JONATHAN J. HIGUERA
The Arizona Republic
Arizonans will be among the first consumers in the nation to be able to request free credit reports, starting tomorrow.
But they will still have to pay a modest fee to obtain their actual credit scores.
The free annual access to credit reports is mandated under the Fair and Accurate Credit Transactions Act, passed by Congress in late 2003. Arizona is among 13 Western states that are part of the first phase of the program, which will be available nationwide by Sept. 1, 2005.
However, Congress didn't require the three major credit reporting companies - Equifax, Experian and TransUnion - to make credit scores available free, although each company must offer them at a "fair and reasonable" fee. While that rate is still being determined, industry observers expect it to be between $4 and $8 per score. Currently, credit reports are typically sold for about $9 and credit scores about $5.
"When you think of how much your credit score could cost you over the life of a loan, it is absolutely worth getting it," said Norma GarcÃa, a senior attorney with Consumers Union, a consumer advocacy group that pushed Congress to grant consumers access to the free credit reports and credit scores.
A consumer's credit score affects the interest rates he pays for a loan, including mortgages and car loans, insurance rates or even a job or housing eligibility.
"Your credit report is your financial résumé, and your credit score is a number derived from it," said Ed Mierzwinski, consumer advocate for U.S. PIRG, a Washington, D.C.-based umbrella group for state Public Interest Research Groups. "It is used in virtually every transaction. It's how insurance and credit card companies and others decide whether you are prime or subprime risk."
The new legislation, which amended the Fair Credit Reporting Act, also is supposed to give greater protections to consumers against identity theft and make it easier to resolve disputed negative credit marks.
One in 4 credit reports contains wrong information that could lead to credit denial, according to a study by U.S. PIRG released in June.
complete article
Tuesday, November 30, 2004
UL overpaid student loans
LAFAYETTE — An audit of University of Louisiana’s financial statements found that the school wasn’t properly calculating students’ federal financial aid awards during the 2003 fiscal year. Errors were found in the university’s calculations of the cost of attendance for the Federal Family Education Loans, according to a management letter from the office of Legislative Auditor Steve Theriot. The audit was conducted by the Legislative Auditor’s Office of the 2003 fiscal year that ended June 30. No other financial problems were uncovered in the audit. Auditors found that of the 43 student applications reviewed, the cost of attendance was miscalculated for three students, or 7 percent of those reviewed. Two of the three students received $6,863 more than they were eligible for in Federal Family Education Loans. Cindy Perez, director of UL’s financial aid office, said the error was caused by a computer glitch, and a new system has been set up to fix the problem. Cost of attendance is based on five factors — tuition and fees, room and board, books and supplies, transportation and personal and miscellaneous expenses. The cost of attendance also varies based on where the student lives, Perez said.“Of those three, only two received funds that they should not have,” Perez said. “There were no other students.”About 65 percent of the 16,000 students on campus receive financial aid, Perez said. Though the audit only reviewed 43 students, Perez said her office checked all awards to ensure that there were no other mistakes. “We award tens of millions of dollars in loans,” Perez said. “Any time you over-award, it’s not a small issue, but we want to maintain the best awarding process that we can.”The university may have to pay interest on the overpayments, according to Theriot’s office, but Perez said she has not been notified of any financial repercussions.A review of the University of Louisiana at Monroe’s financial statements did not identify any financial discrepancies. “We found no matters that required disclosure,” Theriot said.Just last year, UL-Monroe was released from sanctions and oversight by the Southern Association of Colleges and Schools following an unfavorable audit process in 2000. That year, Legislative Auditor Dan Kyle couldn’t even certify an audit because of the university’s disorganized financial records.
Impact of Auto Injury Claims
Press Release
MALVERN, Pa., Nov. 30 /PRNewswire/ --
A new study by the InsuranceResearch Council (IRC) finds that claimed losses for auto injuries haveescalated at vastly different rates across four states with no-fault auto insurance regulations. From 1997 to 2002, the average amounts that personal injury protection claimants reported for expenses stemming from their injuries increased 122 percent in Colorado, 60 percent in New York, 37 percent in Florida, and just 2 percent in Michigan. The study finds escalating medical costs are the key factor behind the growth in losses in Colorado, New York,and Florida. Skyrocketing claim costs contributed to the 2003 Colorado decision to end the state's no-fault auto insurance system. The recently released IRC study, Analysis of Auto Injury Insurance Claims in Four No-Fault States, examines detailed information from auto injury claimsthat closed with payment in Colorado, Florida, Michigan, and New York. TheIRC report focuses on auto injury claiming behavior by exploring claimpatterns under two of the principal private passenger auto insurance coveragesin no-fault states: (1) personal injury protection (PIP), which pays benefitsto persons injured in auto accidents without regard to fault, and (2) bodilyinjury liability (BI), which pays for an insured driver's legal liability forinjury caused to someone else. The IRC study reveals different levels of use of certain medicalprofessionals and diagnostic procedures by state, as well as vastly differentcharges for those professionals and diagnostics. The analysis identified thefollowing PIP claim patterns and differences among the four states: -- The type of medical treatment received by claimants varied by state. * More than 33 percent of the PIP claimants in Colorado, Florida, and New York went to a chiropractor compared to 13 percent in Michigan. * Colorado and New York claimants were at least twice as likely to see physical therapists as claimants in Florida or Michigan. * Twenty-two percent of New York PIP claimants went to alternative professionals such as acupuncturists or massage therapists, compared to 18 percent in Colorado, 7 percent in Florida, and 1 percent in Michigan. -- Average charges for certain medical professionals varied drastically among PIP claimants by state. * The average per-visit charges for chiropractors were significantly higher in Florida ($254) and Colorado ($223), compared to Michigan ($125) and New York ($83). * The average total charged per claimant by chiropractors was more than three times as high in Colorado ($4,804) and Florida ($4,837) than in Michigan ($1,522) and New York ($1,549). In summarizing the findings, Elizabeth A. Sprinkel, senior vice presidentof the IRC, said, "PIP claimants appear to be using more medical resources insome no-fault states than in others, even among claimants with similarinjuries. On top of that, the average charges for certain medical treatmentsin some no-fault states are sometimes more than double the cost for similartreatment in other no-fault states. As a result, claimed auto injury losseshave risen much faster in some states than others, ultimately leading togreater increases in auto insurance premiums for drivers in those states." In no-fault states, injury thresholds must be surpassed before an injuredclaimant can file a bodily injury liability claim against an at-fault driver.Injury thresholds varied among these four states from a monetary threshold ofat least $2,500 of medical expenses in Colorado to a strict verbal thresholdin Michigan that restricts BI claims to injuries that lead to permanentserious disfigurement, serious impairment of a bodily function, or death. One of the goals of no-fault auto insurance systems is to alleviatepressure on the court system by reducing tort liability claims for minorinjuries. Reflecting the restrictive tort threshold in Michigan, BI claimantsthere had more serious injuries than claimants from the other three states.In addition to the closed claim data revealing injury levels among BIclaimants, claim frequency data show fewer Michigan BI claims per number ofinsured drivers than the other three no-fault states in this study. "Michigan is an example of a no-fault state where the majority of BIclaims are for severe injuries with disabling consequences," Sprinkelexplained. "Despite the tort thresholds in the other three no-fault statesthat were examined, liability payments often were paid to claimants withrelatively minor injuries."
MALVERN, Pa., Nov. 30 /PRNewswire/ --
A new study by the InsuranceResearch Council (IRC) finds that claimed losses for auto injuries haveescalated at vastly different rates across four states with no-fault auto insurance regulations. From 1997 to 2002, the average amounts that personal injury protection claimants reported for expenses stemming from their injuries increased 122 percent in Colorado, 60 percent in New York, 37 percent in Florida, and just 2 percent in Michigan. The study finds escalating medical costs are the key factor behind the growth in losses in Colorado, New York,and Florida. Skyrocketing claim costs contributed to the 2003 Colorado decision to end the state's no-fault auto insurance system. The recently released IRC study, Analysis of Auto Injury Insurance Claims in Four No-Fault States, examines detailed information from auto injury claimsthat closed with payment in Colorado, Florida, Michigan, and New York. TheIRC report focuses on auto injury claiming behavior by exploring claimpatterns under two of the principal private passenger auto insurance coveragesin no-fault states: (1) personal injury protection (PIP), which pays benefitsto persons injured in auto accidents without regard to fault, and (2) bodilyinjury liability (BI), which pays for an insured driver's legal liability forinjury caused to someone else. The IRC study reveals different levels of use of certain medicalprofessionals and diagnostic procedures by state, as well as vastly differentcharges for those professionals and diagnostics. The analysis identified thefollowing PIP claim patterns and differences among the four states: -- The type of medical treatment received by claimants varied by state. * More than 33 percent of the PIP claimants in Colorado, Florida, and New York went to a chiropractor compared to 13 percent in Michigan. * Colorado and New York claimants were at least twice as likely to see physical therapists as claimants in Florida or Michigan. * Twenty-two percent of New York PIP claimants went to alternative professionals such as acupuncturists or massage therapists, compared to 18 percent in Colorado, 7 percent in Florida, and 1 percent in Michigan. -- Average charges for certain medical professionals varied drastically among PIP claimants by state. * The average per-visit charges for chiropractors were significantly higher in Florida ($254) and Colorado ($223), compared to Michigan ($125) and New York ($83). * The average total charged per claimant by chiropractors was more than three times as high in Colorado ($4,804) and Florida ($4,837) than in Michigan ($1,522) and New York ($1,549). In summarizing the findings, Elizabeth A. Sprinkel, senior vice presidentof the IRC, said, "PIP claimants appear to be using more medical resources insome no-fault states than in others, even among claimants with similarinjuries. On top of that, the average charges for certain medical treatmentsin some no-fault states are sometimes more than double the cost for similartreatment in other no-fault states. As a result, claimed auto injury losseshave risen much faster in some states than others, ultimately leading togreater increases in auto insurance premiums for drivers in those states." In no-fault states, injury thresholds must be surpassed before an injuredclaimant can file a bodily injury liability claim against an at-fault driver.Injury thresholds varied among these four states from a monetary threshold ofat least $2,500 of medical expenses in Colorado to a strict verbal thresholdin Michigan that restricts BI claims to injuries that lead to permanentserious disfigurement, serious impairment of a bodily function, or death. One of the goals of no-fault auto insurance systems is to alleviatepressure on the court system by reducing tort liability claims for minorinjuries. Reflecting the restrictive tort threshold in Michigan, BI claimantsthere had more serious injuries than claimants from the other three states.In addition to the closed claim data revealing injury levels among BIclaimants, claim frequency data show fewer Michigan BI claims per number ofinsured drivers than the other three no-fault states in this study. "Michigan is an example of a no-fault state where the majority of BIclaims are for severe injuries with disabling consequences," Sprinkelexplained. "Despite the tort thresholds in the other three no-fault statesthat were examined, liability payments often were paid to claimants withrelatively minor injuries."
Monday, November 29, 2004
Car Insurance industry posts $3.676 billion profit
David Menzies
Financial Post
November 27, 2004
At first glance, the so-called "insurance crisis" would appear to be dead and buried. Canada's insurance companies are enjoying third-quarter profits of $3.676-billion, meaning that margins so far this year are up 134% over 2003 -- a year that saw profits soar by 673% compared to 2002.
But at what cost? Consumers renewing their auto insurance policies say there's a reason the industry is experiencing record profits: inexplicably large premium hikes.
Many drivers with excellent, claims-free records are shocked to discover they are being placed in the so-called "facility" insurance category, traditionally the domain of the very worst drivers -- those with multiple accident claims or impaired driving convictions.
Tales of rate woe abound. For example, an Oakville, Ont., consultant and his wife had their three vehicles insured by ING Novex via the Canadian Automobile Association.
Even though the fiftysomething couple has a perfect driving record with no claims or traffic violations, this summer they were placed in the facility market. That meant their rate soared to $9,075 from $2,637.
Incredulous, they shopped around and were finally able to find an insurance policy from RBC that had a rate more in line with their original premium. Still, no one was able to explain how they became high-risk drivers overnight.
"We have more than 30 years driving experience and we've had no accidents, no claims, no tickets -- how does a rate increase by more than 300% for absolutely no reason?" asks the consultant, who does not want his name used. (Most consumers contacted by FP Money would speak only on the condition of anonymity.)
CAA spokeswoman Pauline Mitchell says the club is powerless to stop the trend: "Anyone who didn't fall into the standard market policies [of the insurer] ends up in facility. It's been a very, very tight market."
complete article
Financial Post
November 27, 2004
At first glance, the so-called "insurance crisis" would appear to be dead and buried. Canada's insurance companies are enjoying third-quarter profits of $3.676-billion, meaning that margins so far this year are up 134% over 2003 -- a year that saw profits soar by 673% compared to 2002.
But at what cost? Consumers renewing their auto insurance policies say there's a reason the industry is experiencing record profits: inexplicably large premium hikes.
Many drivers with excellent, claims-free records are shocked to discover they are being placed in the so-called "facility" insurance category, traditionally the domain of the very worst drivers -- those with multiple accident claims or impaired driving convictions.
Tales of rate woe abound. For example, an Oakville, Ont., consultant and his wife had their three vehicles insured by ING Novex via the Canadian Automobile Association.
Even though the fiftysomething couple has a perfect driving record with no claims or traffic violations, this summer they were placed in the facility market. That meant their rate soared to $9,075 from $2,637.
Incredulous, they shopped around and were finally able to find an insurance policy from RBC that had a rate more in line with their original premium. Still, no one was able to explain how they became high-risk drivers overnight.
"We have more than 30 years driving experience and we've had no accidents, no claims, no tickets -- how does a rate increase by more than 300% for absolutely no reason?" asks the consultant, who does not want his name used. (Most consumers contacted by FP Money would speak only on the condition of anonymity.)
CAA spokeswoman Pauline Mitchell says the club is powerless to stop the trend: "Anyone who didn't fall into the standard market policies [of the insurer] ends up in facility. It's been a very, very tight market."
complete article
Mortgage rates a mixed bag
WASHINGTON (AP) — Mortgages rates were a mixed bag last week, with benchmark 30-year mortgages edging down, one-year adjustable-rate mortgages shooting up and 15-year mortgages holding steady.
Freddie Mac, in its weekly survey, said rates on 30-year, fixed-rate mortgages averaged 5.72 this week, down from 5.74 percent last week.
Rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. After that, rates drifted lower.
The relatively good behavior of long-term mortgage rates has pleased economists. "At this time last year, our forecast called for interest rates for 30-year fixed-rate mortgages to exceed 6 percent by this time this year," said Frank Nothaft, Freddie Mac's chief economist.
Low mortgage rates are helping to keep the housing market humming.
New-home sales rose 0.2 percent in October from the previous month to an annual rate of 1.23 million, the third best showing ever. Sales in the Northeast surged 19.7 percent to a rate of 85,000.
Freddie Mac, in its weekly survey, said rates on 30-year, fixed-rate mortgages averaged 5.72 this week, down from 5.74 percent last week.
Rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. After that, rates drifted lower.
The relatively good behavior of long-term mortgage rates has pleased economists. "At this time last year, our forecast called for interest rates for 30-year fixed-rate mortgages to exceed 6 percent by this time this year," said Frank Nothaft, Freddie Mac's chief economist.
Low mortgage rates are helping to keep the housing market humming.
New-home sales rose 0.2 percent in October from the previous month to an annual rate of 1.23 million, the third best showing ever. Sales in the Northeast surged 19.7 percent to a rate of 85,000.
Student loans need change
By Michelle SingletarySunday, November 28, 2004
For many people, a higher education is the ticket to a high-paying job.
But what happens when the cost of that ticket becomes a deterrent to choosing a career that will pay a modest or middle-income salary?
"My worry is that even if people can afford to take out the loans, their career choices are going to be biased in favor of paying off their loans -- biased in favor of careers that will make more money," says former labor secretary Robert B. Reich.
I recently had the pleasure of hearing Reich speak to several hundred financial aid professionals attending a conference in Phoenix.
Reich, who is now the Hexter Professor of Social and Economic Policy at Brandeis University, spoke with compassion for the many people who are graduating from graduate and professional schools with a record amount of student loan debt.
But worrying isn't going to help people pay for their education. We have to come up with bold, creative solutions to address the rapidly rising costs of higher education and the steady reduction in government-subsidized help to finance such education, Reich said.
In fact, Reich has an idea -- an idea I think is worth debating.
What would you think of a student loan program in which people who borrow to attend graduate school would then pay back a small percentage of their annual salary over a 10- or 15-year period? Everyone would pay the same percentage regardless of income.
All the money would go into a general student loan fund and then be lent to others for graduate school. Private lenders could provide the loans, which would be guaranteed by the federal government.
complete article
For many people, a higher education is the ticket to a high-paying job.
But what happens when the cost of that ticket becomes a deterrent to choosing a career that will pay a modest or middle-income salary?
"My worry is that even if people can afford to take out the loans, their career choices are going to be biased in favor of paying off their loans -- biased in favor of careers that will make more money," says former labor secretary Robert B. Reich.
I recently had the pleasure of hearing Reich speak to several hundred financial aid professionals attending a conference in Phoenix.
Reich, who is now the Hexter Professor of Social and Economic Policy at Brandeis University, spoke with compassion for the many people who are graduating from graduate and professional schools with a record amount of student loan debt.
But worrying isn't going to help people pay for their education. We have to come up with bold, creative solutions to address the rapidly rising costs of higher education and the steady reduction in government-subsidized help to finance such education, Reich said.
In fact, Reich has an idea -- an idea I think is worth debating.
What would you think of a student loan program in which people who borrow to attend graduate school would then pay back a small percentage of their annual salary over a 10- or 15-year period? Everyone would pay the same percentage regardless of income.
All the money would go into a general student loan fund and then be lent to others for graduate school. Private lenders could provide the loans, which would be guaranteed by the federal government.
complete article
Health Insurance we could have had
By Michael S. Dukakis November 28, 2004
SIXTEEN YEARS ago, with bands playing and balloons flying, I signed the second universal healthcare bill in America on the steps of the State House. Only the state of Hawaii had beaten us to it.
That bill would have provided comprehensive health insurance for every resident of the Commonwealth. It would have controlled hospital costs. It required all employers with six or more employees to provide their employees and their families with health insurance with a contribution from the employees of up to 20 percent of the total premium. It guaranteed students health insurance while attending college in Massachusetts. It made sure that people who had been laid off from their jobs received health insurance for themselves and their families. And it made special provision for those with the kinds of disabilities that made them virtually uninsurable.
It was approved by the Legislature with one of the broadest political coalitions that had ever been put together on Beacon Hill. The Massachusetts Medical Society supported the bill. So did the hospitals. So did the state nurses' association. So did Health Care for All, the state's principal advocacy group for universal healthcare. So did the unions. And so did most of the state's business community.
That support from the business community had a lot to do with the leadership of a remarkable man named Nelson Gifford. Gifford was the president of Dennison Manufacturing Co. and a member of the state's Business Roundtable. He understood what the healthcare system was doing to the approximately 70 percent of the state's employers who were insuring their employees and their families. Not only were they paying high and growing premiums for their health insurance; those premiums included a hefty surcharge to pay for the cost of free care in emergency rooms and community clinics for people whose employers did not insure them.
complete article
SIXTEEN YEARS ago, with bands playing and balloons flying, I signed the second universal healthcare bill in America on the steps of the State House. Only the state of Hawaii had beaten us to it.
That bill would have provided comprehensive health insurance for every resident of the Commonwealth. It would have controlled hospital costs. It required all employers with six or more employees to provide their employees and their families with health insurance with a contribution from the employees of up to 20 percent of the total premium. It guaranteed students health insurance while attending college in Massachusetts. It made sure that people who had been laid off from their jobs received health insurance for themselves and their families. And it made special provision for those with the kinds of disabilities that made them virtually uninsurable.
It was approved by the Legislature with one of the broadest political coalitions that had ever been put together on Beacon Hill. The Massachusetts Medical Society supported the bill. So did the hospitals. So did the state nurses' association. So did Health Care for All, the state's principal advocacy group for universal healthcare. So did the unions. And so did most of the state's business community.
That support from the business community had a lot to do with the leadership of a remarkable man named Nelson Gifford. Gifford was the president of Dennison Manufacturing Co. and a member of the state's Business Roundtable. He understood what the healthcare system was doing to the approximately 70 percent of the state's employers who were insuring their employees and their families. Not only were they paying high and growing premiums for their health insurance; those premiums included a hefty surcharge to pay for the cost of free care in emergency rooms and community clinics for people whose employers did not insure them.
complete article
Health Insurance time of year
Michael Barone
November 29, 2004
In the next few weeks, millions of American employees will choose which health insurance plan will cover them and their families for calendar year 2005.
Among the choices facing some is an innovative insurance plan pioneered in 1992 in South Africa by a firm called Discovery and marketed in the United States as Destiny Health. It's an approach George W. Bush's and Congress's health care policymakers should keep in mind as they scramble to come up with proposals to deliver on Bush's vaguely worded campaign promises to reform health care finance.
The Destiny health plan has several intelligent features. One is an annual deductible: you pay for basic expectable medical expenses before insurance kicks in. One reason for the high cost of most health insurance is that we expect it to pay for routine medical expenses: it is as if your auto insurance policy covered oil changes but didn't pay you when the car was totalled.
When insurance kicks in, it is in the form of a personal medical fund, similar to the health savings account model that was part of the 2003 Medicare/prescription drug act. Unused amounts can be rolled over into the next year, and employees who leave the company will have access to remaining balances. This encourages employees to treat the money as if it is their own -- which it is -- and to keep cost in mind while making health care decisions. Experts of all ilks agree that one reason health care costs keep rising so rapidly is that consumers have gotten into the habit of making decisions with no regard at all for cost. The Destiny plan encourages them to break that habit.
The third and perhaps most interesting feature of the Destiny plan is its wellness programs, designed to encourage healthier lifestyles. Employees' insurance premiums are cut if they abstain from smoking, exercise regularly, hold down their weight and seek preventive care such as Pap smears or prostate exams. For achieving such goals, they earn "vitality points," which can be redeemed for health club memberships and travel discounts.
These health plans have proved popular. Destiny enrollment increased from 300,000 in 1998 to 1.6 million in 2004. A survey of Destiny members showed that 75 percent are familiar with the terms of their plan, compared with 38 percent for those in other plans, and that 97 percent believe a person's lifestyle choices have done something to reduce the cost of health care, compared to 29 percent for those in other plans. Some 85 percent of Destiny members have started an exercise program and 76 percent have started a nutrition program in the preceding year. For employers, the payoff is tangible: single-digit increases in the cost of health insurance, compared to double-digit increases for most other plans.
The Destiny model addresses one of the leading causes of increased health care costs in America: bad lifestyle choices. In their book "Epidemic of Care," Kaiser Permanente CEO George Halvorsen and Dr. George Isham note that there has been a 33 percent increase in the number of Americans with diabetes since 1990 -- and that type II diabetes can usually be prevented by appropriate behavior and diet changes. "We eat foods that make us vulnerable to diabetes and heart disease," they write, "and then don't exercise enough to keep those diseases from taking over our bodies." This is hugely expensive: diabetes requires expensive medical interventions that all health insurance policyholders must indirectly pay for. The Destiny wellness program pays policyholders to avoid behaviors that, statistically, will produce huge health care costs later on. It looks to be well worth the money, even in the short term.
Destiny's approach is part of a larger trend. Starting in the New Deal era and in World War II, government provided and encouraged employers to provide social insurance and health insurance that would guarantee benefits and buffer individuals against the workings of the market. Today, no one wants to eliminate the social safety net entirely. But it has become apparent that insulating individuals against cost has adverse consequences: low savings rates, unsustainable rises in health care spending, harmful personal behaviors that lead to enormous health care problems and costs. And it has become apparent as well that individuals are not helpless or incompetent beings in need of protection from the marketplace by big government or large corporations. With an adequate safety net, and within an appropriate structure, they can figure out things for themselves. The Destiny plan helps show us the way.
November 29, 2004
In the next few weeks, millions of American employees will choose which health insurance plan will cover them and their families for calendar year 2005.
Among the choices facing some is an innovative insurance plan pioneered in 1992 in South Africa by a firm called Discovery and marketed in the United States as Destiny Health. It's an approach George W. Bush's and Congress's health care policymakers should keep in mind as they scramble to come up with proposals to deliver on Bush's vaguely worded campaign promises to reform health care finance.
The Destiny health plan has several intelligent features. One is an annual deductible: you pay for basic expectable medical expenses before insurance kicks in. One reason for the high cost of most health insurance is that we expect it to pay for routine medical expenses: it is as if your auto insurance policy covered oil changes but didn't pay you when the car was totalled.
When insurance kicks in, it is in the form of a personal medical fund, similar to the health savings account model that was part of the 2003 Medicare/prescription drug act. Unused amounts can be rolled over into the next year, and employees who leave the company will have access to remaining balances. This encourages employees to treat the money as if it is their own -- which it is -- and to keep cost in mind while making health care decisions. Experts of all ilks agree that one reason health care costs keep rising so rapidly is that consumers have gotten into the habit of making decisions with no regard at all for cost. The Destiny plan encourages them to break that habit.
The third and perhaps most interesting feature of the Destiny plan is its wellness programs, designed to encourage healthier lifestyles. Employees' insurance premiums are cut if they abstain from smoking, exercise regularly, hold down their weight and seek preventive care such as Pap smears or prostate exams. For achieving such goals, they earn "vitality points," which can be redeemed for health club memberships and travel discounts.
These health plans have proved popular. Destiny enrollment increased from 300,000 in 1998 to 1.6 million in 2004. A survey of Destiny members showed that 75 percent are familiar with the terms of their plan, compared with 38 percent for those in other plans, and that 97 percent believe a person's lifestyle choices have done something to reduce the cost of health care, compared to 29 percent for those in other plans. Some 85 percent of Destiny members have started an exercise program and 76 percent have started a nutrition program in the preceding year. For employers, the payoff is tangible: single-digit increases in the cost of health insurance, compared to double-digit increases for most other plans.
The Destiny model addresses one of the leading causes of increased health care costs in America: bad lifestyle choices. In their book "Epidemic of Care," Kaiser Permanente CEO George Halvorsen and Dr. George Isham note that there has been a 33 percent increase in the number of Americans with diabetes since 1990 -- and that type II diabetes can usually be prevented by appropriate behavior and diet changes. "We eat foods that make us vulnerable to diabetes and heart disease," they write, "and then don't exercise enough to keep those diseases from taking over our bodies." This is hugely expensive: diabetes requires expensive medical interventions that all health insurance policyholders must indirectly pay for. The Destiny wellness program pays policyholders to avoid behaviors that, statistically, will produce huge health care costs later on. It looks to be well worth the money, even in the short term.
Destiny's approach is part of a larger trend. Starting in the New Deal era and in World War II, government provided and encouraged employers to provide social insurance and health insurance that would guarantee benefits and buffer individuals against the workings of the market. Today, no one wants to eliminate the social safety net entirely. But it has become apparent that insulating individuals against cost has adverse consequences: low savings rates, unsustainable rises in health care spending, harmful personal behaviors that lead to enormous health care problems and costs. And it has become apparent as well that individuals are not helpless or incompetent beings in need of protection from the marketplace by big government or large corporations. With an adequate safety net, and within an appropriate structure, they can figure out things for themselves. The Destiny plan helps show us the way.
Friday, November 26, 2004
Student Loans are private affairs
By Albert B. Crenshaw
Washington Post Staff Writer
Monday, November 22, 2004;
Page E01
Critics who think mortgage funding giants Fannie Mae and Freddie Mac have it too easy because of their special relationship with the government might want to take look a look at the company called SLM Corp.
The Reston-based company, which is better known as Sallie Mae and makes billions of dollars in student loans every year, was founded with a government charter, much like the charters held by the big mortgage finance companies. But in the late 1990s Sallie Mae agreed to give up its charter and strike out on its own as a fully private company.
The result has been a bigger, more profitable, more dominant company than existed or was even possible when it operated with its federal ties in place.
Profits at the company have soared -- from $384 million in 2001 to $792 million in 2002, and to $1.3 billion last year. The company's stock price has climbed from less than $20 a share in early 2001 to more than $50 last week. Its quarterly stock dividend has jumped from less than 6 cents a share to 19 cents in that period, and the stock split three-for-one last year.
Chief executive Albert L. Lord, the architect of Sallie's Mae's success, has also done well. He received $41.8 million in total compensation, including stock options exercised, last year. President Thomas J. Fitzpatrick received $27.8 million. The two ranked second and fourth, respectively, in total compensation in a Washington Post survey of executive compensation in the region.
"Sallie Mae is the Frankenstein that federal law created and let loose on the marketplace," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers and a longtime critic of the company.
for complete story
Washington Post Staff Writer
Monday, November 22, 2004;
Page E01
Critics who think mortgage funding giants Fannie Mae and Freddie Mac have it too easy because of their special relationship with the government might want to take look a look at the company called SLM Corp.
The Reston-based company, which is better known as Sallie Mae and makes billions of dollars in student loans every year, was founded with a government charter, much like the charters held by the big mortgage finance companies. But in the late 1990s Sallie Mae agreed to give up its charter and strike out on its own as a fully private company.
The result has been a bigger, more profitable, more dominant company than existed or was even possible when it operated with its federal ties in place.
Profits at the company have soared -- from $384 million in 2001 to $792 million in 2002, and to $1.3 billion last year. The company's stock price has climbed from less than $20 a share in early 2001 to more than $50 last week. Its quarterly stock dividend has jumped from less than 6 cents a share to 19 cents in that period, and the stock split three-for-one last year.
Chief executive Albert L. Lord, the architect of Sallie's Mae's success, has also done well. He received $41.8 million in total compensation, including stock options exercised, last year. President Thomas J. Fitzpatrick received $27.8 million. The two ranked second and fourth, respectively, in total compensation in a Washington Post survey of executive compensation in the region.
"Sallie Mae is the Frankenstein that federal law created and let loose on the marketplace," said Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers and a longtime critic of the company.
for complete story
The hidden cost of cigarettes
Associated Press
DURHAM, N.C. - Cigarettes may cost smokers more then they believe. A study by a team of health economists finds the combined price paid by their families and society is about $40 per pack of cigarettes.
The figure is based on lifetime costs for a 24-year-old smoker over 60 years for cigarettes, taxes, life and property insurance, medical care and lost earnings because of smoking-related disabilities, researchers said.
"It will be necessary for persons aged 24 and younger to face the fact that the decision to smoke is a very costly one - one of the most costly decisions they make," the study's authors concluded.
Smokers pay about $33 of the cost, their families absorb $5.44 and others pay $1.44, according to health economists from Duke University and a professor from the University of South Florida. The study drew on data including Social Security earnings histories dating to 1951.
Incidental costs such as higher cleaning bills and lower resale values for smokers' cars were not included.
Most smoking studies rely on a snapshot of annual costs, said co-author Frank Sloan, an economics professor and the director of the Center for Health, Policy, Law and Management at Duke's Terry Sanford Institute of Public Policy.
Despite the finding that smoking is a costly habit for individuals, society carries less of a burden than generally believed, the study's authors determined.
"The reason the number is low is that for private pensions, Social Security, and Medicare - the biggest factors in calculating costs to society - smoking actually saves money," Sloan said. "Smokers die at a younger age and don't draw on the funds they've paid into those systems."
Given the high costs, it is "remarkable," the authors conclude, that money from the 1998 settlement involving 46 state attorneys general and major tobacco manufacturers largely are not being spent on smoking-cessation or related programs.
But even after taking into account the cost savings from early deaths, smoking still costs society $2.20 a pack for such things as sick leave, life insurance outlays and medical care not paid by smokers. The researchers concluded that after subtracting the 76 cents a pack smokers pay in state and federal taxes, society's net cost is $1.44 a pack.
Many states use the money to cover budget deficits or, as in North Carolina, on economic development in tobacco communities.
DURHAM, N.C. - Cigarettes may cost smokers more then they believe. A study by a team of health economists finds the combined price paid by their families and society is about $40 per pack of cigarettes.
The figure is based on lifetime costs for a 24-year-old smoker over 60 years for cigarettes, taxes, life and property insurance, medical care and lost earnings because of smoking-related disabilities, researchers said.
"It will be necessary for persons aged 24 and younger to face the fact that the decision to smoke is a very costly one - one of the most costly decisions they make," the study's authors concluded.
Smokers pay about $33 of the cost, their families absorb $5.44 and others pay $1.44, according to health economists from Duke University and a professor from the University of South Florida. The study drew on data including Social Security earnings histories dating to 1951.
Incidental costs such as higher cleaning bills and lower resale values for smokers' cars were not included.
Most smoking studies rely on a snapshot of annual costs, said co-author Frank Sloan, an economics professor and the director of the Center for Health, Policy, Law and Management at Duke's Terry Sanford Institute of Public Policy.
Despite the finding that smoking is a costly habit for individuals, society carries less of a burden than generally believed, the study's authors determined.
"The reason the number is low is that for private pensions, Social Security, and Medicare - the biggest factors in calculating costs to society - smoking actually saves money," Sloan said. "Smokers die at a younger age and don't draw on the funds they've paid into those systems."
Given the high costs, it is "remarkable," the authors conclude, that money from the 1998 settlement involving 46 state attorneys general and major tobacco manufacturers largely are not being spent on smoking-cessation or related programs.
But even after taking into account the cost savings from early deaths, smoking still costs society $2.20 a pack for such things as sick leave, life insurance outlays and medical care not paid by smokers. The researchers concluded that after subtracting the 76 cents a pack smokers pay in state and federal taxes, society's net cost is $1.44 a pack.
Many states use the money to cover budget deficits or, as in North Carolina, on economic development in tobacco communities.
Wednesday, November 24, 2004
Motorcyclist health insurance bill passes U.S. Senate
The American Motorcyclist Association and All-Terrain Vehicle Association report that a bipartisan bill to end health-care discrimination against motorcyclists and ATVers has cleared the U.S. Senate.The measure, S. 423, now goes to the House for consideration. AMA Government Relations Department officials hope the House will give final approval to the measure, and urge all motorcyclists, ATVers and others to contact their U.S. representatives to support the bill.The measure would bar health plans from denying benefits to people injured while riding motorcycles, ATVs, horses, snowmobiles, skiing, or engaging in other legal recreational or transportation activities.Acting in the wee hours of the morning on November 21, the Senate approved the bill by unanimous consent."Americans who enjoy recreational or transportation activities such as riding motorcycles should have the right to the same health insurance protection whether they are injured on their bike or in their home," said U.S. Sen. Susan Collins (R-Maine), who co-authored the bill. "I thank the American Motorcyclist Association for their support as I drafted this legislation, which more clearly defines health insurance regulations to ensure that people participating in legal recreational and transportation activities are covered under an equal standard of protection."U.S. Sen. Russ Feingold (D-Wis.), who co-authored the bill, agreed."If Americans want to enjoy legal transportation and recreational activities, the thought of being refused medical coverage shouldn't stop them," Feingold said. "That's why I have been fighting alongside U.S. Sen. Susan Collins to pass this bill giving people the protection they deserve while taking part in activities like motorcycling, which so many people in my home state of Wisconsin enjoy."Edward Moreland, AMA vice president for government relations, and AMA Washington Representative Patrick Holtz, were elated that the Senate passed the bill, but noted more work needs to be done.We can't let up, they said. We need to get this passed in the House.In the House, U.S. Rep. Ted Strickland (D-Ohio) plans to work for passage of the bill."I am pleased that the Senate has taken action to end the discrimination in health care coverage against those participating in recreational and transportation activities," Strickland said. "I am looking forward to working with my colleagues in the House to pass (the bill) to close up the unfair HIPAA loophole that allows this discrimination."In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA), which prohibits companies from denying access to employer-sponsored health insurance for motorcyclists and those who participate in other recreational activities. However, federal regulators created a loophole that allows the denial of benefits under various conditions.The AMA, the Motorcycle Riders Foundation, Motorcycle Industry Council and various state motorcyclists' rights organizations are working to get this loophole-closing legislation approved.You can find out who your U.S. representative is and contact him or her to support the passage of S. 423 by going to the AMA website at www.AMADirectlink.com and clicking on the AMA Rapid Response Center button on the left. There, you will find a message that you can send immediately.
Health Insurance - Finding the best deals
by Mike Casuey
Several years ago, a friend of mine was being wheeled out of the hospital after a heart procedure. Before they got to the front door, the nurse wheeled him to the cashier's office, where he was presented with a bill for about $40,000. He was urged to settle up before he left. Don't let that happen to you. A big medical bill could set you back or wipe you out. That's something federal and postal workers and government retirees don't have to worry about, if they belong to the Federal Employee Health Benefits Program (FEHBP) and if they pick a plan that will protect them from the costs of a catastrophic medical problem or accident.
All of the FEHBP plans are good, but when it comes to certain benefits, some are better than others. The open-enrollment season, when feds and retirees pick their 2005 health plan, ends Dec. 13. You don't want a non-decision, which would leave you in your current health plan, to wind up costing you a lot in higher premiums, reduced benefits or vastly increased out-of-pocket costs. Walton Francis, editor of Checkbook's 2005 Guide to Health Plans, says catastrophic coverage is something that everyone should consider when shopping for a health plan. Checkbook ($8.95 at most newsstands) rates health plans by estimated total cost to you. That cost includes the premiums you will pay, regardless, and any out-of-pocket costs that you might incur during a good year in which you have no medical problems, a year of routine medical care or a bad year requiring catastrophic coverage. As far as maximum protection, Checkbook ranks most of the health maintenance organizations (HMOs), such as Kaiser Permanente and MD-IPA, as best buys when it comes to catastrophic coverage. Mr. Francis says that in most of the HMOs, catastrophic coverage is good to excellent. For example, a single person with catastrophic medical bills next year could expect to pay about $4,000 in total and a family of two could expect to pay $9,000. If you pick Blue Cross standard's preferred provider organization (PPO) plan and have a major medical event next year, your likely total costs (premiums and out of pocket) would be less than $5,000 for a single person and a little more than $6,000 for a family of two. Costs above that would be absorbed by the health plan. Checkbook also recommends that you look at the Foreign Service PPO plan if eligible, the Mail Handlers High Deductible Health Plan (HDHP), Blue Cross Basic PPO and the Association PPO if eligible. Dental benefits When it comes to dental benefits, the federal health plans — like their cousins in the private sector — are nothing to smile about. But if you shop around, you can get good coverage. For example, Checkbook recommends that you check out various HMOs that have good dental benefits and provide preventive medicine. It recommends Aetna Consumer Driven, MD-IPA, Aetna Open Access, Kaiser High Option, CareFirst, GEHA Standard Option and Blue Cross Standard Option. Invest or else When the Thrift Savings Plan was set up, analysts figured that the investments and income it provided would give the average federal worker about 30 cents of every dollar needed to spend in retirement. But they have upped that estimate. Now, many pros say the TSP will give about half the money needed to spend in retirement. That, of course, is provided that you invest the maximum, at least enough to get the 5 percent tax-deferred matching government contribution, invest for the long haul and not be too conservative in your investments. One way to avoid investing too conservatively, or at too much risk, is to check out the L (as in Lifestyle) Fund coming to the TSP sometime in mid-2005. The optional L Fund will be tailored to your age and retirement goals. It will establish a mix of the TSPs other funds: three in the stock market, one in the bond market, one with Treasury securities. As you age — and get closer to retirement and the time you will start spending down your TSP account — the L Fund will automatically readjust your portfolio to protect you from short-term downturns in the market. The L Fund is still half a year away. Right now, you have until Dec. 31 to make your investment option changes for next year. This includes new higher contribution rates and catch-up contributions for federal-military investors who are 50 or older.
•Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.
Several years ago, a friend of mine was being wheeled out of the hospital after a heart procedure. Before they got to the front door, the nurse wheeled him to the cashier's office, where he was presented with a bill for about $40,000. He was urged to settle up before he left. Don't let that happen to you. A big medical bill could set you back or wipe you out. That's something federal and postal workers and government retirees don't have to worry about, if they belong to the Federal Employee Health Benefits Program (FEHBP) and if they pick a plan that will protect them from the costs of a catastrophic medical problem or accident.
All of the FEHBP plans are good, but when it comes to certain benefits, some are better than others. The open-enrollment season, when feds and retirees pick their 2005 health plan, ends Dec. 13. You don't want a non-decision, which would leave you in your current health plan, to wind up costing you a lot in higher premiums, reduced benefits or vastly increased out-of-pocket costs. Walton Francis, editor of Checkbook's 2005 Guide to Health Plans, says catastrophic coverage is something that everyone should consider when shopping for a health plan. Checkbook ($8.95 at most newsstands) rates health plans by estimated total cost to you. That cost includes the premiums you will pay, regardless, and any out-of-pocket costs that you might incur during a good year in which you have no medical problems, a year of routine medical care or a bad year requiring catastrophic coverage. As far as maximum protection, Checkbook ranks most of the health maintenance organizations (HMOs), such as Kaiser Permanente and MD-IPA, as best buys when it comes to catastrophic coverage. Mr. Francis says that in most of the HMOs, catastrophic coverage is good to excellent. For example, a single person with catastrophic medical bills next year could expect to pay about $4,000 in total and a family of two could expect to pay $9,000. If you pick Blue Cross standard's preferred provider organization (PPO) plan and have a major medical event next year, your likely total costs (premiums and out of pocket) would be less than $5,000 for a single person and a little more than $6,000 for a family of two. Costs above that would be absorbed by the health plan. Checkbook also recommends that you look at the Foreign Service PPO plan if eligible, the Mail Handlers High Deductible Health Plan (HDHP), Blue Cross Basic PPO and the Association PPO if eligible. Dental benefits When it comes to dental benefits, the federal health plans — like their cousins in the private sector — are nothing to smile about. But if you shop around, you can get good coverage. For example, Checkbook recommends that you check out various HMOs that have good dental benefits and provide preventive medicine. It recommends Aetna Consumer Driven, MD-IPA, Aetna Open Access, Kaiser High Option, CareFirst, GEHA Standard Option and Blue Cross Standard Option. Invest or else When the Thrift Savings Plan was set up, analysts figured that the investments and income it provided would give the average federal worker about 30 cents of every dollar needed to spend in retirement. But they have upped that estimate. Now, many pros say the TSP will give about half the money needed to spend in retirement. That, of course, is provided that you invest the maximum, at least enough to get the 5 percent tax-deferred matching government contribution, invest for the long haul and not be too conservative in your investments. One way to avoid investing too conservatively, or at too much risk, is to check out the L (as in Lifestyle) Fund coming to the TSP sometime in mid-2005. The optional L Fund will be tailored to your age and retirement goals. It will establish a mix of the TSPs other funds: three in the stock market, one in the bond market, one with Treasury securities. As you age — and get closer to retirement and the time you will start spending down your TSP account — the L Fund will automatically readjust your portfolio to protect you from short-term downturns in the market. The L Fund is still half a year away. Right now, you have until Dec. 31 to make your investment option changes for next year. This includes new higher contribution rates and catch-up contributions for federal-military investors who are 50 or older.
•Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.
Tuesday, November 23, 2004
CA taxpayers sue Blue Cross and Wellpoint
LOS ANGELES, Nov. 23 /U.S. Newswire/ -- The Foundation for Taxpayer and Consumer Rights has filed a taxpayer lawsuit on behalf of all California taxpayers calling upon California Controller Steve Wesley and the Board of Equalization to collect hundreds of millions of dollars in gross premiums taxes unpaid by Wellpoint subsidiary Blue Cross of California during the last eight years. The complaint can be read at: http://www.consumerwatchdog.org/assets/scans/WellpointComplaint.pdf
Every other for-profit Preferred Provider Organization (PPO) insurance plan in the state pays gross premiums taxes on insurance products as specified by the California Constitution. The lawsuit alleges Wellpoint and Blue Cross have evaded the gross premiums tax, illegally opting to pay a far lower corporate income tax rate, and have shorted California $65 million in 2003 alone.
Article III, Section 28 of the California Constitution requires all insurers doing business in the State of California to pay tax based upon gross premiums received. The gross premium tax is 2.35 percent of an insurer's annual gross premiums and is in lieu of most other taxes and licenses.
"In these times of severe budget shortfalls (projected to be $6 billion in 2004-05 and growing to an $8 billion gap in 2005- 06) and deepening reductions in funding for education and health care, among other public programs, Defendants must be ordered to carry out their Constitutionally-mandated duties to assess and collect the gross premium taxes owed by Blue Cross to the State of California," the complaint states. "California citizens and taxpayers have a substantial right and interest in requiring these outstanding taxes to be collected for the benefit of funding the myriad public programs that are deeply under-funded at present."
"By failing to pay the gross premium tax, Blue Cross is operating at a unique and unfair competitive advantage to other for-profit entities that are required to pay gross premium taxes on their PPO products," according to the complaint. "Accordingly, the relief sought by this Complaint will level the playing field for all California health insurers and result in a more competitive and fair environment for health care insurers. As a result of this action, Blue Cross will be treated under the tax laws of California the same as every other for-profit California health insurer that sells a PPO product and pays gross premium taxes thereon. Blue Cross will pay gross premium tax on its PPO business and franchise tax on its non-indemnity products."
Every other for-profit Preferred Provider Organization (PPO) insurance plan in the state pays gross premiums taxes on insurance products as specified by the California Constitution. The lawsuit alleges Wellpoint and Blue Cross have evaded the gross premiums tax, illegally opting to pay a far lower corporate income tax rate, and have shorted California $65 million in 2003 alone.
Article III, Section 28 of the California Constitution requires all insurers doing business in the State of California to pay tax based upon gross premiums received. The gross premium tax is 2.35 percent of an insurer's annual gross premiums and is in lieu of most other taxes and licenses.
"In these times of severe budget shortfalls (projected to be $6 billion in 2004-05 and growing to an $8 billion gap in 2005- 06) and deepening reductions in funding for education and health care, among other public programs, Defendants must be ordered to carry out their Constitutionally-mandated duties to assess and collect the gross premium taxes owed by Blue Cross to the State of California," the complaint states. "California citizens and taxpayers have a substantial right and interest in requiring these outstanding taxes to be collected for the benefit of funding the myriad public programs that are deeply under-funded at present."
"By failing to pay the gross premium tax, Blue Cross is operating at a unique and unfair competitive advantage to other for-profit entities that are required to pay gross premium taxes on their PPO products," according to the complaint. "Accordingly, the relief sought by this Complaint will level the playing field for all California health insurers and result in a more competitive and fair environment for health care insurers. As a result of this action, Blue Cross will be treated under the tax laws of California the same as every other for-profit California health insurer that sells a PPO product and pays gross premium taxes thereon. Blue Cross will pay gross premium tax on its PPO business and franchise tax on its non-indemnity products."
Mortgage rates stay friendly
BY JEANNINE AVERSAASSOCIATED PRESS WRITER
WASHINGTON -- Interest rates on 30-year and 15-year mortgages dipped last week, a development that should help keep the housing market humming.
Rates on 30-year, fixed-rate mortgages averaged 5.74 percent for the week ending Nov. 18, Freddie Mac said in its weekly survey Thursday. That was down from 5.76 percent the week before.
Interest rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. After that, rates bounced around, yet drifted lower.
"Because long-term mortgage rates are still well below the peak levels reached last May housing starts are currently exceeding expectations," said Frank Nothaft, Freddie Mac's chief economist.
From September to October, housing construction jumped 6.4 percent, to a seasonally adjusted annual rate of 2.03 million units -- the highest level of this year, the Commerce Department reported Wednesday.
"With no dramatic rise in rates on the horizon, the housing industry should continue to be healthy well into the future," Nothaft said.
For 15-year, fixed-rate mortgages, a popular option for refinancing, interest rates week averaged 5.15 percent last week, down slightly from 5.16 percent the week before. For one-year adjustable rate mortgages, rates increased a bit to 4.17 percent, compared with 4.16 percent.
Interest rates on one-year ARMs rose sharply after the Federal Reserve announced on Nov. 10 that it would boost a key short-term rate one-quarter percentage point to 2 percent.
The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a 0.6-point fee. One-year ARMS carried a 0.7-point fee.
Low mortgage rates have aided a housing market that's expected to set sales records for 2004.
A year ago, interest rates on 30-year mortgages averaged 6.03 percent; 15-year mortgages were at 5.39 percent and one-year ARMs were 3.76 percent.
WASHINGTON -- Interest rates on 30-year and 15-year mortgages dipped last week, a development that should help keep the housing market humming.
Rates on 30-year, fixed-rate mortgages averaged 5.74 percent for the week ending Nov. 18, Freddie Mac said in its weekly survey Thursday. That was down from 5.76 percent the week before.
Interest rates on 30-year mortgages hit a high this year of 6.34 percent the week of May 13. After that, rates bounced around, yet drifted lower.
"Because long-term mortgage rates are still well below the peak levels reached last May housing starts are currently exceeding expectations," said Frank Nothaft, Freddie Mac's chief economist.
From September to October, housing construction jumped 6.4 percent, to a seasonally adjusted annual rate of 2.03 million units -- the highest level of this year, the Commerce Department reported Wednesday.
"With no dramatic rise in rates on the horizon, the housing industry should continue to be healthy well into the future," Nothaft said.
For 15-year, fixed-rate mortgages, a popular option for refinancing, interest rates week averaged 5.15 percent last week, down slightly from 5.16 percent the week before. For one-year adjustable rate mortgages, rates increased a bit to 4.17 percent, compared with 4.16 percent.
Interest rates on one-year ARMs rose sharply after the Federal Reserve announced on Nov. 10 that it would boost a key short-term rate one-quarter percentage point to 2 percent.
The nationwide averages for mortgage rates do not include add-on fees known as points. Thirty-year and 15-year mortgages each carried a 0.6-point fee. One-year ARMS carried a 0.7-point fee.
Low mortgage rates have aided a housing market that's expected to set sales records for 2004.
A year ago, interest rates on 30-year mortgages averaged 6.03 percent; 15-year mortgages were at 5.39 percent and one-year ARMs were 3.76 percent.
Health Insurance premiums rise
WASHINGTON, Nov. 23 /U.S. Newswire/ --
The cost of health insurance continued its upward climb for companies of all sizes, with more than half the smaller employers and two-thirds of the medium-size businesses finding their premiums 10 to 20 percent higher during the last six months than they were at the beginning of the year.
Large employers, those with 501 or more employees, also saw their health insurance premiums increasing, with 30 percent of the account premiums up by one to 10 percent, and 40 percent up by 10 to 20 percent over the first six months of 2004.
For small accounts, representing employers with 50 or fewer employees, 12 percent of premiums were up one to 10 percent; 55 percent were up 10 to 20 percent; and 13 percent were up 20 to 30 percent. For medium-sized accounts, with 51 to 500 employees, 19 percent of premiums were one to 10 percent higher; 64 percent were up 10 to 20 percent; and five percent were 20 to 30 percent higher.
According to the survey, less than 11 percent of employers who offer health insurance to their workers experienced flat rates or decreases in their premiums during the second half of the year, regardless of the size of company.
The findings were contained in The Council of Insurance Agents & Brokers' benefits survey, which is taken twice a year to track trends in benefit offerings and premium costs in the commercial insurance marketplace. The Council represents the nation's largest insurance brokers who annually write 80 percent of the commercial property/casualty premiums and administer billions of dollars of employee benefits accounts.
Benefits brokers responding to the survey said increasing employee contributions, assessing prescription drug co-pays and higher deductibles and co-pays for all services were the most common options their clients were choosing to control costs.
Although consumer driven health plans and various defined contribution plans are still relatively new options, the brokers responding to the survey indicated that there is a great deal of interest in them. The health savings accounts (HSAs) and health reimbursement accounts (HRAs) that President Bush has strongly supported are prompting insurers to begin preparing options for employers. Employers are showing interest in them, the respondents said, but they still have not gained much traction in the marketplace.
The cost of health insurance continued its upward climb for companies of all sizes, with more than half the smaller employers and two-thirds of the medium-size businesses finding their premiums 10 to 20 percent higher during the last six months than they were at the beginning of the year.
Large employers, those with 501 or more employees, also saw their health insurance premiums increasing, with 30 percent of the account premiums up by one to 10 percent, and 40 percent up by 10 to 20 percent over the first six months of 2004.
For small accounts, representing employers with 50 or fewer employees, 12 percent of premiums were up one to 10 percent; 55 percent were up 10 to 20 percent; and 13 percent were up 20 to 30 percent. For medium-sized accounts, with 51 to 500 employees, 19 percent of premiums were one to 10 percent higher; 64 percent were up 10 to 20 percent; and five percent were 20 to 30 percent higher.
According to the survey, less than 11 percent of employers who offer health insurance to their workers experienced flat rates or decreases in their premiums during the second half of the year, regardless of the size of company.
The findings were contained in The Council of Insurance Agents & Brokers' benefits survey, which is taken twice a year to track trends in benefit offerings and premium costs in the commercial insurance marketplace. The Council represents the nation's largest insurance brokers who annually write 80 percent of the commercial property/casualty premiums and administer billions of dollars of employee benefits accounts.
Benefits brokers responding to the survey said increasing employee contributions, assessing prescription drug co-pays and higher deductibles and co-pays for all services were the most common options their clients were choosing to control costs.
Although consumer driven health plans and various defined contribution plans are still relatively new options, the brokers responding to the survey indicated that there is a great deal of interest in them. The health savings accounts (HSAs) and health reimbursement accounts (HRAs) that President Bush has strongly supported are prompting insurers to begin preparing options for employers. Employers are showing interest in them, the respondents said, but they still have not gained much traction in the marketplace.
Auto Insurance savings for Missouri residents
Esurance, a direct-to-consumer personal auto insurance company, announced that it has recently decreased rates and added discounts to its Missouri auto insurance program. All Missouri drivers can benefit from the rate decrease, while customers who own their own home or pay their auto insurance premium in full will benefit from additional savings with the new discounts.
Gary Tolman, Esurance President and CEO, stated, "Esurance is dedicated to helping customers save time and money on auto insurance. With recent changes to our auto program, some customers could save up to 25% on their auto insurance premium."
Gary Tolman, Esurance President and CEO, stated, "Esurance is dedicated to helping customers save time and money on auto insurance. With recent changes to our auto program, some customers could save up to 25% on their auto insurance premium."
Monday, November 22, 2004
Blacks demand justice from New York Life
NEW YORK, Nov. 22 /U.S. Newswire/ -- Outraged over what they call a "Jim Crow standard for justice," Black descendants of African slavery victims launched an online campaign against New York Life Insurance Company entitled, "Justice 4 One - Justice 4 All" -- at http://www.justice4one-justice4all.com
The campaign raises questions about why, on January 26, 2004, New York Life forced Blacks out of court with a class action lawsuit for slavery restitution, and three days later settled a similar case for $20 million with White descendants of Armenian genocide victims.
The slavery case was filed against New York Life in May of 2002, and is entitled, In Re: African-American Slave Descendants. Black plaintiffs claimed that New York Life committed a crime against humanity via its early company that wrote life insurance policies enslaving their African ancestors in mid-1800. Slave owners were the beneficiaries. Over one third of New York Life's first revenue came from writing slave policies. This practice encouraged the employment of enslaved people in ultra-hazardous capacities, like coal mining or constructing railroads, which sometimes resulted in burning and drowning deaths. The website contains a copy of a company policy enslaving an African named Robert Moody who was employed in a Virginia coal pit.
The Armenian genocide case, Marootian v. New York Life Insurance Company was filed in November of 1999. The plaintiffs claimed that New York Life wrongfully failed to pay benefits under life insurance policies they issued as far back as the 1870s in the Turkish Ottoman Empire on the lives of their Armenian ancestors. New York Life denies any wrongdoing.
Slave descendants say critical factors in the cases were identical and should have resulted in the same outcome:
-- Both cases involved insurance policies from the 19th century;
-- Both involved descendants making claims on behalf of themselves and their ancestors; and
-- Both cases resulted from some of the worst crimes committed against humans in world history -- the enslavement of Africans, and the genocide of Armenians.
"Race is the key difference in these cases. This looks like discrimination against African-Americans," said Deadria Farmer- Paellmann, executive director of the Restitution Study Group -- the New York non-profit sponsoring the campaign.
The slavery case was refiled in a Chicago Federal Court on April 5, 2004. A decision is pending.
The campaign raises questions about why, on January 26, 2004, New York Life forced Blacks out of court with a class action lawsuit for slavery restitution, and three days later settled a similar case for $20 million with White descendants of Armenian genocide victims.
The slavery case was filed against New York Life in May of 2002, and is entitled, In Re: African-American Slave Descendants. Black plaintiffs claimed that New York Life committed a crime against humanity via its early company that wrote life insurance policies enslaving their African ancestors in mid-1800. Slave owners were the beneficiaries. Over one third of New York Life's first revenue came from writing slave policies. This practice encouraged the employment of enslaved people in ultra-hazardous capacities, like coal mining or constructing railroads, which sometimes resulted in burning and drowning deaths. The website contains a copy of a company policy enslaving an African named Robert Moody who was employed in a Virginia coal pit.
The Armenian genocide case, Marootian v. New York Life Insurance Company was filed in November of 1999. The plaintiffs claimed that New York Life wrongfully failed to pay benefits under life insurance policies they issued as far back as the 1870s in the Turkish Ottoman Empire on the lives of their Armenian ancestors. New York Life denies any wrongdoing.
Slave descendants say critical factors in the cases were identical and should have resulted in the same outcome:
-- Both cases involved insurance policies from the 19th century;
-- Both involved descendants making claims on behalf of themselves and their ancestors; and
-- Both cases resulted from some of the worst crimes committed against humans in world history -- the enslavement of Africans, and the genocide of Armenians.
"Race is the key difference in these cases. This looks like discrimination against African-Americans," said Deadria Farmer- Paellmann, executive director of the Restitution Study Group -- the New York non-profit sponsoring the campaign.
The slavery case was refiled in a Chicago Federal Court on April 5, 2004. A decision is pending.
Health Insurance in Missouri - 8.4% go without it
JEFFERSON CITY, Mo. - About 8.4 percent of Missourians lack health insurance, with young adults the most likely to be going without it, according to a survey released Thursday.
The survey conducted for the state Department of Health and Senior Services estimates that 463,000 Missourians do not have health insurance.
"Although many people expected the uninsured numbers to be much higher, we still have nearly a half million residents that do not have health coverage," said department director Richard Dunn. "Missouri must continue its efforts to expand access to affordable coverage and care."
Of those who were uninsured, nearly 39 percent said they had needed health care attention but didn't get it because of the cost, the survey found.
The telephone survey of 6,995 households was conducted from March to early July by the University of Missouri using questions developed by the University of Minnesota, said Connie Mihalevich, the department's administrator for community health systems and support.
It had a margin of error of plus or minus 0.9 percentage points.
The survey showed that Missourians ages 19-24 were the most likely to be uninsured, with 20.1 percent lacking health coverage. Of adults age 19-64, 12.3 percent of those surveyed were uninsured. Children and senior citizens had the best insurance rates, primarily because of the wider availability of government-funded health care.
The 8.4 percent overall uninsured rate was based on the number of respondents who said they did not have health insurance at the time they were surveyed. A slightly higher 10.9 percent said they had lacked health insurance at some point during the past year, although some of them may have been currently insured.
Among other results of the survey:
_ The uninsured rate was higher among those with less education and in families earning less than 150 percent of the federal poverty level, which is $28,275 annually for a family of four. Of those without high school diplomas, 15.3 percent lacked health insurance, compared with 11.9 percent of high school graduates and just 3.5 percent of college graduates.
_ Residents in urban areas were more likely to have health insurance than those in rural areas. The St. Louis area posted the best rate with 5.8 percent of people uninsured followed by the Kansas City region at 7.9 percent. Predominantly rural northeastern Missouri had the highest uninsured rate at 13.1 percent, followed by southeast Missouri at 11.9 percent.
_ People self-employed or working part time were more likely to lack health insurance. Of the self-employed, 19.1 percent lacked insurance, a rate roughly three times the 6.6 percent for people employed by someone else. Just 5.4 percent of people working more than a 40-hour week lacked health insurance, compared with 20.7 percent of people working 21-30 hours a week.
The survey conducted for the state Department of Health and Senior Services estimates that 463,000 Missourians do not have health insurance.
"Although many people expected the uninsured numbers to be much higher, we still have nearly a half million residents that do not have health coverage," said department director Richard Dunn. "Missouri must continue its efforts to expand access to affordable coverage and care."
Of those who were uninsured, nearly 39 percent said they had needed health care attention but didn't get it because of the cost, the survey found.
The telephone survey of 6,995 households was conducted from March to early July by the University of Missouri using questions developed by the University of Minnesota, said Connie Mihalevich, the department's administrator for community health systems and support.
It had a margin of error of plus or minus 0.9 percentage points.
The survey showed that Missourians ages 19-24 were the most likely to be uninsured, with 20.1 percent lacking health coverage. Of adults age 19-64, 12.3 percent of those surveyed were uninsured. Children and senior citizens had the best insurance rates, primarily because of the wider availability of government-funded health care.
The 8.4 percent overall uninsured rate was based on the number of respondents who said they did not have health insurance at the time they were surveyed. A slightly higher 10.9 percent said they had lacked health insurance at some point during the past year, although some of them may have been currently insured.
Among other results of the survey:
_ The uninsured rate was higher among those with less education and in families earning less than 150 percent of the federal poverty level, which is $28,275 annually for a family of four. Of those without high school diplomas, 15.3 percent lacked health insurance, compared with 11.9 percent of high school graduates and just 3.5 percent of college graduates.
_ Residents in urban areas were more likely to have health insurance than those in rural areas. The St. Louis area posted the best rate with 5.8 percent of people uninsured followed by the Kansas City region at 7.9 percent. Predominantly rural northeastern Missouri had the highest uninsured rate at 13.1 percent, followed by southeast Missouri at 11.9 percent.
_ People self-employed or working part time were more likely to lack health insurance. Of the self-employed, 19.1 percent lacked insurance, a rate roughly three times the 6.6 percent for people employed by someone else. Just 5.4 percent of people working more than a 40-hour week lacked health insurance, compared with 20.7 percent of people working 21-30 hours a week.
Health Insurance costs rising
The cost of health insurance is still rising, but not as rapidly as it has in recent years, according to a survey from Mercer Human Resource Consulting LLC.
The average per-employee cost rose 7.5 percent in 2004, which was the lowest increase since 1999 and was down from last year's increase of 10.1 percent. The annual study found the average total cost of health benefits (including medical and dental) for active employees was $6,679 in 2004. In order to help employees stay healthy, employers are also investing in proactive wellness programs that target diseases such as diabetes, heart disease and hypertension.
The study also found that high deductibles of $1,000 or more in some small employers' preferred-provider organization (PPO) plans could be discouraging people from seeking medical attention.
Mercer Human Resource Consulting said the study, which includes more than 3,000 employers, is the largest of its kind.
The average per-employee cost rose 7.5 percent in 2004, which was the lowest increase since 1999 and was down from last year's increase of 10.1 percent. The annual study found the average total cost of health benefits (including medical and dental) for active employees was $6,679 in 2004. In order to help employees stay healthy, employers are also investing in proactive wellness programs that target diseases such as diabetes, heart disease and hypertension.
The study also found that high deductibles of $1,000 or more in some small employers' preferred-provider organization (PPO) plans could be discouraging people from seeking medical attention.
Mercer Human Resource Consulting said the study, which includes more than 3,000 employers, is the largest of its kind.
Texas Auto Insurance 30% savings
Press Release
(PRWEB) November 22, 2004 -- Texas Wasatch Insurance is pleased to announce that it is in the final stages of completing its recruitment program to double its Texas auto insurance agent workforce. Mark E. Jones, Texas Wasatch Group CEO, explains, “Our core Texas auto insurance business continues to grow very rapidly. Our agent team continues to generate client results that are driving explosive growth for us. Our efforts have saved our new clients an average of over 30% annually on their auto insurance and over 20% on homeowners insurance in Texas. We have had to aggressively expand our team to keep up with the resulting extraordinary client demand.”
(PRWEB) November 22, 2004 -- Texas Wasatch Insurance is pleased to announce that it is in the final stages of completing its recruitment program to double its Texas auto insurance agent workforce. Mark E. Jones, Texas Wasatch Group CEO, explains, “Our core Texas auto insurance business continues to grow very rapidly. Our agent team continues to generate client results that are driving explosive growth for us. Our efforts have saved our new clients an average of over 30% annually on their auto insurance and over 20% on homeowners insurance in Texas. We have had to aggressively expand our team to keep up with the resulting extraordinary client demand.”
Friday, November 19, 2004
BCBSMN eliminates use of SSN
Press Release
Blue Cross and Blue Shield of Minnesota and affiliates recently developed and implemented a permanent solution for totally eliminating the use of the social security number as a member identifier. Blue Cross members had expressed their concern about the use of their social security number as an identifier, especially with the rising tide of identity theft. The solution was the development of an alternative identification number system for all Blue Cross members, both individual as well as to group accounts. The complete conversion from social security numbers to unique identifiers took approximately a year with the final conversion taking place Oct. 23 and 24."Blue Cross strongly supports the privacy rights of its members and recognized the need for a stronger alternative system," said Mark W. Banks, M.D., president and CEO of Blue Cross. "The implementation of the unique identifier will better enable us to safeguard member security and comply with new and emerging legislation to protect member privacy."Senator Steve Kelley (DFL-Hopkins) was pleased to hear about the conversion efforts at Blue Cross. Two years ago Sen. Kelley and Rep. Jim Davnie (DFL-Minneapolis) introduced a bill to legislation to limit the public use of individual social security numbers as a way to identify individuals. The proposed bill did not pass. Blue Cross felt a change toward a more secure member identification number system was needed sooner as opposed to later."The Blue Cross conversion away from using social security numbers is a big improvement for the security of personal identity and the prevention of identity theft," states Senator Kelley. "I congratulate Blue Cross on the conversion and their effort in this area."The U.S. Federal Trade Commission (FTC) says that identity theft is its number one source of consumer complaints. According to the FTC's figures, identity theft is the most popular form of consumer fraud, in part because it is the most profitable. Nearly $100 million was stolen from financial institutions last year due to identity theft, or an average of $6,767 per victim. The total cost for Blue Cross to replace social security-based subscriber/member ID numbers was estimated at $4 million. "Blue Cross felt that it was important to respond to this complex issue responsibly," said Banks. "This way members would be able to feel more at ease and have a stronger sense of security in Blue Cross' services."
Blue Cross and Blue Shield of Minnesota and affiliates recently developed and implemented a permanent solution for totally eliminating the use of the social security number as a member identifier. Blue Cross members had expressed their concern about the use of their social security number as an identifier, especially with the rising tide of identity theft. The solution was the development of an alternative identification number system for all Blue Cross members, both individual as well as to group accounts. The complete conversion from social security numbers to unique identifiers took approximately a year with the final conversion taking place Oct. 23 and 24."Blue Cross strongly supports the privacy rights of its members and recognized the need for a stronger alternative system," said Mark W. Banks, M.D., president and CEO of Blue Cross. "The implementation of the unique identifier will better enable us to safeguard member security and comply with new and emerging legislation to protect member privacy."Senator Steve Kelley (DFL-Hopkins) was pleased to hear about the conversion efforts at Blue Cross. Two years ago Sen. Kelley and Rep. Jim Davnie (DFL-Minneapolis) introduced a bill to legislation to limit the public use of individual social security numbers as a way to identify individuals. The proposed bill did not pass. Blue Cross felt a change toward a more secure member identification number system was needed sooner as opposed to later."The Blue Cross conversion away from using social security numbers is a big improvement for the security of personal identity and the prevention of identity theft," states Senator Kelley. "I congratulate Blue Cross on the conversion and their effort in this area."The U.S. Federal Trade Commission (FTC) says that identity theft is its number one source of consumer complaints. According to the FTC's figures, identity theft is the most popular form of consumer fraud, in part because it is the most profitable. Nearly $100 million was stolen from financial institutions last year due to identity theft, or an average of $6,767 per victim. The total cost for Blue Cross to replace social security-based subscriber/member ID numbers was estimated at $4 million. "Blue Cross felt that it was important to respond to this complex issue responsibly," said Banks. "This way members would be able to feel more at ease and have a stronger sense of security in Blue Cross' services."
BCBSMN eliminates use of SSN
Press Release
Blue Cross and Blue Shield of Minnesota and affiliates recently developed and implemented a permanent solution for totally eliminating the use of the social security number as a member identifier. Blue Cross members had expressed their concern about the use of their social security number as an identifier, especially with the rising tide of identity theft. The solution was the development of an alternative identification number system for all Blue Cross members, both individual as well as to group accounts. The complete conversion from social security numbers to unique identifiers took approximately a year with the final conversion taking place Oct. 23 and 24."Blue Cross strongly supports the privacy rights of its members and recognized the need for a stronger alternative system," said Mark W. Banks, M.D., president and CEO of Blue Cross. "The implementation of the unique identifier will better enable us to safeguard member security and comply with new and emerging legislation to protect member privacy."Senator Steve Kelley (DFL-Hopkins) was pleased to hear about the conversion efforts at Blue Cross. Two years ago Sen. Kelley and Rep. Jim Davnie (DFL-Minneapolis) introduced a bill to legislation to limit the public use of individual social security numbers as a way to identify individuals. The proposed bill did not pass. Blue Cross felt a change toward a more secure member identification number system was needed sooner as opposed to later."The Blue Cross conversion away from using social security numbers is a big improvement for the security of personal identity and the prevention of identity theft," states Senator Kelley. "I congratulate Blue Cross on the conversion and their effort in this area."The U.S. Federal Trade Commission (FTC) says that identity theft is its number one source of consumer complaints. According to the FTC's figures, identity theft is the most popular form of consumer fraud, in part because it is the most profitable. Nearly $100 million was stolen from financial institutions last year due to identity theft, or an average of $6,767 per victim. The total cost for Blue Cross to replace social security-based subscriber/member ID numbers was estimated at $4 million. "Blue Cross felt that it was important to respond to this complex issue responsibly," said Banks. "This way members would be able to feel more at ease and have a stronger sense of security in Blue Cross' services."
Blue Cross and Blue Shield of Minnesota and affiliates recently developed and implemented a permanent solution for totally eliminating the use of the social security number as a member identifier. Blue Cross members had expressed their concern about the use of their social security number as an identifier, especially with the rising tide of identity theft. The solution was the development of an alternative identification number system for all Blue Cross members, both individual as well as to group accounts. The complete conversion from social security numbers to unique identifiers took approximately a year with the final conversion taking place Oct. 23 and 24."Blue Cross strongly supports the privacy rights of its members and recognized the need for a stronger alternative system," said Mark W. Banks, M.D., president and CEO of Blue Cross. "The implementation of the unique identifier will better enable us to safeguard member security and comply with new and emerging legislation to protect member privacy."Senator Steve Kelley (DFL-Hopkins) was pleased to hear about the conversion efforts at Blue Cross. Two years ago Sen. Kelley and Rep. Jim Davnie (DFL-Minneapolis) introduced a bill to legislation to limit the public use of individual social security numbers as a way to identify individuals. The proposed bill did not pass. Blue Cross felt a change toward a more secure member identification number system was needed sooner as opposed to later."The Blue Cross conversion away from using social security numbers is a big improvement for the security of personal identity and the prevention of identity theft," states Senator Kelley. "I congratulate Blue Cross on the conversion and their effort in this area."The U.S. Federal Trade Commission (FTC) says that identity theft is its number one source of consumer complaints. According to the FTC's figures, identity theft is the most popular form of consumer fraud, in part because it is the most profitable. Nearly $100 million was stolen from financial institutions last year due to identity theft, or an average of $6,767 per victim. The total cost for Blue Cross to replace social security-based subscriber/member ID numbers was estimated at $4 million. "Blue Cross felt that it was important to respond to this complex issue responsibly," said Banks. "This way members would be able to feel more at ease and have a stronger sense of security in Blue Cross' services."
Hartford acquires reinsurance group
Hartford acquires reinsurance to cover natural catastrophes
Having suffered the impact of several hurricanes this year, Hartford Financial Services Group has bought $247.5 million worth of reinsurance for natural catastrophes from Foundation Re Ltd., a Cayman Island reinsurance company.
Hartford was one of many insurance companies to suffer losses following the unprecedented series of hurricanes that hit the US earlier this year.
Having suffered the impact of several hurricanes this year, Hartford Financial Services Group has bought $247.5 million worth of reinsurance for natural catastrophes from Foundation Re Ltd., a Cayman Island reinsurance company.
Hartford was one of many insurance companies to suffer losses following the unprecedented series of hurricanes that hit the US earlier this year.
Insurance losses great from hurricanes
Newly released insurance industry information has ranked all four of this season's hurricanes among the top ten costliest U.S. hurricanes in the past 25 years.
And, taken together, the cost of this season’s storms edges out the cost of Andrew by about $100 million.
A report by the Insurance Information Institute (III) shows Hurricane Charley was the second costliest hurricane, with some $6.7 billion in insured losses. That's a far second to Andrew, which caused about $20.3 billion in losses in 1992.
Hurricane Ivan ranked fourth, with $6 billion in losses, coming just under Hugo's costs of $6.2 billion.
Hurricane Frances came in fifth with insured losses of $4.4 billion, while Jeanne ranked seventh with $3.24 billion. Hurricane Georges - which caused $3.27 billion in damages - barely notched in above Jeanne.
Finally, eighth, ninth and tenth rankings: Hurricane Opal in 1995 with $2.5 billion, Floyd in 1999 with $2.1 billion, and Iniki in 1992 with $2.09 billlion, respectively.
These estimates are for insured losses only, and are in addition to the extensive financial assistance provided by the Federal Emergency Management Agency and other federal agencies.
The rankings also did not include an estimated $1.2 billion in insurance payments by the Florida state-created insurer of last resort, the Citizens Property Insurance Corporation (CPIC). The CPIC was created by the state about two years ago to provide insurance coverage for homeowners and businesses that could not obtain insurance elsewhere.
The CPIC currently has reserves totaling $1.5 billion. If the CPIC were to use all available funds for payments, it can assess a special charge on all Florida property insurers, which those companies can in turn pass on to their policyholders.
The CPIC is continuing to process insurance claims, and will not have final insurance payment totals until late February 2005.
And, taken together, the cost of this season’s storms edges out the cost of Andrew by about $100 million.
A report by the Insurance Information Institute (III) shows Hurricane Charley was the second costliest hurricane, with some $6.7 billion in insured losses. That's a far second to Andrew, which caused about $20.3 billion in losses in 1992.
Hurricane Ivan ranked fourth, with $6 billion in losses, coming just under Hugo's costs of $6.2 billion.
Hurricane Frances came in fifth with insured losses of $4.4 billion, while Jeanne ranked seventh with $3.24 billion. Hurricane Georges - which caused $3.27 billion in damages - barely notched in above Jeanne.
Finally, eighth, ninth and tenth rankings: Hurricane Opal in 1995 with $2.5 billion, Floyd in 1999 with $2.1 billion, and Iniki in 1992 with $2.09 billlion, respectively.
These estimates are for insured losses only, and are in addition to the extensive financial assistance provided by the Federal Emergency Management Agency and other federal agencies.
The rankings also did not include an estimated $1.2 billion in insurance payments by the Florida state-created insurer of last resort, the Citizens Property Insurance Corporation (CPIC). The CPIC was created by the state about two years ago to provide insurance coverage for homeowners and businesses that could not obtain insurance elsewhere.
The CPIC currently has reserves totaling $1.5 billion. If the CPIC were to use all available funds for payments, it can assess a special charge on all Florida property insurers, which those companies can in turn pass on to their policyholders.
The CPIC is continuing to process insurance claims, and will not have final insurance payment totals until late February 2005.
State Farm gradual entry into New Jersey
State Farm Indemnity Company and the Department of Banking and Insurance have reached an agreement allowing for the insurer's re-entry into the New Jersey auto insurance market.
Effective Jan. 1, 2005, State farm will once again write new auto insurance business, but will do so on a gradual basis as it phases back into the market.
Also effective Jan. 1, 2005, State Farm Indemnity will implement a voluntary 3.8 percent average rate reduction for private passenger auto insurance customers. This rate reduction will be the fourth in 18 months and will mean that Indemnity has reduced rates by an average of 15 percent since July 2003.
Indemnity -- State Farm's auto-only New Jersey subsidiary -- committed to the department to review its withdrawal decision by the end of 2005, but did so ahead of schedule. "In light of the positive changes we've seen in the New Jersey insurance regulatory environment, we made our decision earlier than planned," said Brian Boyden, president of Indemnity.
Indemnity officials said the insurer has regained its financial footing; however, they also point out that recommitting to the New Jersey auto insurance market will involve a significant investment and will take time. "This is why we will proceed in step-by-step fashion, writing business only on a limited basis for now," said Boyden.
Vince Trosino, president, vice chairman and chief operations officer of State Farm Mutual, Indemnity's parent company, voiced appreciation for the efforts of government officials and Indemnity associates in attaining this reversal. "We appreciate the leadership of the administration, the bi-partisan efforts of the state legislature, and the work of Commissioner Holly Bakke and her department. These positive results also reflect the efforts of our employees, agents and our many policyholders in working toward meaningful insurance regulatory reform," said Trosino.
He also cited the need to keep a watchful eye on insurance reform into the future. "Full implementation of the auto insurance reforms is critical to maintaining a more competitive market and ultimately, more affordable products," Trosino said.
s of Sept. 30, 2004, State Farm Indemnity insures 569,673 autos; serving policyholders from its zone office in Parsippany, its seven claims service offices around the state, and through 822 employees and 151 licensed agents.
Effective Jan. 1, 2005, State farm will once again write new auto insurance business, but will do so on a gradual basis as it phases back into the market.
Also effective Jan. 1, 2005, State Farm Indemnity will implement a voluntary 3.8 percent average rate reduction for private passenger auto insurance customers. This rate reduction will be the fourth in 18 months and will mean that Indemnity has reduced rates by an average of 15 percent since July 2003.
Indemnity -- State Farm's auto-only New Jersey subsidiary -- committed to the department to review its withdrawal decision by the end of 2005, but did so ahead of schedule. "In light of the positive changes we've seen in the New Jersey insurance regulatory environment, we made our decision earlier than planned," said Brian Boyden, president of Indemnity.
Indemnity officials said the insurer has regained its financial footing; however, they also point out that recommitting to the New Jersey auto insurance market will involve a significant investment and will take time. "This is why we will proceed in step-by-step fashion, writing business only on a limited basis for now," said Boyden.
Vince Trosino, president, vice chairman and chief operations officer of State Farm Mutual, Indemnity's parent company, voiced appreciation for the efforts of government officials and Indemnity associates in attaining this reversal. "We appreciate the leadership of the administration, the bi-partisan efforts of the state legislature, and the work of Commissioner Holly Bakke and her department. These positive results also reflect the efforts of our employees, agents and our many policyholders in working toward meaningful insurance regulatory reform," said Trosino.
He also cited the need to keep a watchful eye on insurance reform into the future. "Full implementation of the auto insurance reforms is critical to maintaining a more competitive market and ultimately, more affordable products," Trosino said.
s of Sept. 30, 2004, State Farm Indemnity insures 569,673 autos; serving policyholders from its zone office in Parsippany, its seven claims service offices around the state, and through 822 employees and 151 licensed agents.
Thursday, November 18, 2004
Insurance costly for smokers
From MSN Money ......We pulled some online quotes on 20-year term life insurance (a $500,000 policy) for a healthy 44-year-old male through BudgetLife.com. The range for a non-smoker was $610 to $1,115 in premiums per year; for someone smoking a pack a day, the prices skyrocketed to as much as $4,495 per year. The difference in health insurance isn't as dramatic. According to eHealthInsurance.com, the monthly premium for a policy from Regence Blue Shield with a $1,500 deductible for a 44-year-old male nonsmoker is $98. The same policy for a smoker is $113 per month. He will pay nearly $200 more per year.A few state governments also charge their employees extra for health insurance if they smoke, and others are gradually joining the trend. Alabama Gov. Bob Riley is pushing legislation that would charge state employees and teachers who smoke an extra $20 per month. When shopping for homeowners insurance, nonsmokers can generally expect to receive a minimum 10% discount, according to Ray Neumiller, an agent with Farmer’s Insurance in Seattle. The insurer’s point of view: Smokers burn down houses.The most common homeowners insurance policies range from approximately $290 to $900 per year, depending on the home’s location. With the discount, a non-smoker would realize savings of at least $30, but most likely more.
Wednesday, November 17, 2004
Students must grasp Health Insurance
By Crissanka ChristadossAssistant Features EditorWhitney Weber would like to know what to do about health insurance when she graduates in one month."I am under my parents’ health insurance and I don’t know what to do once I go off their insurance. I’d like to know what I should do," said Weber, a senior in the School of Liberal Arts.Weber isn’t alone in wondering about the complexities of health insurance. Jim Layman, business manager for the Student Health Center, said most Purdue students are covered by some sort of health insurance but there are a small percentage of students who don’t have coverage.According to the U.S. Census Bureau, 29.6 percent of young adults aged 18 to 24 years old didn’t have health insurance in 2002. This age group was less likely than any other age group to have health insurance in 2002.There are many reasons why students might not carry health insurance. Jacob Kerkhoff, medical benefits manager for human resource services, said students who don’t have coverage usually think they don’t need coverage."Some students find the cost prohibitive or they think ‘I’m healthy, I’m fine.’ But when an accident or emergency happens, it’s too late."In Weber’s case, the problem lies with students who are about to graduate who are under their parents’ insurance plan. Some plans don’t allow dependents after they have graduated or after a certain age.These students usually find jobs after graduation and their employers will offer health benefits. Kerkhoff said Purdue offers a six-month continuation insurance plan for graduates who don’t have insurance after they graduate. When looking for employment, Kerkhoff suggests students pay special attention to the medical benefits."Students need to keep in mind when looking for a job that medical coverage is sometimes offered as compensation."For example, employers might not offer an elaborate medical plan but salary might be better. Or the opposite occurs and an employer offers a substantial medical plan but the pay isn’t as plentiful. Kerkhoff said it has been a national trend this year for a 12 percent cost increase for health insurance for all employers. This makes health insurance the No. 1 issue for employers.Layman said domestic students aren’t required to have health insurance but it is strongly encouraged. There are a variety of health insurance plans available to students through different companies and Purdue also offers a student health insurance plan for undergraduate, graduate and international students.International students must meet certain requirements for health insurance in order to attend Purdue. Michael Brzezinski, director of International Students and Scholars, said many international students aren’t accustomed to medical plans that require co-payments and deductibles. This is due to the fact that health care in other countries is much more affordable than in the United States.According to the Centers for Disease Control, 43.6 million Americans went without health insurance coverage in 2003. Of those millions, 20.1 percent of working-age adults went without health insurance.There might not be an explosion of students on campus without health insurance but the problem exists. Kerkhoff said that students who do have insurance under their parents should discuss what their insurance entails with their parents. He said those without insurance or looking for appropriate insurance should look at a variety of plans to distinguish what works and fits their lifestyle."Just be aware about it and get an idea of what health insurance means."
Small Business Health Insurance
The Lt. Governor’s Commission on Small Business Health Insurance Costs has approved its final recommendations to help small business owners better afford health insurance for their employees. The bipartisan panel agreed to a diverse array of tools for small businesses including the creation of a voluntary public-private purchasing pool to allow participating small businesses to get better rates, a tax cut for small businesses that provide insurance for their workers and a separate tax cut for those who cover at least ten percent of the premium for an employee’s dependent, and an insurance buying guide to give small businesses owners the information they need to become better insurance consumers. “I am really proud of the work this panel has done,” said Lt. Governor Tim Kaine. “I believe the recommendations the panel is making will empower small business owners to better address the number one problem facing them today, the skyrocketing cost of health insurance.” The tax credit is aimed at businesses that employ 50 or fewer workers. They will be eligible for an annual $500 tax credit for each insured worker. They will qualify for an additional $100 tax credit for an employee’s dependent if they pay at least ten percent of that person’s premium. A single company would be eligible for up to a maximum $30,000 in annual tax relief under the plan. The panel is also recommending encouraging employers to offer wellness programs at work, and an annual report to track Virginia’s progress in closing the insurance gap. Currently, one out of every seven Virginians lack health insurance. Of those who are uninsured, 75 percent either work full time or live with someone who does. At least half of Virginia’s uninsured workers work in small businesses. Typically the smaller the employer, the less likely it is to provide health insurance.
State Farm's Steer Clear Program
KNOXVILLE (WATE) -- One of the country's largest insurance companies has a new way to save as much as 15 percent on auto insurance.
A new program offered by State Farm will give people the chance to get a premium discount, beginning December 1st. It's called "Steer Clear."
Historically, insurance rates are higher for people just learning to drive and the most significant drop doesn't come until a person turns 25.
It takes anywhere from 30 to 60 days to complete Steer Clear. It includes a quiz based on a video and a magazine. Customers also have to complete 20 to 30 trips and keep a record of driving goals and self-evaluations so honesty counts. And some of the trips may have to be supervised.
Although Steer Clear is a State Farm program, don't forget to shop around with other companies. The insurance business is one of the most competitive. Chances are, one insurance company will try to match any deal you find with another.
A new program offered by State Farm will give people the chance to get a premium discount, beginning December 1st. It's called "Steer Clear."
Historically, insurance rates are higher for people just learning to drive and the most significant drop doesn't come until a person turns 25.
It takes anywhere from 30 to 60 days to complete Steer Clear. It includes a quiz based on a video and a magazine. Customers also have to complete 20 to 30 trips and keep a record of driving goals and self-evaluations so honesty counts. And some of the trips may have to be supervised.
Although Steer Clear is a State Farm program, don't forget to shop around with other companies. The insurance business is one of the most competitive. Chances are, one insurance company will try to match any deal you find with another.
Monday, November 15, 2004
Mortgage Rates Climb
Mortgage rates around the country climbed last week as Wall Street investors responded to some encouraging signs that the economy is gaining traction.
Rates on 30-year, fixed-rate mortgages averaged 5.76 percent for the week ending Nov. 11, Freddie Mac said in its weekly survey released Thursday. That was up from 5.70 percent last week.
This year, rates on 30-year mortgages hit a high of 6.34 percent the week of May 13. After that, rates bounced around but drifted lower as economic activity cooled a bit and inflation fears eased.
Recently, Wall Street investors were buoyed by a government report, issued on Nov. 5, that showed the economy added a sizable 337,000 jobs in October, the most in seven months.
"October's fervent job growth statistics ... led financial markets to believe the economy is picking up steam," said Frank Nothaft, Freddie Mac's chief economist. "The end result translates into higher long-term mortgage rates this week."
Even with the increase, though, mortgage rates remain low by historic standards, analysts said.
For 15-year, fixed-rate mortgages, a popular option for refinancing, , rates rose this week to 5.16 percent, up from 5.08 percent last week.
For one-year adjustable rate mortgages, rates averaged 4.16 percent last week, compared with 4 percent the previous week. The increase in rates for short-term ARMs is related to the Federal Reserve's decision Wednesday to boost a key short-term rate one-quarter percentage point, to 2 percent.
Nationwide averages for mortgage rates do not include add-on fees known as points. Each loan type carried a 0.6-point fee.
Low mortgage rates have aided the housing market. It's expected to see record-high sales for all of 2004.
A year ago, rates on 30-year mortgages averaged 5.98 percent, 15-year mortgages were at 5.31 percent and one-year ARMs averaged 3.73 percent.
Rates on 30-year, fixed-rate mortgages averaged 5.76 percent for the week ending Nov. 11, Freddie Mac said in its weekly survey released Thursday. That was up from 5.70 percent last week.
This year, rates on 30-year mortgages hit a high of 6.34 percent the week of May 13. After that, rates bounced around but drifted lower as economic activity cooled a bit and inflation fears eased.
Recently, Wall Street investors were buoyed by a government report, issued on Nov. 5, that showed the economy added a sizable 337,000 jobs in October, the most in seven months.
"October's fervent job growth statistics ... led financial markets to believe the economy is picking up steam," said Frank Nothaft, Freddie Mac's chief economist. "The end result translates into higher long-term mortgage rates this week."
Even with the increase, though, mortgage rates remain low by historic standards, analysts said.
For 15-year, fixed-rate mortgages, a popular option for refinancing, , rates rose this week to 5.16 percent, up from 5.08 percent last week.
For one-year adjustable rate mortgages, rates averaged 4.16 percent last week, compared with 4 percent the previous week. The increase in rates for short-term ARMs is related to the Federal Reserve's decision Wednesday to boost a key short-term rate one-quarter percentage point, to 2 percent.
Nationwide averages for mortgage rates do not include add-on fees known as points. Each loan type carried a 0.6-point fee.
Low mortgage rates have aided the housing market. It's expected to see record-high sales for all of 2004.
A year ago, rates on 30-year mortgages averaged 5.98 percent, 15-year mortgages were at 5.31 percent and one-year ARMs averaged 3.73 percent.
Living without Health Insurance
Press release
(PRWEB) November 15, 2004 -- Freedom Benefits Association of Philadelphia issued the conclusions of its study that indicates that many Americans without health insurance are still not aware of the most viable coverage options available. The problem may be largely fueled by the fact that these uninsured individuals are isolated in terms of communication about health insurance benefits and because they are in a state of lifestyle transition. The solution may be better education from the private sector rather than expanded public programs. Federal law requiring continuing coverage to departing employees could be modified to provide for lower cost options and more liberal eligibility and enrollment procedures.The number of Americans without health insurance has risen from 41 million a year ago to 45 million in the latest survey according to the U.S. Census Bureau. This figure may be somewhat misleading in that an estimated 85.2 million Americans were without health insurance for at least some small part of the past year, according to a privately funded survey by Families USA. This larger figure includes all who had a gap in coverage while changing health plans – a statistic not counted in the census bureau report. The Families USA report used data compiled and analyzed by The Lewin Group from the U.S. Census Bureau, the Department of Labor, and the Department of Health and Human Services.A common belief is that uninsured Americans cannot afford or are not eligible for health insurance. This is not supported by the findings of the study. A closer look at the uninsured population reveals these details:1) Over half of the uninsured are in a temporary lifestyle change – a recent graduation, job change, starting a business, moving, etc. They do not expect to remain without coverage for a long period of time.2) Over 60% of the uninsured are associated with a small business (as opposed to having health benefits formerly being provided by a large employer).3) The cost of health coverage is increasingly cited as a reason for not carrying insurance, yet the actual cost of issued interim health insurance coverage is less than half of the amount paid by employers. The monthly cost of family health coverage in 2003 provided by employers was $851, according to a survey conducted by the Kaiser foundation. The monthly cost of short term medical insurance issued to families was less than $350, according to the business records of Freedom Benefits Association.4) Over a third of the uninsured come from households with incomes over $50,000.5) Over 62% of Americans receive their health benefits through an employer plan. Employer health plans are not required to offer lower cost coverage options to departing employees. Federal law only requires that employers offer the most expensive coverage option commonly known as “COBRA coverage”.These trends seem to confirm the theory that easiest and least intrusive way to significantly reduce the number of Americans without health insurance is educate and promote low cost health insurance options, especially to the small business community.
(PRWEB) November 15, 2004 -- Freedom Benefits Association of Philadelphia issued the conclusions of its study that indicates that many Americans without health insurance are still not aware of the most viable coverage options available. The problem may be largely fueled by the fact that these uninsured individuals are isolated in terms of communication about health insurance benefits and because they are in a state of lifestyle transition. The solution may be better education from the private sector rather than expanded public programs. Federal law requiring continuing coverage to departing employees could be modified to provide for lower cost options and more liberal eligibility and enrollment procedures.The number of Americans without health insurance has risen from 41 million a year ago to 45 million in the latest survey according to the U.S. Census Bureau. This figure may be somewhat misleading in that an estimated 85.2 million Americans were without health insurance for at least some small part of the past year, according to a privately funded survey by Families USA. This larger figure includes all who had a gap in coverage while changing health plans – a statistic not counted in the census bureau report. The Families USA report used data compiled and analyzed by The Lewin Group from the U.S. Census Bureau, the Department of Labor, and the Department of Health and Human Services.A common belief is that uninsured Americans cannot afford or are not eligible for health insurance. This is not supported by the findings of the study. A closer look at the uninsured population reveals these details:1) Over half of the uninsured are in a temporary lifestyle change – a recent graduation, job change, starting a business, moving, etc. They do not expect to remain without coverage for a long period of time.2) Over 60% of the uninsured are associated with a small business (as opposed to having health benefits formerly being provided by a large employer).3) The cost of health coverage is increasingly cited as a reason for not carrying insurance, yet the actual cost of issued interim health insurance coverage is less than half of the amount paid by employers. The monthly cost of family health coverage in 2003 provided by employers was $851, according to a survey conducted by the Kaiser foundation. The monthly cost of short term medical insurance issued to families was less than $350, according to the business records of Freedom Benefits Association.4) Over a third of the uninsured come from households with incomes over $50,000.5) Over 62% of Americans receive their health benefits through an employer plan. Employer health plans are not required to offer lower cost coverage options to departing employees. Federal law only requires that employers offer the most expensive coverage option commonly known as “COBRA coverage”.These trends seem to confirm the theory that easiest and least intrusive way to significantly reduce the number of Americans without health insurance is educate and promote low cost health insurance options, especially to the small business community.
Insurance Planet expanding to lending news and more
Insurance Planet is expanding to include news stories about other types personal finance products besides insurance offerings. News about banking, mortgage loans, and other personal finance news will be covered from time to time
We welcome your feedback with suggestions of other news in the financial world to cover
We welcome your feedback with suggestions of other news in the financial world to cover
Friday, November 12, 2004
Anthem deal hits another roadblock
Georgia's insurance commissioner has rejected an offer by Anthem Inc. to re-approve its application to buy WellPoint Health Networks.
John Oxendine becomes the first state insurance regulatory head to publicly reveal he's asking for sweetened concessions from the Indianapolis health benefits company since it signed a $265 million concessions package with California's insurance commissioner on Monday.
Georgia is among nine other states that are re-appraising their approvals of the Anthem-WellPoint deal in light of the California settlement, which changed the financial conditions of the merger.
"The commissioner met with Anthem Tuesday. An offer was made. The commissioner declined whatever was offered. He felt like Georgia citizens deserve a little better than what was offered," said Glenn Allen, a spokesman for the Georgia Department of Insurance.
Allen said Oxendine won't reveal what was in the Anthem offer.
Anthem spokesman Jim Kappel said the company is "following up with regulators to answer any questions they may have about the merger," but "we are not going to comment on specifics of our communications with any state regulators."
The next steps in Georgia are for department staff to draw up recommendations for Oxendine to use in further negotiations with Anthem, Allen said.
Oxendine, a Republican, is the only elected insurance commissioner among the nine states that are reviewing their earlier approvals of Anthem's $18 billion offer to buy California-based WellPoint.
Patrick Hojlo, a health stock analyst for Credit Suisse First Boston, said in a report to investors that he expects Oxendine "to readily accept a sweetened offer, once he makes enough noise about the matter to reap some political gain."
WellPoint is licensed to sell Blue Cross or Blue Shield policies in four states. California has about half of WellPoint's membership, while Georgia has about 15 percent.
John Oxendine becomes the first state insurance regulatory head to publicly reveal he's asking for sweetened concessions from the Indianapolis health benefits company since it signed a $265 million concessions package with California's insurance commissioner on Monday.
Georgia is among nine other states that are re-appraising their approvals of the Anthem-WellPoint deal in light of the California settlement, which changed the financial conditions of the merger.
"The commissioner met with Anthem Tuesday. An offer was made. The commissioner declined whatever was offered. He felt like Georgia citizens deserve a little better than what was offered," said Glenn Allen, a spokesman for the Georgia Department of Insurance.
Allen said Oxendine won't reveal what was in the Anthem offer.
Anthem spokesman Jim Kappel said the company is "following up with regulators to answer any questions they may have about the merger," but "we are not going to comment on specifics of our communications with any state regulators."
The next steps in Georgia are for department staff to draw up recommendations for Oxendine to use in further negotiations with Anthem, Allen said.
Oxendine, a Republican, is the only elected insurance commissioner among the nine states that are reviewing their earlier approvals of Anthem's $18 billion offer to buy California-based WellPoint.
Patrick Hojlo, a health stock analyst for Credit Suisse First Boston, said in a report to investors that he expects Oxendine "to readily accept a sweetened offer, once he makes enough noise about the matter to reap some political gain."
WellPoint is licensed to sell Blue Cross or Blue Shield policies in four states. California has about half of WellPoint's membership, while Georgia has about 15 percent.
Progressive profits down
Progressive Corporation's October profit dropped 4 percent to $140.2 million from $145.7 million a year ago, but net premiums written and earned both rose 9 percent.
Net premiums written during the month increased from $1.17 billion in October 2003 to $1.28 billion. Net premiums earned were up to $1.28 billion from $1.17 billion one year ago.
Net premiums written during the month increased from $1.17 billion in October 2003 to $1.28 billion. Net premiums earned were up to $1.28 billion from $1.17 billion one year ago.
Insurance Probes Who's next?
NEW YORK (CNN/Money) - Regulators are scrutinizing "retroactive" insurance policies, leading some investors to worry that Berkshire Hathaway will be caught up in the probe, a newspaper reported Friday.
In a 2003 annual report, Warren Buffett said the investment company had sold retroactive insurance policies, which can help corporate clients boost their financial statements, the Wall Street Journal said. Such policies do not constitute a large part of Berkshire's revenue base.
According to the newspaper, Buffett in the company's annual report called them, "a few jumbo policies that are likely to produce underwriting losses... but also provide unusually large amounts of float," or money for Berkshire to invest.
In a 2003 annual report, Warren Buffett said the investment company had sold retroactive insurance policies, which can help corporate clients boost their financial statements, the Wall Street Journal said. Such policies do not constitute a large part of Berkshire's revenue base.
According to the newspaper, Buffett in the company's annual report called them, "a few jumbo policies that are likely to produce underwriting losses... but also provide unusually large amounts of float," or money for Berkshire to invest.
Health Insurance costs restrict options
MENASHA — Health insurance has become a thorny issue for municipalities as they plan their 2005 budgets.
In Menasha, WI the city has reduced staff during the past decade, but double-digit health insurance cost increases make personnel the most challenging part of the annual budget preparation.
The proposed $27.5 million city budget for 2005 unveiled recently by Mayor Joe Laux includes no change in staffing but personnel costs still will increase by nearly $500,000.
“We require about $215,000 more for wages and salaries,” said Laux, while an 18.2 percent increase in health, dental and vision costs requires an additional $225,000. Laux says the latter figure “is equivalent to adding six new employees.”
“Overall it’s a good budget,” said Laux. “It does a lot. We’re struggling with a lot of things. Health insurance is probably the No. 1 driving factor in the cost of this budget. It’s really having an adverse impact on us.
“Something has to happen because we can’t keep going like this. We’ve cut staff (over the years). We’re at $13,000 a year right now for health insurance (premium cost) per family.”
Property taxpayers can expect to see a 19-cent increase in the assessed tax rate, which represents a 1.7 percent tax hike from $11.33 in 2004 to $11.52 in 2005.
The tax levy is slated to go up $453,239, or 6.1 percent, to $7.86 million.
After losing $310,000 in state shared revenues in the 2004 city budget, Menasha loses another $35,000 in 2005.
“Over the last two years we lost all that aid but because of the growth, we were able to hold ourselves in line,” he said.
Once again, Laux has not touched the $500,000 tax stabilization fund created several years ago.
The budget does not include any funds for the proposed $6 million city garage concept endorsed recently by the council.
Among the new spending planned for 2005: $34,000 to add bike lanes on Racine Street and Valley Road when County P is resurfaced; $45,000 for planning and design of a new fire station (to relocate the city’s northside station farther east); $58,000 to construct 20-foot extensions to existing boat landings at Jefferson Park; $8,500 for a facilities study on the Jefferson Park swimming pool; $6,000 for initial development costs for a dog park; $15,750 for signal/intersection upgrades at Appleton Road/Airport Road and Manitowoc Road/Oneida Street; and $35,000 to upgrade piers in the city-owned marina with a composite plastic material.
Parks and Recreation Director Brian Tungate said the resurfacing of County P provides an opportunity to enhance development of a network of trails.
“We’re trying to do it in a logical way to get people from community to community,” he said.
In Menasha, WI the city has reduced staff during the past decade, but double-digit health insurance cost increases make personnel the most challenging part of the annual budget preparation.
The proposed $27.5 million city budget for 2005 unveiled recently by Mayor Joe Laux includes no change in staffing but personnel costs still will increase by nearly $500,000.
“We require about $215,000 more for wages and salaries,” said Laux, while an 18.2 percent increase in health, dental and vision costs requires an additional $225,000. Laux says the latter figure “is equivalent to adding six new employees.”
“Overall it’s a good budget,” said Laux. “It does a lot. We’re struggling with a lot of things. Health insurance is probably the No. 1 driving factor in the cost of this budget. It’s really having an adverse impact on us.
“Something has to happen because we can’t keep going like this. We’ve cut staff (over the years). We’re at $13,000 a year right now for health insurance (premium cost) per family.”
Property taxpayers can expect to see a 19-cent increase in the assessed tax rate, which represents a 1.7 percent tax hike from $11.33 in 2004 to $11.52 in 2005.
The tax levy is slated to go up $453,239, or 6.1 percent, to $7.86 million.
After losing $310,000 in state shared revenues in the 2004 city budget, Menasha loses another $35,000 in 2005.
“Over the last two years we lost all that aid but because of the growth, we were able to hold ourselves in line,” he said.
Once again, Laux has not touched the $500,000 tax stabilization fund created several years ago.
The budget does not include any funds for the proposed $6 million city garage concept endorsed recently by the council.
Among the new spending planned for 2005: $34,000 to add bike lanes on Racine Street and Valley Road when County P is resurfaced; $45,000 for planning and design of a new fire station (to relocate the city’s northside station farther east); $58,000 to construct 20-foot extensions to existing boat landings at Jefferson Park; $8,500 for a facilities study on the Jefferson Park swimming pool; $6,000 for initial development costs for a dog park; $15,750 for signal/intersection upgrades at Appleton Road/Airport Road and Manitowoc Road/Oneida Street; and $35,000 to upgrade piers in the city-owned marina with a composite plastic material.
Parks and Recreation Director Brian Tungate said the resurfacing of County P provides an opportunity to enhance development of a network of trails.
“We’re trying to do it in a logical way to get people from community to community,” he said.
USAA to cut car insurance rates in texas
One of the state's larger car insurers said Thursday it would cut auto insurance rates an average 12 percent, signaling the change in rules is having an effect.
USAA, which insures military members and their families, already cut rates an average 4.5 percent in February.
The insurer credited the reductions to lower operating costs and last year's insurance reform, which increased competition.
The average savings of $98 per policy for the company's 390,000 auto policyholders will vary by location.
The new rates go into effect Dec. 1, under the state's new file-and-use system that allows insurers to implement new rates upon filing them with the Texas Department of Insurance.
In another sign that auto insurance availability is growing, the Texas Automobile Insurance Plan Association reports 41,881 assignments through October of this year, compared to 74,506 assignments during 2003.
The term "assignments" refers to the number of times an insurance company was assigned to insure a driver who wasn't able to find coverage elsewhere.
Policies placed through the plan usually offer less coverage and cost more than policies sold in the voluntary market.
"This is a very clear indication that the private auto insurance market is functioning well and has the financial capacity to meet the demand for new customers," said Jerry Johns, a spokesman for the automobile insurance association.
Several insurers have already started to file new policies and forms with the Texas Department of Insurance in anticipation of the new file-and-use system, according to Philip Presley, chief property and casualty actuary at the department.
"They're going for tiered rating systems where, within a company, you may have three or four or five different rate levels," Presley said in an interview this week.
"And depending on credit and other factors, you get slotted into one," he added.
Consumers can expect new pricing plans and coverage plans in coming months asinsurers compete for business.
For example, Farmers Texas County Mutual recently increased its discount for policyholders with a Farmers home and auto policy by 5 percent and plans to apply the change to new policies on Dec. 1.
The insurer has 300,000 policyholders.
USAA, which insures military members and their families, already cut rates an average 4.5 percent in February.
The insurer credited the reductions to lower operating costs and last year's insurance reform, which increased competition.
The average savings of $98 per policy for the company's 390,000 auto policyholders will vary by location.
The new rates go into effect Dec. 1, under the state's new file-and-use system that allows insurers to implement new rates upon filing them with the Texas Department of Insurance.
In another sign that auto insurance availability is growing, the Texas Automobile Insurance Plan Association reports 41,881 assignments through October of this year, compared to 74,506 assignments during 2003.
The term "assignments" refers to the number of times an insurance company was assigned to insure a driver who wasn't able to find coverage elsewhere.
Policies placed through the plan usually offer less coverage and cost more than policies sold in the voluntary market.
"This is a very clear indication that the private auto insurance market is functioning well and has the financial capacity to meet the demand for new customers," said Jerry Johns, a spokesman for the automobile insurance association.
Several insurers have already started to file new policies and forms with the Texas Department of Insurance in anticipation of the new file-and-use system, according to Philip Presley, chief property and casualty actuary at the department.
"They're going for tiered rating systems where, within a company, you may have three or four or five different rate levels," Presley said in an interview this week.
"And depending on credit and other factors, you get slotted into one," he added.
Consumers can expect new pricing plans and coverage plans in coming months asinsurers compete for business.
For example, Farmers Texas County Mutual recently increased its discount for policyholders with a Farmers home and auto policy by 5 percent and plans to apply the change to new policies on Dec. 1.
The insurer has 300,000 policyholders.
Thursday, November 11, 2004
Health insurance bills pass house
Governor Riley is halfway toward his goal of restructuring the health insurance programs for public employees.
The Alabama House approved the governor's five-bill package in an hour Wednesday. The bills now go to Senate committees, which will consider them Monday. Senate President Pro Tem Lowell Barron predicts the governor's bills will win Senate approval on Tuesday.
The bills would require smokers to pay more for their insurance. But otherwise there won't be any immediate effect on current state employees or retirees. Public employees who retire after September 30, 2005, would have to pay more for their insurance if they retire before working 25 years.
The Alabama House approved the governor's five-bill package in an hour Wednesday. The bills now go to Senate committees, which will consider them Monday. Senate President Pro Tem Lowell Barron predicts the governor's bills will win Senate approval on Tuesday.
The bills would require smokers to pay more for their insurance. But otherwise there won't be any immediate effect on current state employees or retirees. Public employees who retire after September 30, 2005, would have to pay more for their insurance if they retire before working 25 years.
Esurance lowers PA auto insurance rates
SAN FRANCISCO, Nov. 11 /PRNewswire/ -- Esurance, a direct-to-consumer personal auto insurance company, has reduced auto insurance rates in Pennsylvania. Gary Tolman, Esurance President and CEO, stated, "We're always trying to make sure that our customers save as much as possible with Esurance. With our recent rate decrease in Pennsylvania, some customers could save an additional 5% on their auto insurance premium."
Tolman continued, "I always tell people that, whenever any insurance company changes rates in a given state, all drivers should shop around for the best coverage at the lowest price. Since it takes only minutes to get a quote and compare quotes online at www.esurance.com, it's very easy for people to see their savings right away-whether that's with us or with another carrier."
In addition to instant rate comparisons, Esurance also offers resources that help consumers select the coverage they need, notably the company's interactive planning tool, the Coverage Counselor. Tolman explained, "With a fairly complicated product like auto insurance, being informed is often one of the best ways to save. With our award-winning Web site and our knowledgeable insurance advisors, we try to provide all the help anyone needs to save on auto insurance."
Tolman continued, "I always tell people that, whenever any insurance company changes rates in a given state, all drivers should shop around for the best coverage at the lowest price. Since it takes only minutes to get a quote and compare quotes online at www.esurance.com, it's very easy for people to see their savings right away-whether that's with us or with another carrier."
In addition to instant rate comparisons, Esurance also offers resources that help consumers select the coverage they need, notably the company's interactive planning tool, the Coverage Counselor. Tolman explained, "With a fairly complicated product like auto insurance, being informed is often one of the best ways to save. With our award-winning Web site and our knowledgeable insurance advisors, we try to provide all the help anyone needs to save on auto insurance."
Tuesday, November 9, 2004
Progressive earnings rise
NEW YORK, Nov 9 (Reuters) - Car Insurer Progressive Corp. (PGR.N: Quote, Profile, Research) said on Tuesday its third-quarter earnings rose, helped by a low level of auto accidents in the quarter.
The Mayfield Village, Ohio-based company said its third- quarter profit was $388.9 million, or $1.77 a share, compared with $319.8 million, or $1.45 a share, a year earlier.
Analysts had expected the company to earn $1.69 in the quarter, according to Reuters Estimates.
The company said net premiums written rose 9 percent in the quarter while net premiums earned gained 12 percent.
The Mayfield Village, Ohio-based company said its third- quarter profit was $388.9 million, or $1.77 a share, compared with $319.8 million, or $1.45 a share, a year earlier.
Analysts had expected the company to earn $1.69 in the quarter, according to Reuters Estimates.
The company said net premiums written rose 9 percent in the quarter while net premiums earned gained 12 percent.
Wellpoint Anthem Merger Approved
LOS ANGELES - The state's insurance commissioner gave his blessing Tuesday to a $16.4 billion merger that would create the nation's largest health insurance company after saying he had wrung hundreds of millions of dollars out of the companies involved that would be used to improve health care for all Californians.
Insurance Commissioner John Garamendi had blocked the proposed merger between Anthem and WellPoint California subsidiary Blue Cross Life & Health Insurance Co. for months, complaining that it would pull $400 million a year out of California in the form of dividends that would go to Indianapolis-based Anthem and that the buyout package it offered WellPoint's chief executive was excessive.
"Last week Anthem and WellPoint returned to my office and presented a revised offer of settlement. I demanded more and after long negotiations, Anthem has made additional concessions and contributions that will assure that California health care consumers will realize benefits from this transaction," Garamendi told reporters Tuesday morning.
"With these additional concessions and commitments by Anthem and WellPoint I am today announcing that I will approve Anthem's application and will allow a change in control of Blue Cross Life & Health Insurance Co.," Garamendi added.
Neither Anthem nor WellPoint officials were immediately available following the announcement. Spokesmen for each declined comment Monday evening after Garamendi said he would be making an announcement on the deal.
Anthem sued Garamendi in August for blocking the proposed merger. The lawsuit specifically sought to overturn his decision to reject Anthem's acquisition of Blue Cross Life & Health, one of 75 WellPoint subsidiaries involved in the deal - and the only one under Garamendi's jurisdiction.
After holding a series of public hearings, Garamendi rejected the deal July 23, saying it would reduce the quality of health care for policyholders. He also criticized the merger's executive compensation package, saying the payouts were excessive in a state where 6 million residents lack health insurance.
Both companies reported strong growth in income during the three months ending Sept. 30. Anthem reported $242.1 million in earnings compared with $196.5 million during the same quarter in 2003. WellPoint reported third quarter net income of $315.1 million compared to $246.2 million in the third quarter of 2003.
Garamendi said the deal he worked out this week assures that Blue Cross Life & Health policyholders will not see their premiums increased, adding that any proposed changes BCLH wants to make must be reviewed and approved by his office.
"With this commitment my department will be able to determine that premiums for BCLH products will not increase," Garamendi said.
The insurance commissioner said the companies have also agreed to contribute $35 million to provide health-care clinics in underserved California communities, $15 million to train nurses and to invest $200 million in health-care services to underserved communities.
The $15 million contribution should increase California's nursing ranks by 2,500, he said.
States and territories that earlier approved the merger include Puerto Rico, Delaware, Illinois, Georgia, Missouri, Oklahoma, Texas, Virginia, West Virginia and Wisconsin.
Shares of both companies surged on the news. Anthem rose $6.47, or 7.5 percent, to $92.97 on the New York Stock Exchange, where WellPoint shares gained $10.49, or 10 percent, to $115.46.
Insurance Commissioner John Garamendi had blocked the proposed merger between Anthem and WellPoint California subsidiary Blue Cross Life & Health Insurance Co. for months, complaining that it would pull $400 million a year out of California in the form of dividends that would go to Indianapolis-based Anthem and that the buyout package it offered WellPoint's chief executive was excessive.
"Last week Anthem and WellPoint returned to my office and presented a revised offer of settlement. I demanded more and after long negotiations, Anthem has made additional concessions and contributions that will assure that California health care consumers will realize benefits from this transaction," Garamendi told reporters Tuesday morning.
"With these additional concessions and commitments by Anthem and WellPoint I am today announcing that I will approve Anthem's application and will allow a change in control of Blue Cross Life & Health Insurance Co.," Garamendi added.
Neither Anthem nor WellPoint officials were immediately available following the announcement. Spokesmen for each declined comment Monday evening after Garamendi said he would be making an announcement on the deal.
Anthem sued Garamendi in August for blocking the proposed merger. The lawsuit specifically sought to overturn his decision to reject Anthem's acquisition of Blue Cross Life & Health, one of 75 WellPoint subsidiaries involved in the deal - and the only one under Garamendi's jurisdiction.
After holding a series of public hearings, Garamendi rejected the deal July 23, saying it would reduce the quality of health care for policyholders. He also criticized the merger's executive compensation package, saying the payouts were excessive in a state where 6 million residents lack health insurance.
Both companies reported strong growth in income during the three months ending Sept. 30. Anthem reported $242.1 million in earnings compared with $196.5 million during the same quarter in 2003. WellPoint reported third quarter net income of $315.1 million compared to $246.2 million in the third quarter of 2003.
Garamendi said the deal he worked out this week assures that Blue Cross Life & Health policyholders will not see their premiums increased, adding that any proposed changes BCLH wants to make must be reviewed and approved by his office.
"With this commitment my department will be able to determine that premiums for BCLH products will not increase," Garamendi said.
The insurance commissioner said the companies have also agreed to contribute $35 million to provide health-care clinics in underserved California communities, $15 million to train nurses and to invest $200 million in health-care services to underserved communities.
The $15 million contribution should increase California's nursing ranks by 2,500, he said.
States and territories that earlier approved the merger include Puerto Rico, Delaware, Illinois, Georgia, Missouri, Oklahoma, Texas, Virginia, West Virginia and Wisconsin.
Shares of both companies surged on the news. Anthem rose $6.47, or 7.5 percent, to $92.97 on the New York Stock Exchange, where WellPoint shares gained $10.49, or 10 percent, to $115.46.
State Farm re-enters New Jersey market
State Farm Indemnity, which once insured one in five New Jersey motorists, has decided to re-enter the state's auto insurance market, Banking and Insurance Commissioner Holly C. Bakke announced today.
State Farm marked its re-entry into the New Jersey marketplace by announcing its fourth voluntary rate reduction for existing customers.
Effective Jan. 1, State Farm will reduce its rates by 3.8 percent, resulting in $26.3 million for more than 330,000 policyholders, the insurance deparment said in a statement.
At its peak, State Farm Indemnity insured nearly 20 percent of the New Jersey auto insurance market, but stopped writing policies three years ago after sustaining considerable financial losses.
State Farm joins GEICO in writing new auto insurance policies in New Jersey following a series of reforms initiated by the McGreevey administration.
State Farm marked its re-entry into the New Jersey marketplace by announcing its fourth voluntary rate reduction for existing customers.
Effective Jan. 1, State Farm will reduce its rates by 3.8 percent, resulting in $26.3 million for more than 330,000 policyholders, the insurance deparment said in a statement.
At its peak, State Farm Indemnity insured nearly 20 percent of the New Jersey auto insurance market, but stopped writing policies three years ago after sustaining considerable financial losses.
State Farm joins GEICO in writing new auto insurance policies in New Jersey following a series of reforms initiated by the McGreevey administration.
Monday, November 8, 2004
Spitzer's new Target e-bay
New York State Attorney General Eliot Spitzer (who has previously been vigorously attacking the insurance industry) has announced a resolution in the investigation of three cases dealing with phony bids in e-Bay auctions.
Three individuals have pleaded guilty to criminal charges for inflating the prices of artwork and other merchandise while defendants in two other cases have settled for illegally bidding up sports memorabilia and automobiles sold via the on-line auctions.
"The use of shill bids in on-line auctions illegally drives up prices and defrauds consumers," said Spitzer, who noted E-Bay assisted his office during the investigation.
Jerrold Schuster, the former owner of the New Windsor Auction Gallery, is expected to pay $50,000 in restitution and fines after he pleaded guilty in Orange County court to violating the state's antitrust law. Two former employees, Darek Szydlowski and Francis Komsisky, Jr., pleaded guilty to misdemeanor antitrust violation.
Investigators said the men cast bids in over 1,100 of each others' eBay auctions for the sole purpose of driving up the price of the merchandise that they offered for sale over a five-year period. The defendants were known by various e-Bay User IDs including "sambuca914," "gutek914," "zugnicht," and "fourlizards."
In a separate civil case, Robert Baranovich and his son, Steven Baranovich, of West Babylon, N.Y., agreed to pay $10,000 in penalties and restitution to consumers harmed by their shill bidding. It was alleged the defendants placed 170 phony bids in 165 of their own E-Bay auctions of sports memorabilia.
Also, Richard Eggleston, Darryl Lien, and David Printy, together with a related corporation, Daryl Lien, Inc., agreed to pay more than $28,000 in penalties and restitution for placing 610 bids in 106 of their own auto auctions under the user ID "Mother's Custom Automotive NY Dealer."
Spitzer's office has identified more than 120 consumers who paid more for items as a result of the three cases.
Three individuals have pleaded guilty to criminal charges for inflating the prices of artwork and other merchandise while defendants in two other cases have settled for illegally bidding up sports memorabilia and automobiles sold via the on-line auctions.
"The use of shill bids in on-line auctions illegally drives up prices and defrauds consumers," said Spitzer, who noted E-Bay assisted his office during the investigation.
Jerrold Schuster, the former owner of the New Windsor Auction Gallery, is expected to pay $50,000 in restitution and fines after he pleaded guilty in Orange County court to violating the state's antitrust law. Two former employees, Darek Szydlowski and Francis Komsisky, Jr., pleaded guilty to misdemeanor antitrust violation.
Investigators said the men cast bids in over 1,100 of each others' eBay auctions for the sole purpose of driving up the price of the merchandise that they offered for sale over a five-year period. The defendants were known by various e-Bay User IDs including "sambuca914," "gutek914," "zugnicht," and "fourlizards."
In a separate civil case, Robert Baranovich and his son, Steven Baranovich, of West Babylon, N.Y., agreed to pay $10,000 in penalties and restitution to consumers harmed by their shill bidding. It was alleged the defendants placed 170 phony bids in 165 of their own E-Bay auctions of sports memorabilia.
Also, Richard Eggleston, Darryl Lien, and David Printy, together with a related corporation, Daryl Lien, Inc., agreed to pay more than $28,000 in penalties and restitution for placing 610 bids in 106 of their own auto auctions under the user ID "Mother's Custom Automotive NY Dealer."
Spitzer's office has identified more than 120 consumers who paid more for items as a result of the three cases.
Allstate ranks qrepair quality
NORTHBROOK, Ill.--(BUSINESS WIRE)--Nov. 8, 2004--How do you know if you're choosing a quality body shop after an accident? Allstate Insurance Company thinks it knows, and has just taken a bold new step toward helping ensure its customers are getting just that. Part of a program Allstate hopes will drive body shops to compete aggressively with each other to provide the best customer service and repair quality, the second largest auto insurer in the nation has begun ranking repair facilities.
Beginning this month, Allstate has begun ranking body shops that participate in its direct repair program based on criteria including overall customer service, repair quality, estimate accuracy and repair time. Each month, participating body shops will get a report showing their individual results and their standing compared to other participating body shops in the same market. Allstate says shops that demonstrate the highest levels of repair quality, customer service, estimate accuracy and repair time will be rewarded by receiving a greater number of recommendations to Allstate's customers, - potentially boosting their repair business. Body shops that demonstrate sub-par performance could receive fewer referrals and could be removed from Allstate's program.
"This is another way Allstate is delivering first-class claims service," said Allstate assistant vice-president for claims Jim Murray. "Allstate wants to reward those shops that are doing the best work for our customers and we want to connect more of our customers with the shops delivering the best combination of quality and service."
More than 3,200 auto body shops around the country participate in Allstate Insurance Company's direct repair program (DRP). The DRP includes repair facilities from across the country that have agreed to provide repairs to Allstate insurance customers and claimants. Many consumers never realize the DRP program exists, but the program allows Allstate to provide recommendations to customers and claimants after an accident and helps speed up the claims process by giving the customer a one-stop-shop for estimates and repairs that Allstate guarantees.
Allstate revolutionized the auto insurance and repair industries when it introduced the idea of an auto body direct repair program 30 years ago. Allstate's new body shop ranking and customer recommendation program is part of an overall enhancement of the company's direct repair program. Other components of the new, redesigned program include expanded quality inspections of completed repairs, stronger environmental requirements for participating body shops and greater emphasis on new technology training.
As always, Allstate says it will continue to honor any customer or claimant's choice of repair facility. According to Allstate, ranking body shops strengthens the power of its referral program for those customers that request help in choosing a repair facility.
Beginning this month, Allstate has begun ranking body shops that participate in its direct repair program based on criteria including overall customer service, repair quality, estimate accuracy and repair time. Each month, participating body shops will get a report showing their individual results and their standing compared to other participating body shops in the same market. Allstate says shops that demonstrate the highest levels of repair quality, customer service, estimate accuracy and repair time will be rewarded by receiving a greater number of recommendations to Allstate's customers, - potentially boosting their repair business. Body shops that demonstrate sub-par performance could receive fewer referrals and could be removed from Allstate's program.
"This is another way Allstate is delivering first-class claims service," said Allstate assistant vice-president for claims Jim Murray. "Allstate wants to reward those shops that are doing the best work for our customers and we want to connect more of our customers with the shops delivering the best combination of quality and service."
More than 3,200 auto body shops around the country participate in Allstate Insurance Company's direct repair program (DRP). The DRP includes repair facilities from across the country that have agreed to provide repairs to Allstate insurance customers and claimants. Many consumers never realize the DRP program exists, but the program allows Allstate to provide recommendations to customers and claimants after an accident and helps speed up the claims process by giving the customer a one-stop-shop for estimates and repairs that Allstate guarantees.
Allstate revolutionized the auto insurance and repair industries when it introduced the idea of an auto body direct repair program 30 years ago. Allstate's new body shop ranking and customer recommendation program is part of an overall enhancement of the company's direct repair program. Other components of the new, redesigned program include expanded quality inspections of completed repairs, stronger environmental requirements for participating body shops and greater emphasis on new technology training.
As always, Allstate says it will continue to honor any customer or claimant's choice of repair facility. According to Allstate, ranking body shops strengthens the power of its referral program for those customers that request help in choosing a repair facility.
Friday, November 5, 2004
Home Owners Insurance claims can cost you
By Janis Mara, BUSINESS WRITER
When rainwater damaged her home, Diane Canadas quickly filed aninsurance claim and fixed the leaking roof. When she bought a new home in El Dorado County four years later, she discovered that her seemingly efficient response might have been a mistake.
"The homeowner's insurance premium for the new house almost doubled when Allstate learned about that claim," said Michael Godfrey of Fremont. Godfrey bought the El Dorado County house with Canadas, who is his sister, in September. "Originally, it was about $500 for a year. When they learned of the claim, it jumped to $900."
Canadas had run afoul of a major Catch-22 of homeowner's insurance: Filing a claim can increase your premium. There are some ways to negotiate these rocky shoals and maybe even reduce your premiums.
"You want to think very carefully about filing a claim," said John Harris, an insurance agent with Farmers Insurance in Hayward. Not only is it likely your rates will go up, your policy might not be renewed or might even be canceled, and it will be hard to find another carrier, Harris said.
The trick is to do a risk-benefit analysis and decide whether it's worth it. For example, though most homeowner's policies cover personal belongings, it often doesn't pay to file claims for theft.
"If your $750 television is stolen and you have a $500 deductible, you could get $250 back. But you will have to pay a higher rate for the next three years and that could outstrip what you got
for the claim," said Harris.
"Your home insurance policy is not a maintenance policy," said Jerry Davies of the Personal Insurance Federation of California. "It's designed for serious losses such as a roof blowing off and rain flooding the house."
If part of a fence collapses or a hot water heater breaks, "fix it yourself," said Davies.
When is it a good idea to make a claim?
If damage is affecting the marketability of the house, that probably means you should make a claim, Harris said.
"Water leak, fire damage, wind damage -- if the structure is damaged, get that fixed," he said. Hence, Canadas was probably wise to repair the water damage caused by her leak, despite the resulting rate hike.
Before filing a claim, discuss it with your agent. It's important to develop a relationship with your agent, Harris said. For example, some people simply can't afford to pay for necessary repairs even if they're not catastrophic. An agent can help you weigh the risks.
It's not just risky filing a claim yourself. If you're buying a home and the previous owner filed too many claims, your rates will probably be affected.
"If the seller made a homeowner's insurance claim in the last three years, the buyer will pay maybe double what he or she anticipates paying," said Ann Biddell, who has sold real estate in Hayward for more than 20 years.
Biddell advises people to get insurance in place at the beginning of a transaction. And Harris recommends having your real estate agent find out if any claims have been filed on a property you're interested in.
Filing a claim doesn't always result in higher rates, according to Steve Bartley, who has been a State Farm agent in Fremont for 25 years.
"For example, if you have been insured with the same company long enough, you may get a forgiven claim," Bartley said. Multiple claims are almost certain to land you in trouble, though, especially within a 3-year period.
If you must file a claim, take heart: Many companies will reduce your premium to the prevailing rate after a certain time period, generally three to five years.
Other than being careful about filing claims, there are a number of other ways to keep premiums low. First, go for the highest deductible you can.
"The $500 deductible is going by the wayside," Harris said. He pointed out that "you don't want to file a claim for $1,000 or $2,000 anyway." Harris recommended a deductible of at least $1,000.
Deductibles can save 15 percent or more on the cost of the premium, according to the Insurance Information Network of California. (The average premium for homeowners in 2001 in California was $599 a year, according to the organization.)
Installing smoke detectors and an alarm system and adding your car to the policy are two other ways to bring costs down, according to Harris. And, as always, an ounce of prevention is worth a pound of cure.
"Clean your rain gutters, check the pipes around your toilet, dishwasher and clothes washer. Clear debris from around your home," said Davies.
"People who don't maintain their homes may have more claims. The insurance companies will see them as a greater risk and charge more because of it," Harris said.
When rainwater damaged her home, Diane Canadas quickly filed aninsurance claim and fixed the leaking roof. When she bought a new home in El Dorado County four years later, she discovered that her seemingly efficient response might have been a mistake.
"The homeowner's insurance premium for the new house almost doubled when Allstate learned about that claim," said Michael Godfrey of Fremont. Godfrey bought the El Dorado County house with Canadas, who is his sister, in September. "Originally, it was about $500 for a year. When they learned of the claim, it jumped to $900."
Canadas had run afoul of a major Catch-22 of homeowner's insurance: Filing a claim can increase your premium. There are some ways to negotiate these rocky shoals and maybe even reduce your premiums.
"You want to think very carefully about filing a claim," said John Harris, an insurance agent with Farmers Insurance in Hayward. Not only is it likely your rates will go up, your policy might not be renewed or might even be canceled, and it will be hard to find another carrier, Harris said.
The trick is to do a risk-benefit analysis and decide whether it's worth it. For example, though most homeowner's policies cover personal belongings, it often doesn't pay to file claims for theft.
"If your $750 television is stolen and you have a $500 deductible, you could get $250 back. But you will have to pay a higher rate for the next three years and that could outstrip what you got
for the claim," said Harris.
"Your home insurance policy is not a maintenance policy," said Jerry Davies of the Personal Insurance Federation of California. "It's designed for serious losses such as a roof blowing off and rain flooding the house."
If part of a fence collapses or a hot water heater breaks, "fix it yourself," said Davies.
When is it a good idea to make a claim?
If damage is affecting the marketability of the house, that probably means you should make a claim, Harris said.
"Water leak, fire damage, wind damage -- if the structure is damaged, get that fixed," he said. Hence, Canadas was probably wise to repair the water damage caused by her leak, despite the resulting rate hike.
Before filing a claim, discuss it with your agent. It's important to develop a relationship with your agent, Harris said. For example, some people simply can't afford to pay for necessary repairs even if they're not catastrophic. An agent can help you weigh the risks.
It's not just risky filing a claim yourself. If you're buying a home and the previous owner filed too many claims, your rates will probably be affected.
"If the seller made a homeowner's insurance claim in the last three years, the buyer will pay maybe double what he or she anticipates paying," said Ann Biddell, who has sold real estate in Hayward for more than 20 years.
Biddell advises people to get insurance in place at the beginning of a transaction. And Harris recommends having your real estate agent find out if any claims have been filed on a property you're interested in.
Filing a claim doesn't always result in higher rates, according to Steve Bartley, who has been a State Farm agent in Fremont for 25 years.
"For example, if you have been insured with the same company long enough, you may get a forgiven claim," Bartley said. Multiple claims are almost certain to land you in trouble, though, especially within a 3-year period.
If you must file a claim, take heart: Many companies will reduce your premium to the prevailing rate after a certain time period, generally three to five years.
Other than being careful about filing claims, there are a number of other ways to keep premiums low. First, go for the highest deductible you can.
"The $500 deductible is going by the wayside," Harris said. He pointed out that "you don't want to file a claim for $1,000 or $2,000 anyway." Harris recommended a deductible of at least $1,000.
Deductibles can save 15 percent or more on the cost of the premium, according to the Insurance Information Network of California. (The average premium for homeowners in 2001 in California was $599 a year, according to the organization.)
Installing smoke detectors and an alarm system and adding your car to the policy are two other ways to bring costs down, according to Harris. And, as always, an ounce of prevention is worth a pound of cure.
"Clean your rain gutters, check the pipes around your toilet, dishwasher and clothes washer. Clear debris from around your home," said Davies.
"People who don't maintain their homes may have more claims. The insurance companies will see them as a greater risk and charge more because of it," Harris said.
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