| OCR Text |
Show 4D The Salt Lake Tribune, Tuesday, December 24, 15 Staying Ahead: Insurance Commission Cuts May Save Money By Jane Bryant Quinn NEW YORK Consumer activists in two states are fighting for a change in the way insurance agents commissions. A make out your checks to the insurance company. The salesman might get 55 percent of that amount the first year and an additional 5 percent for each of the next few years. But you dont pay the salesman directly. He gets his cut from the insurance company. A salesman trying to attract more business could, in theory, cut the effective price of the policy, by rebating part of his commission to you. For example, he might offer to return $500 of a $1,100 commission, cutting costs on the above polyour first-yea- r icy to $1,500. A more aggressive salesman might return even more of the commission. You cannot get a price rebate today, because this practice is prohibited by state laws. But court cases in Florida and California are asking whether these laws should be overturned. Floridas Appeals Court says yes. It found there was no legitimate state charge if it victory Jane Bryant Quinn would spreads to other states change the face of insurance selling in America. It should also reduce the price of the policies you buy. The dispute concerns whether insurance agents should be able to cut their commissions, as a way of offering you a lower price. When you buy a cy poli- that costs, say, 2,000 a year, you interest in prohibiting this form of price competition among insurance agents. The case is now on appeal before the states Supreme Court. The California lawsuit, still in its early stages, may be a year away from trial. If rebates are permitted, the effect on how you buy life insurance and what you pay for it, could be profound. As you might expect, consumer groups say the change would be good for you while insurance groups say it would be bad. Some probable outcomes: Aggressive insurance agencies rewould advertise big first-yea- r bates on the price of their policies. (But insurance companies might comcounter by ending big first-yea- r missions, in favor of level commissions over several years. So your rebate would also be spread over several years.) The bigger your policy and the - Tuesday at a neutral location. Were not able to comment at all on the discussions, said Texaco spokesman John B. OMahoney, when asked to comment on the article. Last month, a Houston jury ruled Texaco had wrongly interfered with a merger agreement between Pennzoil and Getty Oil Co. before acquiring Yields Up Slightly (AP) - Yields Treasury securities T-B- ill WASHINGTON on short-ter- edged up slightly in Mondays auction to levels in effect earlier this month. The Treasury Department sold $7.6 billion in three-mont- h bills at an average discount rate of 7.02 percent, up from 7 percent last week. Another $7.6 billion was sold in bills at an average discount rate of 7.05 percent, up from 7.01 percent last week. The three-mont- h rate was the highest since 7.05 percent on Dec. 12, while the rate was the highest since 7.26 percent on Dec. 2. The new discount rates understate the actual return to investors 7.24 bills and 7.41 percent for three-mont- h bills. percent for th top-lev- six-mon- th six-mon- Rick Warner, Son Buy Schettler-Willia- bond. Under the agreement, Texaco promised not to file for reorganization under Chapter 11 of the U.S. bankruptcy laws, and Pennzoil agreed not to file liens to seize Texaco assets. The bond is required under Texas law if a damage award is appealed. But three days after Cassebs ruling, Texaco asked a federal court in New York to free it from having to pay the bond, arguing the amount was so huge that it would bankrupt the company thereby denying Texaco its constitutional right to appeal the adverse verdict. Judge Charles Brieant Jr. of the U.S. District Court in White Plains responded by issuing a temporary restraining order forbidding Pennzoil from attaching liens on Texaco property while the bond question was being considered. Continued From D-- l the automobile industry from the ground floor, cleaning the showroom floors with his younger brother, Bart, while still in high school. He later worked for Galpin Ford in the San Fernando Valley in Southern California and returned to Rick Warner Ford, becoming general manager for the 600 South division. For the past two years, he has been presiden-towne- r of Competitive Edge Leasing. Mr. Williams has been in the automobile industry since 1950, selling cars for Arch Browning Buick and later became sales manager. He and Mr. Schletter have been partners since 1958 and have had the Volvo franchise since 1957 and Nissan since 1970. Mr. Williams was awarded the Time Magazine Quality Dealer Effective Annual Yield 1 1 .50 Annual Rate Utahn Joins Board of Fed Home Loan Bank The bank represents the 12th LeRoy Mecham, president of MountainWest Savings & Loan, has term on been elected to a two-yethe board of directors of the Federal Home Loan Bank of Seattle. M. dis- trict of the Federal Home Loan Bank System, which supervises all savings and loan institutions in Utah, Oregon, Washington, Hawaii, Alaska, Wyoming, Montana, Idaho and Guam. ar Buy Mouse Paint Free SPECIAL IRA BONUS! CERTIFICATES OF DEPOSIT ms UADA Insurance Trust and chairman of the 1588 Inc. Group, the land and holding companies of the UADA. Mr. Schletter has been active in the business community, and is a past bishop in the LDS Church. Mr. Williams expects the transition to be completed in January. Mr. Williams said he plans to go skiing. The two men will pursue their other real estate holdings and personal investment interests, he said. Award in 1980 and the Sports Illustrated Dealer of Distinction Award in 1981. He was past president of the Utah Automobile Dealers Association and was elected to the American International Automobile Dealers Association board of directors of Washington, D.C., has been on the advisory board for NissanDatsun since 1981, and was president of the advisory board in 1983. Currently, he is chairman of the O Certificates Post Writers Group AND 1TH0U6HT SANTA HAD A WHITE BEARP ANP REP SUIT 24 Mos. IRA 1985 Washington by Bruce Hammond ratesTAtTcharter! KlfeUli;) The industrys strongest argument, said the Florida court, is that rebating will lower the insurance agents profits to the extent that he may not be willing to take the time needed to counsel clients. But thats not good enough reason, the court concluded, to stifle price competition among insurance agents. Besides, a consumer seeking a lot of counseling would still be able to choose a higher-price- d agent, reserving the discount shops for like the discount stockbrokers alone. to it go people willing &ONU5 CHECKS FOR EVERYONE. IN THE PEPAKTCTENT, PUFFY?? EUT WHERE WP THEY COTOE FROM ? ? Getty itself for $10.1 billion. The jury awarded Pennzoil $10.53 billion in damages, a verdict that was affirmed Dec. 10 by Texas State Judge Solomon Casseb Jr. He also added $600 million in interest and In addition, Casseb temporarily waived a requirement that Texaco post a $12 billion bond as security for Pennzoils award as part of an agreement between the two companies that Texaco could continue operating for up to 90 days without paying the introduce efficiencies that would compensate for rebating part of the premium to customers. Duffy Pennzoil, Texaco Mum on Lawsuit Talks not could dustry price-cuttin- Hut Paper Reports Progress Toward Settlement NEW YORK (AP) Pennzoil Co. and Texaco Inc. were reported making progress toward settling a lawsuit that won Pennzoil a $10.5 billion damage judgment against Texaco, but both sides declined to comment on the reports Monday. We cant comment, because of the agreement between the two parties not to talk to the media, said Tom Powell, a spokesman at Pennzoils headquarters in Houston. Quoting unidentified sources close to the negotiations, the Wall Street Journal said Monday both sides agreed over the weekend to either come to terms within a matter of days or to take the issue back to court. It also quoted the unidentified sources as saying the negotiations had moved faster than either side expected. The pressure is on. Both sides have agreed to make their best-fait- h effort, and if the talks get nowhere or break down altogether, the chances of ever resuming serious negotiations are probably unlikely, one source was quoted as saying. The Journal said negotiators met Friday and Saturday in Tulsa, Okla., and that Texaco officials discussed various proposals Sunday at the companys headquarters in White Plains, N.Y. It said negotiations would resume The Florida court expressly rejected the argument the rebating would lead to more insolvency among insurance companies. Nor is there any reason to believe that the insurance in- Aggressive consumers would have an incentive to switch insurance policies more often, in order to get price rebates. (But insurers might then charge a fee for policies dropped within a certain number of years.) g apThe prospect of New agencies might eventually and both insurance the industry be organized, offering discount prices palls some state insurance regulators. If on a volume basis to the small insurance buyer. If prices drop at agen- consumers take up policy switching, counsel for the cies, they will also drop on insurance Don Dowdell, general told Insurance Florida Department, policies offered by mail. Faced with it Wilson, associate, Virginia this competition, small insurance my y insurance-compancosts would raise a have time harder agents might and raise the general price level for staying in business. insurance products. The price of your coverage He also argues that rebating would for life, health, auto and liability inthreaten the solvency of eventually surance might depend on how much business you give a certain insurance companies, by forcing them to contribute to larger disagent. If you buy all your insurance counts than are fiscally sound. through him, you might pay less than Personally, I have trouble buying if you just bought life insurance. these arguments. Every regulated inSome agents might rebate their dustry has argued that price dereguentire commission and instead lation would harm the public but I charge a flat fee for service. have yet to see it happen. higher the cost, the larger percentage discount youd be offered. Small insurance buyers might get little or no price break from the average agent, while heavy buyers got substantial rebates. Take advantage of Overlands d Thrift Certificates and Receive Special ZCMI BONUS CERTIFICATES! High-Yiel- -- H 3 PASSBOOK SAVINGS EFFECTIVE ANNUAL YIELD 9.00 ANNUAL RATE .3 47 Now when you buy the Microsoft Mouse for your IBM PC or compatible, youll get PC Paintbrush, too. The mouse can help you work faster by saving you hundreds of keystrokes. And you can team it with PC Paintbrush to up create illustrations, logos, ANNUAL PERCENTAGE YIELD' K letterheads, and other designs. SAIT LAKE CITY 10 W. 3rd S. H0LLADAY 4891 S. HieMeed BOUNTIFUL 335 W. 500 S. 2724207 322-188- 7 298-368- So get them both. And an Art Department at put your fingertips. OGDEN 1175 E. Country Hill 3 479-126- Dr. 1 EXTRA-BONU- S IRA SPECIAL Microsoft Mouse and PC Paintbrush Yields at presstime Yields quoted are on an annual basis. Investment certificate accounts subject to penalty for early withdrawal. reg. $195 MICROSOFT. Sale 145 Sale Ends SALT LAKE CITY, A 235 S. Main Street, Salt Lake City, UT 84111 (801) 521-440- 0 wholly owned subsidiary ol Atlantic Financial Federal. Over S3 Billion strong sMFJiwaiRe 272-942- 5 E1TBI EJ M (CUP w hen yuu build a ear mostly ol galvanized met.il and cover of paint, you'd expect that c;ir to last. Thats one reason vs hy Volvo, instead of gh ing you an odometer that reaches 99,999 miles, gives you one that goes all the way to 999,999 miles. 'lb see the many other ways Volvo outdistances the competition, visit our showroom tomorrow. it with layer upon layer $100.00 Membership Fee 36 0035 0 ind 240 01, ir. power (tiering 2 only. Stock 6A 1 Wain rnr A wrfha war IwninJ r3! rL pul- n lirrw mbrw Vr mum Otter Expires January 6, 1986 322-425- VIP Bleacher seating in finish area World Cup Bumper Sticker Transportation from base to race hill World Cup Club Membership Card Complimentary food and beverage (numbered & registered) World Cup kml hat U S. Ski Team Pin World Cup Shirt U S. Ski Team Decal World Cup Pm Souvenir American Flao 2 240 ON SALE NOW AT THE PARK CITY SKI AREA; P.0. BOX 39, PARK CITY, UT 84060 THIS OFFER IS LIMITED AND ONLY AVAILABLE WHILE TICKETS LAST. (801) 649-811- $13,995 VdMtkk U THE BEST SEATS IN THE HOUSE! VOLVO SLC I SUPPORT THE AMERICAN TEAM FROM Available Now for Christmas! 394-261- Come See what we have in store for you (in trim and tumkuan , , , WI o . 4720 So. Highland Dr. Em-MbSKM- O 1 3535 Wall Ave. Ogden THE VOLVO Dec. 31, 1985 1 |
