Your Federal Government in ActionEarlier in this decade, the Attorney General of New York, Eliot Spitzer, reached a class action settlement with one of the largest auto insurers in the nation. What did the carrier do wrong? When it paid a total loss on a policyholder’s vehicle, the company did not report it to the state as required. Instead, it repaired the vehicle and sold it without disclosing the extent the car had been damaged. It got caught and paid out $40 million to settle the suit. As a result of the settlement, those people who had purchased one of the vehicles were sent a revised title stamped “Salvage Vehicle.” They also received a check for a couple of hundred or a couple of thousand dollars, not nearly enough to compensate them for the diminution in value on their vehicle. They had been taken.
Another auto scam, rampant after Katrina, was “title washing.” Con artists picked up flooded cars for pennies on the dollar, hid the damage, and sold them to unsuspecting buyers at full price. If the car had a “branded” title, the car was simply retitled in a series of states with different standards; eventually the warning on the title was gone. With both of these scams, the buyer paid too much for a car, or even worse, purchased an unsafe vehicle.
A new national database sponsored by the Justice Department is designed to prevent auto scams by providing an accurate history of a vehicle that has been stolen, flooded, or totaled out. The National Motor Vehicle Title Information System (NMVTIS) will receive reports from state motor vehicle departments, insurance carriers, and auto dealers and salvagers. The system was created as part of the Anti-Car Theft Act of 1992 but never got activated because of opposition from the insurance companies, businesses that issue car-history reports, and car dealers and junk yard owners. It is finally up and running but not fully operational. When it is complete, the information reported by one party will be almost instantly available to consumers. There will be a small charge for the service as it is designed to be self-sufficient. It is projected to save car buyers in this country over $11 billion dollars a year lost to car scams. Check out the website at www.nmvtis.gov. It will not address all car scams so caveat emptor prevails.
A Sad FarewellAnother insurance company is going silently into that dark night. This time it is Wausau Insurance Company. This is the company that issued the nation’s first Workers Compensation policy in 1911. The insured was Mosinee Paper Company; that insured stayed with Wausau for over 90 years. You may remember Wausau from the award-winning commercials they ran nationally a couple of decades ago. Those commercials put Wausau on the map.
Wausau was an industry leader in Workers Compensation but got into trouble in the 1980’s writing long-tail professional liability. It was rescued by Nationwide and then sold to Liberty Mutual in 1999. Liberty has now decided to “retire the brand” transferring existing accounts to Liberty paper with Gallagher acting as the primary broker. Wausau has always been a formidable competitor on middle market accounts and will be missed, especially in the Wisconsin market. Good night fair Wausau, to us you were much more merely than a brand.
Words of Wisdom“A recession reveals what the auditor missed.”
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