Following a few simple tips and taking these measures will ensure that you are getting the lowest rates possible on your auto insurance policy.
1. Avoid more Accidents, Pay Close Attention at Intersections. Auto accidents involving seniors often occur at intersections. Make sure to look ahead if you plan to quickly change lanes after an intersection. Pay attention to protected left turn lanes with their own arrows, and always keep your tires pointed straight ahead when stopped, so that a rear-end accident doesn't push you into oncoming traffic.
2. Follow the flow of traffic, Drive at the at or near the speed limit. Driving too slowly can be just as dangerous as speeding, especially when entering or exiting interstates or freeways. It can also trigger dangerous "road rage" in less patient drivers. You don't have to be Mario Andretti, but keeping to the right and following the flow of traffic is the safest bet.
3. Many violations include failure to yield right-of-way, improper turning or incorrect lane changes, so keep current on the traffic laws relating to new traffic designs.
4. Sit high enough in your seat so that you can see at least 10 feet in front of your car, advises the National Highway Traffic Safety Administration. If your car seat does not adjust to allow this, add a cushion. This will make it easier to see pedestrians and bike riders, and reduce problems from oncoming headlight glare at night.
5. Do not wear sunglasses or tinted glasses when driving at night. For many older drivers, night vision is reduced, so safety dictates not driving at twilight or after dark.
6. Make sure you learn how to operate a New Car. Things like Anti-lock brakes, for example operate differently in slippery situations. If you have never driven a car with anti-lock brakes, sure to get training on proper use.
7. Senior drivers can refresh their skills and knowledge -- and get a discount on auto insurance in many states -- by taking a refresher driving course, such as the eight-hour "55 Alive" course offered by AARP. More than two-thirds of states mandate auto insurance policy discounts for such courses, and many insurance companies offer the discounts voluntarily.
8. Look for cars with rear-view mirrors that automatically dim and filter out headlight glare.
9. Air bag technology has become more advanced, with sensors that deploy air bags based on the weight of the occupant, reducing air-bag-related injuries. Some new cars also have side air bags in the seats or door frame that offer better protection.
10. Consider fit and comfort in your new car. Seat belts that comfortably fit over your shoulder and low on your lap will keep you safer. Automatic transmission, power steering and power brakes require less physical effort.
11. Last but definitely not least, Check to see which companies offer specific 'Senior Discounts' While shopping around for the best auto insurance rates is important, which insurance company you choose might depend on how they treat senior drivers. You'll get their best rates if you're healthy and drive a safe, modern vehicle.
Reprints of this article are allowed (and encouraged) for your site or newsletter with inclusion of a simple link to http://www.hometownquotes.com.
Saturday, January 2, 2010
Eleven Money-Saving Auto Insurance Tips for Senior Drivers
Free Money Saving Auto Insurance Tips
Our money saving auto insurance tips were written for one reason - To Save You Money on your next auto insurance policy. Since in most states you are required by law to purchase a minimum amount of liability coverage we've looked for ways to save you money. Additionally many people want more than just the bare minimum in order to provide themselves with adequate protection.
The top two biggest money saving auto insurance tips are to first shop around. There are numerous providers of insurance and generally speaking you can save a great deal of money on your policy if you take the time to find the right provider.
The second biggest tip to lower your rates is to simply raise your deductable. In some cases you can reduce your annual premium by 10 percent or more if you increase your deductible by a few hundred dollars. USE CAUTION HERE: You want to make sure you can actually afford the amount that you raise your deductible to or you're no better off then before.
Additional tips include eliminating certain types of coverage from your current policy and reducing the amount of coverage you currently have. Generally this is up to each individual based on thier needs, wants and desires. You may want to consult an insurance agent before making any drastic changes to your current policy.
Other factors raising the cost of your policy include the amount of mileage you drive annually and the type of vehicle you own and operate.
Did you also know that where you live can determine rates and keeping your car in a garage can lower your rates. Cars parked in garages are less likely to be stolen, vandalized, or struck by other vehicles. Using a garage to store your car may entitle you to a slight premium reduction.
If you have multiple cars and drivers then you could qualify for a multifamily discount. Sometimes your children's insurance premium can be lowered based on their school grade point average.
Other discounts may be available if you meet certain criteria. Examples may include discounts for taking a defensive driving course, being a AAA member or staying with the same auto insurance company for a number of years. These discounts vary by company.
Finally try using an anti-theft device. This helps to reduce your insurance cost.
Thanks for taking the time to read our money saving auto insurance tips. We hope our free tips and save you some of your hard earned cash.
10 Crucial and Surprising Steps to Build Trust in a Relationship
1. Be predictable.
When do seeds of suspicion emerge? When one begins to think, What's up? Why is he doing that? He's never done that before. That is so unlike him. He loses 30 pounds, buys a new wardrobe and comes home late from work. He changes his patterns. His behavior becomes unpredictable. You get the picture? Any movement away from predictable behavior can become suspect and trust can deteriorate.
Focus on acting predictably if you need to build trust. Be consistent in what you do.
This doesn't mean you must be boring. If there is a twinkle in your eye and a dose of spontaneity every so often, for goodness sakes be spontaneous and fun loving. But, be spontaneous consistently! Be true to who you have always been and be that consistently, whoever you tend to be!
2. Inform your significant other when you become "unpredictable."
No one goes through life the same person. We all make shifts and changes. Frankly sometimes we may be fairly clueless about what is happening and where we are going. Those times may be very intense and we do some silly things or make some downright dumb decisions. Life can get very squirrelly and unpredictable. (I have a favorite phrase: Gold is refined through intense heat.) Growth in an individual, marriage or family often is accompanied by a little chaos.
Welcome these shifts, for there is a part of you searching for something better/different/richer/deeper, but for heaven's sake, inform your partner of what you are experiencing. Say, "I really don't know what is going on in me right now, but I'm moving in a different direction. Be a little patient with me while I figure this out. I might do some silly things, but my intent is not to harm you or scare you. Accept some of my wondering and wandering and please be there for me? I may need to run some of this by you every so often!"
3. Make sure your words match the message.
Mean what you say and say what you mean. When your partner hears one thing in your words but your tone of voice, body language and facial expressions are really saying something else, you open the relationship to some crazy making days. Which message is she to believe? This can waste a tremendous amount of energy and she learns not to trust part of what you are saying.
Here's a very simple but common example. You are getting ready to go to a formal dinner. Your wife comes to you and says, "How do I look?" (And she's wearing a dress you don't particularly like and her hair is pulled back in a way that turns you off.)
Not to spoil the evening you enthusiastically say, "You look great." You don't really mean it and a part of her knows you really don't mean it. But, you leave it at that.
This might not seem like a big deal - we all have done something similar - but if trust is shaky to begin with, it is even shakier now.
Here's how to match the words with the nonverbal: "I think you are a beautiful person. I want you to know that. I love you dearly and it will be wonderful to have you by my side tonight. Others will see your beauty. (As you say this, you look into her eyes as you put your hands around her waist.)
She's not concerned so much with how she looks but is expressing a need for affirmation. She's not talking about her dress or hair, but about wanting to know the evening is going to go just fine. You respond to the real message.
You can take this one step further, if you like. At some point you might bring up her need for affirmation and talk about that. Ask her is there is anything you can say or do so that need is met.
Trust is awareness of the intent beneath the obvious message and responding to that!
4. Believe the other person is competent.
I hear this phrase very often: "But, I don't want to hurt him." A couple things are at play here. First, she may not have the skill of confronting the other with the truth in a way that brings reconciliation and understanding. She believes truth telling is destructive or entails some sort of drama. Neither is true. The truth is never destructive and can be conveyed in loving ways. (With that said, what we believe to be the truth may indeed be a distorted perception that fits our personal needs.)
Or, she may see the other person as a wimp; someone she believes cannot handle rigorous personal confrontation. She doesn't trust that the other person has the internal strength or stamina or skills to be in a relationship of mutual respect and equality. The other person picks up on this mistrust and does what he does (feigns inadequacy and incompetence) to avoid the personal confrontation as well. A dance is acted out.
Believe and know in your heart that the other person, somewhere and somehow, beneath the games, has the internal strength and capacity to handle anything. Such trust builds trust in the other person and begins to pervade the relationship. "Hey, she thinks I can handle this! Hmmmm, this is mighty good! I CAN engage her and be truly intimate!"
5. Be very very careful of keeping secrets.
If he knows there is an elephant in the room and doesn't talk about it, the elephant takes up tremendous space in the relationship. It takes energy for him to walk around it. She may not see the elephant but knows he is bending his neck to look around something. She will be curious, mildly disturbed, have feelings but no words to wrap around them, might wonder if something is wrong with her or struggle with trusting her intuition (her intuition KNOWS an elephant is there.) And, when we can't trust the messages that come from within us, we find it very difficult to trust the messages of the other person.
Secrets demand tremendous energy and erode trust. The relationship is doomed never to experience wall-banging intimacy. This is why extramarital affairs are so damaging. She is not so much concerned about him having sex with someone else as she is about the betrayal, lack of trust, the secrets and deception that are crazy making and energy draining.
Now, please. I'm not saying that you sit your partner down and divulge the 23 secrets of your illicit past behaviors. If you have resolved those, i.e. forgiven yourself, understand those behaviors, learned from them and were able to use them to make the internal shifts necessary for your personal development, they do not qualify as an elephant. Hopefully, in the course of growing intimacy in your relationship you may want to share some of those events as you disclose to your partner where you were and where you are now. You do so without emotional charge.
However, if a secret takes up room, i.e. still has an emotional charge and holds you back from disclosing more and more of yourself in the growing stages of intimacy, you have a problem that needs to be addressed with your partner.
6. Let YOUR needs be known - loudly.
Be a little - no, be a lot - self-centered. (Be self-centered, but not selfish!)
Here's a problem I run into almost every day. He is backing away (perhaps attached to work, another person, etc.). She feels the trust and intimacy eroding, is scared and wants to "win him back." So she begins an all out effort to "work on the marriage." She invites him to do so as well. He may reluctantly agree. She blasts full throttle ahead trying to "be nice" and meet every need he ever said he had. She's going to "fill his tank with goodies."
Doesn't work. Her eyes are riveted on him. He feels "smothered" or maybe even resentful: "Why is she doing this NOW!" She's hopeful, but eventually that turns to resentment. Her underlying motive - if I meet his needs, he will feel good and meet mine - just doesn't work. It's perceived as manipulation, which it is. Of course, he doesn't say anything. After all, how do you get angry with someone who is so "nice and caring?"
Trust disintegrates under a blanket of quiet niceties.
Start with your eyes focused on YOU. What do YOU need? Explore your personal need system. Dig beneath the surface. And then say to him: "I need?x, y and z. I would like to talk to you about them. I would like us to work out a way so my needs are met. Are you open to that?"
He is empowered to say yes or no. Or, he may say, "What about my needs?" You respond, "I am very interested in hearing what is important to you, certainly."
Have you ever been around someone who stated clearly what they needed/wanted?
Didn't you respect that person?
Because you knew where he stood, and therefore where you stood, didn't that interaction move toward a trusting relationship?
7. State who YOU are - loudly.
It is very sad to see those in relationships of emotional investment hold back from letting the other person know who they really are.
You build trust in a relationship by entrusting your SELF to the other person.
This sounds easy but I find it difficult for most to pull off. Most of us have a difficult time declaring our SELF. For one thing, if you're like most of us, you haven't given much thought to what it is that makes YOU truly YOU. Don't you feel like you glide through life on autopilot, focusing on tasks, goals, accomplishments, problems and the external realities?
Don't you tend to focus on those things out there or that person out there? You're concerned about what he is thinking, how he is responding to you, whether he likes you, whether he will be an obstacle and where he will fit in your life?
Your conversations may be pleasant but fairly superficial and bluntly, boringly inane. You converse about things/relationships/events out there. You are reluctant to share your thoughts, values, and impressions or take a stand. This doesn't destroy trust. But it doesn't create it either.
And, if you do take a stand it may serve the purpose of protecting you or entrenching you as you react against someone. This more often than not creates trust barriers.
Take some time to reflect on your standards. What are your standards for a relationship? What standards do you hold for yourself? What do you order your life around? What are the 4 top values in your life? What are some themes that you live by? What are you known for?
And then?begin letting significant people in your life know.
They will respect you. They will know you more deeply. They will thank you for the opportunity to know you. They will see you as a person of character.
They will trust you. They can count on you. They know exactly what is behind and within you.
8. Learn to say NO!
Sometimes you need to say NO! Often it is crucial to say NO!
Saying NO sets boundaries around you that protects you from being hurt or venturing into territory that will be destructive to your heart and soul. You draw a line. You stop tolerating that which drains energy and makes you less than YOU. You refuse to allow the destructive behaviors of others to destroy you. You build a moat around the core of your life.
You do this by informing the other person of what they are doing. You request they stop. If they don't stop, you demand they stop. If they don't stop you walk away without a snide remark, eye-roll or comment.
To some this seems harsh, but saying NO is RESPECTED.
Fear is the basis of mistrust. If you fear that someone will hurt you and believe you have no recourse but to endure that hurt, fear will prevail. How can you trust when you are in fear?
Saying NO, protecting yourself, sends a message to the other person that you will not live in fear. This usually triggers a response of respect from the other person. After all, if you can protect yourself and refuse subjugation to that which is destructive, will not the other person come to trust you and see you as a person who just might protect him/her from harm as well?
9. Charge Neutral.
When your significant other expresses something powerfully, charge neutral.
Most of us are afraid of strong feelings or points of contention in a relationship. I commonly hear people respond by defending themselves (to a perceived attack), explaining themselves, counter-attacking, shutting down, or walking away. Of course, the relationship remains stuck in this quagmire of mistrust and fear.
Rather than reacting and having your feelings flowing all over the place or shutting down, practice charging neutral.
Communicate calmness, not only in your tone of voice but also in how you carry your body. Don't speak with a charge to your voice. Control your voice! Say what you must say, state the truth and do it directly and calmly.
You can do this, once you master your fears. It will dramatically change the flow of the relationship.
You will be able to point out something big, without making a big deal out of it. You will be in control of you. This not only feels great, but your partner trusts that you won't fly or fall apart.
You will experience your personal power. This makes you very attractive. Don't people really trust someone who knows their personal power and how to use it for the welfare of themselves and others?
Your partner will love the fact that she can trust you consistently to operate from your "quiet center," remain engaged, not back down and speak the truth with conviction and calmness.
10. Dig into the dirt.
Relationships of emotional investment, by their nature, bring trials, tribulations, fears, chaos, turmoil, change, stretching and growth. They become the grist from which your life is shaped and formed.
Be fearless when faced with turmoil, upset, crisis, questions, and fears. When the time is right, seek them out. Move toward the frightening unknown. Dig into the dirt of your relationship and uncover the treasures. Do you really TRUST that this can happen?
The purpose of your relationship is not to make you happy. Do you realize this? Happiness may be an outcome, but your other is given to you to move you to where you really want to be.
Obstacles, trials and moments of pain are given as lessons on which you intentionally write the script of your life individually and together. Embrace the difficult. Trust that in this embracing you will find more of your true self.
Trust that you are given the resources and capacity to face what you and your significant other are to face.
Once you are able to believe and trust these ultimate purposes, trusting your significant other will be that much more easy.
What Went Wrong? When Relationships Go From Hot To Cold
Everything was great.
We had been dating for 6 months. We shared the same interests, felt very at ease together, had (often) discussed future plans and had even spent some of the holidays together. Our relationship seemed right on track and just right in general.
Then, without warning, he said he "needs some time to think and figure things out." He stopped calling and rarely returned my calls. When he did, I was often met with silence on the other end of the line. When I asked "what happened", I just got a verbal run around of excuses about how busy he is and/or how much stress he is under right now.
What happened? What did I do? I don't know what to think.
Does the above scenario sound at all familiar? If so, you can relate to being confused and stunned over the sudden change in a boyfriend's/girlfriend's behavior.
Now think about this - What if your relationship wasn't what you thought it was? What if unspoken issues had existed all along? What if there were signs you chose to ignore or just didn't see? Are any of these possible?
Probably.
This sudden change in a couple's relationship is reported quite a bit by individuals who have just broken up with a significant other. Unfortunately, it leaves the person who has been "dumped" with feelings of low self-esteem, regret, inadequacy and anger.
There is often no real closure, as the couple is never able (willing) to talk through what went wrong or was never right with their relationship.
So, how can you know what the problem was and hope to avoid a repeat of this hurtful experience? You can do this by examining your failed relationship and gaining insight and understanding about what just wasn't right between you.
In order to assist you with this; I am providing a basic framework of the relationship stages a couple must pass through TOGETHER in order to get to a place of shared intimacy and commitment. If either person's feelings change before, during or after one of these stages; it is not necessarily the "fault" of the other individual. It is simply a statement about the individuals' rightness (or not) for each other. It is also a reflection of each individual's relationship readiness and ability to handle long-term, committed intimacy.
How an individual handles their changing feelings and resultant behavior toward the other is a subject for another article.
Relationships have stages. We have all read articles and books by authors who have come up with their own unique number or names for these. I will try to take a very basic approach to this and keep it simple and as universal as possible.
Attraction
This is the first stage. It is physical, intellectual and emotional - on a very surface level. Girl sees boy and vice versa. They flirt, talk and get a very basic sense of the other. They are usually responding to a physical pull. He/she is cute, funny, charming, interesting to talk to, etc.
Without attraction, first dates wouldn't happen. It can therefore be assumed that the other person finds us attractive if we have gotten to a first date.
In a way, this is the easy one. We are unknowns to each other. Things progress from this point or they do not. Hurt feelings are minimal. We usually chalk up rejection to; "I'm not his type". There is no need to analyze or wonder what went wrong.
If both people feel a strong enough level of attraction continues to exist after a few dates, they usually move along to stage two. However, if one finds the other has unattractive characteristics or behaviors, this can lead to an abrupt change in the relationship.
Remember, these behaviors or characteristics would be ones that would manifest in the very early stage of dating. Some examples: frequently late, never offers to pay, dresses or grooms sloppily, rude to waitress, etc.
Romantic Relating
In this second stage, couples begin to test out the idea of themselves as a unit. Dating is no longer brand new. It is more comfortable and predictable. Sharing romantic dinners and exciting special interests are typical dates during this new and fun time in a growing relationship.
During this stage, flowers are given for no special reason and loving cards are slipped back and forth with words like "thinking of you". It's a happy carefree time, when lovers tend to idealize, romanticize and overlook that which can be right in front of them. The relationship seems effortless and spontaneous. Affection is shared openly and frequently. One's partner seems perfect. There is rarely conflict during this period. The partners often share the unrealistic belief that their relationship is so special and unique that it will always stay this way.
This stage can last from three or four months up to more than a year. It is actually the shortest stage that any long-term relationship goes through. It is also the one we wish we could hold on to forever and long for when it is gone. This is the stage that love poems speak about. It is also believed (falsely) by many that this is what long-term committed love will always be like.
Many relationships begin to stumble at the end of this period. For that is when reality begins to set in. As partners begin to experience some disagreement, conflict and/or shared challenges- the relationship shifts as do the dynamics between the partners.
Though many relationships move past this stage, a number do not. Why? There are many reasons. These can include:
* lack of readiness for the challenges of the next stage
* issues with commitment and fidelity
* immature beliefs about what relationships should be
* being stuck on an idealized, romanticized notion of love
If one of the partners is not ready for a less than perfect and more demanding stage of love, they will exhibit this in their behavior, language and overall level of openness and availability towards the other.
This is when the couple begins to think more seriously of a future with each other. The focus tends to be; how well do we get along, do we share similar interests and do I want to date this person exclusively?
Growth Through Negotiation
This is a very challenging and growing time in all relationship building. Reality comes into play as the couple settles into the comfort and predictability of their togetherness. Little issues can become blown-up into large conflicts. The individuals begin to compete for their share of control and their place in this growing union. Differences can become highlighted instead of minimized.
This is often the period when couples experience their first fight. Hurt feelings can occur as that once loving and completely accepting other person airs a criticism or voices annoyance or concern. Often, the individuals believe it is the other person who needs to change.
This is where the need for (or lack of) communication, problem-solving and negotiating skills becomes apparent. For without an adequate measure of these, disagreements can break down into screaming matches where insults and recriminations are fired like missiles.
If the individuals can listen, be supportive of each other's feelings, compromise and not lay blame, they have a good chance of working through this stage and achieving a true intimacy. This does not mean they will share all the same beliefs and opinions or that they will necessarily even like the other's view. However, having and showing respect is a cornerstone of a healthy relationship.
Not only will relationships fail without these relationship-building strengths, they can also abruptly end if one of the partners decides that they don't feel the same way about this person in their less than idealized state. The reality may not be to their liking or just something they are not ready for in general. Either way, they will pull back, present differently or disappear without warning. How they handle their changing feelings is further information about their level of relationship readiness and maturity in general.
Intimacy
Intimacy is the reward that is gained when a couple has successfully worked through the difficult last stage of negotiation. It is almost like a new coming together with much greater self (and other) awareness. This new information can work to solidify the union or give one of both individuals enough new information about the other to require a reassessment of their desire to remain together.
Each person looks at the other in their (naked) state and asks; "is this the person I want to be with"? Here their individual differences are highlighted. The early romantic haze has cleared. What they have to offer to each other and to a future life together comes into play.
This is a time when couples often begin to contemplate each other's attributes in a more practical way. They look at the other's strengths and weaknesses. They evaluate each other's potential as a future spouse, parent, provider, caregiver, partner, etc.
Relationships can be tested more during this time. Infidelity is one dysfunctional way that some individuals do this. Often, this leads to the end of the relationship.
When differences can be seen, aired and accepted, the couple has a good chance of moving on together from this place. Essentially, they have decided they want to be with the other, warts and all.
When the behavior of one or both partners change, it is generally because they have made a conscious or unconscious decision regarding the wrongness of the other for them or for the type of relationship they seek.
Commitment
This is the final stage of relationship building. Once individuals have reached this place, they are ready to cement their bond. While much growth and work will lay ahead in a future life together, they are ready to begin this life soon.
New challenges arise during each stage, and will happen here as well. However, if the couple has successfully worked through the previous stages, they should have many of the tools they need.
The external problems and pressures that come with life will test their resolve and commitment over the years. They may need to reassess, re-negotiate and renew their feelings and commitment. Fortunately, they will be in possession of the basic tools required.
If they choose well to begin with, they should be successful.
As you evaluate your failed relationship, note the stage you were in when the change occurred. Chances are that the necessary level of readiness and maturity was not present in one or both of you. Perhaps one of you decided that this is not the kind of partner or relationship I am seeking.
This new information and insight should help you to choose a future partner who is better suited to you and desirous of the same kind of relationship that you are.
What Planet Is Your Relationship On?
If men are from Mars and women are from Venus, what planet is their relationship on?
John Gray's bestselling book used a planetary analogy to understand relationships. It proved very popular as a way of understanding and interpreting the behaviour patterns that men and women display.
Astrology also uses planets to understand and predict character traits and behaviour patterns. It is an extremely effective tool for analysing relationships. Venus and Mars are not the only planets looked at, although they are important. In total there are ten planets to consider and 12 different signs that each planet could be in. This gives a very high number of possible combinations, which can lead to an insightful and detailed analsis.
One of the reasons astrology is such a useful tool is its neutrality. By describing a relationship astrologically, a distance can be achieved. Difficulties then become a shared problem which could be resolved through co-operation. Identifying the problem as 'We have a Mars opposition' is a much more neutral way of saying 'We argue all the time' or even ' Why do you always argue with me?' What's more, astrology can even help to identify the timing of both good and difficult times. Knowing that things will get better can dissolve a lot of tension.
In any relationship there will be combinations of harmonious and challenging aspects, but there will often be a way of relating to each other that seems to work most of the time. It becomes a habitual way of interacting, the line of least resistance. Sometimes one particular planet provides a dominant theme for the relationship. In effect, it is the planet on which the relationship is based.
It could be the moon, signifying that emotional rapport and domestic compatability are the foundation on which it is based. Or it could be Mercury,indicating that both partners are on the same wavelength, can communicate well with each other and enjoy chatting or even writing to each other. Or perhaps it is the Sun, suggesting compatability at a deep level and that fundamental values and ways of approaching life are in harmony.
Only three examples have been given here, but there are lots more. It can get very complex, but the fundamental principles are simple and can be grasped by anybody sufficiently motivated to understand them.
If you want to understand the dynamic of a relationship, you should first try to understand each person as an individual. Astrology is a great way of doing this. It can help identify what matters most to you. If you are fundamentally an emotional person, emotional rapport will be the most important aspect of any relationship you have. A relationship that is great in lots of other ways, but does not meet this need, will ultimately be unfulfilling. Equally, you may tolerate all kinds of other difficulties if you are in a relationship where you feel a deep emotional connection. Discovering which planet you want the relationship to be on, is crucial. A great relationship on Venus may be fine for some people,but you might personally be happier with one based on the moon.
Astrology is a fascinating subject. After all, what could be more interesting than studying yourself, the person you love and the relationship that you have? It's worth investing some time to understand it yourself, rather than relying on other people's predictions and interpretations. It can be easy to place too much faith in an expert interpretation. There are some very experienced astrologers out there, but you are the most qualified person to understand yourself and your relationship. Astrology gives you the tools to do so in a neutral way, and it's also great fun. So, if you do feel inspired to look at it in more depth, be sure to enjoy yourself whatever planet you are on.
Monday, April 13, 2009
INSURANCE UNDERWRITING PROCESS
The underwriting process is associated with insurance, the same way it is associated with other financial services. It is all about measuring the chances of risks as also the premium needed to cover that risk.
What is the role of an underwriter?
The underwriter's job is to scale the risks and probabilities that may refer to their prospective clients. They are needed to ascertain the worth of your insurance coverage. They would also help you to decide the amount of premium that you need to pay.
The processes of underwriting & segmenting the insured risks may be clear, only after studying the pool of risks associated with them. This is also essential in order to understand the uneven distribution of risks. The underwriting guidelines defined by an insurance company may vary towards deciding the fate of an insurance application. The underwriter may choose to reject an application or may also choose to offer a quote referring the different premium levels. This might also indicate circumstances that involve a variety of exclusions, which mandate certain conditions towards the payment of claims. The underwriting process necessitates prospective clients to pay their premiums to that extent as is required by the insurer towards meeting the unforeseen risks associated with such individuals, in the event that they might occur. Hence, the procedure of identifying risks & explaining them to a client becomes the sole obligation of the insurer.
At times, the insured might just succeed in making the insurer see no reason towards properly justifying the associated risks, thereby inviting a higher expectancy of losses arising out of it. Under such circumstances, the insurer might just need to charge higher premium rates in order to fill the lower returns & save him from insolvency. The insurance companies are subject to huge risks worth billions every year in terms of financial losses arising out of protecting an insured person or a group. Underwriters are there fore needed to focus on every minute detail while arriving at a premium rate for a certain individual or even at offering a policy for that purpose. While doing these the underwriters would also need to keep a track of the steps and measures undertaken by their competitors towards achieving their goals, failing which they might lose their business to their rivals.
The different areas of operation:
The underwriters would certainly like to focus at any of the main branches of insurance namely – life, property & casualty and health.
It is common for the life & health underwriters to specialize at group or independent policies depending on their areas of operation and qualification. In order to decide about the functions of a group policy, the group underwriters would often resort to representatives of the union or the employer. For the property and casualty underwriters, it is quite normal that their operational areas would depend on the nature of insurance they are associated with (eg. personal or commercial insurance), as also the nature of the risk involved. The group underwriter has to keep a check on the overall risk, so that it never crosses the limits. This is dependent on his study of the group patterns. In contrast, the casualty underwriter has to study the contribution of the individual group members and then forward his feedbacks based on his report. With the advent of the modern computers, it has become easier for the underwriters to figure out the different risk factors associated with a prospect & then arrive at a quicker decision regarding their approval of a policy. This fast-track decision-making process is contributing largely towards the overall growth of the capital fund of the modern insurers.
Beware the Dreaded 'Make-Whole': Private Placement Insurance Company Debt.
You're a CFO. Times are good, and you receive an offer you can't refuse - 7-10 year, $100 million term financing. No bothersome collateral. A relatively low fixed-rate coupon for such a maturity - call it 5.50 percent. A pre-negotiated term sheet leading to reduced lawyer haggling and, ultimately, reduced transaction costs. Sounds good, right?
These are the earmarks of the traditional private placement debt market - a corporate debt market provided by U.S. insurance companies that indeed constitutes one of the true cornerstones of American finance. And over the years, many CFOs across the country have in fact signed on the dotted line and have tapped this important market for their corporate debt.
For many, it has been absolutely the correct decision. The private placement insurance company debt markets do provide relatively low-cost, long-term, unsecured financing. However, if the economy suffers, corporate profits swoon and lenders start instituting defaults, a two-word phrase can be heard ringing down the halls of corporate America - "make-whole."
The Refi Pain
You're a CFO, and now times are not so good. Your company is no longer investment grade, and is in default under the financial covenants contained in the private placement debt agreement pursuant to which these long-term, fixed-rate unsecured notes were issued. You've missed your numbers and missed your covenants. The insurance company lenders that bought these notes have told you that they want "out." They demand that you refinance the notes. And, adding insult to injury, they demand payment of a prepayment premium of sorts - the dreaded "make-whole"
"Make-whole" may not sound so bad, but, unfortunately, the "make-whole" amount can be a really, really, big number - a devastatingly large number. For example, for some recent refinancing deals ranging between $90 million to $200 million, the make-whole amount ranged from $13 million to $22 million. Ouch! For some perspective, imagine if you had to pay a $75,000 prepayment premium on your $500,000 home mortgage - it's about the equivalent.
Defining ‘Make-Whole'
Make-whole is the term used to describe the amount over par that the issuer of notes is required to pay in the event the issuer desires to, or, as is quite often these days, is required to, prepay or refinance the notes prior to their stated maturity.
The make-whole amount is calculated by determining the present value of the interest that would have accrued on the notes through their originally stated maturity, all as if the notes had not been prepaid. The present value calculation uses a discount factor, referred to as the "reinvestment yield," equal to the treasury rate corresponding to the remaining maturity of the notes (plus, typically, 25 or 50 basis points).
The reinvestment yield represents what the investor can now theoretically earn by reinvesting the prepaid principal in a relatively safe investment. Not surprisingly, given its name, the make-whole feature is designed to give the investor the benefit of its economic bargain as if the notes were held to maturity and to make the investor whole, notwithstanding the early prepayment.
Further, make-whole is payable not only when the issuer voluntarily prepays the notes for its own internal reasons, such as a recapitalization of its balance sheet or a refinancing to reduce interest expense. Rather, insurance companies insist upon - and private placement loan documents will invariably provide for - make-whole even when it is the insurance companies themselves that call a default and force the issuer to refinance them out.
It is this "forced refinancing" scenario that is most disturbing to CFOs. Paying a premium in the case of a voluntary prepayment is one thing. After all, it is the issuer that is depriving the noteholder of the benefit of the remaining interest-payment stream. But it is quite another matter, from the perspective of the CFO, if his or her company is being forced to refinance the notes because the insurance companies are not willing to waive covenant violations beyond the control of the issuer. It is the payment of a make-whole premium in this context that is most distressing.
Insurance companies will argue adamantly that such yield protection is the price of a relatively low, long-term, fixed rate. Borrowers will argue that the insurance company lenders should not be compensated for the entire portion of the interest they would have received, since they are not making an outlay of cash, and therefore an outlay of risk, during this entire time. But regardless of who is right and who is wrong, it is the CFO that must account for this hit to net income.
Pre-Closing Considerations for the CFO
Before signing onto the issuance of private placement insurance company debt, CFOs should understand the potential extraordinary impact of make-whole in an early refinancing context.
- First, understand the amounts involved. Run some projections assuming prepayment in the first years of the deal, using your best estimates as to where interest rates will be at those times. Understand the extent of the make-whole risk your company is undertaking.
- Second, like any financing, obtain the most lenient financial ratio covenant package you can negotiate. The longer your company stays out of default, the longer you can avoid the dreaded forced refi scenario and reduce or eliminate the dreaded make-whole itself.
- Third, proceed cautiously if your company is especially cyclical or is in an industry sector that could face a downturn. Otherwise, basically sound but cyclical businesses can often stumble on the financial covenants, resulting in a potential forced refinancing.
- Fourth, because make-whole is payable in a voluntary prepayment context as well, consider whether there are any potential transactions or events on even the mid-term horizon that could fundamentally change the company's corporate structure or character. Examples include a potential change of control, a significant equity issuance or other recapitalization or a significant acquisition or divesture. If such events are likely, either build them into the agreement so that they are permitted or carefully consider whether the private-placement market is for you.
- Fifth, consider other long-term financing alternatives, including the public debt markets. Yes, public bonds do typically contain extended no-call periods. Further, even when the bonds become callable, they come with substantial premiums. However, the key difference between public debt and privately placed debt in this regard is that public debt instruments do not contain financial ratio maintenance covenants that give rise to the dreaded forced refinancing scenario. As a result, it is far easier to stay out of default with public debt. The transactions costs may be higher but the make-whole risk is reduced.
When Make-Whole Stares You in the Face
So, what do you do when you are looking at a $15 million make-whole payment in a forced refi scenario? Negotiate. For the most part, experience has shown that insurance companies will forgo all or a portion of the make-whole in exchange for receiving 100 percent of their principal if they sense a true distressed or workout credit.
But, to get to this result, you must either actually be poor or cry poor effectively! Obviously, actually being poor has its own hurdles - first and foremost of which is the ability to obtain refinancing in the first place. If the issuer is in a tenuous position financially, it may be unable to obtain sufficient refinancing to repay principal, much less make-whole.
However, if the issuer can obtain alternate refinancing, crying poor effectively is still tricky. The issuer must demonstrate to the insurance companies that it has just enough collateral or cash flow to refinance the notes at par but not enough to pay any additional make-whole amount. While this can often be the true state of the issuer's financial affairs, it is often difficult to convince the insurance companies of this fact.
Depending upon the gravity of the situation, the insurance companies may waive the make-whole. For instance, a series of failed refinancings is an obvious signal that the issuer has real problems and, if presented with a refinancing that pays principal at par but no make-whole, the insurance companies may very well take that deal.
Often, if cash or collateral is tight, insurance companies will accept deferred subordinated notes or preferred stock or other equity, or simply reduced make-whole, depending upon a range of factors. These include the amount of make-whole involved, the issuer's true (and perceived) financial state, the intransigence of the noteholders and, perhaps, the effectiveness of issuer's counsel.
Also, CFOs are encouraged to be skillful in playing groups of lenders against one another. Commercial banks despise make-whole just as much as the issuer that is obligated to pay it. The banks can place pressure on the insurance companies to accept a refi that pays less than the full make-whole amount. If the issuer can present a picture of true financial distress, some or even great success can often be had.
In this same vein, attempt, with the aid and comfort of other lenders, to subordinate the make-whole portion of the insurance company claims in any intercreditor negotiations-whether before or after default. As a corollary, avoid whenever possible securing the make-whole obligation with any collateral security. The lower the make-whole is in the waterfall of payment, the greater chance for success in avoiding or reducing make-whole. Sometimes, your other lenders can be your best friends.
(This article first appeared on Financial Executive Online, November 2003)