BY PRADNYA JOSHISTAFF WRITEROctober 29, 2004
Insurance isn't supposed to be this exciting.On Oct. 14, New York Attorney General Eliot Spitzer unveiled a major investigation of routine insurance industry practices and declared them to be nothing short of illegal payoffs and bid-rigging schemes. Spitzer sued insurance broker Marsh & McLennan Cos., alleging that the company steered business to insurance carriers that paid the company the most in extra commissions rather than to the carrier that offered clients the best rate or coverage. The investigation also concluded several prominent insurance companies, including American International Group and Ace Ltd., participated in a scheme to submit fake insurance quotes so that Marsh could be sure a selected insurer got the business.So how widespread is this scandal and how will it affect your pocketbook? Here are some answers:
Q: Is there more to come out of the Marsh & McLennan case?
A: The three major insurance brokers say the contingent payments were widespread and well-known to the companies that buy casualty insurance. Since the scandal, Marsh, Aon Corp. and Willis Group Ltd. have announced that they will stop collecting them. Marsh executives said the company is investigating the allegations of price-fixing but believes the cases were "limited." However, Marsh has not reached a settlement with Spitzer's office and additional criminal prosecutions of individuals could be in the works.
Q: Could the same problems be affecting my company health insurance plans?
A: Marsh said the company received most of these payments for placing corporate - not consumer - casualty insurance. However, Marsh said the company did receive about $10 million in such payments for placing employee-benefits plans with companies. New York State insurance laws limit broker commissions to 4 percent of the policy, but private lawsuits filed in California allege that other brokers received special payments for placing employee-benefits plans.
Q: How is consumer insurance sold?
A: About 66 percent of all auto insurance and 69 percent of homeowner insurance is sold through a "direct" channel rather than an outside broker or agent, according to the industry trade group. That means most consumers are buying insurance directly through companies such as Geico or an exclusive agent of companies like State Farm Insurance, who sells only one company's insurance. You don't have a choice, so steering to one insurer over another isn't an issue. Independent brokers do sell many different brands of insurance from different insurers, which looks similar to the commercial brokers. But independents still have to compete with the direct-sales companies, said Bob Hartwig, chief economist for the Insurance Information Institute. That keeps a lid on prices, especially if you shop around.
Q: Do contingent payments exist for my home, auto or personal life insurance?
A: Yes. Insurance brokers or agents get a commission, a normal and legal practice. What makes it tricky is that they also get incentives for hitting volume targets or keeping claims low, noted Bob Hunter of the Consumer Federation of America. So by definition, there are other "contingent" payments that could influence what policy you are offered."I think contingency arrangements are egregious because they set up conflicts between the agents and their brokers," Hunter said. "The most important lesson of the Spitzer thing is very sophisticated companies and buyers of insurance got duped."
Q: What will this scandal mean for employment in the metro area?A: More than 56,500 people work at insurance companies, brokers and related firms. The end of contingent commissions at Marsh and Aon will hurt their bottom line, and Marsh has vowed to cut costs, without specifically mentioning people. The companies say they will find ways to replace the revenue. Analysts say mergers and losses from huge catastrophes have had more of an impact on employment. For property and casualty insurers, "this is going to be one of the worst hurricane seasons ever," said Chip Law, an insurance analyst with SNL Financial.
Friday, October 29, 2004
Thursday, October 28, 2004
Maryland Car Insurance Initiative
Baltimore, MD (WJZ) Here in Baltimore, city residents pay pretty much double what county residents pay when it comes down to car insurance.The statistics support that accidents do occur more often in the city, which means more insurance claims.But now a new program is trying to base insurance premiums on the mileage that you drive, instead of the area you reside in.The Baltimore City Council met today to discuss the pay-as-you-drive insurance initiative.Senator Lisa Gladden was one of the main participants. She is the sponsor of the state legislation for pay-as-you- drive program. Alfred Redmer, Insurance Commissioner for the State of Maryland, was also in attendance, supporting the measure.Baltimore City is trying to encourage the state to pay for a study aimed at convincing car insurance companies to adopt the program.The City Council Committee is expected to vote early next month.
Interruption Insurance
Have you ever noticed that while the words ''insurance'' and ''interesting'' are very close in the dictionary, you almost never hear them used in the same sentence?
''I sell insurance,'' Phil Lyons told the Palmetto Bay Business Association. ``When I talk, people's eyes glaze within five minutes.''
Yet, Lyons, a vice president with InSource Inc., in Dadeland, kept the audience's attention with his presentation on the very timely subject of business interruption insurance.
With hurricanes attacking Florida from every angle this year, the audience not only listened attentively, but also had questions. The premise of business interruption insurance is simple, said Lyons.
``Think of it as disability insurance for your business.
''When something happens to shut down your business, your damage insurance would cover repairs in a fire, flood or windstorm,'' he told the group. ``But you may be closed for months. During that time you have continuing expenses. Your own salary and those of your employees. Mortgage and tax payments and outstanding business loans. Bills from suppliers. None of those are covered by your property damage insurance.''
Fewer than half of all businesses have interruption insurance, he said, and many of those find they don't have enough when they suffer a loss.
Also, while the concept is simple, in fact the coverage can get very complex and you may need to buy special endorsements to get the protection you want.
For example, Lyons said, the trigger for business interruption insurance is damage to your building.
The business has a fire, is closed for repairs, and the interruption insurance compensates for lost income.
But if there is no damage, there is no coverage. That happened frequently this year as hurricanes knocked out power to entire communities for weeks.
The businesses had to close, even though they escaped damage, but the interruption insurance did not kick in unless a special extra-cost clause was inserted.
Or, perhaps, a key supplier in another state has a fire and can't ship you the parts you need to make your product.
Again, you would not be covered unless you have an extra-cost endorsement to cover this possibility. What if your computers crash or are infected by a virus and nobody can get any work done?
This requires a separate coverage, also. You can see there are many questions to be asked and answered so you end up with the level of protection you want.
A surprising number of people at the Palmetto Bay Business Association raised their hands when Lyons asked if they have business interruption insurance -- a hard-learned lesson from Hurricane Andrew, some said.
So why are so many businesses around the country without this coverage? Lyons told the group that it's hard to sell, and some agents don't push very hard.
''First,'' he said, ``it's difficult to foresee losses and predict loss amounts. Projecting business interruption losses involves some educated guesswork. It is particularly difficult for a new business to do this accurately. Likewise, it is very easy for a growing business to underestimate the amount of coverage needed.''
He said that the insurance requires completion of a ''business interruption work sheet'' that can get time-consuming and perhaps require the services of a CPA, and the business may have to disclose confidential financial information.
Also, Lyons said, ``unlike insurance for property damage, this insurance usually is not required by lenders, and it's natural for a business to focus only on what is required. Business owners have limited financial resources, and it's hard to spend money on insurance rather than put it back into their business.''
Is business interruption insurance for you?
Lyons asked some questions to get the audience thinking, and handed out a seven-page checklist (you can get a copy by calling him at 305-670-5337 or e-mailing PLyons@Insource-inccom.)
Lyons suggested that business owners ask their insurance agents about business interruption insurance and if the agent seems uninterested or uneducated, they should seek assistance elsewhere.
''This kind of insurance is important for businesses everywhere,'' Lyons said, ``but in Florida it's almost a necessity.''
''I sell insurance,'' Phil Lyons told the Palmetto Bay Business Association. ``When I talk, people's eyes glaze within five minutes.''
Yet, Lyons, a vice president with InSource Inc., in Dadeland, kept the audience's attention with his presentation on the very timely subject of business interruption insurance.
With hurricanes attacking Florida from every angle this year, the audience not only listened attentively, but also had questions. The premise of business interruption insurance is simple, said Lyons.
``Think of it as disability insurance for your business.
''When something happens to shut down your business, your damage insurance would cover repairs in a fire, flood or windstorm,'' he told the group. ``But you may be closed for months. During that time you have continuing expenses. Your own salary and those of your employees. Mortgage and tax payments and outstanding business loans. Bills from suppliers. None of those are covered by your property damage insurance.''
Fewer than half of all businesses have interruption insurance, he said, and many of those find they don't have enough when they suffer a loss.
Also, while the concept is simple, in fact the coverage can get very complex and you may need to buy special endorsements to get the protection you want.
For example, Lyons said, the trigger for business interruption insurance is damage to your building.
The business has a fire, is closed for repairs, and the interruption insurance compensates for lost income.
But if there is no damage, there is no coverage. That happened frequently this year as hurricanes knocked out power to entire communities for weeks.
The businesses had to close, even though they escaped damage, but the interruption insurance did not kick in unless a special extra-cost clause was inserted.
Or, perhaps, a key supplier in another state has a fire and can't ship you the parts you need to make your product.
Again, you would not be covered unless you have an extra-cost endorsement to cover this possibility. What if your computers crash or are infected by a virus and nobody can get any work done?
This requires a separate coverage, also. You can see there are many questions to be asked and answered so you end up with the level of protection you want.
A surprising number of people at the Palmetto Bay Business Association raised their hands when Lyons asked if they have business interruption insurance -- a hard-learned lesson from Hurricane Andrew, some said.
So why are so many businesses around the country without this coverage? Lyons told the group that it's hard to sell, and some agents don't push very hard.
''First,'' he said, ``it's difficult to foresee losses and predict loss amounts. Projecting business interruption losses involves some educated guesswork. It is particularly difficult for a new business to do this accurately. Likewise, it is very easy for a growing business to underestimate the amount of coverage needed.''
He said that the insurance requires completion of a ''business interruption work sheet'' that can get time-consuming and perhaps require the services of a CPA, and the business may have to disclose confidential financial information.
Also, Lyons said, ``unlike insurance for property damage, this insurance usually is not required by lenders, and it's natural for a business to focus only on what is required. Business owners have limited financial resources, and it's hard to spend money on insurance rather than put it back into their business.''
Is business interruption insurance for you?
Lyons asked some questions to get the audience thinking, and handed out a seven-page checklist (you can get a copy by calling him at 305-670-5337 or e-mailing PLyons@Insource-inccom.)
Lyons suggested that business owners ask their insurance agents about business interruption insurance and if the agent seems uninterested or uneducated, they should seek assistance elsewhere.
''This kind of insurance is important for businesses everywhere,'' Lyons said, ``but in Florida it's almost a necessity.''
BCBSNC to offer free flu shots to members
Blue Cross and Blue Shield of North Carolina will offer free flu vaccines to some of its members at a series of clinics.
Only Blue Cross members who meet the high-risk criteria of the federal Centers for Disease Control can receive the shots.
A clinic will be held at Joel Coliseum on Nov. 10 from 9 a.m. until 5 p.m. and on Nov. 11 from 8 a.m. until 4 p.m.
A clinic also will be held at Greensboro Coliseum on Nov. 8 from 9 a.m. until 5 p.m. and on Nov. 9 from 9 a.m. until 5 p.m.
About 3,000 shots will be given at each clinic. The vaccines will be given on a first-come, first-serve basis.
Those considered high risk are primarily the elderly, the chronically ill, pregnant women and certain health-care workers. Infants and children younger than 9 are not eligible to receive the shots at the clinics.
Only Blue Cross members who meet the high-risk criteria of the federal Centers for Disease Control can receive the shots.
A clinic will be held at Joel Coliseum on Nov. 10 from 9 a.m. until 5 p.m. and on Nov. 11 from 8 a.m. until 4 p.m.
A clinic also will be held at Greensboro Coliseum on Nov. 8 from 9 a.m. until 5 p.m. and on Nov. 9 from 9 a.m. until 5 p.m.
About 3,000 shots will be given at each clinic. The vaccines will be given on a first-come, first-serve basis.
Those considered high risk are primarily the elderly, the chronically ill, pregnant women and certain health-care workers. Infants and children younger than 9 are not eligible to receive the shots at the clinics.
InsWeb quarterly results
Press Release
SACRAMENTO, Calif., Oct. 28 /PRNewswire-FirstCall/ -- InsWeb Corp.(Nasdaq: INSW) today announced results for the third quarter ended September30, 2004. Revenues for the third quarter totaled $3.4 million, compared to$6.2 million in the third quarter of 2003. InsWeb's net loss for the quarterwas $2.2 million, or $0.47 per share, compared to a net loss for the thirdquarter of 2003 of $0.6 million, or $0.13 per share.
SACRAMENTO, Calif., Oct. 28 /PRNewswire-FirstCall/ -- InsWeb Corp.(Nasdaq: INSW) today announced results for the third quarter ended September30, 2004. Revenues for the third quarter totaled $3.4 million, compared to$6.2 million in the third quarter of 2003. InsWeb's net loss for the quarterwas $2.2 million, or $0.47 per share, compared to a net loss for the thirdquarter of 2003 of $0.6 million, or $0.13 per share.
Wednesday, October 27, 2004
Wellmark Blue Cross and Blue Shield Launches BluesEnroll
DES MOINES, Iowa, Oct. 27 /PRNewswire/ -- Wellmark Blue Cross and Blue Shield, the leading health benefits administrator serving Iowa and South Dakota, today announced the availability of BluesEnroll, a new, secure, online benefits administration tool. With BluesEnroll, Wellmark Blue Cross and Blue Shield offers its Iowa and South Dakota large groups and their employees a timesaving and convenient solution that is accessible 24 hours a day, seven days a week.
BluesEnroll provides a rich set of benefit administration tools and capabilities for benefit coordinators, administrators and payroll staff who are now able to exchange enrollment and eligibility information at the click of a button. Large group employees and their family members, insured by Wellmark Blue Cross and Blue Shield, can access BluesEnroll to gather information about their benefits, make life event changes, such as adding dependents, and obtain confirmation of their benefit information.
"We constantly strive to be the easiest health plan to do business with by offering our members the most innovative health insurance products, services and solutions," said Ellen Gaucher, group vice president, Operations, Quality and Customer Satisfaction. "BluesEnroll saves time, reduces paperwork, and eliminates hassles for our large groups and their employees."
"For the past several years, we have made a substantial investment in providing market leading technologies to our members, employer groups, brokers and providers," Gaucher added. "The launch of BluesEnroll is yet another example of our commitment to our marketplace."
Benefit administrators save time with BluesEnroll's report feature, which generates more than 60 customizable reports with a click or two of the mouse. With BluesEnroll, benefit administrators can make benefit changes for employees and dependents, add new hires, manage COBRA coverage, and change employee classifications. BluesEnroll processes these and all transactions securely, efficiently and accurately. It supports health and dental insurance provided by Wellmark Blue Cross and Blue Shield, as well as third-party insurance, such as life insurance, disability, flexible spending and all other employee benefit offerings.
With BluesEnroll, Wellmark Blue Cross and Blue Shield large group members can make updates to their information online securely and at their convenience. By using BluesEnroll, employees can gain access to their benefit information and can make changes 24 hours a day, seven days a week. This constant availability of benefit information also helps reduce the Human Resource cost structure of most employers.
"The selection by Wellmark Blue Cross and Blue Shield, and now full scale roll out, is a real win for Benefitfocus.com," said Shawn Jenkins, president and CEO of Benefitfocus.com, Inc. "We're extremely proud to have Wellmark Blue Cross and Blue Shield and its employer groups as clients. This demonstrates that our substantial commitment to technology and services in the Midwest region is paying off."
"We have gained a real market leadership position through our focus and dedication to easy-to-use and flexible technologies provided to employer groups," Jenkins added. "We look forward to bringing even more efficiency and new technologies to Wellmark Blue Cross and Blue Shield and its members."
Wellmark Blue Cross and Blue Shield's announcement follows on the heels of a substantial integration effort and pilot testing of the BluesEnroll platform in both the Iowa and South Dakota markets. Wellmark Blue Cross and Blue Shield will be offering the BluesEnroll platform to new and prospective group members for coverage effective January 1, 2005.
BluesEnroll provides a rich set of benefit administration tools and capabilities for benefit coordinators, administrators and payroll staff who are now able to exchange enrollment and eligibility information at the click of a button. Large group employees and their family members, insured by Wellmark Blue Cross and Blue Shield, can access BluesEnroll to gather information about their benefits, make life event changes, such as adding dependents, and obtain confirmation of their benefit information.
"We constantly strive to be the easiest health plan to do business with by offering our members the most innovative health insurance products, services and solutions," said Ellen Gaucher, group vice president, Operations, Quality and Customer Satisfaction. "BluesEnroll saves time, reduces paperwork, and eliminates hassles for our large groups and their employees."
"For the past several years, we have made a substantial investment in providing market leading technologies to our members, employer groups, brokers and providers," Gaucher added. "The launch of BluesEnroll is yet another example of our commitment to our marketplace."
Benefit administrators save time with BluesEnroll's report feature, which generates more than 60 customizable reports with a click or two of the mouse. With BluesEnroll, benefit administrators can make benefit changes for employees and dependents, add new hires, manage COBRA coverage, and change employee classifications. BluesEnroll processes these and all transactions securely, efficiently and accurately. It supports health and dental insurance provided by Wellmark Blue Cross and Blue Shield, as well as third-party insurance, such as life insurance, disability, flexible spending and all other employee benefit offerings.
With BluesEnroll, Wellmark Blue Cross and Blue Shield large group members can make updates to their information online securely and at their convenience. By using BluesEnroll, employees can gain access to their benefit information and can make changes 24 hours a day, seven days a week. This constant availability of benefit information also helps reduce the Human Resource cost structure of most employers.
"The selection by Wellmark Blue Cross and Blue Shield, and now full scale roll out, is a real win for Benefitfocus.com," said Shawn Jenkins, president and CEO of Benefitfocus.com, Inc. "We're extremely proud to have Wellmark Blue Cross and Blue Shield and its employer groups as clients. This demonstrates that our substantial commitment to technology and services in the Midwest region is paying off."
"We have gained a real market leadership position through our focus and dedication to easy-to-use and flexible technologies provided to employer groups," Jenkins added. "We look forward to bringing even more efficiency and new technologies to Wellmark Blue Cross and Blue Shield and its members."
Wellmark Blue Cross and Blue Shield's announcement follows on the heels of a substantial integration effort and pilot testing of the BluesEnroll platform in both the Iowa and South Dakota markets. Wellmark Blue Cross and Blue Shield will be offering the BluesEnroll platform to new and prospective group members for coverage effective January 1, 2005.
Anthem posts gains
INDIANAPOLIS - Growing enrollment in its national health insurance plans drove earnings at Anthem Inc. up 23 percent during the third quarter, the company reported Wednesday.
The nation's fourth largest health insurance company earned $242.1 million, or $1.70 per share, for the three months ending Sept. 30, compared with $196.5 million, or $1.38 per share, for the third quarter of 2003. The latest results beat by five cents the consensus estimate by analysts surveyed by Thomson First Call.
Revenues rose 13 percent to $4.8 billion from $4.3 billion for the Indianapolis-based licensee for Blue plans in Indiana, Kentucky, Ohio, Connecticut, New Hampshire, Colorado, Nevada and Maine, and part of Virginia.
Chairman and chief executive Larry C. Glasscock cited an 8 percent growth in health plan enrollment for driving down Anthem's administrative expense ratio by 180 basis points to 16.9 percent. Enrollment has grown by 890,000 members since September 2003, including 810,000 since the start of the year.
Glasscock, in a news release, reminded investors "we are also very committed to completing our proposed merger with WellPoint Health Networks."
Anthem has sued California Insurance Commissioner John Garamendi, saying he exceeded his authority when on July 23 he vetoed the proposed $16.4 billion cash-and-stock merger of the nation's two largest Blue Cross Blue Shield companies. Garamendi has said it would pull millions of dollars out of his state, lower health care quality for consumers and give too much severance pay to executives.
Nine other affected states, the U.S. Department of Justice and Puerto Rico have approved the merger, which was announced a year ago and would create the nation's largest health insurance company.
Thousand Oaks, Calif.-based WellPoint on Monday reported its third-quarter net income rose 28 percent to $315.1 million, or $1.97 a share, on 16 percent revenue growth to $5.85 billion.
Anthem advised it expects its fourth quarter net income to be consistent with the third-quarter results. For all of 2004, it expects to earn $7.05 to $7.10 per share, up from its previous guidance of $6.95 to $7.05 per share. It expects 2005 net income to grow 15 percent over 2004.
Anthem stock rose $4.28 per share, or 5.6 percent, to close at $81.12 Wednesday on the New York Stock Exchange.
For the first nine months of this year, Anthem's profits rose 37 percent to $775.6 million, or $5.43 per share, from $565.5 million, or $3.98 per share, for the same period in 2003. Revenues rose 12 percent to $14.0 million from $12.5 million.
The nation's fourth largest health insurance company earned $242.1 million, or $1.70 per share, for the three months ending Sept. 30, compared with $196.5 million, or $1.38 per share, for the third quarter of 2003. The latest results beat by five cents the consensus estimate by analysts surveyed by Thomson First Call.
Revenues rose 13 percent to $4.8 billion from $4.3 billion for the Indianapolis-based licensee for Blue plans in Indiana, Kentucky, Ohio, Connecticut, New Hampshire, Colorado, Nevada and Maine, and part of Virginia.
Chairman and chief executive Larry C. Glasscock cited an 8 percent growth in health plan enrollment for driving down Anthem's administrative expense ratio by 180 basis points to 16.9 percent. Enrollment has grown by 890,000 members since September 2003, including 810,000 since the start of the year.
Glasscock, in a news release, reminded investors "we are also very committed to completing our proposed merger with WellPoint Health Networks."
Anthem has sued California Insurance Commissioner John Garamendi, saying he exceeded his authority when on July 23 he vetoed the proposed $16.4 billion cash-and-stock merger of the nation's two largest Blue Cross Blue Shield companies. Garamendi has said it would pull millions of dollars out of his state, lower health care quality for consumers and give too much severance pay to executives.
Nine other affected states, the U.S. Department of Justice and Puerto Rico have approved the merger, which was announced a year ago and would create the nation's largest health insurance company.
Thousand Oaks, Calif.-based WellPoint on Monday reported its third-quarter net income rose 28 percent to $315.1 million, or $1.97 a share, on 16 percent revenue growth to $5.85 billion.
Anthem advised it expects its fourth quarter net income to be consistent with the third-quarter results. For all of 2004, it expects to earn $7.05 to $7.10 per share, up from its previous guidance of $6.95 to $7.05 per share. It expects 2005 net income to grow 15 percent over 2004.
Anthem stock rose $4.28 per share, or 5.6 percent, to close at $81.12 Wednesday on the New York Stock Exchange.
For the first nine months of this year, Anthem's profits rose 37 percent to $775.6 million, or $5.43 per share, from $565.5 million, or $3.98 per share, for the same period in 2003. Revenues rose 12 percent to $14.0 million from $12.5 million.
Erie Insurance results
Press release
ERIE, Pa., Oct. 27 /PRNewswire-FirstCall/ -- Erie Indemnity Company(Nasdaq: ERIE) today announced results for the third quarter 2004, includingthe following highlighted information: - Net income increased by 4.1 percent to $58.6 million, up from $56.2 million at September 30, 2003. - Net income per share increased by 5.3 percent to $.83 per share, compared to $.79 per share in the comparable quarter for 2003. - Net income, excluding net realized gains on investments and related federal income taxes, increased by 5.4 percent to $58.0 million, or $.83 per share, up from $55.0 million, or $.78 per share, for the same period one year ago. - Management fee revenue grew by 6.3 percent to $246.4 million, up from $231.7 million for the same period one year ago.
ERIE, Pa., Oct. 27 /PRNewswire-FirstCall/ -- Erie Indemnity Company(Nasdaq: ERIE) today announced results for the third quarter 2004, includingthe following highlighted information: - Net income increased by 4.1 percent to $58.6 million, up from $56.2 million at September 30, 2003. - Net income per share increased by 5.3 percent to $.83 per share, compared to $.79 per share in the comparable quarter for 2003. - Net income, excluding net realized gains on investments and related federal income taxes, increased by 5.4 percent to $58.0 million, or $.83 per share, up from $55.0 million, or $.78 per share, for the same period one year ago. - Management fee revenue grew by 6.3 percent to $246.4 million, up from $231.7 million for the same period one year ago.
Tuesday, October 26, 2004
Aon deceptive too
n six months of examining documents from insurance companies and brokers, investigators for the New York attorney general have discovered evidence at the Aon Corporation of deceptive and coercive practices, a person close to the inquiry said yesterday.
Until now, the sweeping investigation by Eliot Spitzer, the attorney general, has centered on Marsh & McLennan Companies, the world's largest broker, with headquarters in New York. In a civil lawsuit nearly two weeks ago, Mr. Spitzer accused Marsh of cheating customers by faking bids, fixing prices and steering business to the highest-paying insurance companies.
Investigators are pushing to complete their work on Aon, the world's second-largest broker, with headquarters in Chicago, and could bring a civil lawsuit against the company within two weeks, said another person who has been briefed on the case.
The investigators are also expected to file lawsuits shortly against some smaller national insurance brokers, this person said. Mr. Spitzer's accusations against Marsh and criminal charges that he brought against two executives of the American International Group and one executive of Ace Ltd. have shaken the insurance industry and investors. The stock prices of all big insurance brokers and insurance companies have fallen sharply, and several attorneys general and insurance regulators across the country have started or widened separate investigations.
On Friday, shares of Aon rose 54 cents, or 2.8 percent, to $19.80 on the New York Stock Exchange; they were trading at about $28 a share two weeks ago.
The discovery of improprieties at Aon broadens Mr. Spitzer's investigation to a company that, along with Marsh, dominates the insurance brokerage business. Together, they control more than 70 percent of the market.
At Aon, the person close to the case said, investigators have found documentation of brokers steering business to insurers that paid the company incentives. They also found another anticompetitive practice known as tying, a kind of pay-to-play arrangement in which brokers threaten to curtail sales for an insurance company unless the insurer lets the broker also arrange its own coverage needs or reinsurance. Fees on reinsurance, which insurers buy to reduce their risk, can run into the tens of millions of dollars.
Both steering and tying can violate New York's fraud and antitrust laws and apply to anyone doing business in the state. Though Aon is based in Chicago, it has offices in New York, which is an important center for the insurance industry. Its founder, Patrick G. Ryan, announced late last month that he would be stepping down as chief executive after running the company for 40 years, but he gave no indication of when he planned to move on.
Gary Sullivan, a spokesman for Aon, declined to comment yesterday.
While the investigators have found what they regard as antitrust violations at Aon, they so far have found no evidence of bid rigging and price fixing, people briefed on the case said.
Bid rigging and price fixing are the most serious accusations to arise thus far in the investigation because they are clearly defined antitrust violations that can also result in criminal charges, legal experts said. Steering and tying can also be against the law, the experts said, but they involve certain issues of judgment by the courts. These include the possibility that a company paying the highest incentive also provided the best deal to a customer and, in tying arrangements, the degree to which an insurance company was actually pressured to comply or acted in what it perceived to be its own best interests in anticipation of pressure.
"Bid rigging and price fixing are an absolute per se violation of antitrust laws," said John Coffee, a Columbia University specialist on securities law. "Steering and tying are in a gray area."
Insurance executives and analysts have been anticipating that Aon would be the next target. Marsh arranges the insurance coverage for about 40 percent of corporate America, and Aon handles 30 percent. Between them, they have enormous purchasing power that enables them to compel insurance companies to meet their demands or risk losing business, industry experts said.
"Anytime you have this much market power concentrated in the hands of such a small number of brokers, the pure competition that is supposed to occur in the free market is stifled," said Paul Equale, a Washington consultant. He is the former chief executive and chief lobbyist for the Independent Insurance Agents and Brokers of America, one of the industry's largest trade groups whose members mainly sell commercial insurance to small and medium-size businesses around the country as well as home and auto insurance.
Until now, the sweeping investigation by Eliot Spitzer, the attorney general, has centered on Marsh & McLennan Companies, the world's largest broker, with headquarters in New York. In a civil lawsuit nearly two weeks ago, Mr. Spitzer accused Marsh of cheating customers by faking bids, fixing prices and steering business to the highest-paying insurance companies.
Investigators are pushing to complete their work on Aon, the world's second-largest broker, with headquarters in Chicago, and could bring a civil lawsuit against the company within two weeks, said another person who has been briefed on the case.
The investigators are also expected to file lawsuits shortly against some smaller national insurance brokers, this person said. Mr. Spitzer's accusations against Marsh and criminal charges that he brought against two executives of the American International Group and one executive of Ace Ltd. have shaken the insurance industry and investors. The stock prices of all big insurance brokers and insurance companies have fallen sharply, and several attorneys general and insurance regulators across the country have started or widened separate investigations.
On Friday, shares of Aon rose 54 cents, or 2.8 percent, to $19.80 on the New York Stock Exchange; they were trading at about $28 a share two weeks ago.
The discovery of improprieties at Aon broadens Mr. Spitzer's investigation to a company that, along with Marsh, dominates the insurance brokerage business. Together, they control more than 70 percent of the market.
At Aon, the person close to the case said, investigators have found documentation of brokers steering business to insurers that paid the company incentives. They also found another anticompetitive practice known as tying, a kind of pay-to-play arrangement in which brokers threaten to curtail sales for an insurance company unless the insurer lets the broker also arrange its own coverage needs or reinsurance. Fees on reinsurance, which insurers buy to reduce their risk, can run into the tens of millions of dollars.
Both steering and tying can violate New York's fraud and antitrust laws and apply to anyone doing business in the state. Though Aon is based in Chicago, it has offices in New York, which is an important center for the insurance industry. Its founder, Patrick G. Ryan, announced late last month that he would be stepping down as chief executive after running the company for 40 years, but he gave no indication of when he planned to move on.
Gary Sullivan, a spokesman for Aon, declined to comment yesterday.
While the investigators have found what they regard as antitrust violations at Aon, they so far have found no evidence of bid rigging and price fixing, people briefed on the case said.
Bid rigging and price fixing are the most serious accusations to arise thus far in the investigation because they are clearly defined antitrust violations that can also result in criminal charges, legal experts said. Steering and tying can also be against the law, the experts said, but they involve certain issues of judgment by the courts. These include the possibility that a company paying the highest incentive also provided the best deal to a customer and, in tying arrangements, the degree to which an insurance company was actually pressured to comply or acted in what it perceived to be its own best interests in anticipation of pressure.
"Bid rigging and price fixing are an absolute per se violation of antitrust laws," said John Coffee, a Columbia University specialist on securities law. "Steering and tying are in a gray area."
Insurance executives and analysts have been anticipating that Aon would be the next target. Marsh arranges the insurance coverage for about 40 percent of corporate America, and Aon handles 30 percent. Between them, they have enormous purchasing power that enables them to compel insurance companies to meet their demands or risk losing business, industry experts said.
"Anytime you have this much market power concentrated in the hands of such a small number of brokers, the pure competition that is supposed to occur in the free market is stifled," said Paul Equale, a Washington consultant. He is the former chief executive and chief lobbyist for the Independent Insurance Agents and Brokers of America, one of the industry's largest trade groups whose members mainly sell commercial insurance to small and medium-size businesses around the country as well as home and auto insurance.
Allmerica profits up
Allmerica Financial Corp.'s third-quarter earnings rose 55 percent, and the property and casualty operations reported ''solid" pretax segment earnings for the period despite being hurt by catastrophe losses primarily related to hurricanes in the Southeast. The Worcester insurance and financial services holding company said earnings were $17.7 million, or 33 cents a share, for the quarter, up from net income of $11.4 million, or 21 cents a share, a year earlier. Total segment income after taxes was $19.6 million, or 37 cents a share, nearly flat from $19.7 million, or 37 cents a share, in the third quarter of last year. During the quarter, the company incurred gross catastrophe losses of about $99 million, primarily related to hurricanes in the Southeast. After reinsurance, pretax catastrophe losses were about $62 million, compared to $17 million in the year-ago period.
Cheaper Health Insurance
If you think buying cheaper prescription drugs in Canada is a good idea, what would you say to buying a cheaper health insurance plan from another US state? What would you say if it meant the average Mainer could have another $3,300 a year tax free? If you think it's a good idea, you're not the only one. So does President Bush, which is why he is pushing for a national health insurance market. The idea of buying health insurance across state lines is also extraordinarily popular with the American people. A recent Zogby poll for the Council for Affordable Health Insurance showed that 72 percent of the American people support allowing someone living in one state to purchase health insurance from another state if the insurance is state-regulated and approved. In addition, 82 percent said they would be likely to purchase a policy across state lines if they were paying very high rates and needed access to more affordable health insurance policies. Maine's notoriously high health insurance rates, especially for individuals, would likely make this idea even more popular among Mainers. On Oct. 12, eHealthInsurance, the nation's largest source of health insurance for individuals and families, released data from its semi-annual Cost and Benefits of Individual Health Insurance report that showed that Iowa, at $103 for an average age of 35, has the lowest average monthly health insurance premiums for single policies of any of the 43 states in which eHealthInsurance sells insurance. The average premium figures are derived from the a sample of 82,000 individual and family health insurance policies purchased through its Web site, including policies that are PPOs, HMOs, point of sale, indemnity, and high deductible health insurance plans. The comparison of these average monthly premiums provides a fair approximation of the relative costs of health insurance among the states. Because eHealthInsurance does not sell in Maine, we checked Anthem Insurance's web site and found the least expensive monthly premium for a 35-year-old male in Hancock County Maine is $286, $183 (or 177 percent) more expensive than the average monthly premium rate in Iowa. In other words, if the average Mainer enjoyed the average Iowan's individual insurance premium, he or she would have $2,196 more in his pocket at the end of each year. And assuming for the moment that the same thrifty individual Mainer decided to deposit $2,000 of this savings into a health savings account, the new tax-free account for medical expenses made possible by the 2003 Medicare drug law, then he or she could realize an additional federal tax savings of around $500 (assuming an income of between $28,000 to $68,000). In addition, if Maine, like many states, also provided for HSA deposits to be made tax-free under state tax law, that would mean an additional tax savings of $170. Well, so far this Mainer is now ahead $2,866 for the year, but it's not quite the end of the story. If Bush succeeds in not only passing his plan for a national health insurance market but also for his plans for the deductibility of health insurance premiums for HSA-eligible plans, then the Mainer's $103 monthly premium for a high deductible plan would be deducted from his or her federal taxes for an additional federal tax savings of $309. That brings the Mainer's total savings in a national health insurance market to $3,175. We can probably leave it there, but if this Mainer works for a small business, there is a Bush proposal for a $200 tax rebate for individuals working for small business or a family farm who contribute at least that amount to their own HSA. In that case, the total savings would come to $3,375. With savings like these, there is no question that many more Mainers will be able to afford health insurance. We don't yet have a national market for health insurance but already, after only nine months of sales of HSA-qualifying health plans, thousands of previously uninsured individuals, families, small businesses, and family farms are finding affordable insurance either for the first time or the first time in a long time. Assurant Health reports that 43 percent of its HSA applicants were previously uninsured. Similarly, eHealthInsurance reports that approximately 33 percent of its HSA purchasers were previously uninsured. Maine's high insurance rates not only take a large chunk out of individual take-home pay, but they also act as a drag on the state's economy adversely affecting its ability to compete with other states for jobs. Now there is an opportunity for Maine leadership to take advantage of the plans for a national insurance market and push for it to occur sooner rather than later. The results could be stunning for the Maine economy and could significantly increase the affordability of health coverage for thousands of Mainers who currently go without it.
Monday, October 25, 2004
Kravitz sued by Amica
Lenny Kravitz's neighbor is suing over what he says is Kravitz's clogged toilet. Amica Mutual Insurance Company is suing on behalf of retired financial executive Joel Disend, who lives below Kravitz in New York. The company says in court papers Disend's condo "sustained catastrophic water damage" on August first.
The filing blames it on Kravitz "allowing a commode to become blocked, clogged and congested with various materials." Amica says it had to pay nearly $334,000 to fix Disend's condo.
The filing blames it on Kravitz "allowing a commode to become blocked, clogged and congested with various materials." Amica says it had to pay nearly $334,000 to fix Disend's condo.
Thursday, October 21, 2004
AIG subject of criminal probe
NEW YORK (Reuters) - American International Group Thursday reported higher third-quarter earnings despite losses related to four U.S. hurricanes, and the insurer said it was the target of a grand jury investigation.
AIG said the U.S. attorney for the Southern District of Indiana had informed the company that the investigation was looking into "non-traditional insurance or
income-smoothing products marketed by AIG that were directed at creating agreements with businesses that would appear to be insurance and accounted for as insurance but did not involve any actual risk transfer.''
The investigation is also directed at a company named Brightpoint Inc., which was previously investigated by federal regulators, AIG said.
AIG said the U.S. attorney for the Southern District of Indiana had informed the company that the investigation was looking into "non-traditional insurance or
income-smoothing products marketed by AIG that were directed at creating agreements with businesses that would appear to be insurance and accounted for as insurance but did not involve any actual risk transfer.''
The investigation is also directed at a company named Brightpoint Inc., which was previously investigated by federal regulators, AIG said.
Tuesday, October 19, 2004
Most Stolen Cars
A study released by the auto insurance industry found which cars are mostly likely to be stolen and the average payment amount per insurance claim.
HIGHEST THEFT CLAIMS
Make and model (2001-03) Average payment per claim
Cadillac Escalade EXT $14,939
Nissan Maxima 4,126
Cadillac Escalade 15,703
Dodge Stratus/Chrysler Sebring 5,483
Dodge Intrepid 5,394
Average, all cars 5,928
LOWEST THEFT CLAIMS
Make and model (2001-03) Average payment per claim
Buick LeSabre $3,201
Buick Park Avenue 5,098
Ford Taurus 4,920
Buick Rendevous 4WD 1,601
Saturn LW 2,075
Average, all cars 5,928
SOURCE: INSURANCE INSTITUTE FOR HIGHWAY SAFETY
HIGHEST THEFT CLAIMS
Make and model (2001-03) Average payment per claim
Cadillac Escalade EXT $14,939
Nissan Maxima 4,126
Cadillac Escalade 15,703
Dodge Stratus/Chrysler Sebring 5,483
Dodge Intrepid 5,394
Average, all cars 5,928
LOWEST THEFT CLAIMS
Make and model (2001-03) Average payment per claim
Buick LeSabre $3,201
Buick Park Avenue 5,098
Ford Taurus 4,920
Buick Rendevous 4WD 1,601
Saturn LW 2,075
Average, all cars 5,928
SOURCE: INSURANCE INSTITUTE FOR HIGHWAY SAFETY
Kaiser, United CEOs are stepping down
The CEOs of two Colorado insurers are stepping down from their positions.
Vic Lazzaro, 59, retired from UnitedHealthcare, Colorado's second-largest health plan, last week.
Chris Binkley, president and CEO of Kaiser Permanente Colorado, is stepping down after 24 years with the organization to work for Kaiser on national issues, including bargaining with unions, implementing the new electronic medical record and growing membership.
Lazzaro was with UnitedHealthcare for nearly five years.
"Basically the company was looking at new organization, and I looked at what was available to me and said, 'We had a great deal of success, and I'm at a point in life where the option of retiring became very attractive,'" he said. "I'm going to retire and enjoy travel and community activities, as well as possibly do something else, more than likely unrelated to health care."
Lazzaro is being replaced by Dr. Craig Keyes, the former CEO of United's plan that served New York and parts of New Jersey and Connecticut.
UnitedHealth Group acquired Oxford Health Plans Inc. in July. Oxford provides health plans to employers and individuals primarily in New York, New Jersey and Connecticut. Charles Berg, CEO of Oxford, remained in that position and assumed responsibility for all UnitedHealthcare operations serving the tri-state markets.
UnitedHealthcare has about 550,000 members in Colorado.
Binkley has served as regional and divisional president for Kaiser Permanente for 16 years, including a stint in the Georgia region.
The Kaiser Permanente program offices in Oakland, Calif., will coordinate the search for Binkley's replacement, with involvement from the Kaiser Permanente Colorado leadership and physician group. Dr. Jack Cochran remains executive medical director of the Colorado Permanente Medical Group, the physician group that provides care exclusively to Kaiser Permanente members.
"I'm proud that I can hand to my successor a region that is well-positioned to continue to thrive in the marketplace," Binkley said in a press release.
Kaiser Permanente is a nonprofit health plan and the largest private health care provider in Colorado. Kaiser Permanente cares for more than 417,000 members in the Denver/Boulder and Colorado Springs areas.
Vic Lazzaro, 59, retired from UnitedHealthcare, Colorado's second-largest health plan, last week.
Chris Binkley, president and CEO of Kaiser Permanente Colorado, is stepping down after 24 years with the organization to work for Kaiser on national issues, including bargaining with unions, implementing the new electronic medical record and growing membership.
Lazzaro was with UnitedHealthcare for nearly five years.
"Basically the company was looking at new organization, and I looked at what was available to me and said, 'We had a great deal of success, and I'm at a point in life where the option of retiring became very attractive,'" he said. "I'm going to retire and enjoy travel and community activities, as well as possibly do something else, more than likely unrelated to health care."
Lazzaro is being replaced by Dr. Craig Keyes, the former CEO of United's plan that served New York and parts of New Jersey and Connecticut.
UnitedHealth Group acquired Oxford Health Plans Inc. in July. Oxford provides health plans to employers and individuals primarily in New York, New Jersey and Connecticut. Charles Berg, CEO of Oxford, remained in that position and assumed responsibility for all UnitedHealthcare operations serving the tri-state markets.
UnitedHealthcare has about 550,000 members in Colorado.
Binkley has served as regional and divisional president for Kaiser Permanente for 16 years, including a stint in the Georgia region.
The Kaiser Permanente program offices in Oakland, Calif., will coordinate the search for Binkley's replacement, with involvement from the Kaiser Permanente Colorado leadership and physician group. Dr. Jack Cochran remains executive medical director of the Colorado Permanente Medical Group, the physician group that provides care exclusively to Kaiser Permanente members.
"I'm proud that I can hand to my successor a region that is well-positioned to continue to thrive in the marketplace," Binkley said in a press release.
Kaiser Permanente is a nonprofit health plan and the largest private health care provider in Colorado. Kaiser Permanente cares for more than 417,000 members in the Denver/Boulder and Colorado Springs areas.
Monday, October 18, 2004
Progressive Insurance announces results of dutch auction
The Progressive Corporation (NYSE:PGR) today announced the preliminary results of its modified "Dutch auction" tender offer to purchase up to 17.1 million of its Common Shares, $1.00 par value. The tender offer expired at 12:00 midnight, New York City time, on Friday, October 15, 2004.
A preliminary count by the depositary for the tender offer indicates that approximately 16.9 million Common Shares were properly tendered at prices at or below $88 per share and not withdrawn, including approximately 6.7 million shares tendered pursuant to notices of guaranteed delivery. Because shareholders tendered less than 17.1 million Common Shares, the Company anticipates that the tendered shares will not be subject to proration. As a result, the Company expects to purchase approximately 16.9 million Common Shares at a purchase price of $88 per share. These figures are based on preliminary results and are subject to verification and proper delivery of shares tendered pursuant to notices of guaranteed delivery.
The final number of Common Shares accepted for purchase will be determined and announced promptly after the final results of the tender offer are available, which the Company expects to be completed within 5 business days. The Company will then promptly commence payment for the Common Shares accepted for purchase, and all other tendered shares (if any) will be returned to the tendering shareholders.
A preliminary count by the depositary for the tender offer indicates that approximately 16.9 million Common Shares were properly tendered at prices at or below $88 per share and not withdrawn, including approximately 6.7 million shares tendered pursuant to notices of guaranteed delivery. Because shareholders tendered less than 17.1 million Common Shares, the Company anticipates that the tendered shares will not be subject to proration. As a result, the Company expects to purchase approximately 16.9 million Common Shares at a purchase price of $88 per share. These figures are based on preliminary results and are subject to verification and proper delivery of shares tendered pursuant to notices of guaranteed delivery.
The final number of Common Shares accepted for purchase will be determined and announced promptly after the final results of the tender offer are available, which the Company expects to be completed within 5 business days. The Company will then promptly commence payment for the Common Shares accepted for purchase, and all other tendered shares (if any) will be returned to the tendering shareholders.
Sunday, October 17, 2004
Unicare Insurance and the policy store announce new offering
---Press Release from Unicare / Policy Store---
(PRWEB) September 18, 2004 -- Policy Store has teamed up with Unicare Health insurance to offer you the best health insurance products in the industry. Unicare health insurance and Policy Store's committment to service will gaurantee you a excellent Medical Insurance Experiance. PolicyStore.com wants to be your number one choice for insurance on the web, this is why we offer outstanding customer service.
We have many Senior Products, even dental insurance for seniors which I am told was not the norm. Many seniors are told that if they are over 65 that they no longer need dental insurance or no longer qualify for it! I feel that if they have teeth they have a need and if they want it, it would be an insult to those who have taken care of themselves for all those years to be told that you are too old for dental insurance.
Not only does the Policy Store have senior products but we also have a welcome edition to those who have "little people" that need coverage and are not able to cover themselves therefore don't realize that they can cover just their children! The Policy Store is striving to be the company that offers the Best possible coverage for the best possible rates with the best possible customer service.
(PRWEB) September 18, 2004 -- Policy Store has teamed up with Unicare Health insurance to offer you the best health insurance products in the industry. Unicare health insurance and Policy Store's committment to service will gaurantee you a excellent Medical Insurance Experiance. PolicyStore.com wants to be your number one choice for insurance on the web, this is why we offer outstanding customer service.
We have many Senior Products, even dental insurance for seniors which I am told was not the norm. Many seniors are told that if they are over 65 that they no longer need dental insurance or no longer qualify for it! I feel that if they have teeth they have a need and if they want it, it would be an insult to those who have taken care of themselves for all those years to be told that you are too old for dental insurance.
Not only does the Policy Store have senior products but we also have a welcome edition to those who have "little people" that need coverage and are not able to cover themselves therefore don't realize that they can cover just their children! The Policy Store is striving to be the company that offers the Best possible coverage for the best possible rates with the best possible customer service.
State Farm back in West Virginia
CHARLESTON -- Citing changes in West Virginia's insurance laws, State Farm Insurance announced Friday that it will again offer coverage to new automobile customers in the state.
However, the company said it will not accept new homeowner or commercial customers until the Legislature makes additional changes.
State Farm had stopped writing new insurance policies in West Virginia on Dec. 16, 2002. The company said it lost nearly $290 million on auto insurance policies in West Virginia between 1993 and 2001.
State Farm attributed its decision to changes in the auto insurance market and several revisions to state law that the Legislature approved this year. Those revisions include the establishment of an insurance fraud unit within the office of the insurance commissioner, and a provision that allows insurers to elect to refuse to renew up to 1 percent of their auto policies statewide each year, though no more than 1 percent of their policyholders in any one county.
State Farm said the revisions will give insurers more flexibility to reject policy renewals for ''bad risk drivers'' and will reduce fraud.
''Senate President Earl Ray Tomblin and House Speaker Bob Kiss are to be commended for their leadership in passing these laws, which will bring more stability to the West Virginia insurance market, particularly in auto insurance. This increased stability allows us to begin accepting new West Virginia auto insurance customers,'' said Arlene Hogan, operations vice president for the company's Mid-Atlantic Zone.
However, the company said new homeowner and commercial customers will not be accepted until the Legislature eliminates ''third party bad faith'' lawsuits and makes other revisions. ''Third party bad faith'' lawsuits allege an insurance company failed to handle a claim reasonably. They are filed by non-policyholders involved in claims with policyholders.
The state Chamber of Commerce also has called for a ban on such lawsuits.
State Farm also wants the Legislature to give insurers more flexibility in rejecting renewals of homeowner policies.
A report issued to lawmakers in July by Insurance Commissioner Jane Cline, blamed high homeowner rates on natural disasters such as wind and hail storms. Excluding those catastrophes, the report concluded that the severity of claims filed in West Virginia ''are very comparable to countrywide.''
However, the company said it will not accept new homeowner or commercial customers until the Legislature makes additional changes.
State Farm had stopped writing new insurance policies in West Virginia on Dec. 16, 2002. The company said it lost nearly $290 million on auto insurance policies in West Virginia between 1993 and 2001.
State Farm attributed its decision to changes in the auto insurance market and several revisions to state law that the Legislature approved this year. Those revisions include the establishment of an insurance fraud unit within the office of the insurance commissioner, and a provision that allows insurers to elect to refuse to renew up to 1 percent of their auto policies statewide each year, though no more than 1 percent of their policyholders in any one county.
State Farm said the revisions will give insurers more flexibility to reject policy renewals for ''bad risk drivers'' and will reduce fraud.
''Senate President Earl Ray Tomblin and House Speaker Bob Kiss are to be commended for their leadership in passing these laws, which will bring more stability to the West Virginia insurance market, particularly in auto insurance. This increased stability allows us to begin accepting new West Virginia auto insurance customers,'' said Arlene Hogan, operations vice president for the company's Mid-Atlantic Zone.
However, the company said new homeowner and commercial customers will not be accepted until the Legislature eliminates ''third party bad faith'' lawsuits and makes other revisions. ''Third party bad faith'' lawsuits allege an insurance company failed to handle a claim reasonably. They are filed by non-policyholders involved in claims with policyholders.
The state Chamber of Commerce also has called for a ban on such lawsuits.
State Farm also wants the Legislature to give insurers more flexibility in rejecting renewals of homeowner policies.
A report issued to lawmakers in July by Insurance Commissioner Jane Cline, blamed high homeowner rates on natural disasters such as wind and hail storms. Excluding those catastrophes, the report concluded that the severity of claims filed in West Virginia ''are very comparable to countrywide.''
Frivilous Insurance Lawsuits...mostly hoaxes
By PETER CARLSON
The Washington Post
Are you mad as hell about the plague of frivolous lawsuits that’s ruining this great country? So was I until I read “False Alarm,” by Stephanie Mencimer in October’s Washington Monthly.
It’s an eye-opening expose of how the insurance industry, aided by gullible reporters, has hyped a “lawsuit crisis” by disseminating dubious stories of idiotic lawsuits.
Remember the story of the guy who won a $500,000 lawsuit against a lawn mower manufacturer after he hurt himself while using the mower as a hedge clipper?
It never happened.
How about the guy who won a $300,000 jury verdict against a ladder manufacturer after he fell off a ladder he’d set in a pile of manure? There was no manure.
And the story of the woman who threw a drink at her boyfriend in a restaurant, then won $100,000 suing the restaurant because she slipped in the puddle and hurt herself? More baloney.
All those stories were widely reported and, Mencimer says, all were either totally fictitious or wildly distorted.
These horror stories are hyped by insurance industry groups and their allies to convince Americans that we’re in a “lawsuit crisis.”
Actually, Mencimer writes, the rate of lawsuits has been falling since 1975, and the median jury award to plaintiffs who manage to win has dropped from $65,000 in 1992 to $37,000 in 2001.
The Washington Post
Are you mad as hell about the plague of frivolous lawsuits that’s ruining this great country? So was I until I read “False Alarm,” by Stephanie Mencimer in October’s Washington Monthly.
It’s an eye-opening expose of how the insurance industry, aided by gullible reporters, has hyped a “lawsuit crisis” by disseminating dubious stories of idiotic lawsuits.
Remember the story of the guy who won a $500,000 lawsuit against a lawn mower manufacturer after he hurt himself while using the mower as a hedge clipper?
It never happened.
How about the guy who won a $300,000 jury verdict against a ladder manufacturer after he fell off a ladder he’d set in a pile of manure? There was no manure.
And the story of the woman who threw a drink at her boyfriend in a restaurant, then won $100,000 suing the restaurant because she slipped in the puddle and hurt herself? More baloney.
All those stories were widely reported and, Mencimer says, all were either totally fictitious or wildly distorted.
These horror stories are hyped by insurance industry groups and their allies to convince Americans that we’re in a “lawsuit crisis.”
Actually, Mencimer writes, the rate of lawsuits has been falling since 1975, and the median jury award to plaintiffs who manage to win has dropped from $65,000 in 1992 to $37,000 in 2001.
Friday, October 15, 2004
Safeco revises its storm costs upwards by $44m
LOSSES from hurricanes Charley and Frances were larger and more severe than first anticipated, says insurer Safeco.
Safeco revised its loss estimate for the two storms to $117m, a $44m increase compared with its previously reported estimate of $73m. The insurer said its aggregate pre-tax catastrophe losses for the third quarter are estimated at $195m, with $183m of this attributable to the hurricanes. The losses will reduce third-quarter net income by $127m after tax. "This hurricane season has taken a tremendous toll in Florida," said Mike McGavick, Safeco chairman and chief executive. "While we were taken aback by the number of large losses from Charley, we now have inspected every severe and potentially large loss from the hurricanes and 67% of all claims.
"Four hurricanes hitting one state in a span of just six weeks is an extraordinary event. One factor that is clearly an estimate at this time is the loss cost trends we will see with these storms," he added. "We're monitoring state and regional markets very carefully. If we see repair and restoration cost trends that are different from our current estimates, it may require further revision to our loss estimates for these storms."
The impact on Bermudian insurers and reinsurers became clearer yesterday when Ace and Aspen revealed loss estimates for this year's hurricanes.
Ace said its catastrophe-related charges during the third quarter will be $480m pre-tax, including expected losses from the hurricanes as well as typhoons Songda, Chaba and Meari.
Aspen Insurance said its hurricane losses will be $135m, net of reinsurance and tax, with an additional $13m impact from typhoon Songda.
Chris O'Kane, Aspen chief executive, said: "Due to the rapid succession and overlapping footprint of the Florida storms, loss adjustment levels are complicating the claims process and delaying the reporting of claims at the reinsurance level. We believe losses of this magnitude are likely to have a significant impact on trading conditions, leading to increases in price and improvements in terms and conditions for wind-exposed property business in the US."
Safeco revised its loss estimate for the two storms to $117m, a $44m increase compared with its previously reported estimate of $73m. The insurer said its aggregate pre-tax catastrophe losses for the third quarter are estimated at $195m, with $183m of this attributable to the hurricanes. The losses will reduce third-quarter net income by $127m after tax. "This hurricane season has taken a tremendous toll in Florida," said Mike McGavick, Safeco chairman and chief executive. "While we were taken aback by the number of large losses from Charley, we now have inspected every severe and potentially large loss from the hurricanes and 67% of all claims.
"Four hurricanes hitting one state in a span of just six weeks is an extraordinary event. One factor that is clearly an estimate at this time is the loss cost trends we will see with these storms," he added. "We're monitoring state and regional markets very carefully. If we see repair and restoration cost trends that are different from our current estimates, it may require further revision to our loss estimates for these storms."
The impact on Bermudian insurers and reinsurers became clearer yesterday when Ace and Aspen revealed loss estimates for this year's hurricanes.
Ace said its catastrophe-related charges during the third quarter will be $480m pre-tax, including expected losses from the hurricanes as well as typhoons Songda, Chaba and Meari.
Aspen Insurance said its hurricane losses will be $135m, net of reinsurance and tax, with an additional $13m impact from typhoon Songda.
Chris O'Kane, Aspen chief executive, said: "Due to the rapid succession and overlapping footprint of the Florida storms, loss adjustment levels are complicating the claims process and delaying the reporting of claims at the reinsurance level. We believe losses of this magnitude are likely to have a significant impact on trading conditions, leading to increases in price and improvements in terms and conditions for wind-exposed property business in the US."
Coventry will buy First Health for $1.8 billion
First Health Group, which manages health-care benefits for employers and unions and which has struggled lately, will be acquired by Coventry Health Care in a $1.8 billion cash and stock deal, the companies said Thursday.
Maryland-based Coventry, a managed health-care company with operations in 15 U.S. markets and 3.1 million members, is purchasing firms to compete with larger insurers such as UnitedHealth Group because employers aren't adding jobs fast enough to increase membership in Coventry's health plans. Adding Downers Grove-based First Health will extend Coventry's coverage to all 50 U.S. states.
Like its bigger rivals, Coventry has grown through acquisitions since beginning operations in 1987. The company listed 11 acquisitions from 2000 and 2003 in a March filing with the U.S. Securities and Exchange Commission.
Coventry will issue 0.1791 shares of Coventry common stock and pay $9.375 in cash for each First Health share under the terms of the agreement.
The agreement values First Health at about $17.67 a share, based on Thursday's closing price for Coventry. That's a 17 percent premium to First Health's closing price Wednesday.
Shares of First Health rose $2 Thursday, or 13 percent, to $17.04 They had dropped 23 percent this year, before Thursday's gain. The transaction is based on about 94.5 million First Health shares outstanding, spokeswoman Erin Gardiner said.
Shares of Coventry fell $5.76, or 11 percent, to $46.29 Thursday.
"This merger will provide great opportunities for all of our constituents including colleagues, clients and providers, and enhance efforts to secure and service a growing client base," said First Health President and Chief Executive Edward L. Wristen.
First Health was founded in 1982 as a business that evaluated the efficiency, quality and necessity of health-care services. Through strategic mergers and acquisitions it evolved into a full-service group health- and workers-compensation benefits company.
But it has faced recent challenges. The company, which employs 6,000 people, including 750 in the Chicago area, cut 200 jobs in the first quarter as profit came in below expectations. Thursday it reduced its 2004 earnings per share forecast to $1.25 to $1.28 per share, down from $1.30 to $1.40 projected in April. It blamed slower ramp up of new business in the third quarter.
Through the first six months of this year, revenues fell to $58.9 million from $74 million a year earlier.
"The combination of Coventry Health Care and First Health Group creates a truly national health-benefits platform with the tools to serve our local, national and governmental clients," said Coventry President and Chief Executive Allen Wise.
Bear Stearns & Co. is ''uncertain as to the strategic rationale for the acquisition given our concern with regard to the long-term viability of First Health's group health business,'' said Bear Stearns analyst John Rex in a report. He has an ''overweight'' rating on the shares and doesn't own them.
Coventry said the purchase will add 30 cents to 36 cents a share to earnings next year, previously forecast at $4.13 to $4.17. The company expects to save $20 million to $30 million next year and $40 million to $50 million by the end of 2006.
It also reported that third-quarter net income rose 29 percent to $87 million, or 96 cents a share, from $67.5 million, or 74 cents, in the year-earlier period.
''They know what they are doing,'' said Thomas Mangan, a vice president with James Investment Research, which he said holds about 140,000 Coventry shares. The First Health purchase ''is more of the same and the same has been pretty good.''
Coventry didn't disclose whether the acquisition deal will lead to job cuts. The purchase, which is subject to regulatory approval, is expected to close in the first quarter of 2005.
Maryland-based Coventry, a managed health-care company with operations in 15 U.S. markets and 3.1 million members, is purchasing firms to compete with larger insurers such as UnitedHealth Group because employers aren't adding jobs fast enough to increase membership in Coventry's health plans. Adding Downers Grove-based First Health will extend Coventry's coverage to all 50 U.S. states.
Like its bigger rivals, Coventry has grown through acquisitions since beginning operations in 1987. The company listed 11 acquisitions from 2000 and 2003 in a March filing with the U.S. Securities and Exchange Commission.
Coventry will issue 0.1791 shares of Coventry common stock and pay $9.375 in cash for each First Health share under the terms of the agreement.
The agreement values First Health at about $17.67 a share, based on Thursday's closing price for Coventry. That's a 17 percent premium to First Health's closing price Wednesday.
Shares of First Health rose $2 Thursday, or 13 percent, to $17.04 They had dropped 23 percent this year, before Thursday's gain. The transaction is based on about 94.5 million First Health shares outstanding, spokeswoman Erin Gardiner said.
Shares of Coventry fell $5.76, or 11 percent, to $46.29 Thursday.
"This merger will provide great opportunities for all of our constituents including colleagues, clients and providers, and enhance efforts to secure and service a growing client base," said First Health President and Chief Executive Edward L. Wristen.
First Health was founded in 1982 as a business that evaluated the efficiency, quality and necessity of health-care services. Through strategic mergers and acquisitions it evolved into a full-service group health- and workers-compensation benefits company.
But it has faced recent challenges. The company, which employs 6,000 people, including 750 in the Chicago area, cut 200 jobs in the first quarter as profit came in below expectations. Thursday it reduced its 2004 earnings per share forecast to $1.25 to $1.28 per share, down from $1.30 to $1.40 projected in April. It blamed slower ramp up of new business in the third quarter.
Through the first six months of this year, revenues fell to $58.9 million from $74 million a year earlier.
"The combination of Coventry Health Care and First Health Group creates a truly national health-benefits platform with the tools to serve our local, national and governmental clients," said Coventry President and Chief Executive Allen Wise.
Bear Stearns & Co. is ''uncertain as to the strategic rationale for the acquisition given our concern with regard to the long-term viability of First Health's group health business,'' said Bear Stearns analyst John Rex in a report. He has an ''overweight'' rating on the shares and doesn't own them.
Coventry said the purchase will add 30 cents to 36 cents a share to earnings next year, previously forecast at $4.13 to $4.17. The company expects to save $20 million to $30 million next year and $40 million to $50 million by the end of 2006.
It also reported that third-quarter net income rose 29 percent to $87 million, or 96 cents a share, from $67.5 million, or 74 cents, in the year-earlier period.
''They know what they are doing,'' said Thomas Mangan, a vice president with James Investment Research, which he said holds about 140,000 Coventry shares. The First Health purchase ''is more of the same and the same has been pretty good.''
Coventry didn't disclose whether the acquisition deal will lead to job cuts. The purchase, which is subject to regulatory approval, is expected to close in the first quarter of 2005.
Thursday, October 14, 2004
Insurance broker accused of rigging bids
Eliot Spitzer, the New York state attorney general, yesterday accused the world's largest insurance broker of cheating customers by rigging prices and steering business to insurers in exchange for millions of dollars in kickbacks
The lawsuit brought by Mr. Spitzer against the broker, Marsh Inc., a unit of the Marsh & McLennan Companies, contends that Marsh conducted sham bidding to mislead customers into thinking that they were getting the best price for the coverage they needed. The lawsuit cites several examples of customers - including Fortune Brands, which sells Titleist golf balls and Jim Beam spirits, and the school district of Greenville, S.C. - who were misled that way.
In addition to the lawsuit, two executives of the American International Group, one of the world's largest insurance companies, pleaded guilty to criminal charges of rigging bids with Marsh.
While Mr. Spitzer's target yesterday was Marsh, he made clear that he was taking aim at a widespread practice in the insurance industry. "This investigation is broad and deep and it is disappointing,'' he said.
Mr. Spitzer suggested that he had also come across indications of wrongdoing in the sale of many kinds of personal insurance, including coverage on cars, homes and health insurance. "Virtually every line of insurance is implicated,'' he said.
The lawsuit names American International, or A.I.G., and three other insurers, as participants in the bid rigging and steering: the Hartford, a unit of Hartford Financial Services; Ace Ltd., which is based in Bermuda but is a major player in the American insurance market; and Munich American Risk Partners, a unit of Munich Re with offices in Princeton, N.J.
"There will be numerous criminal and civil cases,'' Mr. Spitzer promised.
Insurance is now the new financial battleground for Mr. Spitzer after recent crackdowns against conflicts of interest involving Wall Street analysts and abuses in trading mutual funds. The latest investigation has opened a rare window into a huge business of corporate middlemen. The role of insurance brokers is to get the proper insurance coverage at the best possible price for clients ranging from the giants of corporate America to regional businesses and mom-and-pop operations across the country. They receive commissions from the clients for arranging the coverage.
But decades ago, the brokers also began collecting fees from the other side of the deal, the insurers. Those fees were for steering a certain volume of business to an insurer or for arranging a particularly profitable form of coverage. Marsh reaped $800 million from these fees in 2003, the lawsuit says.
The investigation also threatens to embroil the insurance industry's remarkable family dynasty. Jeffrey Greenberg, 53, is chief executive of Marsh, while his brother Evan, 49, is chief executive of Ace.
Over several decades, the patriarch of the family, Maurice R. Greenberg, has converted A.I.G. from a small internationally oriented insurance company to one of the wealthiest and most powerful in the world. He had dreamed that he would eventually be succeeded by one of his sons.
But both Jeffrey and Evan left A.I.G. to strike out on their own after Mr. Greenberg, who is now 79 years old, showed no sign of intending to retire.
In a news conference yesterday, Mr. Spitzer was sharply critical of Jeffrey Greenberg, saying that he and other top executives of Marsh had initially misled his investigators. Mr. Spitzer said he did not try to negotiate a settlement with Marsh before filing the lawsuit.
"The leadership of that company is not a leadership I will talk with,'' an obviously angry Mr. Spitzer said. "It is not a leadership I will negotiate with.''
Through a spokeswoman, Jeffrey. Greenberg declined a request for an interview. In a statement, the parent company, Marsh & McLennan Companies, said: "We take very seriously the allegations made by Attorney General Spitzer.''
Shares of Marsh and A.I.G. and other insurers tumbled yesterday, dragging down the stock market. Marsh's stock price plunged 24 percent, or $11.28, to $34.85. Shares of A.I.G. fell 10 percent, or $6.99, to $60. The sell-off in A.I.G. accounted for nearly half the decline yesterday in the Dow Jones industrial average and was the steepest drop in the stock since the 1987 market crash. Hartford shares fell 6 percent, to $58.40, and Ace shares fell 9.5 percent, to $36.47.
The lawsuit brought by Mr. Spitzer against the broker, Marsh Inc., a unit of the Marsh & McLennan Companies, contends that Marsh conducted sham bidding to mislead customers into thinking that they were getting the best price for the coverage they needed. The lawsuit cites several examples of customers - including Fortune Brands, which sells Titleist golf balls and Jim Beam spirits, and the school district of Greenville, S.C. - who were misled that way.
In addition to the lawsuit, two executives of the American International Group, one of the world's largest insurance companies, pleaded guilty to criminal charges of rigging bids with Marsh.
While Mr. Spitzer's target yesterday was Marsh, he made clear that he was taking aim at a widespread practice in the insurance industry. "This investigation is broad and deep and it is disappointing,'' he said.
Mr. Spitzer suggested that he had also come across indications of wrongdoing in the sale of many kinds of personal insurance, including coverage on cars, homes and health insurance. "Virtually every line of insurance is implicated,'' he said.
The lawsuit names American International, or A.I.G., and three other insurers, as participants in the bid rigging and steering: the Hartford, a unit of Hartford Financial Services; Ace Ltd., which is based in Bermuda but is a major player in the American insurance market; and Munich American Risk Partners, a unit of Munich Re with offices in Princeton, N.J.
"There will be numerous criminal and civil cases,'' Mr. Spitzer promised.
Insurance is now the new financial battleground for Mr. Spitzer after recent crackdowns against conflicts of interest involving Wall Street analysts and abuses in trading mutual funds. The latest investigation has opened a rare window into a huge business of corporate middlemen. The role of insurance brokers is to get the proper insurance coverage at the best possible price for clients ranging from the giants of corporate America to regional businesses and mom-and-pop operations across the country. They receive commissions from the clients for arranging the coverage.
But decades ago, the brokers also began collecting fees from the other side of the deal, the insurers. Those fees were for steering a certain volume of business to an insurer or for arranging a particularly profitable form of coverage. Marsh reaped $800 million from these fees in 2003, the lawsuit says.
The investigation also threatens to embroil the insurance industry's remarkable family dynasty. Jeffrey Greenberg, 53, is chief executive of Marsh, while his brother Evan, 49, is chief executive of Ace.
Over several decades, the patriarch of the family, Maurice R. Greenberg, has converted A.I.G. from a small internationally oriented insurance company to one of the wealthiest and most powerful in the world. He had dreamed that he would eventually be succeeded by one of his sons.
But both Jeffrey and Evan left A.I.G. to strike out on their own after Mr. Greenberg, who is now 79 years old, showed no sign of intending to retire.
In a news conference yesterday, Mr. Spitzer was sharply critical of Jeffrey Greenberg, saying that he and other top executives of Marsh had initially misled his investigators. Mr. Spitzer said he did not try to negotiate a settlement with Marsh before filing the lawsuit.
"The leadership of that company is not a leadership I will talk with,'' an obviously angry Mr. Spitzer said. "It is not a leadership I will negotiate with.''
Through a spokeswoman, Jeffrey. Greenberg declined a request for an interview. In a statement, the parent company, Marsh & McLennan Companies, said: "We take very seriously the allegations made by Attorney General Spitzer.''
Shares of Marsh and A.I.G. and other insurers tumbled yesterday, dragging down the stock market. Marsh's stock price plunged 24 percent, or $11.28, to $34.85. Shares of A.I.G. fell 10 percent, or $6.99, to $60. The sell-off in A.I.G. accounted for nearly half the decline yesterday in the Dow Jones industrial average and was the steepest drop in the stock since the 1987 market crash. Hartford shares fell 6 percent, to $58.40, and Ace shares fell 9.5 percent, to $36.47.
Tuesday, October 12, 2004
Individual Health Insurance premiums hold steady
MOUNTAIN VIEW, Calif., Oct. 12 /PRNewswire/ -- Health insurance premiums for individuals across the country are holding steady at $150 per month, reported eHealthInsurance in its semi-annual Cost and Benefits of Individual Health Insurance Plans Report, released today. The report also shows that individuals who purchase their health insurance through the individual market choose plans with a deductible under $1000 nearly 40 percent of the time.
Families who purchased health insurance through the individual market were able to effectively manage their health insurance costs, paying an average monthly premium of $307 per month. Employer-based health insurance costs were up in 2004 by 11.2 percent(1), but according to eHealthInsurance premium costs in the individual market were up only 7 percent ($19 on average) for families from the last period.
"Consumers are now taking more control of their healthcare choices to manage costs," said Gary Lauer, CEO of eHealthInsurance, the nation's leading source of health insurance for individuals and families. "In the individual market, the majority of individuals and families are able to purchase quality health insurance at surprisingly affordable costs, while getting plans with comprehensive benefits, including prescription drugs."
The Cost and Benefits Report presents an analysis of data from a sample of about 82,000 health insurance policies purchased nationally through www.ehealthinsurance.com from April through September 2004. The last report in the series was released in March of this year.
Families who purchased health insurance through the individual market were able to effectively manage their health insurance costs, paying an average monthly premium of $307 per month. Employer-based health insurance costs were up in 2004 by 11.2 percent(1), but according to eHealthInsurance premium costs in the individual market were up only 7 percent ($19 on average) for families from the last period.
"Consumers are now taking more control of their healthcare choices to manage costs," said Gary Lauer, CEO of eHealthInsurance, the nation's leading source of health insurance for individuals and families. "In the individual market, the majority of individuals and families are able to purchase quality health insurance at surprisingly affordable costs, while getting plans with comprehensive benefits, including prescription drugs."
The Cost and Benefits Report presents an analysis of data from a sample of about 82,000 health insurance policies purchased nationally through www.ehealthinsurance.com from April through September 2004. The last report in the series was released in March of this year.
Washington DC Car Insurance Rates Third Highest In Nation
Washington, D.C. car insurance rates are third in the nation following New Jersey and New York, according to the Insurance Information Institute website, www.iii.org, an institute providing definitive insurance information to the public. The average D.C. resident pays $1,011 per year.
Blue Cross launches program to curb obesity
Blue Cross and Blue Shield of North Carolina announced a new program on Tuesday to treat obesity as a medical condition. The program, dubbed Healthy Lifestyle Choices, will take affect April 1, 2005, for employer groups and individuals enrolled in the company's Blue Care, Blue Options or Blue Advantage plans. The program is designed to help Blue Cross members lose weight and avoid costly medical problems linked to obesity. Some 1.1 million of the company's 3 million members will be eligible for the benefits, which will include:
Coverage of four doctors visits annually and related testing for the evaluation and treatment of obesity. Coverage fo two prescription weight-loss drugs, Meridia and Xenical, when medically necessary. Services from licenses dietitians. The company has also identified 12 doctors in seven practices as Bariatric Surgery Centers for Excellence. None of those facilities are in the Triad. The company says unhealthy weight can lead to health problems such as high blood pressure, heart disease and arthritis. It said that its obese members incurred 32 percent more in claims and medical expenses than normal-weight members.
The Healthy Lifestyle Choices program will not be available to people enrolled in the State Health Plan, the Federal Employee Program or the company's Medicare Supplemental plans.
© 2004 American City Business Journals Inc.
Coverage of four doctors visits annually and related testing for the evaluation and treatment of obesity. Coverage fo two prescription weight-loss drugs, Meridia and Xenical, when medically necessary. Services from licenses dietitians. The company has also identified 12 doctors in seven practices as Bariatric Surgery Centers for Excellence. None of those facilities are in the Triad. The company says unhealthy weight can lead to health problems such as high blood pressure, heart disease and arthritis. It said that its obese members incurred 32 percent more in claims and medical expenses than normal-weight members.
The Healthy Lifestyle Choices program will not be available to people enrolled in the State Health Plan, the Federal Employee Program or the company's Medicare Supplemental plans.
© 2004 American City Business Journals Inc.
Monday, October 11, 2004
Health Insurance REform Needed
Healthcare Crisis Update: Health Insurance Reform Needed. LowerMyDoctorbills.com Proposes to Change the Way America Buys Healthcare!
Health insurance premiums continue to rise and are becoming unaffordable for many American working families. We've moved away from the original concept of insurance in dealing with healthcare. Spreading the risk among many for large claims makes sense, but paying additional premiums to cover expenses you know you will incur doesn't. Perhaps a new approach to health insurance is needed.
(PRWEB) October 11, 2004 -- Let’s compare other areas where insurance plays a major role. You purchase auto insurance to protect yourself and others as mandated by state laws. But, you also protect your car from damage due to accidents and theft. What would happen to your auto insurance premiums if your policy included the cost of a weekly carwash, annual detailing and monthly oil changes? That’s what we’ve done with health insurance. Homeowners insurance is another example. Home maintenance costs are not built into the cost of insuring the home against damage. Is there any wonder our idea of health insurance isn’t working today? Accidents and illnesses do happen and having health insurance coverage makes handling the situation easier. However, check ups, dental cleanings, vision and hearing exams and chiropractic care are basic maintenance benefits that are best purchased separate from a health insurance plan. Gail Lynn Moore, owner of www.LowerMyDoctorBills.com advises, “Consumers need to be open to some alternative benefit options when designing a healthcare plan. I recommend that if clients need to buy a high deductible plan to keep the premiums affordable, they should consider adding a discount benefit card to replace a lot of the maintenance benefits that the high deductible negates.” As a licensed insurance agent in California, Moore has access to a number of discount plans, but only recommends one. “I became a Marketing Associate with International Associate of Businesses (IAB) because, while the plans themselves are not insurance, they offer members the best “insured benefits” on the market. They are more than just discount cards.”When asked to clarify, she explained that membership to the association gave access to benefits such as a $2000 accidental medical benefit, a $1000/day ICU/CCU benefit, a $25 benefit toward doctor visits and $1000 annual dental benefit per family member. These insured benefits are available to everyone regardless of any pre-existing health conditions. A Care Advocacy Program (CAP) assists in getting the lowest possible costs for hospital services. Coupled with large nationwide PPO networks, these benefits give members the greatest savings possible. Additional health care and supplies, including prescriptions, vision and hearing aids are made available at deep discounts. Moore cautions "Check out the organization offering the benefits. IAB has been around since 1982 and is committed to addressing issues and concerns of the American family." Also, "Make sure the discount plan has providers in your area. Many plans limit your selection. The IAB plans have the same PPO networks offered by many national insurance companies.” She concludes, “While the healthcare crisis continues to affect more and more Americans every day, consumers have to be made aware of alternative healthcare planning options. And, www.LowerMyDoctorBills.com is leading the way in changing the way America buys healthcare.”
Health insurance premiums continue to rise and are becoming unaffordable for many American working families. We've moved away from the original concept of insurance in dealing with healthcare. Spreading the risk among many for large claims makes sense, but paying additional premiums to cover expenses you know you will incur doesn't. Perhaps a new approach to health insurance is needed.
(PRWEB) October 11, 2004 -- Let’s compare other areas where insurance plays a major role. You purchase auto insurance to protect yourself and others as mandated by state laws. But, you also protect your car from damage due to accidents and theft. What would happen to your auto insurance premiums if your policy included the cost of a weekly carwash, annual detailing and monthly oil changes? That’s what we’ve done with health insurance. Homeowners insurance is another example. Home maintenance costs are not built into the cost of insuring the home against damage. Is there any wonder our idea of health insurance isn’t working today? Accidents and illnesses do happen and having health insurance coverage makes handling the situation easier. However, check ups, dental cleanings, vision and hearing exams and chiropractic care are basic maintenance benefits that are best purchased separate from a health insurance plan. Gail Lynn Moore, owner of www.LowerMyDoctorBills.com advises, “Consumers need to be open to some alternative benefit options when designing a healthcare plan. I recommend that if clients need to buy a high deductible plan to keep the premiums affordable, they should consider adding a discount benefit card to replace a lot of the maintenance benefits that the high deductible negates.” As a licensed insurance agent in California, Moore has access to a number of discount plans, but only recommends one. “I became a Marketing Associate with International Associate of Businesses (IAB) because, while the plans themselves are not insurance, they offer members the best “insured benefits” on the market. They are more than just discount cards.”When asked to clarify, she explained that membership to the association gave access to benefits such as a $2000 accidental medical benefit, a $1000/day ICU/CCU benefit, a $25 benefit toward doctor visits and $1000 annual dental benefit per family member. These insured benefits are available to everyone regardless of any pre-existing health conditions. A Care Advocacy Program (CAP) assists in getting the lowest possible costs for hospital services. Coupled with large nationwide PPO networks, these benefits give members the greatest savings possible. Additional health care and supplies, including prescriptions, vision and hearing aids are made available at deep discounts. Moore cautions "Check out the organization offering the benefits. IAB has been around since 1982 and is committed to addressing issues and concerns of the American family." Also, "Make sure the discount plan has providers in your area. Many plans limit your selection. The IAB plans have the same PPO networks offered by many national insurance companies.” She concludes, “While the healthcare crisis continues to affect more and more Americans every day, consumers have to be made aware of alternative healthcare planning options. And, www.LowerMyDoctorBills.com is leading the way in changing the way America buys healthcare.”
Thursday, October 7, 2004
AARP announces dental insurance for seniors
A dental insurance plan for people 50 and over has been announced by AARP and Delta Dental Insurance Company.
"As the 50-plus population continues to grow in numbers, and with the current lack of accessibility, there is a critical need for affordable dental insurance for this population, as well as public information focused on the importance of dental health as we age," said Dawn Sweeney, president of AARP Services, Inc.
To meet these needs, AARP, through its subsidiary AARP Services, Inc., has teamed with Delta Dental Insurance Company to create the AARP Dental Insurance Plan and to launch a dental care initiative targeting those who are 50-plus.
The AARP Dental Insurance Plan -- featuring comprehensive family coverage and the freedom to choose any licensed dentist -- will initially be available to AARP members in 21 states and the District of Columbia. Plans are to make the program available to all 35 million AARP members across the country by 2005.
"Our members have been asking us for this type of program because they realize the value of continuing dental care," Sweeney said. "However, because of financial limitations, many have had to eliminate regular dental care from their budget." The health implications for post-retirement dental care are significant, said Harold C. Slavkin, DDS, dean of the University of Southern California School of Dentistry and one of the chief architects of the landmark Surgeon General's report, released in 2000.
"Medicare does not cover routine dental services and, in most states, neither does Medicaid," he said. "With continued dental care, those who are 50-plus can avoid a myriad of health problems, including tooth loss, gum disease and mouth cancers. With continued care, we can all enjoy a robust lifestyle and a wide range of foods, communicate effectively, maintain self- esteem and meet our social responsibilities within our family and community." The AARP Dental Insurance Plan provides immediate coverage for most preventive, diagnostic and basic restorative services, as well as endodontics (root canal treatment) and oral surgery (extractions). After 12 months, coverage expands to include major restorations, periodontics (gum treatment) and prosthodontics (dentures).
"Dental insurance for retirees and those who are 50-plus is often very restrictive or simply unavailable," said Gary D. Radine, president and CEO of the holding company that includes Delta Dental Insurance Company. "This new program balances the need for immediate benefits with the need for affordable monthly premiums." Those interested in the coverage may contact the AARP Dental Insurance Plan for more information at http://www.deltadentalins.com/aarp or call toll-free at (866) 583-2085 to enroll. AARP membership is required for enrollment.
Approximately 60 percent of Americans older than 50 have dental insurance and most will lose this coverage when they retire and face fixed or reduced incomes, according to the landmark U.S. Surgeon General's Report on Oral Health.
As the "Baby Boom Generation" inches closer to retirement, their ranks continue to swell the 50-plus population of the United States, which was about 27 percent in 2000; by 2020, that number will jump by more than 115 million to approximately 35 percent, according to the U.S. Census.
"As the 50-plus population continues to grow in numbers, and with the current lack of accessibility, there is a critical need for affordable dental insurance for this population, as well as public information focused on the importance of dental health as we age," said Dawn Sweeney, president of AARP Services, Inc.
To meet these needs, AARP, through its subsidiary AARP Services, Inc., has teamed with Delta Dental Insurance Company to create the AARP Dental Insurance Plan and to launch a dental care initiative targeting those who are 50-plus.
The AARP Dental Insurance Plan -- featuring comprehensive family coverage and the freedom to choose any licensed dentist -- will initially be available to AARP members in 21 states and the District of Columbia. Plans are to make the program available to all 35 million AARP members across the country by 2005.
"Our members have been asking us for this type of program because they realize the value of continuing dental care," Sweeney said. "However, because of financial limitations, many have had to eliminate regular dental care from their budget." The health implications for post-retirement dental care are significant, said Harold C. Slavkin, DDS, dean of the University of Southern California School of Dentistry and one of the chief architects of the landmark Surgeon General's report, released in 2000.
"Medicare does not cover routine dental services and, in most states, neither does Medicaid," he said. "With continued dental care, those who are 50-plus can avoid a myriad of health problems, including tooth loss, gum disease and mouth cancers. With continued care, we can all enjoy a robust lifestyle and a wide range of foods, communicate effectively, maintain self- esteem and meet our social responsibilities within our family and community." The AARP Dental Insurance Plan provides immediate coverage for most preventive, diagnostic and basic restorative services, as well as endodontics (root canal treatment) and oral surgery (extractions). After 12 months, coverage expands to include major restorations, periodontics (gum treatment) and prosthodontics (dentures).
"Dental insurance for retirees and those who are 50-plus is often very restrictive or simply unavailable," said Gary D. Radine, president and CEO of the holding company that includes Delta Dental Insurance Company. "This new program balances the need for immediate benefits with the need for affordable monthly premiums." Those interested in the coverage may contact the AARP Dental Insurance Plan for more information at http://www.deltadentalins.com/aarp or call toll-free at (866) 583-2085 to enroll. AARP membership is required for enrollment.
Approximately 60 percent of Americans older than 50 have dental insurance and most will lose this coverage when they retire and face fixed or reduced incomes, according to the landmark U.S. Surgeon General's Report on Oral Health.
As the "Baby Boom Generation" inches closer to retirement, their ranks continue to swell the 50-plus population of the United States, which was about 27 percent in 2000; by 2020, that number will jump by more than 115 million to approximately 35 percent, according to the U.S. Census.
Life Insurance for the at home parents
By Tim Dameron-business columnist/Rocky Mount Telegram
If you belong to one of the 19.6 million American families with children where both parents are working, buying life insurance for both breadwinners is an obvious "must."
However, if you are one of the 5.3 million families that rely on one-income while the other parent stays at home, life insurance for the at-home parent may seem less important. Contrary to popular belief, life insurance for the at-home parent also is extremely important.
According to the Personal Economy Index, a recent survey conducted on behalf of American Express Financial Advisors, 35 percent of at-home parents are uninsured.
Value of the at-home parent.
The at-home parent provides a valuable service to the family. In fact, if a stay-at-home parent was on a corporate payroll, the starting salary could be $65,000 per year, according to the U.S. Census Bureau. This "value" comes from factoring in the cost of replacing the at-home parent with a full-time child care worker, cook and so on. The untimely death of a stay-at-home parent would not only be heartbreaking and tragic, but could drastically affect a family's immediate finances and long-term financial security as well.
Benefits of insuring the at-home parent.
A client from Texas, who is an electrical engineer, was advised by his American Express financial advisor to take out a life insurance policy for his wife who home-schooled five of their six children. Tragically, his wife died from complications just days after giving birth to their seventh child.
His life insurance policy gave him the financial security to leave his job to care for his family. Additionally, he was able to spare his children from further lifestyle changes such as moving or forcing them to quit their numerous sporting activities. With the money from the life insurance policy, he was able to take over for his wife's home schooling, and he didn't have to hire a child care worker or housekeeper, all of which made the transition just a bit easier for his kids.
Insuring the at-home parent.
When considering purchasing life insurance, for yourself or the stay-at-home parent, there are two questions you need to ask yourself: What type of insurance should I purchase? How much coverage do I need?
Generally, there are two types of life insurance policies: A term-life insurance policy, which provides protection for a specified term and pays a death benefit to the beneficiary should the owner of the policy die during the term. A cash value insurance policy provides the owner with a death benefit, plus any cash value earned from investments.
Generally, non-income producing parents tend to like the cash value policies, because these policies allow for them to accumulate assets despite the fact that they are not working. Term life insurance policies may be appropriate for some, since they are usually relatively less expensive in the short term.
Deciding how much life insurance you need is unique to each family and circumstances. As a starting point, consider having at least enough coverage to equal five to seven years of income. So if the stay-at-home parents' value is estimated at $65,000 per year, you may need a life insurance policy with coverage of $325,000 to $455,000. This formula can be applied to the working parent as well.
Generally speaking, you should follow these other helpful tips:
Overlooked expenses: You have to account for the less obvious costs of losing a stay-at-home parent. For example, the working parent may need to take an extended vacation or leave of absence to be at home in the case of such a tragedy. In addition, the family may eat out more often and incur other new expenses based on the new lifestyle with one parent. Don't forget to account for inflation and the expected increase in these expenses over time.
Account for lost savings: With extra expenses or lost wages, you may be forced to dip into your emergency cash reserves or reduce contributions to your 401(k).
Number of dependents and duration: When calculating how much insurance you need, estimate the length of time your dependents might need the benefits. This will depend on how old your kids are and how many you have.
Seek help: Consider meeting with a qualified financial advisor who can help you and your family develop a comprehensive financial plan. This plan will include adequate life insurance coverage for both parents, the one who works outside the home and the one who provides the valuable, albeit unsalaried, services in the home.
Tim Dameron is a financial advisor with American Express Financial Advisors Inc. in Rocky Mount.
If you belong to one of the 19.6 million American families with children where both parents are working, buying life insurance for both breadwinners is an obvious "must."
However, if you are one of the 5.3 million families that rely on one-income while the other parent stays at home, life insurance for the at-home parent may seem less important. Contrary to popular belief, life insurance for the at-home parent also is extremely important.
According to the Personal Economy Index, a recent survey conducted on behalf of American Express Financial Advisors, 35 percent of at-home parents are uninsured.
Value of the at-home parent.
The at-home parent provides a valuable service to the family. In fact, if a stay-at-home parent was on a corporate payroll, the starting salary could be $65,000 per year, according to the U.S. Census Bureau. This "value" comes from factoring in the cost of replacing the at-home parent with a full-time child care worker, cook and so on. The untimely death of a stay-at-home parent would not only be heartbreaking and tragic, but could drastically affect a family's immediate finances and long-term financial security as well.
Benefits of insuring the at-home parent.
A client from Texas, who is an electrical engineer, was advised by his American Express financial advisor to take out a life insurance policy for his wife who home-schooled five of their six children. Tragically, his wife died from complications just days after giving birth to their seventh child.
His life insurance policy gave him the financial security to leave his job to care for his family. Additionally, he was able to spare his children from further lifestyle changes such as moving or forcing them to quit their numerous sporting activities. With the money from the life insurance policy, he was able to take over for his wife's home schooling, and he didn't have to hire a child care worker or housekeeper, all of which made the transition just a bit easier for his kids.
Insuring the at-home parent.
When considering purchasing life insurance, for yourself or the stay-at-home parent, there are two questions you need to ask yourself: What type of insurance should I purchase? How much coverage do I need?
Generally, there are two types of life insurance policies: A term-life insurance policy, which provides protection for a specified term and pays a death benefit to the beneficiary should the owner of the policy die during the term. A cash value insurance policy provides the owner with a death benefit, plus any cash value earned from investments.
Generally, non-income producing parents tend to like the cash value policies, because these policies allow for them to accumulate assets despite the fact that they are not working. Term life insurance policies may be appropriate for some, since they are usually relatively less expensive in the short term.
Deciding how much life insurance you need is unique to each family and circumstances. As a starting point, consider having at least enough coverage to equal five to seven years of income. So if the stay-at-home parents' value is estimated at $65,000 per year, you may need a life insurance policy with coverage of $325,000 to $455,000. This formula can be applied to the working parent as well.
Generally speaking, you should follow these other helpful tips:
Overlooked expenses: You have to account for the less obvious costs of losing a stay-at-home parent. For example, the working parent may need to take an extended vacation or leave of absence to be at home in the case of such a tragedy. In addition, the family may eat out more often and incur other new expenses based on the new lifestyle with one parent. Don't forget to account for inflation and the expected increase in these expenses over time.
Account for lost savings: With extra expenses or lost wages, you may be forced to dip into your emergency cash reserves or reduce contributions to your 401(k).
Number of dependents and duration: When calculating how much insurance you need, estimate the length of time your dependents might need the benefits. This will depend on how old your kids are and how many you have.
Seek help: Consider meeting with a qualified financial advisor who can help you and your family develop a comprehensive financial plan. This plan will include adequate life insurance coverage for both parents, the one who works outside the home and the one who provides the valuable, albeit unsalaried, services in the home.
Tim Dameron is a financial advisor with American Express Financial Advisors Inc. in Rocky Mount.
NJ has highest auto insurance in nation
By KATHY HENNESSYAssociated Press WriterSeptember 30, 2004, 5:16 PM EDT
TRENTON, N.J. -- New Jersey car insurance rates are still the highest car insurance rates in the country, but the national group that tracks insurers now concedes it's unfair to compare the state with places that have far fewer drivers and less congested roads. The state is predominantly urban and results are not comparable with states with large rural areas, according to the report from the National Association of Auto Insurance Commissioners. The report uses data from 2002.
While the report no longer gives rankings, it still shows New Jersey with the highest premiums nationwide with an average annual premium of $1,112.86, an increase of $85 over the prior year. Nationally, the average annual premium was $773.68. "Due to the costs associated with the urban-type driving conditions in New Jersey, it will never have the lowest auto insurance premiums in the country," said David Snyder, vice president of the American Insurance Association. In 2002, New Jersey drivers traveled more than 68 billion miles and the state logged more than 300,000 accidents, the report found. The national average for accidents is 131,400 per state. The ranking system was abandoned after some insurance regulators said it wasn't fair to look at a state like New Jersey in the same way as a place like Montana. Northeast states like New York, Massachusetts, and Connecticut are regularly among the top states in auto insurance costs. States may also vary greatly in the way they calculate premium costs, regulators said. "I think they were concerned with the fact that each state did not have the same auto insurance environment because of different laws in each state," said Ann Womer Benjamin, the Ohio Insurance director and member of task force that wrote the report. "Comparing them no longer made sense." For example, in New Jersey policyholders often get money back as dividends, but that money is not counted in the rankings. Some of the state's largest insurers, including State Farm, have paid back two to four times the national average in dividends. New Jersey Banking and Insurance Commissioner Holly Bakke said the report also doesn't reflect recent changes made to the state's auto insurance laws that have brought in two new insurers, Mercury General and GEICO. "While the information is more useful, it's still two years old and doesn't reflect improvements for policyholders in New Jersey in 2004," said Bakke.
TRENTON, N.J. -- New Jersey car insurance rates are still the highest car insurance rates in the country, but the national group that tracks insurers now concedes it's unfair to compare the state with places that have far fewer drivers and less congested roads. The state is predominantly urban and results are not comparable with states with large rural areas, according to the report from the National Association of Auto Insurance Commissioners. The report uses data from 2002.
While the report no longer gives rankings, it still shows New Jersey with the highest premiums nationwide with an average annual premium of $1,112.86, an increase of $85 over the prior year. Nationally, the average annual premium was $773.68. "Due to the costs associated with the urban-type driving conditions in New Jersey, it will never have the lowest auto insurance premiums in the country," said David Snyder, vice president of the American Insurance Association. In 2002, New Jersey drivers traveled more than 68 billion miles and the state logged more than 300,000 accidents, the report found. The national average for accidents is 131,400 per state. The ranking system was abandoned after some insurance regulators said it wasn't fair to look at a state like New Jersey in the same way as a place like Montana. Northeast states like New York, Massachusetts, and Connecticut are regularly among the top states in auto insurance costs. States may also vary greatly in the way they calculate premium costs, regulators said. "I think they were concerned with the fact that each state did not have the same auto insurance environment because of different laws in each state," said Ann Womer Benjamin, the Ohio Insurance director and member of task force that wrote the report. "Comparing them no longer made sense." For example, in New Jersey policyholders often get money back as dividends, but that money is not counted in the rankings. Some of the state's largest insurers, including State Farm, have paid back two to four times the national average in dividends. New Jersey Banking and Insurance Commissioner Holly Bakke said the report also doesn't reflect recent changes made to the state's auto insurance laws that have brought in two new insurers, Mercury General and GEICO. "While the information is more useful, it's still two years old and doesn't reflect improvements for policyholders in New Jersey in 2004," said Bakke.
Dayton Daily News urges 'no' vote on gay-marriage ban
Associated Press
DAYTON, Ohio - Ohioans should vote against a proposed state constitutional amendment to ban gay marriage, the Dayton Daily News said Thursday.
"A constitution should be the place where society puts down its most important principles about citizens' rights and how they'll govern themselves," the newspaper said in an editorial. "It shouldn't be a place to single out a group and deny them something."
The Daily News said the language of the proposal could be construed as barring public agencies from offering family health insurance or other benefits to employee couples.
The newspaper said the measure could also make it difficult for businesses and universities to recruit workers who aren't in traditional families.
DAYTON, Ohio - Ohioans should vote against a proposed state constitutional amendment to ban gay marriage, the Dayton Daily News said Thursday.
"A constitution should be the place where society puts down its most important principles about citizens' rights and how they'll govern themselves," the newspaper said in an editorial. "It shouldn't be a place to single out a group and deny them something."
The Daily News said the language of the proposal could be construed as barring public agencies from offering family health insurance or other benefits to employee couples.
The newspaper said the measure could also make it difficult for businesses and universities to recruit workers who aren't in traditional families.
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