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1 AUTO INSURANCE REPORT The Authority on Insuring Personal and Commercial Vehicles Vol. 22#41/1049 INSIDE Third-party software, big data, and online price shopping are among the trends benefiting smaller insurers. Page 2 Montana culture hinders highway safety laws, with predictable results. Page 5 Insurers start rising to the TNC challenge with new products. Page 8 Corrections on satisfaction and liability and physical damage loss ratios. Page 8 THE GRAPEVINE Uber Faces Employment Ruling and Privacy Challenge As Lyft Works on NY Return Transportation network companies such as Uber and Lyft continue the complex process of transforming the livery business around the world, and it remains a bumpy road. The interior minister of France banned the service, saying it was illegal, after sometimes violent protests by taxi drivers. The biggest domestic pressure point came from the California Labor Commissioner s Office, which recently ruled that an Uber driver was an employee and not an independent contractor. It was not the first time the company s independent contractor strategy has been challenged; Florida s Department of Economic Opportu- Please see GRAPEVINE on Page 3 Big Trends for Small Insurers As Signs Point to Growth Possibilities (Editor s note: Unlike prior years, where we wrote one long story about trends discussions from our annual conference, this year we re focusing on one topic that integrates some of the other themes.) For many years, the biggest personal auto insurers have been gaining market share. In the past decade alone, the top 10 have gained 7.41 points of market share to control of the U.S. market. Every single other decile in the top 100 lost share, not to mention continued share loss for the shrinking number of carriers ranked below 100. (See AIR 5/25/15.) That would naturally lead you to believe that big insurers have an insurmountable lead over the rest of the pack. We don t think so. Why are we so bullish on the prospects for smaller insurers? Because while the biggest insurers are indeed garnering more share, the loss of share by smaller insurers is less a factor of size, and more a factor of skill. Smaller insurers are also bigger beneficiaries than their Please see SMALL IS BEAUTIFUL on Page 2 Montana Solid Despite Struggles With Weather and Drunk Driving It would be nice to say Montana s auto market is off to a fresh start this year, but you can never quarantine the past. The two-headed snake of hail and highway fatalities continues to haunt the state. Last year was a difficult year one for auto insurers, with losses driven primarily by a single event. In May 2014, a hailstorm hit the bull s-eye of Billings with hailstones up to 2.75 inches, just slightly smaller than the diameter of a baseball. The storm wreaked havoc with both the auto and property markets, with one major insurer telling us it had nearly 5,000 claims connected to the storm a lot for a small state. That was not the only blight upon Montana s auto mar- Please see MONTANA on Page Magellan Isle Dana Point, CA (949)

2 Page 2 AUTO INSURANCE REPORT SMALL IS BEAUTIFUL Continued from Page 1 larger counterparts of the emergence of third party tools in pricing, underwriting operations software, data acquisition and management, claims handling, and more. Indeed, just being large is no guarantee of success, as several share-losing giants can attest. Only five of the top 10 grew on a pro forma basis (adjusting for acquisitions): State Farm, Geico, Progressive, USAA and Liberty Mutual. Five lost share: Allstate, Farmers, Nationwide, American Family and Travelers. For good measure, insurers ranked 11th and 12th also lost share. If anything undermines the argument that size begets growth, this is it. We spent hours combing through the performance of hundreds of other insurers, looking for threads of success and failure. Were mutuals less likely to succeed than stocks? Big in general better than small? National better than regional? Direct better than captive agent or either of those better than independent agent? Long company names versus short? (Seriously, we searched for possible branding advantages for more modern names versus older names.) The outcome: nothing. There was no strong correlation between any of these factors and success. The real answer is more fundamental: auto insurers that are good at what they do succeed, regardless of every other factor we could dream up. The real reason big insurers are gaining share is summed up in one word: Geico. The gain of big insurers flows almost exclusively from Geico s addition of 4.6 share points in the past decade, and 8 points since If you want to stretch it, you can add USAA (+1.7 points), and Progressive (+1.3 points). Importantly for our point here, those three have all succeeded for reasons that long precede their arrival as a giant. Here are four of the trends we believe have a disproportionate benefit to small insurers: Third-party claims and policy administration systems. Just a decade ago, large insurers had a profound competitive advantage over small insurers when it came to infrastructure. Simply put, a State Farm or Allstate could spend tens of millions of dollars on a modern claims system and, if they didn t make a mess of it, dramatically outperform smaller insurers using subpar systems. Today, no single insurer can outspend big infrastructure software vendors such as Guidewire and Duck Creek. Most insurers can t match even smaller vendors like One Inc. Some big insurers have told us that not only has this trend eliminated one scale advantage, they believe the most talented and nimble smaller insurers find it easier to adopt these solutions than even the smartest giants. Some of the biggest insurers are now abandoning their homegrown systems and installing the same software available to single-state farm bureaus. This isn t to say that buying third-party systems is easy for small insurers. A board member from one small insurer told us that buying such a system represented the largest single check the company had ever written, including the one for the home office building. But the infrastructure playing field has definitely tilted in favor of smaller insurers. The arrival of Big Data. A few decades ago, the only truly valuable and reliable data an insurer could use was internal. With the possible exception of shared ISO loss costs, small insurers had very little to work with when trying to set prices or analyze operations or claims. The giants had a profound advantage in data. Today, no insurer s internal data set has close to the power of pooled data sets available to virtually everyone. Big insurers enjoy significant advantages in their ability to afford teams of analysts, and in utilizing the filter of their internal data to better understand big data. But the gap between the data haves and have-nots has shrunk dramatically, and outside consultants (and some reinsurers) are working hard to help reduce it even more for Please see SMALL IS BEAUTIFUL on Page 3

3 AUTO INSURANCE REPORT Page 3 Continued from Page 1 nity ruled in May that a driver was an employee. Making all drivers employees might not destroy Uber s economics the app is so substantially superior to hailing cabs as they randomly pass by it could survive many problems but the independent contractor model adds immeasurably to TNC flexibility. Not surprisingly, Uber is appealing these decisions and fighting other attempts around the country to categorize drivers as employees. Fortunately for Uber, the California decision applies only to the driver in question and contradicts an earlier ruling by the same regulator in 2012, offering chances for a reversal. Uber takes California very seriously because it is one of the nation s largest markets for its services as well as a leader in TNC laws and regulation. On July 1, a new California law took effect requiring ride-sharing companies to ensure SMALL IS BEAUTIFUL Continued from Page 2 small insurers. Online price transparency. Insurers big and small agree that the arrival of online price shopping for auto insurance should benefit small insurers more than the bigger market leaders. Right now, small insurers have a very hard time joining consumer consideration sets of three to five insurers when they re competing with brands that spend hundreds of millions of dollars on advertising. Online price shopping, however, stands those giant brands right next to a smaller carrier that spends a few thousand dollars a year on advertising its names on pencils. True, the brand spending will enable big insurers to win more than their share of online shoppers, but small insurers will definitely see more success online than they have seen in the current marketplace. Again, the value of scale is diminished. The reduction in location penalties. Few auto insurers are located in places that are attractive to technical talent, especially young talent. Consider these hot spots for big insurers: THE GRAPEVINE that insurance is available for all parts of the process: 1) when the driver has the app turned on and is waiting for a customer; 2) when a customer asks for a ride and the driver travels to make the pickup; and 3) for the duration of the ride. Uber and other TNCs have been offering commercial insurance for the second two parts of the process, but they have tried to have each driver s personal insurance cover the first. Nearly half the states have enacted legislation requiring drivers to have insurance specifically covering TNC activities for all three periods. In a compromise hammered out with several large insurers and insurance trade groups, TNCs agreed to model language acknowledging the need for commercial coverage in period 1, when the app on and the driver is waiting for a fare. Yet they still lobby to avoid those requirements Please see GRAPEVINE on Page 8 Bloomington, Chevy Chase, Northbrook, Mayfield Heights, suburban San Antonio (USAA is more than an hour from downtown by mass transit), Woodland Hills and Columbus. No offense, but those locations are not top of mind for the best college graduates. Liberty Mutual s Boston home and American Family s Madison HQ work well, especially since Madison frequently makes Playboy s list of top party towns. But at least these insurers have size and heft to attract talent, or to establish satellite research and development offices in more attractive locations. Smaller insurers in similar or even more remote locations have long struggled in this regard. But the gap narrows when you can call upon a third party to deliver software development from nerds in Silicon Valley and online marketing skills from Brooklyn hipsters. Technology allowing people to live and work from remote locations has also been a boon in attracting talent. The bottom line: being big still helps, but the trends are providing solace to the small. AIR

4 Page 4 AUTO INSURANCE REPORT State Market Montana Focus: MONTANA Personal Auto Insurers Continued from Page 1 fatalities has risen since 2010, reaching 0.76 per ket. The state still has a stubbornly high fatality 100 million vehicle miles traveled in The Groups Ranked by 2014 Direct Premium Written (000) rate. In 2013, 1.96 people died per 100 million one bright spot is early 2014 data showing a 16 vehicle miles traveled, the highest fatality rate decline in total Mkt highway Loss fatalities to share Ratio 2013 share Ratio 2012 share Ratio in Group the country. Name It was a notable Premium increase from 2014 the 2014 Premium Even with 2013 the prospect 2013 of Premium a decline 2012 in deaths, State Farm rate Mutual of 1.76, which was lower $132,626 than 21.7 North 69.0 the state $125,091 has a 21.4 real problem 57.0 with $118,551 fatal 21.3 accidents Dakota, Liberty Mutual West Virginia and South $72,817 Carolina The lack $69,245 of trauma 11.9 centers 49.5 in $65,157 a geographically Progressive The state s Corp. rate of alcohol-related $72,524 driving $64, $56, Please see MONTANA on Page 5 Farmers Insurance Group $67, $71, $71, Mountain West Farm Bureau Mutual $37, $35, $33, Montana USAA Insurance Group $37, $34, $30, Allstate Corp. Personal $28, Auto 70.9 $27,758 Insurers $26, Berkshire Hathaway/GEICO $28, $19, Groups Ranked by 2014 Direct $24,301 Premium 4.2 Written 68.0 (000) Hartford Financial Services $25, $24, $24, QBE Insurance (Gen Cas/Unigard) $19, $17, $16, share Ratio 2013 share Ratio 2012 share Ratio Group Nationwide Name Mutual Group Premium $13, Premium $12, Premium $11, State Travelers Farm Companies Mutual $132,626 $11, $125,091 $13, $118,551 $17, Liberty Kemper Mutual Corp. $72,817 $10, $69,245 $13, $65,157 $16, Progressive CSAA Insurance Corp. Exchange (NorCal) $72,524 $7, $64,855 $4, $56,833 $4, Farmers Insurance Alliance Mutual GroupInsurance Co. $67,476 $6, $71,686 $6, $71,947 $6, Mountain American West Financial Farm Group Bureau Inc. Mutual $37,961 $6, $35,349 $7, $33,339 $8, USAA American Insurance National Group Insurance (ANPAC) $37,401 $3, $34,259 $3, $30,318 $3, Allstate Cincinnati Corp. Financial Corp. $28,610 $2, $27,758 $2, $26,425 $2, Berkshire Hallmark Financial Hathaway/GEICO Services $28,608 $2, $24,301 $2, $19,892 $2, Hartford MetLife Inc. Financial Services $25,335 $2, $24,499 $2, $24,036 $2, QBE Horace Insurance Mann Educators (Gen Cas/Unigard) Corp. $19,365 $2, $17,769 $1, $16,123 $2, Nationwide Employers Mutual Casualty Group Co. $13,529 $1, $12,223 $2, $11,831 $2, Travelers Ameriprise Companies Financial Inc. $11,309 $1, $13,879 $1, $17,260 $1, Kemper Integon National Corp. Group (GMAC) $10,552 $1, $13,785 $1, $16,124 $1, CSAA Chubb Insurance Corp. Exchange (NorCal) $7,286 $1, $4,723 $1, $4,049 $1, Farmers Global Indemnity Alliance Mutual plc Insurance Co. $6,535 $1, $6,724 $1, $6,553 $1, American RLI Corp. Financial Group Inc. $6,509 $1, $7,271 $1, $8,186 $ American Main Street National America Insurance Group (ANPAC) $3,768 $1, $3,774 $1, $3,936 $1, Cincinnati American International Financial Corp. Group $2,806 $ $2,618 $ $2,352 $ Hallmark California Financial Casualty Services Indemnity Exchange $2,756 $ $2,399 $ $2,206 $ MetLife Munich-American Inc. Holding Corp. $2,743 $ $2,694 $ $2,748 $ Horace Amica Mutual Mann Educators Insurance Co. Corp. $2,043 $ $1,979 $ $2,078 $ Employers Assurant Inc. Mutual Casualty Co. $1,983 $ $2,257 $ $2,566 $ Ameriprise Sentry Insurance Financial Mutual Inc. $1,975 $ $1,522 $ $1,214 $ Integon Baldwin National & Lyons Group (GMAC) $1,590 $ $1,740 $ $1,879 $ Chubb Markel Corp. $1,589 $ $1,263 $ $1,191 $ Global United Indemnity Fire Group plc Inc. $1,500 $ $1,581 $ $1,469 $ RLI Corp. Statewide s $609,940 $1, $583,975 $1, $556,762 $ Main Source: Street SNL America Financial, Groupby permission, $1,189 and the Auto 0.2 Insurance 60.8 Report $1,030 database $1, American Loss ratio International is incurred Group losses as a percentage $928of direct 0.2 premium earned. $840 The ratio 0.1 does 58.0not include $803 dividends 0.1or loss 21.4 adjustment expense. Single year data can be skewed by reserve adjustments. California Casualty Indemnity Exchange $ $ $ Munich-American Warning: Auto Holding Insurance Corp. Report $640 is a confidential, copyrighted $417 newsletter for subscribers $ only Amica No Mutual part of Insurance this publication Co. may be $609 reproduced by any form $612 or means, 0.1 including 40.3 photocopying, $ scanning, 5.5 Assurant Inc. $ $ $ Sentry Insurance Mutual $ $ $ Baldwin & Lyons Group $ $ $ Markel Corp. $ $ $ United Fire Group Inc. $ $ $

5 AUTO INSURANCE REPORT Page 5 Continued from Page 4 large but sparsely populated state makes it difficult, as does the cultural acceptance of drunk driving. Montana s aggressive individualism has made it difficult to pass legislation to toughen highway safety laws. The state still lacks a primary seat belt law, and even if cited for a seat belt violation when pulled over for something else, the maximum penalty for a first offense is just $20. There was no movement on stiffer impaired-driving laws in this year s legislative session. State law still does not allow for DUI checkpoints, though law enforcement officers are permitted to set up safety spot checks to identify fugitives and to make sure drivers have a license, registration and proof of insurance. If other violations are noticed, drivers can be cited. In addition, drivers are allowed to refuse breath, urine and blood alcohol tests, although that refusal comes with a license suspension. There had been some talk, but no action, in regards to putting forth a no right of refusal law. State Market Focus: MONTANA It seems that the moment still isn t right. Montana s physical damage loss ratio for 2014 shot up to 82.3, an increase of 20.7 percentage points from It s not as bad as 2010 s 91.6 loss ratio but it was still the second-worst loss ratio this century. The rise in physical damage losses led to a rise in the market s overall incurred loss ratio. Clocking in at 67.8, the 2014 loss ratio was much worse than the recent sub-60 loss ratios and higher than the national average of If insurers can price for catastrophe losses, they can turn a profit. In 2013, a modest year for catastrophe losses, the statewide profit margin was 11th-best in the country, and for the decade ending 2013, the 10-year average of 7.8 made it the 23rd most profitable market over time. Insurers and regulators viewed 2014 as the inevitable off year. Insurance is a business accustomed to volatility, and 2014 was certainly that. The market s size is its greatest weakness. With $609.9 million in direct written premium Montana Auto Insurance Margins Ten-Year Summary, Percent of Direct Premiums Earned Please see MONTANA on Page 6 Line of Business Personal Auto Liab Avg 5.7 Personal Auto Phys Personal Auto Comm. Auto Liab Comm. Auto Phys Comm. Auto All Lines* *Auto; Home, Farm & Commercial Multiperil; Fire; Allied; Inland Marine; Med Malpractice; Other Liability; Workers Comp; All Other Note: calculations are by Auto Insurance Report using data from the National Association of Insurance Commissioners. Calculations are estimates, some based on national averages.

6 Page 6 AUTO INSURANCE REPORT State Market Focus: MONTANA Montana Continued from Page 5 which raised rates more than any other top last year, Montana was Commercial the 45th largest market. Auto 10 group in Insurers the last five years, fell from the The market grew Groups 4.5 last Ranked year, slightly by less 2014 Direct third-largest Premium writer Written to the fourth (000) in Geico s than the 4.9 national average premium Mkt growth Losspushed it ahead Mkt of The Loss According to SNL Financial s 2014 RateWatch, share RatioHartford 2013 to No. share8. Ratio 2012 share Ratio Group Name Premium Premium Premium rates have been relatively unmoved in the last Monica Lindeen was twice elected Montana s commissioner of securities and insurance Old Republic International Corp. $14, $13, $12, five years, growing only 3.6 since Thus Travelers Companies Inc. $13, $14, $15, far, rates have actually declined 0.3 for and now also serves as president of the National Association $10, of Insurance 67.9 Commissioners. $10, for Nationwide auto insurance Mutual Group in 2012, and the $10,488 state ranked Unable $9,796 to run 7.1 again 65.8 for insurance $8,790 commissioner right Cincinnati in the Financial middle Corp. of our PAIN index, $7,705which because $7,242 of term 5.3limits, 89.2 she is seeking $6,277 election measures Employers Mutual the relative Casualty affordability Co. $6,607 of insurance as Montana s $6,221 secretary of state $6,345 while her 5.0 No , Liberty Mutual $13, $12, $11, Montana drivers paid the 38th highest amount Progressive Corp. $12, by Allianz comparing Group premium to income. $5, Jesse Laslovich, $4, seeks 79.8 election $4,151 to fill her 3.2 seat Farmers The Insurance top three Group insurers in the state $4,509 State $4, $3, The election may have contributed to a more Berkshire Hathaway Inc. $4, $2, $2, Farm, Liberty Mutual and Progressive have active legislative session. HB 531, which was W. R. Berkley Corp. $3, $3, $2, continued to cement their status. Farmers, Please see MONTANA on Page 7 Zurich Insurance Group $3, $4, $4, American International Group $2, $2, $1, ACE Ltd. $2, $2, $2, Montana Tokio Marine Group $2, $2, $2, Arch Capital Group Ltd. Commercial $2, Auto $1,053 Insurers $ Western National Insurance Groups GrpRanked $2,469 by Direct $2,155 Premium 1.6 Written 37.8 (000) $1, Farmers Alliance Mutl Ins Co. $2, $2, $2, State Farm Mutual $2, $1, $2, share Ratio 2013 share Ratio 2012 share Ratio Group Mtn W Farm Name Bureau Mutl Ins Co. Premium $2, Premium $1, Premium $1, Old American Republic Financial International Group Corp. Inc. $14,730 $2, $13,276 $1, $12,423 $1, Travelers United Fire Companies Group Inc. Inc. $13,815 $1, $14,058 $1, $15,461 $1, Liberty Amer Trucking Mutual & Transportation $13,373 $1, $12,089 $1, $11,397 $1, Progressive QBE Insurance Corp. (Gen Cas/Unigard) $12,931 $1, $10,840 $2, $10,290 $2, Nationwide Allstate Corp. Mutual Group $10,488 $1, $9,796 $1, $8,790 $1, Cincinnati Hartford Financial Services Corp. $7,705 $1, $7,242 $1, $6,277 $1, Employers Hallmark Financial Mutual Casualty ServicesCo. $6,607 $1, $6,221 $1, $6,345 $1, Allianz Sentry Group Insurance Mutual $5,286 $1, $4,922 $1, $4,151 $1, Farmers CNA Financial Insurance Corp. Group $4,509 $1, $4,078 $1, $3,682 $1, Berkshire IAT Reinsurance Hathaway (U.S.) Inc. $4,033 $1, $2,831 $1, $2,193 $ W. Munich-American R. Berkley Corp. Holding Corp. $3,705 $1, $3,290 $1, $2,418 $ Zurich Baldwin Insurance & Lyons Group $3,646 $ $4,760 $ $4,435 $ American AmTrust Financial International Services Group $2,820 $ $2,592 $ $1,563 $ ACE Chubb Ltd. Corp. $2,714 $ $2,899 $ $2,408 $ Tokio Main Street Marine America Group Group $2,552 $ $2,479 $ $2,229 $ Arch ACUITY Capital A Mutual Group Insurance Ltd. Co. $2,469 $ $1,053 $ $610 $ Western HDI-Gerling National America Insurance Co. Grp $2,469 $ $2,155 $ $1,300 $ Farmers Statewide Alliance Mutl s Ins Co. $149,031 $2, $137,854 $2, $128,222 $2, State Farm Mutual $2, $1, Source: SNL Financial, by permission, and the Auto Insurance Report database $2, Mtn Loss W ratio Farm is Bureau incurred Mutl losses Ins Co. as a percentage $2,110 of direct premium earned. $1,032 The ratio 0.8 does 138.5not include $1,041 dividends 0.8 or loss 75.1 American adjustment Financial expense. Group Single Inc. year data can $2,058 be skewed 1.4 by 82.9 reserve adjustments. $1, $1, United Fire Group Inc. $1, $1, $1, Amer No Trucking part of & this Transportation publication may $1,866 be reproduced 1.3 by any form $1,688 or means, 1.2 including 77.0 photocopying, $1, scanning, 70.1 Insurance fax or (Gen , Cas/Unigard) without prior $1,728 permission 1.2 of 76.8 the Publisher. $2,006 For 1.5information 72.1 call $2,135 (949) QBE Allstate Corp. $1, $1, $1, Hartford Financial Services $1, $1, $1, Hallmark Financial Services $1, $1, $1, Sentry Insurance Mutual $1, $1, $1,

7 AUTO INSURANCE REPORT Page 7 State Market Focus: MONTANA Continued from Page 6 tabled in committee, would have banned the use of credit, education, homeownership, occupation and price elasticity of demand in underwriting and rating. The Department of Insurance supported it, latching onto the bill s ban on price optimization, which has been emerging as an issue in a number of states. With one Montana insurer having filed a rating plan including elasticity of demand, regulators were seeking to get ahead of the issue. Meanwhile, the department is working on a bulletin that would prohibit the practice. A draft for public comment should be out soon, according to Laslovich. Lawmakers did pass a bill, HB 188, that allows for electronic delivery of insurance documents. There had been some conflict over whether or not cancellations would be included, but they eventually were. The issue of telematics was also tackled this session, with the passage of HB 78. The bill addresses concerns about who owns telematics data. The bill ended up being a compromise in which insurers agreed that they would only use telematics data in a consumer s favor. The bill also put the data s ownership into the hands of consumers. The bill seems to close the issue, but upon a discussion with the department we sense further telematics regulation will come under the next commissioner. Lawmakers also passed a bill, SB 396, that allows transportation network companies, like Uber, to operate in the state. The bill creates a new class, E, for carriers that offer TNC services. TNCs have to provide proof of insurance to the Public Service Commission. The bill is based upon the compromise model legislation agreed to earlier this year by insurers and TNCs. The state is eager to have TNCs begin service, partly as away to address concerns about drinking and driving, particularly in places like Missoula. AIR Montana Snapshot Regulator: Commissioner of Insurance & Securities Monica Lindeen Rate regulation: file and use Size of personal auto market: $609.9 million (2014 DPW) Rank: 45th Average policy expenditure: $658 (2012) Rank: 38th Auto Insurance Report PAIN Index rank: 25th (2012) Property Insurance Report HURT Index rank: 18th (2012) Auto registrations: 444,707 (2013) Truck registrations: 919,711 (2013) Vehicle miles traveled (VMT): billion (2013) Traffic fatalities: Traffic fatalities: 1.96 per 100 million VMT; U.S.: 1.11 (2013) Vehicle thefts: per 100,000 residents; Region: per 100,000 residents (2013) Liability defense: Modified Comparative Fault 51 bar Minimum Insurance Requirements: BI: $25,000/$50,000 PD: $10,000 Safety Laws Weak graduated licensing Secondary safety belt law Motorcycle helmets required only for under 18 Demographics Population: 1.02 million (2014 est.) Change from 2010 to 2014: +3.5, U.S.: +3.3 Median household income: $46,230; U.S.: $53,046 ( ) Population density: 6.8 per square mile; U.S: 87.4 per square mile (2010) Sources: SNL Securities, NAIC, U.S. Dept. of Transportation, PCIAA, NAMIC, U.S. Census Bureau, Insurance Institute for Highway Safety, FBI

8 Page 8 AUTO INSURANCE REPORT GRAPEVINE Continued from Page 3 in states where they have a chance. For insurers, the move toward employee status would simplify matters, making clear that drivers are engaged in a commercial act, though few are relying on this possibility. In the meantime, insurers are taking different approaches as they start offering coverage for TNC activities. Many carriers are using endorsements to personal policies to provide coverage for just period 1, while others cover all three periods. Some are offering coverage for just Uber or just Lyft, while other policies cover activities with any TNC. Progressive and Geico are offering drivers commercial TNC policies that will also cover their off-duty driving instead of offering coverage through personal policies. Companies are entering this market slowly, with pilot programs in just one or two states. With offerings in California, Colorado and most recently Arkansas and Utah, Farmers Insurance is a leader in selling TNC coverage. Its policies cover all three periods at an additional cost of about $15 per month. (See AIR 4/6/15 for other carrier offerings.) Uber has other challenges as well. The Electronic Privacy Information Center recently filed a complaint with the Federal Trade Commission, charging Uber s plan to track users and gather contact details is an unlawful and deceptive trade practice. The company has proposed to continually track its customers locations and mine data from their phones contacts. Uber would like to use this data to facilitate social interaction and to offer promotional services. Uber is not the only one facing challenges. Lyft recently paid $300,000 in penalties to New York State for allegedly operating without proper insurance or licenses for its drivers. The settlement is the first step in Lyft trying to move back into the New York market. AUTO INSURANCE REPORT Established 1993 Brian P. Sullivan, Editor Telephone: (949) bpsullivan@riskinformation.com Leslie Werstein Hann, Managing Editor Telephone: (908) leslie@hannwriting.com Patrick Sullivan, Associate Editor Telephone: (949) bpsullivan@gmail.com Subscription Information: (800) On the Web: Auto Insurance Report, 2015, published weekly, 48 times a year, by Risk Information Inc., Magellan Isle, Dana Point, CA It is a violation of federal law to photocopy or reproduce any part of this publication without first obtaining permission from the Publisher. ISSN: Subscription Rates: $1,087 per year in U.S. and Canada. Elsewhere $1,127 per year. Corrections and Clarifications on J.D. Power Satisfaction and Loss Ratios In dissecting the newest J.D. Power customer satisfaction survey (AIR 6/29/15) we made several mistakes. We wrote Gen Y was the least satisfied demographic in all categories; they are in fact more satisfied than Boomers on price. We wrote California is the least satisfied region; that honor actually belongs to New England. We wrote that a top-10 U.S. auto insurer tops only two of 11 regions in satisfaction, but the correct number is three since State Farm tied for the top in the Southwest. Trying to be kind to Geico, we wrote they ranked below average in four regions; the correct number is five. Our apologies. These are too many errors, so we have posted a corrected file on Under Newsletters on the home page, select Download Sample. Some tables in AIR 06/08/15 lacked data for West Virginia, Wisconsin and Wyoming. We have posted an new issue with revised tables at under Hot Issues. AIR