The owner finds himself significantly underinsured.

 

Small shop, big troubles

A Virginia tool and die manufacturer suffers a major fire. The owners carried $20,000 of business interruption insurance, assuming they could be back in business within a couple of months in case of a disruption.

However, the shop cannot produce anything without two special machines made by a German manufacturer. It will take six months for the replacements to be ordered, manufactured, shipped, installed and tested.

The shop’s lost revenue will far exceed the $20,000 of business interruption insurance.

 

The takeaway

All of these situations could have been avoided had the businesses not limited themselves to securing the minimal insurance they could get by on. They key is knowing what your risk is, and then seeing if it can be addressed with insurance.

There is certainly going to be a greater cost with securing the insurances a business truly needs, but the cost of not having necessary coverage can be much greater.

Worse yet, it can put you out of business. If you think you may have some blind spots, give us a call so we can go over your coverage with you.

 

The Future of Insurance with Smart Cars

With more cars connected to the web, helping us navigate, talking to other cars as we zoom down the road and sometimes even driving for us, it won’t be long until our autos can also make an insurance claim for us after an accident.

Consider that more cars are being built with sensors and technology that allows them to communicate with external parties. It’s not hard to imagine that the car could communicate immediately with emergency services and your insurance company if there is an impact.

The emergency authorities could be notified in real time with detailed information about the condition of the vehicle and the location of the accident.

Insurers are currently teaming up with tech firms and are developing programs that would prompt your vehicle to report immediately to your insurance company’s data center if it’s been in an accident, which could start the claim. These programs could also:

• Arrange for immediate roadside assistance.
• Arrange for a replacement vehicle or rental.
• Provide a data-rich first notice of loss to your insurance company.
• Assess the vehicle damage using onboard sensors and using predictive analytics to determine the cost of repairs.
• Create predictive estimates and parts requirements lists, and then send that information to dealers or parts procurement companies.
• Identify which shop is best positioned to repair the vehicle, based on shop scorecards and availability.
• Keep you informed of what is happening at all times, via mobile communications.

 

Right now, all of the technological parts of this puzzle are in place, and insurers are working with tech companies on apps to make it happen.

Pioneering partnerships

Insurance companies are also currently working to create partnerships with auto manufacturers to make all this a reality.

The most notable of these partnerships involves General Motor’s OnStar system, with the auto giant having secured relationships with about a half dozen auto insurance companies already in the US.

In Europe, BMW and Allianz have a similar partnership.

The evolution is ongoing, but in the next few years, as cars become smarter, it won’t be long until we see the next stage in development for car insurance that will make your life easier and also give you an added sense of security.