By EILEEN ALT POWELL
NEW YORK - The insurance giant MetLife Inc. announced Monday that it was acquiring Travelers Life & Annuity Co. from Citigroup Inc. for at least $11.5 billion.
The two companies, both based in New York, said in a statement that the deal will make MetLife "the largest individual life insurer in North America, based on sales."
The deal already has been approved by both boards and is expected to close in the summer, the statement said.
It said the price was "subject to closing adjustments."
MetLife shares rose 34 cents, or 0.85 percent, to $40.28 in midmorning trading on the New York Stock Exchange. Citigroup shares advanced 67 cents, or 1.4 percent, to $49.05 on the Big Board.
Citigroup, the nation's largest financial institution, had retained Travelers Life & Annuity in 2002 when it spun off Travelers Property Casualty Corp. in a $5 billion initial public offering. Travelers Property merged with St. Paul Cos. Inc. in 2003 to create The St. Paul Travelers Cos., based in St. Paul, Minn.
The announcement Monday said that Citigroup and MetLife "have entered into 10-year agreements under which MetLife will greatly expand its distribution by making products available through certain Citigroup distribution channels," including Citi branches and its Smith Barney brokerage unit.
It said that Citigroup will receive $1 billion to $3 billion in MetLife equity securities and the balance in cash, which will result in an after-tax gain of about $2 billion. It added that MetLife may finance the cash portion of the transaction through a combination of cash on hand, debt, mandatory convertible securities and selected asset sales.
In a phone call with analysts, MetLife's chief financial officer, William J. Wheeler, said that the asset sales could include divestiture of MetLife's reinsurance operations. Reinsurance is backup coverage purchased by insurance companies.
MetLife owns about 52 percent of the Reinsurance Group of America.
Wheeler said asset sales could also include "equity real estate investments and potential other things."
C. Robert Henrikson, MetLife's president and chief operating officer, said the purchase would bring "even more balance" to MetLife's business mix.
MetLife currently earns about 46 percent of its profits from institutional sales and 30 percent from individual sales, he said. After the merger, profits from institutional sales should drop to about 43 percent, while earnings from individual sales should rise to 36 percent. Other categories are international, 7 percent; auto and home 6 percent; and miscellaneous, 8 percent.
Citigroup said that the businesses being acquired by MetLife generated total revenues of $5.2 billion and profits of $901 million in 2004. The business had total assets of $96 billion at year's end, it said.
The Wall Street Journal, in Monday editions, disclosed that the merger talks were under way.
The move was the latest by Citigroup to sell off noncore businesses. In November, Citigroup sold a truck-leasing operation to General Electric Co. for $4.4 billion. It also sold its European vendor-finance leasing operation for CIT Group Inc.
Although no longer consider strategic, Travelers had played a big part in the creation of Citigroup.
Citigroup Chairman Sanford I. Weill acquired the Travelers insurance group in 1993 and Travelers then acquired Shearson in 1993 and Salomon brokerage in 1997; it merged with Citicorp in 1998 to form Citigroup.
Shortly after the announcement was made, Fitch Ratings affirmed MetLife debt ratings but downgraded Travelers Life "insurer financial strength" rating to AA from AA-Plus.
In Monday's statement, Robert H. Benmosche, MetLife's chairman and chief executive officer, said the deal "increases MetLife's size and scale in our core products and markets."
He added: "Combining Travelers Life & Annuity's strengths with MetLife's will enable us to take full advantage of market opportunities and favorable demographic trends."
Citigroup chief executive Charles Prince said that selling Travelers "sharpens our focus on Citigroup's long-term growth franchises."
He did not say how Citigroup would use the proceeds from the sale, but promised to deploy them "to higher return and higher growth opportunities."
The transaction encompasses Travelers Life & Annuity's business in the United States and its international operations other than Citigroup's life business in Mexico.
Monday, January 31, 2005
Affordable Health Care for Families in Oregon Now in Reach
PORTLAND, Ore.--(BUSINESS WIRE)--Jan. 31, 2005--Providence Health Plan and The Partners Group, one of Oregon's largest independent benefit consulting firms, today announced a new insurance plan to address one of the most significant concerns of businesses today -- escalating health care costs.
After three years in research and development, the two companies are launching Dependent Solutions(SM), the first group insurance plan designed to address the high cost of dependent health care coverage for children and spouses of employees. The plan ensures basic coverage while helping families save as much as $250 a month. It's available for the first time to Oregon businesses through The Partners Group.
"With premiums rising an average of 12-15 percent annually, one of the most costly benefits is coverage for dependents," said Rod Cruickshank, president of The Partners Group. "While most employers pay the majority if not the full premium for employee health care benefits, they're forced to pass on the cost of dependent coverage. For an average family, the monthly expense can exceed $500."
The typical monthly dependent care premium can force dependents off company plans in search of less expensive individual coverage. Often healthy dependents looking for the cheapest option settle for catastrophic coverage, which ensures benefits only for significant health emergencies. Unlike a traditional plan, this option includes high deductibles with no preventative care or prescription coverage.
"People deserve better -- and more affordable -- coverage," said Jack Friedman, chief executive, Providence Health Plan. "Together with The Partners Group, we were able to develop a plan that allows dependents to be covered at a level that is more affordable without sacrificing the basic elements of a solid health plan. It's a breakthrough for the industry -- the first effective attempt to curb premiums for a targeted group of people."
To keep costs low, Dependent Solutions raises deductible limits but does so without sacrificing coverage, ensuring competitive medical and prescription drug benefits for employees' spouses and children. It also enables families to stay within the same health insurance company, eliminating the hassle of finding alternative individual coverage.
The plan is available exclusively through The Partners Group in 2005 to large employers (51+ employees) located in the Providence Health Plan service area in Oregon.
After three years in research and development, the two companies are launching Dependent Solutions(SM), the first group insurance plan designed to address the high cost of dependent health care coverage for children and spouses of employees. The plan ensures basic coverage while helping families save as much as $250 a month. It's available for the first time to Oregon businesses through The Partners Group.
"With premiums rising an average of 12-15 percent annually, one of the most costly benefits is coverage for dependents," said Rod Cruickshank, president of The Partners Group. "While most employers pay the majority if not the full premium for employee health care benefits, they're forced to pass on the cost of dependent coverage. For an average family, the monthly expense can exceed $500."
The typical monthly dependent care premium can force dependents off company plans in search of less expensive individual coverage. Often healthy dependents looking for the cheapest option settle for catastrophic coverage, which ensures benefits only for significant health emergencies. Unlike a traditional plan, this option includes high deductibles with no preventative care or prescription coverage.
"People deserve better -- and more affordable -- coverage," said Jack Friedman, chief executive, Providence Health Plan. "Together with The Partners Group, we were able to develop a plan that allows dependents to be covered at a level that is more affordable without sacrificing the basic elements of a solid health plan. It's a breakthrough for the industry -- the first effective attempt to curb premiums for a targeted group of people."
To keep costs low, Dependent Solutions raises deductible limits but does so without sacrificing coverage, ensuring competitive medical and prescription drug benefits for employees' spouses and children. It also enables families to stay within the same health insurance company, eliminating the hassle of finding alternative individual coverage.
The plan is available exclusively through The Partners Group in 2005 to large employers (51+ employees) located in the Providence Health Plan service area in Oregon.
Sunday, January 30, 2005
Lawsuits can fight fat
By John F. Banzhaf III
It took lawyers and litigation to start the civil rights, environmental protection, disability rights and anti-smoking movements. Legislators wouldn't act until the lawsuits caused change and produced publicity that led to laws and other reforms. For example, lawsuits aimed at smoking did what Congress refused to do: slashed smoking rates and returned hundreds of billions of dollars to taxpayers.
Five fat lawsuits have already been successful and, as USA TODAY reported, they were a major factor in pressuring fast-food and other food companies to provide more nutritional information and more healthful alternatives, and to take other steps to reduce obesity.
A court of impartial federal judges has now unanimously held that the same legal rules that apply to hundreds of products, from cigarettes to automobiles, should apply to fast food, and that those who sell it should be liable for their fair share of the costs if they misrepresent or fail to disclose risks that aren't common knowledge.
USA TODAY opposes the suits, arguing for public education and personal responsibility. But expensive taxpayer-funded government educational campaigns weren't very effective in reducing smoking, race discrimination, sexual harassment or other behaviors, while lawsuits were. Face it, personal responsibility by itself simply hasn't worked for obesity any better than it did for smoking and the others, and it isn't likely to.
Juries continue to rule that, while smokers must bear much of the responsibility for their own health, Big Tobacco must share some responsibility if its misconduct contributed to it. Surveys suggest that juries will apply the same principle in obesity cases, especially where young children are the innocent victims. After all, we don't hold sick children liable for the faults of their parents.
Moreover, if fast-food companies are not held liable, or otherwise forced to change, the $117 billion-a-year cost of obesity will continue to be paid largely — and unfairly — by the non-obese in the form of higher taxes and bloated health insurance premiums.
That's why, until lawmakers legislate against obesity, lawyers will continue to litigate against it — and probably continue to win.
It took lawyers and litigation to start the civil rights, environmental protection, disability rights and anti-smoking movements. Legislators wouldn't act until the lawsuits caused change and produced publicity that led to laws and other reforms. For example, lawsuits aimed at smoking did what Congress refused to do: slashed smoking rates and returned hundreds of billions of dollars to taxpayers.
Five fat lawsuits have already been successful and, as USA TODAY reported, they were a major factor in pressuring fast-food and other food companies to provide more nutritional information and more healthful alternatives, and to take other steps to reduce obesity.
A court of impartial federal judges has now unanimously held that the same legal rules that apply to hundreds of products, from cigarettes to automobiles, should apply to fast food, and that those who sell it should be liable for their fair share of the costs if they misrepresent or fail to disclose risks that aren't common knowledge.
USA TODAY opposes the suits, arguing for public education and personal responsibility. But expensive taxpayer-funded government educational campaigns weren't very effective in reducing smoking, race discrimination, sexual harassment or other behaviors, while lawsuits were. Face it, personal responsibility by itself simply hasn't worked for obesity any better than it did for smoking and the others, and it isn't likely to.
Juries continue to rule that, while smokers must bear much of the responsibility for their own health, Big Tobacco must share some responsibility if its misconduct contributed to it. Surveys suggest that juries will apply the same principle in obesity cases, especially where young children are the innocent victims. After all, we don't hold sick children liable for the faults of their parents.
Moreover, if fast-food companies are not held liable, or otherwise forced to change, the $117 billion-a-year cost of obesity will continue to be paid largely — and unfairly — by the non-obese in the form of higher taxes and bloated health insurance premiums.
That's why, until lawmakers legislate against obesity, lawyers will continue to litigate against it — and probably continue to win.
Friday, January 28, 2005
The Progressive Group Expands Tempe Training Facility
TEMPE, Ariz.--(BUSINESS WIRE)--Jan. 25, 2005--
Country's Third Largest Commercial Auto Insurer Focuses on Settling Claims Fast, Getting Small Business Owners Back in the Driver's Seat Sooner
Nearly a year after The Progressive Group of Insurance Companies expanded its Phoenix area sales and customer service call center, Progressive is growing its Arizona operations again by opening what it believes to be the only insurance-group owned commercial auto claims training facility in the U.S.
The Progressive Group offers commercial auto insurance for a wide variety of business types including construction, sales, landscaping and towing and is one of the fastest-growing commercial auto groups in the country.
Existing auto claims representatives will be cross trained in commercial auto estimating in the 9,500 square-foot space, located within Progressive's 600 Curry Road facility in Tempe. In addition, Progressive's commercial auto claims specialists will receive ongoing training there.
"We know how important a vehicle can be to a small business owner's livelihood. A new specialized training curriculum, along with this facility, will help us get more claims representatives trained to provide fast, fair and accurate claims service that helps small business owners get back on the road as quickly as possible after a claim," said Brian Silva, commercial auto general manager, Progressive.
Like the training Progressive provides its auto claims representatives, the commercial auto training is hands-on. Representatives learn how the vehicles are built and the types of damage they sustain in crashes. Additionally, they get hands-on experience with the type of body and paint work necessary to restore vehicles to pre-loss condition. Silva said: "Until you know how a dump truck or other commercial vehicle is built and how it should be repaired, you cannot write an accurate estimate."
Training at the site begins on January 25. In addition to the commercial auto training, Tempe is also home to Progressive's motorcycle, ATV, RV, boat and personal watercraft claims training center. Progressive conducts auto claims training at similar facilities in Cleveland, Tampa, Fla., and Phoenix.
Country's Third Largest Commercial Auto Insurer Focuses on Settling Claims Fast, Getting Small Business Owners Back in the Driver's Seat Sooner
Nearly a year after The Progressive Group of Insurance Companies expanded its Phoenix area sales and customer service call center, Progressive is growing its Arizona operations again by opening what it believes to be the only insurance-group owned commercial auto claims training facility in the U.S.
The Progressive Group offers commercial auto insurance for a wide variety of business types including construction, sales, landscaping and towing and is one of the fastest-growing commercial auto groups in the country.
Existing auto claims representatives will be cross trained in commercial auto estimating in the 9,500 square-foot space, located within Progressive's 600 Curry Road facility in Tempe. In addition, Progressive's commercial auto claims specialists will receive ongoing training there.
"We know how important a vehicle can be to a small business owner's livelihood. A new specialized training curriculum, along with this facility, will help us get more claims representatives trained to provide fast, fair and accurate claims service that helps small business owners get back on the road as quickly as possible after a claim," said Brian Silva, commercial auto general manager, Progressive.
Like the training Progressive provides its auto claims representatives, the commercial auto training is hands-on. Representatives learn how the vehicles are built and the types of damage they sustain in crashes. Additionally, they get hands-on experience with the type of body and paint work necessary to restore vehicles to pre-loss condition. Silva said: "Until you know how a dump truck or other commercial vehicle is built and how it should be repaired, you cannot write an accurate estimate."
Training at the site begins on January 25. In addition to the commercial auto training, Tempe is also home to Progressive's motorcycle, ATV, RV, boat and personal watercraft claims training center. Progressive conducts auto claims training at similar facilities in Cleveland, Tampa, Fla., and Phoenix.
A.M. Best affirms Permanent General rating
A.M. Best Co. has affirmed the financial strength rating of Permanent General Assurance Corp. with a "B++" designation.
The rating also applies to Permanent General Assurance Corp. of Ohio, which operates through an inter-company pooling arrangement with Permanent General in Nashville. A.M. Best's rating outlook is positive.
The rating update follows regulatory approval of Capital Z Financial Services' plan to buy Nashville-based Permanent General Cos. Inc.
The acquisition is expected to provide Permanent General with greater capital resources and financial flexibility, says A.M. Best, giving it a favorable risk-adjusted capitalization and improved operating performance.
Permanent General was previously owned by Ingram Industries Inc. The company employs about 600 people and specializes in auto insurance and related products in the non-standard auto insurance market. Terms of the deal were not disclosed.
Permanent General is licensed in 35 states and is currently active in seven, including Tennessee. Through the first 10 months of 2004, the company had revenues of more than $196 million.
Capital Z is a private equity investor focused solely on the financial services industry in the United States and Europe. Since 1990, Capital Z has invested more than $2.2 billion in more than 53 transactions.
The rating also applies to Permanent General Assurance Corp. of Ohio, which operates through an inter-company pooling arrangement with Permanent General in Nashville. A.M. Best's rating outlook is positive.
The rating update follows regulatory approval of Capital Z Financial Services' plan to buy Nashville-based Permanent General Cos. Inc.
The acquisition is expected to provide Permanent General with greater capital resources and financial flexibility, says A.M. Best, giving it a favorable risk-adjusted capitalization and improved operating performance.
Permanent General was previously owned by Ingram Industries Inc. The company employs about 600 people and specializes in auto insurance and related products in the non-standard auto insurance market. Terms of the deal were not disclosed.
Permanent General is licensed in 35 states and is currently active in seven, including Tennessee. Through the first 10 months of 2004, the company had revenues of more than $196 million.
Capital Z is a private equity investor focused solely on the financial services industry in the United States and Europe. Since 1990, Capital Z has invested more than $2.2 billion in more than 53 transactions.
Thursday, January 27, 2005
Nationwide big homeowners rate hike
By David Sedore
Palm Beach Post Staff Writer
Wednesday, January 26, 2005
Nationwide's homeowners insurance customers statewide, particularly in Martin County, might want to duck and cover.
The Columbus, Ohio-based insurance giant is asking state regulators for permission to jack homeowners insurance premiums by a statewide average of 28.3 percent, according to a filing with the Florida Office of Insurance Regulation.
But in Martin County, Nationwide wants to nearly double rates, asking for approval to raise premiums by 89.3 percent. In Palm Beach County, Nationwide is proposing a 33.1 percent increase, and in St. Lucie County, the carrier wants a 9.2 percent increase. Nationwide is also seeking to raise condominium and renter insurance rates.
If approved, the higher rates would go into effect on July 23 for all customers.
Nationwide is the fourth-largest homeowners insurer in Florida, with more than 279,000 policies. Market share numbers for Palm Beach County and the Treasure Coast were not available.
Valerie Beynon of the Florida Office of Insurance Regulation said Nationwide is the 24th insurer to ask to raise homeowner rates since Hurricane Jeanne hit the state in late September.
A Nationwide spokesman declined to comment on the rate hike other than to confirm that the filing was made.
"Given the competitive marketplace, we have a policy not to publicly discuss our pricing strategy," Nationwide spokesman Joe Case said Tuesday. The company has received 97,000 property damage claims through Dec. 31 as a result of the four hurricanes that hit Florida in August and September, Case said. The company estimated it will pay about $850 million to settle those claims. That data was included to justify the rate hike request, according to the firm's filing with Florida insurance regulators.
Insurance companies can't legally raise premiums to recoup losses, but they can compare hurricane losses with what they projected before a storm and use that data to justify a hike.
On Dec. 31, Citizens Property Insurance Corp., Florida's insurer of last resort, asked to raise premiums by an average of 19.7 percent. The state-sponsored pool by law must charge more than any private insurer.
State Farm, the largest carrier in Florida, earlier received permission to hike rates by 5 percent.
Allstate Floridian, the state's No. 2 private insurer, hasn't filed to raise rates as of Tuesday.
Generally, the Office of Insurance Regulation rules on rate requests within 60 days.
Palm Beach Post Staff Writer
Wednesday, January 26, 2005
Nationwide's homeowners insurance customers statewide, particularly in Martin County, might want to duck and cover.
The Columbus, Ohio-based insurance giant is asking state regulators for permission to jack homeowners insurance premiums by a statewide average of 28.3 percent, according to a filing with the Florida Office of Insurance Regulation.
But in Martin County, Nationwide wants to nearly double rates, asking for approval to raise premiums by 89.3 percent. In Palm Beach County, Nationwide is proposing a 33.1 percent increase, and in St. Lucie County, the carrier wants a 9.2 percent increase. Nationwide is also seeking to raise condominium and renter insurance rates.
If approved, the higher rates would go into effect on July 23 for all customers.
Nationwide is the fourth-largest homeowners insurer in Florida, with more than 279,000 policies. Market share numbers for Palm Beach County and the Treasure Coast were not available.
Valerie Beynon of the Florida Office of Insurance Regulation said Nationwide is the 24th insurer to ask to raise homeowner rates since Hurricane Jeanne hit the state in late September.
A Nationwide spokesman declined to comment on the rate hike other than to confirm that the filing was made.
"Given the competitive marketplace, we have a policy not to publicly discuss our pricing strategy," Nationwide spokesman Joe Case said Tuesday. The company has received 97,000 property damage claims through Dec. 31 as a result of the four hurricanes that hit Florida in August and September, Case said. The company estimated it will pay about $850 million to settle those claims. That data was included to justify the rate hike request, according to the firm's filing with Florida insurance regulators.
Insurance companies can't legally raise premiums to recoup losses, but they can compare hurricane losses with what they projected before a storm and use that data to justify a hike.
On Dec. 31, Citizens Property Insurance Corp., Florida's insurer of last resort, asked to raise premiums by an average of 19.7 percent. The state-sponsored pool by law must charge more than any private insurer.
State Farm, the largest carrier in Florida, earlier received permission to hike rates by 5 percent.
Allstate Floridian, the state's No. 2 private insurer, hasn't filed to raise rates as of Tuesday.
Generally, the Office of Insurance Regulation rules on rate requests within 60 days.
Insurance First to sell Allied Insurance products
Insurance First Agency Inc. has agreed to sell products from Allied Insurance, a division of Nationwide Mutual Insurance Co.
Columbus-based Insurance First will offer Allied auto insurance, business owners' policies and commercial auto policies.
Insurance First is an independent insurance agency, offering products from a wide range of insurers.
Unlike Columbus-based Nationwide, which sells through a captive agent network, Allied Insurance sells its policies through independent agencies. Nationwide bought Des Moines, Iowa-based Allied in 1998.
Columbus-based Insurance First will offer Allied auto insurance, business owners' policies and commercial auto policies.
Insurance First is an independent insurance agency, offering products from a wide range of insurers.
Unlike Columbus-based Nationwide, which sells through a captive agent network, Allied Insurance sells its policies through independent agencies. Nationwide bought Des Moines, Iowa-based Allied in 1998.
Moms-to-be without insurance get help
NORTHEAST PHOENIX - A program at Paradise Valley Hospital may patch a gap in health care for pregnant women in the city's Palomino neighborhood.
A Family Assistance Center, due to open Tuesday at the hospital, 40th Street and Bell Road in Phoenix, will provide free pregnancy testing, financial counseling and discounted prenatal treatment for uninsured women.
The center aims to care for women early in their pregnancies and to enroll qualified women in state and federal programs to cover their medical costs.
Paradise Valley Hospital is in an affluent area next to "the square," the name public safety officials use to describe the low-income Palomino neighborhood, an area near 32nd Street and Greenway Road.
Residents of the predominantly Hispanic community rely on the hospital but often wait for emergencies for care because they assume they can't afford checkups and other preventive treatment, such as prenatal care.
"We know there's a need," said Paradise Valley Hospital's chief executive, John Harrington.
Many of the mothers qualify for coverage under the state's Arizona Health Care Cost Containment System, he said, but they don't know they qualify.
Statistics show prenatal care results in fewer complications at birth. The question is how to enroll the women in the medical plan earlier in the pregnancy, when they need care.
The hospital's solution is to provide free pregnancy testing to all women.
For women who test positive, the Family Assistance Center immediately will help set up public-health coverage and prenatal care.
The program will be staffed by a representative from AHCCCS five days a week and one from the Arizona Department of Economic Security two days. Qualified individuals can enroll in AHCCCS or special programs such as Baby AZ, a state program for pregnant women, and Kids Care, health insurance for children.
Non-citizens can sign up for the Federal Emergency Services Program, which covers birthing costs with no prenatal care, but help is available. The hospital plans to provide their initial lab work, with fees based on ability to pay.
A Family Assistance Center, due to open Tuesday at the hospital, 40th Street and Bell Road in Phoenix, will provide free pregnancy testing, financial counseling and discounted prenatal treatment for uninsured women.
The center aims to care for women early in their pregnancies and to enroll qualified women in state and federal programs to cover their medical costs.
Paradise Valley Hospital is in an affluent area next to "the square," the name public safety officials use to describe the low-income Palomino neighborhood, an area near 32nd Street and Greenway Road.
Residents of the predominantly Hispanic community rely on the hospital but often wait for emergencies for care because they assume they can't afford checkups and other preventive treatment, such as prenatal care.
"We know there's a need," said Paradise Valley Hospital's chief executive, John Harrington.
Many of the mothers qualify for coverage under the state's Arizona Health Care Cost Containment System, he said, but they don't know they qualify.
Statistics show prenatal care results in fewer complications at birth. The question is how to enroll the women in the medical plan earlier in the pregnancy, when they need care.
The hospital's solution is to provide free pregnancy testing to all women.
For women who test positive, the Family Assistance Center immediately will help set up public-health coverage and prenatal care.
The program will be staffed by a representative from AHCCCS five days a week and one from the Arizona Department of Economic Security two days. Qualified individuals can enroll in AHCCCS or special programs such as Baby AZ, a state program for pregnant women, and Kids Care, health insurance for children.
Non-citizens can sign up for the Federal Emergency Services Program, which covers birthing costs with no prenatal care, but help is available. The hospital plans to provide their initial lab work, with fees based on ability to pay.
Wednesday, January 26, 2005
Wells Fargo Home Mortgage Introduces 10-Year ARM
Press Release
DES MOINES, Iowa, Jan. 26 /PRNewswire/
A new product feature from Wells Fargo Home Mortgage can help homebuyers looking to increase their short-term
cash flow or who intend to move or refinance within a few years.
The company is launching an interest-only feature that doesn't require
principal payment for a period of 10 years. Wells Fargo Home Mortgage's
interest-only product feature was previously available only on 5- and 7-year
adjustable-rate mortgages (ARMs). Interest-only mortgages can be used for
purchase or refinance transactions and allow homebuyers to make payments of
"interest only" during the fixed-rate period of the ARM -- five, seven or
10 years. After the interest-only period has ended, full principal and
interest payments are required as the loan fully amortizes.
Homebuyers/homeowners can make principal reductions during the interest-only
period, but aren't required to do so.
Potential homebuyers who may be suited for the interest-only feature
include:
-- Those who do not intend to be in their homes for more than a few
years.
-- People looking for lower monthly payments and a chance to redirect
their cash flow to high-yield and tax-deferred savings or maximize
retirement contributions.
"We are committed to designing mortgage products and features that meet
the needs of our homebuyers," said Joe Rogers, executive vice president for
pricing, products and programs within Wells Fargo Home Mortgage's National
Consumer Lending Sales area. "The rollout of our interest-only 10-year ARM is
another option we're offering customers to help them meet their overall
financial goals."
Interest-only mortgages are not for homebuyers who are looking to build
equity by paying down their principal or buying in a market where home values
are not appreciating. Interest-only mortgages cannot be used for investment
properties.
"The interest-only feature is a great option for customers who need to
invest funds in other ways," Rogers said. "To some, a home is not their best
or most important asset-building tool. To others, a short-term ability to
lower payments each month works with their long-term cash or asset management
strategies."
Wells Fargo Home Mortgage is the nation's No. 1 retail mortgage lender*,
the No. 1 lender to both low- to moderate-income customers and ethnic
minorities, and one of the country's leading servicers of home mortgages. It
operates the country's largest mortgage network from more than 2,000 mortgage
and Wells Fargo banking stores and the Internet. Based in Des Moines, Iowa,
it serves about 5 million customers in all 50 states through its retail and
wholesale lending operations.
*Based on third quarter 2004 statistics compiled by Inside Mortgage
Finance . Nov. 19, 2004
DES MOINES, Iowa, Jan. 26 /PRNewswire/
A new product feature from Wells Fargo Home Mortgage can help homebuyers looking to increase their short-term
cash flow or who intend to move or refinance within a few years.
The company is launching an interest-only feature that doesn't require
principal payment for a period of 10 years. Wells Fargo Home Mortgage's
interest-only product feature was previously available only on 5- and 7-year
adjustable-rate mortgages (ARMs). Interest-only mortgages can be used for
purchase or refinance transactions and allow homebuyers to make payments of
"interest only" during the fixed-rate period of the ARM -- five, seven or
10 years. After the interest-only period has ended, full principal and
interest payments are required as the loan fully amortizes.
Homebuyers/homeowners can make principal reductions during the interest-only
period, but aren't required to do so.
Potential homebuyers who may be suited for the interest-only feature
include:
-- Those who do not intend to be in their homes for more than a few
years.
-- People looking for lower monthly payments and a chance to redirect
their cash flow to high-yield and tax-deferred savings or maximize
retirement contributions.
"We are committed to designing mortgage products and features that meet
the needs of our homebuyers," said Joe Rogers, executive vice president for
pricing, products and programs within Wells Fargo Home Mortgage's National
Consumer Lending Sales area. "The rollout of our interest-only 10-year ARM is
another option we're offering customers to help them meet their overall
financial goals."
Interest-only mortgages are not for homebuyers who are looking to build
equity by paying down their principal or buying in a market where home values
are not appreciating. Interest-only mortgages cannot be used for investment
properties.
"The interest-only feature is a great option for customers who need to
invest funds in other ways," Rogers said. "To some, a home is not their best
or most important asset-building tool. To others, a short-term ability to
lower payments each month works with their long-term cash or asset management
strategies."
Wells Fargo Home Mortgage is the nation's No. 1 retail mortgage lender*,
the No. 1 lender to both low- to moderate-income customers and ethnic
minorities, and one of the country's leading servicers of home mortgages. It
operates the country's largest mortgage network from more than 2,000 mortgage
and Wells Fargo banking stores and the Internet. Based in Des Moines, Iowa,
it serves about 5 million customers in all 50 states through its retail and
wholesale lending operations.
*Based on third quarter 2004 statistics compiled by Inside Mortgage
Finance . Nov. 19, 2004
Auto Insurance Planners Provides Body Shop Database
Press Release
(PRWEB) January 26, 2005 -- Auto Insurance Planners, an auto insurance information hub, offers a free directory of body shops across the United States while providing instant car insurance quotes and other useful auto insurance information to consumers.
Users can easily find numerous auto body shops located near them using Auto Insurance Planners’ automobile body shop locator at www.AutoInsurancePlanners.com. The name of the body shop, address, and phone number are listed in the company’s automobile body shop database. Consumers may search by state or city to find the contact information of the nearest body shop.
"We are pleased to be able to bring such a valuable tool to our site visitors,” said Sean Denny, founder of Auto Insurance Planners. “Now, in addition to free auto insurance quotes, tips on auto safety, driving tips, and state by state car insurance information, we are providing our users a free directory where they can locate all of the auto body shops in their local area."
Other than the auto body shop locator, Auto Insurance Planners also provides instant car insurance quotes from the leading auto insurance providers, such as Amica, Liberty Mutual, and GMAC Insurance. Helpful tips such as how to prevent auto theft and how to save money on insurance for teenage drivers as well as information that assists consumers in better understanding the auto insurance industry can also be found at www.AutoInsurancePlanners.com
(PRWEB) January 26, 2005 -- Auto Insurance Planners, an auto insurance information hub, offers a free directory of body shops across the United States while providing instant car insurance quotes and other useful auto insurance information to consumers.
Users can easily find numerous auto body shops located near them using Auto Insurance Planners’ automobile body shop locator at www.AutoInsurancePlanners.com. The name of the body shop, address, and phone number are listed in the company’s automobile body shop database. Consumers may search by state or city to find the contact information of the nearest body shop.
"We are pleased to be able to bring such a valuable tool to our site visitors,” said Sean Denny, founder of Auto Insurance Planners. “Now, in addition to free auto insurance quotes, tips on auto safety, driving tips, and state by state car insurance information, we are providing our users a free directory where they can locate all of the auto body shops in their local area."
Other than the auto body shop locator, Auto Insurance Planners also provides instant car insurance quotes from the leading auto insurance providers, such as Amica, Liberty Mutual, and GMAC Insurance. Helpful tips such as how to prevent auto theft and how to save money on insurance for teenage drivers as well as information that assists consumers in better understanding the auto insurance industry can also be found at www.AutoInsurancePlanners.com
CIGNA Joins WomenHeart
Press Release
WASHINGTON, Jan. 26, 2005 /PRNewswire-FirstCall/ --
CIGNA today announced its support of WomenHeart: the National Coalition for Women with Heart
Disease. CIGNA will be recognized as a National GoldHeart sponsor and as the
premier sponsor of WomenHeart's "Red Bag of Courage" program. As part of the
sponsorship, CIGNA will work to raise awareness among customers and members of
the risks and signs of heart disease.
Eight million American women are currently living with heart disease, and
it is the leading cause of death of American women. WomenHeart is the
nation's only patient advocacy organization that provides support, education
and advocacy for the number one killer of American women. Through its
coalition of national organizations and its community-based patient support
networks across the country, WomenHeart offers comprehensive services to women
with heart disease and empowers all women to take charge of their heart
health.
"Women's health is a priority for CIGNA. Many people are not aware that
women are at risk of heart disease, and that the symptoms of a heart attack
differ in women," said W. Allen Schaffer, M.D., CIGNA's chief clinical
officer. "Our goal is to help our members be more healthy, and we are proud
to support WomenHeart's efforts."
WomenHeart will soon begin distributing its new "Red Bag of Courage" to
women at risk for and living with heart disease. The bags are filled with
up-to-date heart health information and products that will help women take
charge of their health and meet the disease head on, with courage and
confidence. CIGNA is the presenting sponsor for WomenHeart's "Red Bag of
Courage" program.
"WomenHeart is proud to have CIGNA's support. CIGNA's commitment to
helping us address the #1 killer of women in this country - heart disease -
will help keep this issue at the forefront of the American public and will
help more and more women get the important information, accurate diagnosis and
proper treatment that they deserve," said Nancy Loving, Executive Director and
Co-Founder of WomenHeart.
As a leading provider of health and related employee benefits, CIGNA works
with employers and their employees to support health and well-being by
promoting prevention of illness and helping members living with chronic
conditions lead healthier, more productive lives. CIGNA provides members
ongoing support and education through several tools and programs, including
its member newsletter, its 24-Hour Health Information Line and its interactive
Web site, myCIGNA.com, where members can access health education information
and decision support tools to help them better understand and manage health
conditions. The CIGNA Well Aware Program for Better Health(SM) is an award-
winning disease management program that offers members living with heart
disease and other chronic conditions education and support to help empower
them to gain greater control over their health.
In addition to customer programs, CIGNA is a strong supporter of
initiatives that raise awareness of health challenges and promote better
health habits for long-term health and well-being. By working with
WomenHeart, CIGNA will work to raise awareness of the high risk of heart
disease among women. In addition, CIGNA maintains a longtime relationship
with the March of Dimes to help raise awareness of the risks and threats of
prematurity as the leading cause of newborn death in the United States. CIGNA
also works with the Healthy Kids Challenge to prevent childhood obesity and
promote better health habits among children for long-term well-being.
WASHINGTON, Jan. 26, 2005 /PRNewswire-FirstCall/ --
CIGNA today announced its support of WomenHeart: the National Coalition for Women with Heart
Disease. CIGNA will be recognized as a National GoldHeart sponsor and as the
premier sponsor of WomenHeart's "Red Bag of Courage" program. As part of the
sponsorship, CIGNA will work to raise awareness among customers and members of
the risks and signs of heart disease.
Eight million American women are currently living with heart disease, and
it is the leading cause of death of American women. WomenHeart is the
nation's only patient advocacy organization that provides support, education
and advocacy for the number one killer of American women. Through its
coalition of national organizations and its community-based patient support
networks across the country, WomenHeart offers comprehensive services to women
with heart disease and empowers all women to take charge of their heart
health.
"Women's health is a priority for CIGNA. Many people are not aware that
women are at risk of heart disease, and that the symptoms of a heart attack
differ in women," said W. Allen Schaffer, M.D., CIGNA's chief clinical
officer. "Our goal is to help our members be more healthy, and we are proud
to support WomenHeart's efforts."
WomenHeart will soon begin distributing its new "Red Bag of Courage" to
women at risk for and living with heart disease. The bags are filled with
up-to-date heart health information and products that will help women take
charge of their health and meet the disease head on, with courage and
confidence. CIGNA is the presenting sponsor for WomenHeart's "Red Bag of
Courage" program.
"WomenHeart is proud to have CIGNA's support. CIGNA's commitment to
helping us address the #1 killer of women in this country - heart disease -
will help keep this issue at the forefront of the American public and will
help more and more women get the important information, accurate diagnosis and
proper treatment that they deserve," said Nancy Loving, Executive Director and
Co-Founder of WomenHeart.
As a leading provider of health and related employee benefits, CIGNA works
with employers and their employees to support health and well-being by
promoting prevention of illness and helping members living with chronic
conditions lead healthier, more productive lives. CIGNA provides members
ongoing support and education through several tools and programs, including
its member newsletter, its 24-Hour Health Information Line and its interactive
Web site, myCIGNA.com, where members can access health education information
and decision support tools to help them better understand and manage health
conditions. The CIGNA Well Aware Program for Better Health(SM) is an award-
winning disease management program that offers members living with heart
disease and other chronic conditions education and support to help empower
them to gain greater control over their health.
In addition to customer programs, CIGNA is a strong supporter of
initiatives that raise awareness of health challenges and promote better
health habits for long-term health and well-being. By working with
WomenHeart, CIGNA will work to raise awareness of the high risk of heart
disease among women. In addition, CIGNA maintains a longtime relationship
with the March of Dimes to help raise awareness of the risks and threats of
prematurity as the leading cause of newborn death in the United States. CIGNA
also works with the Healthy Kids Challenge to prevent childhood obesity and
promote better health habits among children for long-term well-being.
Tuesday, January 25, 2005
Florida Health Insurance
The Associated Press
TALLAHASSEE, FL -- With a child's visit to an emergency room possibly running up a bill in the thousands of dollars, parents who can't afford Florida health insurance for their children are facing an important deadline.
Requests for KidCare health insurance coverage must be in by Sunday.
Letters that come in after midnight on that day will be denied.
KidCare's director is Rose Naff. She says that to make sure a request reaches Tallahassee on time, parents and other caregivers of kids fax or e-mail requests.
Naff says people should attach a copy of their I-R-S W-2 wage statement and send it along by e-mail with the application.
She says the goal is to get about 100-thousand applications, so her office is encouraging people to not rely on snail mail.
The KidCare program has received about 70-thousand applications.
Applications can be faxed to 850-681-2131 or e-mailed to:
applyhealthykids.org
TALLAHASSEE, FL -- With a child's visit to an emergency room possibly running up a bill in the thousands of dollars, parents who can't afford Florida health insurance for their children are facing an important deadline.
Requests for KidCare health insurance coverage must be in by Sunday.
Letters that come in after midnight on that day will be denied.
KidCare's director is Rose Naff. She says that to make sure a request reaches Tallahassee on time, parents and other caregivers of kids fax or e-mail requests.
Naff says people should attach a copy of their I-R-S W-2 wage statement and send it along by e-mail with the application.
She says the goal is to get about 100-thousand applications, so her office is encouraging people to not rely on snail mail.
The KidCare program has received about 70-thousand applications.
Applications can be faxed to 850-681-2131 or e-mailed to:
applyhealthykids.org
Monday, January 24, 2005
Is Progressive About to Regress?
Motley Fool
Is Progressive About to Regress?
Friday January 21, 2:27 pm ET
By Stephen D. Simpson
Think "progressive," and you might think of rock bands like Fates Warning and Queensryche, or politicians like presidential wannabes Howard Dean and Dennis Kucinich. But a Fool thinking about insurance might instead think of Progressive (NYSE: PGR - News), the auto insurer.
On the surface, Progressive's December quarter results look quite strong. Net premiums written grew 15%, the combined ratio (a measure of the cost of losses and expenses incurred) dropped from 85.9 to 85.5, and earnings per share of $2.01 blew away the median analysts' estimate of $1.67. Even if you factor out $0.31 per share of favorable reserve adjustments, the company still beat the Street.
So what's not to love? Well, the company acknowledged yet again that business is slowing. Auto insurers have been enjoying a "perfect storm" of rising policy rates and lower-than-forecast accident claims, and their coffers have filled with cash. So far, so good. Right?
When insurers find cash piling up, they have a few options -- they can buy back stock, they can pay the money out in dividends, or they can write even more insurance and grow their business. Not surprisingly, most companies pick option No. 3. As a result, insurers are becoming more aggressive with their policy pricing and are driving down profitability.
Ultimately, insurers like Progressive will have to decide whether to chase business that will be less profitable and/or more risky or to simply step back and watch other insurers snatch up business. Neither option is especially appealing, now, is it?
Progressive is no doubt a high-quality insurer, but Wall Street has already bestowed its reward. When comparing price-to-book value with other insurers, such as Torchmark (NYSE: TMK - News), AON (NYSE: AOC - News), Chubb (NYSE: CB - News), or Safeco (Nasdaq: SAFC - News), Progressive is certainly trading at a premium. What's more, of the list below, only Progressive and AON are projected to actually have lower earnings next year.
Company P/E Price/Book Forward P/E
Torchmark 13.4 1.8 11.9
AON 10.4 1.5 12.6
Chubb 12.7 1.6 9.7
Safeco 10.6 1.6 9.0
PGR 11.0 3.0 12.8
Given that Progressive is a high-quality company, many investors may be tempted to just hold on -- after all, the insurer may hit a few potholes, but it's probably not going to smack into a tree. And we at the Motley Fool staunchly believe in the virtues of long-term buy-and-hold investing. Still, those who don't already own the shares (and maybe some of the more short-term-oriented of those who do) might want to look at shares of Pfizer (NYSE: PFE - News) or Applied Materials (Nasdaq: AMAT - News) for a sneak peek and what a cyclical down period can look like.
Is Progressive About to Regress?
Friday January 21, 2:27 pm ET
By Stephen D. Simpson
Think "progressive," and you might think of rock bands like Fates Warning and Queensryche, or politicians like presidential wannabes Howard Dean and Dennis Kucinich. But a Fool thinking about insurance might instead think of Progressive (NYSE: PGR - News), the auto insurer.
On the surface, Progressive's December quarter results look quite strong. Net premiums written grew 15%, the combined ratio (a measure of the cost of losses and expenses incurred) dropped from 85.9 to 85.5, and earnings per share of $2.01 blew away the median analysts' estimate of $1.67. Even if you factor out $0.31 per share of favorable reserve adjustments, the company still beat the Street.
So what's not to love? Well, the company acknowledged yet again that business is slowing. Auto insurers have been enjoying a "perfect storm" of rising policy rates and lower-than-forecast accident claims, and their coffers have filled with cash. So far, so good. Right?
When insurers find cash piling up, they have a few options -- they can buy back stock, they can pay the money out in dividends, or they can write even more insurance and grow their business. Not surprisingly, most companies pick option No. 3. As a result, insurers are becoming more aggressive with their policy pricing and are driving down profitability.
Ultimately, insurers like Progressive will have to decide whether to chase business that will be less profitable and/or more risky or to simply step back and watch other insurers snatch up business. Neither option is especially appealing, now, is it?
Progressive is no doubt a high-quality insurer, but Wall Street has already bestowed its reward. When comparing price-to-book value with other insurers, such as Torchmark (NYSE: TMK - News), AON (NYSE: AOC - News), Chubb (NYSE: CB - News), or Safeco (Nasdaq: SAFC - News), Progressive is certainly trading at a premium. What's more, of the list below, only Progressive and AON are projected to actually have lower earnings next year.
Company P/E Price/Book Forward P/E
Torchmark 13.4 1.8 11.9
AON 10.4 1.5 12.6
Chubb 12.7 1.6 9.7
Safeco 10.6 1.6 9.0
PGR 11.0 3.0 12.8
Given that Progressive is a high-quality company, many investors may be tempted to just hold on -- after all, the insurer may hit a few potholes, but it's probably not going to smack into a tree. And we at the Motley Fool staunchly believe in the virtues of long-term buy-and-hold investing. Still, those who don't already own the shares (and maybe some of the more short-term-oriented of those who do) might want to look at shares of Pfizer (NYSE: PFE - News) or Applied Materials (Nasdaq: AMAT - News) for a sneak peek and what a cyclical down period can look like.
More Than One in Four Auto Accidents Result in Injury Claims
MALVERN, Pa., Jan. 24 /PRNewswire/ --
More than one in four auto accidents resulted in bodily injury liability (BI) claims (Auto Insurance) in 2003, according to a recent study by the Insurance Research Council (IRC). The study, Trends in Auto Injury Claims, 2004 Edition, reveals that BI claim rates have remained high even though IRC research suggests that auto accident rates and the seriousness of auto injuries have decreased in recent years.
"Indicators such as extent of disability, days of restricted activity, and time lost from work tell us that auto accidents are producing fewer serious injuries. The good news is that auto safety campaigns and the manufacture of safer cars have made a difference," said Elizabeth A. Sprinkel, senior vice president of the IRC. "Clearly, the injury liability claim rate is influenced by the attitudes and behaviors of auto accident victims, and that rate has increased over time," said Sprinkel.
IRC's recent study uses the ratio of BI claims for every 100 property damage liability (PD) claims to measure the likelihood that BI claims will be filed in auto accidents (PD claim rates approximate auto accident rates in the United States). In 1980, 17.9 BI claims occurred for every 100 PD claims -- in other words, slightly fewer than one in five auto accidents produced BI claims that year. By 2003, the BI to PD ratio increased to 26.4. The 2003 ratio is an improvement over the ratio in 1995, however, when 29.5 BI claims occurred for every 100 PD claims.
The increase since 1980 in the BI to PD ratio is the result of opposing trends in BI and PD claim rates. From 1980 to 2003, the BI claim rate increased by 19 percent, to 1.05 BI claims per 100 insured cars. At the same time, the PD claim rate decreased by 20 percent, to 3.97 PD claims per 100 insured cars. The IRC's latest report contains BI and PD claim rate information for all 50 states and shows that state claim rates vary widely.
People who are injured in auto accidents not only receive compensation for medical treatment and other accident-related expenses under the BI coverage, but also they receive compensation for the pain and suffering and emotional distress associated with their auto injuries. BI awards are paid by auto insurers of at-fault drivers. One reason that BI claim rates vary from state to state is differences in auto insurance laws. In no-fault states, for example, BI claims can be filed only when the cost for treatment of auto injuries exceeds a specific dollar amount in medical expenses or when a verbal description of injury-related impairment is met. Other states do not have these requirements.
More than one in four auto accidents resulted in bodily injury liability (BI) claims (Auto Insurance) in 2003, according to a recent study by the Insurance Research Council (IRC). The study, Trends in Auto Injury Claims, 2004 Edition, reveals that BI claim rates have remained high even though IRC research suggests that auto accident rates and the seriousness of auto injuries have decreased in recent years.
"Indicators such as extent of disability, days of restricted activity, and time lost from work tell us that auto accidents are producing fewer serious injuries. The good news is that auto safety campaigns and the manufacture of safer cars have made a difference," said Elizabeth A. Sprinkel, senior vice president of the IRC. "Clearly, the injury liability claim rate is influenced by the attitudes and behaviors of auto accident victims, and that rate has increased over time," said Sprinkel.
IRC's recent study uses the ratio of BI claims for every 100 property damage liability (PD) claims to measure the likelihood that BI claims will be filed in auto accidents (PD claim rates approximate auto accident rates in the United States). In 1980, 17.9 BI claims occurred for every 100 PD claims -- in other words, slightly fewer than one in five auto accidents produced BI claims that year. By 2003, the BI to PD ratio increased to 26.4. The 2003 ratio is an improvement over the ratio in 1995, however, when 29.5 BI claims occurred for every 100 PD claims.
The increase since 1980 in the BI to PD ratio is the result of opposing trends in BI and PD claim rates. From 1980 to 2003, the BI claim rate increased by 19 percent, to 1.05 BI claims per 100 insured cars. At the same time, the PD claim rate decreased by 20 percent, to 3.97 PD claims per 100 insured cars. The IRC's latest report contains BI and PD claim rate information for all 50 states and shows that state claim rates vary widely.
People who are injured in auto accidents not only receive compensation for medical treatment and other accident-related expenses under the BI coverage, but also they receive compensation for the pain and suffering and emotional distress associated with their auto injuries. BI awards are paid by auto insurers of at-fault drivers. One reason that BI claim rates vary from state to state is differences in auto insurance laws. In no-fault states, for example, BI claims can be filed only when the cost for treatment of auto injuries exceeds a specific dollar amount in medical expenses or when a verbal description of injury-related impairment is met. Other states do not have these requirements.
Saturday, January 22, 2005
heraldtribune.com: Southwest Florida's Information Leader
By ROBERT PEAR
New York Times
WASHINGTON, Jan. 21 - The Bush administration on Friday unveiled rules for the new Medicare drug benefit that guarantee patients access to a wide variety of medicines while giving insurance companies potent tools to control costs.
Issuance of the rules is one of the most significant events between Dec. 8, 2003, when President Bush signed the Medicare law, and Jan. 1 next year, when the drug benefit becomes available.
The rules, which were made final after a long, contentious public comment period, will govern all who might be involved in the new program: health insurers, employers, drug manufacturers, pharmacies, benefit managers and up to 41 million elderly and disabled people covered by Medicare.
On many issues, the rules strike a balance between competing interests.
On the one hand, the rules say that every prescription drug plan must provide "adequate coverage of the types of drugs most commonly needed" by Medicare beneficiaries. These include drugs to treat high blood pressure, heart disease, cancer, osteoporosis and Alzheimer's disease.
On the other hand, the rules say that a plan can establish a list of preferred drugs and can refuse to pay for other medicines.
In general, the list, known as a formulary, must have at least two drugs for treating each condition or illness.
The rules do not dictate which specific drugs must be covered - for example, by specifying Paxil or Zoloft among the antidepressants, or Lipitor or Crestor among the cholesterol drugs. But Medicare officials said they could require insurers to cover "specific drugs" or types of drugs, to be identified in the future.
The rules also embody other important policy decisions that will determine exactly how the new program works and whether it succeeds. Consumers, insurers, drug companies and politicians have been sparring over almost every detail of the rules.
The final rules address many concerns that people expressed about a preliminary version, issued in late July. One concern centered on the fact that Medicare will replace Medicaid as the source of drug coverage for many of the elderly poor.
About 6.3 million low-income people are enrolled in both insurance programs. Medicaid, which is financed jointly by the federal government and the states, now pays for their drugs, but will not do so after Jan. 1, 2006. State officials and advocates for low-income people had expressed alarm that many of these beneficiaries would lose coverage for months, while they moved from Medicaid to a Medicare drug plan.
Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said Friday that people eligible for the two programs would "have no gap in coverage" because they would be automatically enrolled in Medicare drug plans this fall.
The law, the biggest expansion of Medicare since its creation in 1965, depends on private health plans to deliver the new benefit. Insurers, eager to control costs, wanted to limit the number of drugs they must cover. Doctors, drug companies and advocates for beneficiaries wanted to maximize the number.
The government offered a compromise. It allows the use of formularies and says insurers must cover only one drug in a therapeutic category or class if only two drugs are available and one is clearly superior.
But if a doctor certifies that a particular drug is medically necessary for a patient, the drug plan must cover it, regardless of whether it is on the list of preferred medicines. Under the rules, the insurer "must grant an exception whenever it determines that the drug is medically necessary," and the insurer is supposed to accept the judgment of the prescribing physician on the question of medical necessity.
Dr. McClellan said the rules offered "comprehensive assistance for low-income beneficiaries," nearly 11 million of the 41 million elderly and disabled people on Medicare.
Many employers have cut retiree health benefits in the last 15 years. The law offers subsidies to employers to encourage them to continue providing drug benefits to retirees.
Dr. McClellan predicted that 9.8 million retirees would receive drug coverage from employer-sponsored health plans that qualify for the federal subsidies. This number, he said, is more than one million above the highest previous estimates.
The rules explain how a beneficiary can appeal the denial of coverage for a particular drug, and they set standards to ensure convenient access to drugstores.
Patients denied coverage can appeal through a complex, five-stage process. They can ask for a redetermination by their drug plan, a reconsideration by an outside organization, a hearing before an administrative law judge and a review by the Medicare Appeals Council, a unit of the Department of Health and Human Services. A beneficiary who is still dissatisfied can file suit in a federal district court.
Each prescription drug plan can establish a network of pharmacies that agree to sell drugs to Medicare patients at discounted prices. An insurer must have a large enough network so that 90 percent of the Medicare beneficiaries in urban areas live within two miles of a participating drugstore, and 90 percent of those in suburban areas are within five miles of a store.
Beneficiaries who sign up with a drug plan are generally locked in for a year. Insurers can end coverage for a particular drug, or increase the co-payment, if they give 60 days' notice to patients and the government.
The United States Chamber of Commerce, the Blue Cross and Blue Shield Association and America's Health Insurance Plans, a trade group for insurers, praised the new rules. Howard G. Phanstiel, chairman of PacifiCare Health Systems, a large insurer based in Cypress, Calif., said the rules showed that the government would be "a good business partner."
But consumer advocates, like Families USA and the Medicare Rights Center, said they were somewhat disappointed.
Judith A. Stein, director of the Center for Medicare Advocacy, a nonprofit group that counsels beneficiaries, said the rules allowed immense complexity and variation in benefits. Drug discount cards, offered as a temporary source of assistance, were too complex for many elderly people, she said, and the new drug benefit may be even more confusing.
Many states, like New York, New Jersey and Pennsylvania, have programs that assist state residents with their drug costs. The new rules say states cannot select one Medicare drug plan and enroll all their beneficiaries in that plan. Instead, states must work with all available drug plans.
Senator Jon Corzine, Democrat of New Jersey, said this requirement would disrupt a state program that had worked well for three decades.
New York Times
WASHINGTON, Jan. 21 - The Bush administration on Friday unveiled rules for the new Medicare drug benefit that guarantee patients access to a wide variety of medicines while giving insurance companies potent tools to control costs.
Issuance of the rules is one of the most significant events between Dec. 8, 2003, when President Bush signed the Medicare law, and Jan. 1 next year, when the drug benefit becomes available.
The rules, which were made final after a long, contentious public comment period, will govern all who might be involved in the new program: health insurers, employers, drug manufacturers, pharmacies, benefit managers and up to 41 million elderly and disabled people covered by Medicare.
On many issues, the rules strike a balance between competing interests.
On the one hand, the rules say that every prescription drug plan must provide "adequate coverage of the types of drugs most commonly needed" by Medicare beneficiaries. These include drugs to treat high blood pressure, heart disease, cancer, osteoporosis and Alzheimer's disease.
On the other hand, the rules say that a plan can establish a list of preferred drugs and can refuse to pay for other medicines.
In general, the list, known as a formulary, must have at least two drugs for treating each condition or illness.
The rules do not dictate which specific drugs must be covered - for example, by specifying Paxil or Zoloft among the antidepressants, or Lipitor or Crestor among the cholesterol drugs. But Medicare officials said they could require insurers to cover "specific drugs" or types of drugs, to be identified in the future.
The rules also embody other important policy decisions that will determine exactly how the new program works and whether it succeeds. Consumers, insurers, drug companies and politicians have been sparring over almost every detail of the rules.
The final rules address many concerns that people expressed about a preliminary version, issued in late July. One concern centered on the fact that Medicare will replace Medicaid as the source of drug coverage for many of the elderly poor.
About 6.3 million low-income people are enrolled in both insurance programs. Medicaid, which is financed jointly by the federal government and the states, now pays for their drugs, but will not do so after Jan. 1, 2006. State officials and advocates for low-income people had expressed alarm that many of these beneficiaries would lose coverage for months, while they moved from Medicaid to a Medicare drug plan.
Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said Friday that people eligible for the two programs would "have no gap in coverage" because they would be automatically enrolled in Medicare drug plans this fall.
The law, the biggest expansion of Medicare since its creation in 1965, depends on private health plans to deliver the new benefit. Insurers, eager to control costs, wanted to limit the number of drugs they must cover. Doctors, drug companies and advocates for beneficiaries wanted to maximize the number.
The government offered a compromise. It allows the use of formularies and says insurers must cover only one drug in a therapeutic category or class if only two drugs are available and one is clearly superior.
But if a doctor certifies that a particular drug is medically necessary for a patient, the drug plan must cover it, regardless of whether it is on the list of preferred medicines. Under the rules, the insurer "must grant an exception whenever it determines that the drug is medically necessary," and the insurer is supposed to accept the judgment of the prescribing physician on the question of medical necessity.
Dr. McClellan said the rules offered "comprehensive assistance for low-income beneficiaries," nearly 11 million of the 41 million elderly and disabled people on Medicare.
Many employers have cut retiree health benefits in the last 15 years. The law offers subsidies to employers to encourage them to continue providing drug benefits to retirees.
Dr. McClellan predicted that 9.8 million retirees would receive drug coverage from employer-sponsored health plans that qualify for the federal subsidies. This number, he said, is more than one million above the highest previous estimates.
The rules explain how a beneficiary can appeal the denial of coverage for a particular drug, and they set standards to ensure convenient access to drugstores.
Patients denied coverage can appeal through a complex, five-stage process. They can ask for a redetermination by their drug plan, a reconsideration by an outside organization, a hearing before an administrative law judge and a review by the Medicare Appeals Council, a unit of the Department of Health and Human Services. A beneficiary who is still dissatisfied can file suit in a federal district court.
Each prescription drug plan can establish a network of pharmacies that agree to sell drugs to Medicare patients at discounted prices. An insurer must have a large enough network so that 90 percent of the Medicare beneficiaries in urban areas live within two miles of a participating drugstore, and 90 percent of those in suburban areas are within five miles of a store.
Beneficiaries who sign up with a drug plan are generally locked in for a year. Insurers can end coverage for a particular drug, or increase the co-payment, if they give 60 days' notice to patients and the government.
The United States Chamber of Commerce, the Blue Cross and Blue Shield Association and America's Health Insurance Plans, a trade group for insurers, praised the new rules. Howard G. Phanstiel, chairman of PacifiCare Health Systems, a large insurer based in Cypress, Calif., said the rules showed that the government would be "a good business partner."
But consumer advocates, like Families USA and the Medicare Rights Center, said they were somewhat disappointed.
Judith A. Stein, director of the Center for Medicare Advocacy, a nonprofit group that counsels beneficiaries, said the rules allowed immense complexity and variation in benefits. Drug discount cards, offered as a temporary source of assistance, were too complex for many elderly people, she said, and the new drug benefit may be even more confusing.
Many states, like New York, New Jersey and Pennsylvania, have programs that assist state residents with their drug costs. The new rules say states cannot select one Medicare drug plan and enroll all their beneficiaries in that plan. Instead, states must work with all available drug plans.
Senator Jon Corzine, Democrat of New Jersey, said this requirement would disrupt a state program that had worked well for three decades.
Friday, January 21, 2005
Tracking Device for Car Insurance
SAN DIEGO -- A tiny new device tracking the car's every move may save drivers money on car insurance.
But there's a catch: drivers have to let the insurance company become a backseat driver, of sorts.
It's called the "TripSensor", developed by Progressive Insurance. The device measures when people drive, how far and how fast, and depending on those factors, the customers could get a 5 to 25 percent discount.
"Progressive's interested in this because we know people who drive less are less likely to have an accident. So, we give them more of a discount, they present less of a risk to us," Progressive representative Jim Haas said.
Currently, thousands of drivers in Minnesota are participating in a pilot program.
"The program is entirely voluntary, you don't have to do it if you don't want to. You get to look at the data before you share it with us and decide then [whether you want to share it.] If you don't want to share it, that's fine," Haas said.
And privacy advocates -- including Beth Givens, the director of the Privacy Rights Clearinghouse -- likes that.
"Progressive has appeared to put the subscriber in the driver's seat," Givens said.
But she still has some serious concerns.
"Not only could the privacy policy change at any moment, but there could be demands for that data from third parties," Givens said.
Givens said the records could possibly be subpoenaed in a custody battle or by law enforcement, making personal driving data public record very quickly.
When it comes to sharing any information with companies, the Privacy Rights Clearinghouse recommends drivers read the privacy policy and terms of service very closely.
The pilot program will last at least a year.
But there's a catch: drivers have to let the insurance company become a backseat driver, of sorts.
It's called the "TripSensor", developed by Progressive Insurance. The device measures when people drive, how far and how fast, and depending on those factors, the customers could get a 5 to 25 percent discount.
"Progressive's interested in this because we know people who drive less are less likely to have an accident. So, we give them more of a discount, they present less of a risk to us," Progressive representative Jim Haas said.
Currently, thousands of drivers in Minnesota are participating in a pilot program.
"The program is entirely voluntary, you don't have to do it if you don't want to. You get to look at the data before you share it with us and decide then [whether you want to share it.] If you don't want to share it, that's fine," Haas said.
And privacy advocates -- including Beth Givens, the director of the Privacy Rights Clearinghouse -- likes that.
"Progressive has appeared to put the subscriber in the driver's seat," Givens said.
But she still has some serious concerns.
"Not only could the privacy policy change at any moment, but there could be demands for that data from third parties," Givens said.
Givens said the records could possibly be subpoenaed in a custody battle or by law enforcement, making personal driving data public record very quickly.
When it comes to sharing any information with companies, the Privacy Rights Clearinghouse recommends drivers read the privacy policy and terms of service very closely.
The pilot program will last at least a year.
State Farm drops rates for LA auto policyholders
By TED GRIGGS
tgriggs@theadvocate.com
Advocate business writer
Roughly one-third of the state's drivers could see a small drop in their auto premiums starting Feb. 15, when State Farm Mutual Automobile Insurance Co. cuts its rates by 2.1 percent overall.
State Farm is Louisiana's largest auto insurer, with 969,000 policyholders, the company said. The decrease means an annual savings of $19.3 million for Louisiana customers, or an average of nearly $20 per policyholder.
The last time State Farm cut its auto insurance rate was in August 2000. The company cut rates then by 2.3 percent, or $16.6 million. A year later the company upped rates by 6.5 percent, or $47 million. In 2002, the company upped rates by $133 million, or 14 percent. In April of last year, the company raised rates by 0.9 percent.
State Farm was able to reduce its rates this year because customers have filed fewer claims than in the past, although the amount per claim is around the same, spokesman Morris Anderson said Thursday.
"We would like to think that people are driving a little bit safer. Cars are certainly a lot safer than in the past" Anderson said.
Insurance Commissioner Robert Wooley said some much smaller auto insurers have also reduced their rates, while others have increased rates by smaller percentages than in the past few years.
"It's all part of the market softening up after the reinsurance market hardened after 9-11," Wooley said.
Reinsurance is the insurance that insurance companies buy to reduce their risks. A reinsurer assumes part of the risk and part of the premium originally taken by the insurer, known as the primary company.
Wooley said auto insurance rates have also benefited from the "flex-band rating system." The law, passed in 2003, allows insurers to increase or decrease their rates by 10 percent once a year.
Insurers aren't as reluctant to reduce rates when business is good because they know they can also raise rates without incurring a political battle, Wooley said.
The savings per customer in State Farm's Feb. 15 cut will vary, but the largest decreases will be in collision and comprehensive coverage, Anderson said. Comprehensive coverage pays for losses from theft, storm damage, vandalism and glass breakage.
The company is also revising its discount program for auto insurance customers with more than one State Farm policy, Anderson said. A high percentage auto insurance customers also buy their homeowner's policies from State Farm.
Most customers will see a larger discount than they now receive, Anderson said. The maximum discount possible is 18 percent.
tgriggs@theadvocate.com
Advocate business writer
Roughly one-third of the state's drivers could see a small drop in their auto premiums starting Feb. 15, when State Farm Mutual Automobile Insurance Co. cuts its rates by 2.1 percent overall.
State Farm is Louisiana's largest auto insurer, with 969,000 policyholders, the company said. The decrease means an annual savings of $19.3 million for Louisiana customers, or an average of nearly $20 per policyholder.
The last time State Farm cut its auto insurance rate was in August 2000. The company cut rates then by 2.3 percent, or $16.6 million. A year later the company upped rates by 6.5 percent, or $47 million. In 2002, the company upped rates by $133 million, or 14 percent. In April of last year, the company raised rates by 0.9 percent.
State Farm was able to reduce its rates this year because customers have filed fewer claims than in the past, although the amount per claim is around the same, spokesman Morris Anderson said Thursday.
"We would like to think that people are driving a little bit safer. Cars are certainly a lot safer than in the past" Anderson said.
Insurance Commissioner Robert Wooley said some much smaller auto insurers have also reduced their rates, while others have increased rates by smaller percentages than in the past few years.
"It's all part of the market softening up after the reinsurance market hardened after 9-11," Wooley said.
Reinsurance is the insurance that insurance companies buy to reduce their risks. A reinsurer assumes part of the risk and part of the premium originally taken by the insurer, known as the primary company.
Wooley said auto insurance rates have also benefited from the "flex-band rating system." The law, passed in 2003, allows insurers to increase or decrease their rates by 10 percent once a year.
Insurers aren't as reluctant to reduce rates when business is good because they know they can also raise rates without incurring a political battle, Wooley said.
The savings per customer in State Farm's Feb. 15 cut will vary, but the largest decreases will be in collision and comprehensive coverage, Anderson said. Comprehensive coverage pays for losses from theft, storm damage, vandalism and glass breakage.
The company is also revising its discount program for auto insurance customers with more than one State Farm policy, Anderson said. A high percentage auto insurance customers also buy their homeowner's policies from State Farm.
Most customers will see a larger discount than they now receive, Anderson said. The maximum discount possible is 18 percent.
Medicare to pay for more heart devices
Jan 21 (Reuters) -
Medicare will soon fund implantable heart devices for thousands more patients, after publication of a landmark study finding the devices can save more lives, top agency officials said in a medical journal on Wednesday.
Results of 2,500-patient trial, which found the devices cut the risk of death in heart failure patients by 23 percent, were published in the New England Journal of Medicine's Jan. 20 issue.
Officials at Medicare, the health insurance program for the elderly, said in an accompanying editorial the findings will lead to a major policy shift. The government will now pay for the devices for 500,000 patients, or two to three times more than were previously eligible.
Medicare's blessing is key because of the technology's $25,000-plus price tag. Most patients who get an implantable cardioverter-defibrillator (ICD) are over the age of 65 and thus qualify for the federal health insurance program for 41 million elderly and disabled.
"Cost is obviously a major incremental expense, but just because a technology is expensive doesn't mean it's not valuable," said Sean Tunis, chief medical officer for Medicare. The agency "is poised to expand its ICD coverage substantially," he said.
The National Institutes of Health study, funded by manufacturer Medtronic Inc. and drug maker Wyeth, was first presented last year at a major medical meeting. In September, CMS said it would expand coverage, pending the study's publication in a major medical journal.
Medicare had been waiting for the full results and publication before issuing its final decision, which Tunis said is now expected around Jan. 27.
LIFESAVING SHOCK
Implantable cardioverter defibrillators, or ICDs, are pager-sized devices implanted under the skin near the collarbone and connected to the heart with insulated wires. The devices deliver a forceful shock that jolts a racing heart back into normal rhythm.
The trial, called the Sudden Cardiac Death in Heart Failure Trial, or SCD-HeFT, was the first major study to include heart failure patients whose condition was the result of clogged arteries, as well as from a variety of other conditions such as a heart rhythm disturbance,
The 2,521-patient study measured whether ICDs reduce the number of deaths from sudden cardiac arrest in patients with moderate heart failure, when compared with patients who received only conventional drug therapy.
It also tested whether the drug amiodarone could prevent deaths from sudden cardiac arrest, which claims 450,000 lives a year, making it the No. 1 killer in America.
Sudden cardiac arrest is caused by an extreme disturbance in the heart's natural electrical rhythms, as opposed to a heart attack, which typically occurs when the heart muscle does not get enough blood.
In addition to Medtronic, Guidant Corp. and St. Jude Medical Inc. both make ICDs and stand to benefit from expanded reimbursement.
EXPANDED COVERAGE
The government currently spends $1 billion per year for some 40,000 ICDs in patients.
"In my practice, Medicare will now pay for 1 in 3, or 1 in 4 patients" who need the device, said Marc Silver, a cardiologist at Raleigh Cardiology Associates in North Carolina, who had patients enrolled in the study.
With the changes, nearly all will be covered, he said.
"A lot of people are waiting for this," he said.
After discussions with doctor groups and manufacturers, Medicare is now likely to pay for the device for very sick patients in a small subgroup that were not included in the original recommendation, Tunis added.
"We are certainly very inclined in that direction," he said.
Medicare will soon fund implantable heart devices for thousands more patients, after publication of a landmark study finding the devices can save more lives, top agency officials said in a medical journal on Wednesday.
Results of 2,500-patient trial, which found the devices cut the risk of death in heart failure patients by 23 percent, were published in the New England Journal of Medicine's Jan. 20 issue.
Officials at Medicare, the health insurance program for the elderly, said in an accompanying editorial the findings will lead to a major policy shift. The government will now pay for the devices for 500,000 patients, or two to three times more than were previously eligible.
Medicare's blessing is key because of the technology's $25,000-plus price tag. Most patients who get an implantable cardioverter-defibrillator (ICD) are over the age of 65 and thus qualify for the federal health insurance program for 41 million elderly and disabled.
"Cost is obviously a major incremental expense, but just because a technology is expensive doesn't mean it's not valuable," said Sean Tunis, chief medical officer for Medicare. The agency "is poised to expand its ICD coverage substantially," he said.
The National Institutes of Health study, funded by manufacturer Medtronic Inc. and drug maker Wyeth, was first presented last year at a major medical meeting. In September, CMS said it would expand coverage, pending the study's publication in a major medical journal.
Medicare had been waiting for the full results and publication before issuing its final decision, which Tunis said is now expected around Jan. 27.
LIFESAVING SHOCK
Implantable cardioverter defibrillators, or ICDs, are pager-sized devices implanted under the skin near the collarbone and connected to the heart with insulated wires. The devices deliver a forceful shock that jolts a racing heart back into normal rhythm.
The trial, called the Sudden Cardiac Death in Heart Failure Trial, or SCD-HeFT, was the first major study to include heart failure patients whose condition was the result of clogged arteries, as well as from a variety of other conditions such as a heart rhythm disturbance,
The 2,521-patient study measured whether ICDs reduce the number of deaths from sudden cardiac arrest in patients with moderate heart failure, when compared with patients who received only conventional drug therapy.
It also tested whether the drug amiodarone could prevent deaths from sudden cardiac arrest, which claims 450,000 lives a year, making it the No. 1 killer in America.
Sudden cardiac arrest is caused by an extreme disturbance in the heart's natural electrical rhythms, as opposed to a heart attack, which typically occurs when the heart muscle does not get enough blood.
In addition to Medtronic, Guidant Corp. and St. Jude Medical Inc. both make ICDs and stand to benefit from expanded reimbursement.
EXPANDED COVERAGE
The government currently spends $1 billion per year for some 40,000 ICDs in patients.
"In my practice, Medicare will now pay for 1 in 3, or 1 in 4 patients" who need the device, said Marc Silver, a cardiologist at Raleigh Cardiology Associates in North Carolina, who had patients enrolled in the study.
With the changes, nearly all will be covered, he said.
"A lot of people are waiting for this," he said.
After discussions with doctor groups and manufacturers, Medicare is now likely to pay for the device for very sick patients in a small subgroup that were not included in the original recommendation, Tunis added.
"We are certainly very inclined in that direction," he said.
Thursday, January 20, 2005
Progressive says growth continued to slow in Dec
SAN FRANCISCO (CBS.MW) -- Progressive Corp., the third-largest auto insurer in the United States, said Thursday that premium growth slowed in December compared with the previous month, continuing a trend that began last year.
Progressive (PGR: news, chart, profile) , which reports results monthly, said net written premiums came in at $1.14 billion in December.
Excluding an extra week that the insurer included in its December results, net written premium growth was 5 percent last month compared with December 2003, the company said. That's below previous months: In November, net written premiums advanced 7 percent from a year earlier, while in October premiums climbed 9 percent.
Shares of the Mayfield Village, Ohio-based insurer declined $1.28, or 1.5 percent, to $84.14 in morning trading Thursday.
"Growth continued to slow in the company's personal lines business," Progressive said in a statement.
"Three markets in which the company writes personal lines business were unprofitable for the month," it added. "For the year, all personal lines markets were profitable."
Progressive's main business is personal auto insurance, which accounts for more than three quarters of its premiums. After several years of rising prices and lower-than-expected claims, auto insurers are flush with capital and are using that money to compete on price to gain market share.
That presents a choice for companies: They can either reduce their prices or risk losing customers to rivals.
Safeco Corp. (SAFC: news, chart, profile) , a smaller competitor to Progressive, said Wednesday that it probably won't meet growth targets this year because competition is heating up. See full story.
For the fourth quarter, Progressive said net income was $413.5 million, or $2.01 per share, up 16 percent from $357.8 million, or $1.63 a share, a year earlier.
The fourth-quarter combined ratio -- which measures the cost of claims and expenses as a percentage of premiums -- was 85.5 in the period versus 85.9 a year ago.
Progressive (PGR: news, chart, profile) , which reports results monthly, said net written premiums came in at $1.14 billion in December.
Excluding an extra week that the insurer included in its December results, net written premium growth was 5 percent last month compared with December 2003, the company said. That's below previous months: In November, net written premiums advanced 7 percent from a year earlier, while in October premiums climbed 9 percent.
Shares of the Mayfield Village, Ohio-based insurer declined $1.28, or 1.5 percent, to $84.14 in morning trading Thursday.
"Growth continued to slow in the company's personal lines business," Progressive said in a statement.
"Three markets in which the company writes personal lines business were unprofitable for the month," it added. "For the year, all personal lines markets were profitable."
Progressive's main business is personal auto insurance, which accounts for more than three quarters of its premiums. After several years of rising prices and lower-than-expected claims, auto insurers are flush with capital and are using that money to compete on price to gain market share.
That presents a choice for companies: They can either reduce their prices or risk losing customers to rivals.
Safeco Corp. (SAFC: news, chart, profile) , a smaller competitor to Progressive, said Wednesday that it probably won't meet growth targets this year because competition is heating up. See full story.
For the fourth quarter, Progressive said net income was $413.5 million, or $2.01 per share, up 16 percent from $357.8 million, or $1.63 a share, a year earlier.
The fourth-quarter combined ratio -- which measures the cost of claims and expenses as a percentage of premiums -- was 85.5 in the period versus 85.9 a year ago.
Insurer sues MA over high-risk drivers
By Julie Mehegan,
Transcript Statehouse Bureau
BOSTON -- The state Division of Insurance remains committed to a new system of dividing high-risk drivers among auto insurance carriers, despite pending legal action by one of the state's largest insurers.
"The rules are in play, and the transition commences, and we wouldn't have any comment on the litigation at this point until after it is ruled on," said Christopher Goetchus, a spokesman for the state Division of Insurance.
Webster-based Commerce Insurance Inc. has sued Insurance Commissioner Julianne Bowler over regulatory changes she implemented on Jan. 1 that may require the company to assume a larger share of the so-called "residual market" of high-risk drivers.
Commerce has asked a Suffolk Superior Court to review whether the changes are consistent with Massachusetts law, or whether Bowler may have overstepped her authority by unilaterally imposing them. Under the new regulations, the state is set to move to an "assigned risk" system over the next three years. The new system will randomly assign high-risk drivers whom insurance companies don't want to voluntarily insure to individual carriers, based on each company's market share.
Under the old rules, agents representing high-risk drivers were assigned to certan carriers, but the carriers were permitted to cede those drivers into a high-risk pool, the cost of which was distributed among all insurance companies.
The new system will force the insurers to directly assume the cost of losses the high-risk drivers might incur.
James Ermilio, senior vice president and general counsel at Commerce, was out of the office and could not be reached for comment yesterday on the lawsuit. In an earlier statement the company said the new system raises "serious legal issues."
In August, Ermilio told a trade publication that Commerce opposes the new system not because it fears competition, but because of concerns over exposure to liability from potential violations of existing consumer protection laws.
Critics of the new system have also suggested Bowler should not have implemented it without legislative input.
But most of the state's other insurers back the new system, suggesting it will distribute the cost of insuring high-risk drivers more fairly.
The new Massachusetts Assigned Insurance Program is part of the Romney administration's effort to make the state's highly regulated auto insurance market more competitive. Massachusetts is the only state in the nation that sets auto insurance rates.
Despite the effort at reform, there was discouraging news this week for those who have a strong record behind the wheel. Only two companies have sought approval from the state to offer "good driver" discounts to customers who have a good safety record, down from three companies last year.
The number of companies offering the good driver discount has plummeted over the past decade, with insurers insisting the state's regulations have made it cost-prohibitive. Only Amica Insurance and Electric Insurance Co. of Beverly will offer the good driver discount this year.
Transcript Statehouse Bureau
BOSTON -- The state Division of Insurance remains committed to a new system of dividing high-risk drivers among auto insurance carriers, despite pending legal action by one of the state's largest insurers.
"The rules are in play, and the transition commences, and we wouldn't have any comment on the litigation at this point until after it is ruled on," said Christopher Goetchus, a spokesman for the state Division of Insurance.
Webster-based Commerce Insurance Inc. has sued Insurance Commissioner Julianne Bowler over regulatory changes she implemented on Jan. 1 that may require the company to assume a larger share of the so-called "residual market" of high-risk drivers.
Commerce has asked a Suffolk Superior Court to review whether the changes are consistent with Massachusetts law, or whether Bowler may have overstepped her authority by unilaterally imposing them. Under the new regulations, the state is set to move to an "assigned risk" system over the next three years. The new system will randomly assign high-risk drivers whom insurance companies don't want to voluntarily insure to individual carriers, based on each company's market share.
Under the old rules, agents representing high-risk drivers were assigned to certan carriers, but the carriers were permitted to cede those drivers into a high-risk pool, the cost of which was distributed among all insurance companies.
The new system will force the insurers to directly assume the cost of losses the high-risk drivers might incur.
James Ermilio, senior vice president and general counsel at Commerce, was out of the office and could not be reached for comment yesterday on the lawsuit. In an earlier statement the company said the new system raises "serious legal issues."
In August, Ermilio told a trade publication that Commerce opposes the new system not because it fears competition, but because of concerns over exposure to liability from potential violations of existing consumer protection laws.
Critics of the new system have also suggested Bowler should not have implemented it without legislative input.
But most of the state's other insurers back the new system, suggesting it will distribute the cost of insuring high-risk drivers more fairly.
The new Massachusetts Assigned Insurance Program is part of the Romney administration's effort to make the state's highly regulated auto insurance market more competitive. Massachusetts is the only state in the nation that sets auto insurance rates.
Despite the effort at reform, there was discouraging news this week for those who have a strong record behind the wheel. Only two companies have sought approval from the state to offer "good driver" discounts to customers who have a good safety record, down from three companies last year.
The number of companies offering the good driver discount has plummeted over the past decade, with insurers insisting the state's regulations have made it cost-prohibitive. Only Amica Insurance and Electric Insurance Co. of Beverly will offer the good driver discount this year.
Insurance switch results in big savings
By FREDA R. SAVANA
The Intelligencer
Warrington Township will save more than $200,000 this year, said Supervisor Carol Butterworth, by switching insurance carriers that provide the municipality with liability coverage for its property, employees and officials.
Butterworth, herself an insurance broker, said the township will spend about $210,000 rather than the $440,000 it spent in 2004 for comparable coverage.
The township left the Delaware Valley Insurance Trust, a Hatboro-based company, for Selective Insurance Co., with a broker, Brown and Brown, in the Lehigh Valley. However, it will continue in the trust for its workers' compensation and health insurance coverage.
Butterworth said she began looking into the township's insurance coverage after the township settled a lawsuit with United Artists in 2003. Due to a confidentiality clause in the settlement, the details were not disclosed. The township did not make a cash settlement but came to terms on future development at the site where the theater wanted to build.
"Our premium went up and our deductible went up," said the supervisor. DVIT raised the deductible from $10,000 in 2004 to $25,000 in 2005, Butterworth said. Under the new policy, the deductible is $5,000.
A representative of DVIT declined to comment on Warrington's insurance matters.
The insurance covers a range of liability matters for Warrington, including general, property and auto liability, as well as employee dishonesty and suits against public officials.
Both Butterworth and Supervisor Glenn McKay said they were concerned the trust, known as a self-insured organization, is not regulated by the state's Insurance Department.
With Brown and Brown, which is regulated by the state, Butterworth said, "we'll have a third party looking over our shoulder, which makes me feel good." With a regulated agency, there is also an appeal process, something a self-insured group does not have, the supervisor added.
McKay said he thought DVIT, a coalition of municipalities who share insurance coverage under what's known as an umbrella policy, should have absorbed the cost of Warrington's settlement with the theater chain.
"But it looks like when you make a claim the premium jumped significantly in my opinion. The claim was not equally shared by the coalition."
This year's budget, Butterworth said, allotted $504,681 for its annual premium with DVIT. She said she wants to be sure the savings that result from the switch in companies is untouched.
"We've got our insurance paid for next year, if we don't have any claims."
The Intelligencer
Warrington Township will save more than $200,000 this year, said Supervisor Carol Butterworth, by switching insurance carriers that provide the municipality with liability coverage for its property, employees and officials.
Butterworth, herself an insurance broker, said the township will spend about $210,000 rather than the $440,000 it spent in 2004 for comparable coverage.
The township left the Delaware Valley Insurance Trust, a Hatboro-based company, for Selective Insurance Co., with a broker, Brown and Brown, in the Lehigh Valley. However, it will continue in the trust for its workers' compensation and health insurance coverage.
Butterworth said she began looking into the township's insurance coverage after the township settled a lawsuit with United Artists in 2003. Due to a confidentiality clause in the settlement, the details were not disclosed. The township did not make a cash settlement but came to terms on future development at the site where the theater wanted to build.
"Our premium went up and our deductible went up," said the supervisor. DVIT raised the deductible from $10,000 in 2004 to $25,000 in 2005, Butterworth said. Under the new policy, the deductible is $5,000.
A representative of DVIT declined to comment on Warrington's insurance matters.
The insurance covers a range of liability matters for Warrington, including general, property and auto liability, as well as employee dishonesty and suits against public officials.
Both Butterworth and Supervisor Glenn McKay said they were concerned the trust, known as a self-insured organization, is not regulated by the state's Insurance Department.
With Brown and Brown, which is regulated by the state, Butterworth said, "we'll have a third party looking over our shoulder, which makes me feel good." With a regulated agency, there is also an appeal process, something a self-insured group does not have, the supervisor added.
McKay said he thought DVIT, a coalition of municipalities who share insurance coverage under what's known as an umbrella policy, should have absorbed the cost of Warrington's settlement with the theater chain.
"But it looks like when you make a claim the premium jumped significantly in my opinion. The claim was not equally shared by the coalition."
This year's budget, Butterworth said, allotted $504,681 for its annual premium with DVIT. She said she wants to be sure the savings that result from the switch in companies is untouched.
"We've got our insurance paid for next year, if we don't have any claims."
Farm Bureau Backs Health Savings Account Tax Deduction
The Wisconsin Farm Bureau Federation is giving their blessing toward a bill that would give a state tax credit for individuals who make contributions to health savings accounts. On Tuesday, the Joint Finance Committee voted 12-4 to provide the tax deduction. The Farm Bureau said health savings accounts are especially useful for farmers who have high deductible health insurance policies and have to cover uncovered costs.
"Health savings accounts are just another tool for small businesses like farmers to get a tax benefit for putting money aside to cover out-of-pocket expenses," said Sabrina Gentile, director of Governmental Relations with the Wisconsin Farm Bureau.
Under current federal law, individuals may make tax-deductible contributions to health savings accounts and withdraw the money tax-free when needed to cover routine and preventive medical care.
The bill would allow those contributing to health savings accounts to claim a 6.5 percent state tax deduction on what they contribute to the account.
"Health savings accounts are just another tool for small businesses like farmers to get a tax benefit for putting money aside to cover out-of-pocket expenses," said Sabrina Gentile, director of Governmental Relations with the Wisconsin Farm Bureau.
Under current federal law, individuals may make tax-deductible contributions to health savings accounts and withdraw the money tax-free when needed to cover routine and preventive medical care.
The bill would allow those contributing to health savings accounts to claim a 6.5 percent state tax deduction on what they contribute to the account.
UnitedHealth income surges 46%
The Dayton area's second-largest health insurance provider, UnitedHealth Group Inc., credited the addition of 6 million enrollees and strong revenue growth for a profitable fourth quarter.
Net income was $739 million, or $1.09 per share, increased from $507 million, or 83 cents per share, during the same quarter last year.
The showing bested Wall Street estimates by a penny per share, according to market tracker Thomson Financial.
Revenue was $10.5 billion, a 40 percent increase from $7.5 billion in the year-ago quarter.
"The growth performance of our businesses is accelerating, our customers are increasingly well served by capabilities facilitated by investments made over the past few years and we have a new generation of initiatives under way," said William McGuire, chairman and chief executive officer.
Net income was $739 million, or $1.09 per share, increased from $507 million, or 83 cents per share, during the same quarter last year.
The showing bested Wall Street estimates by a penny per share, according to market tracker Thomson Financial.
Revenue was $10.5 billion, a 40 percent increase from $7.5 billion in the year-ago quarter.
"The growth performance of our businesses is accelerating, our customers are increasingly well served by capabilities facilitated by investments made over the past few years and we have a new generation of initiatives under way," said William McGuire, chairman and chief executive officer.
Wednesday, January 19, 2005
Oregonians lack health coverage
The ranks of uninsured, the most since 1992, exceed the national rate, and reflect a smaller Oregon Health Plan, the economy and rising costs for all Tuesday, January 18, 2005
DON COLBURN
One in six Oregonians lacks health insurance, the highest rate since 1992, according to a new survey by the Oregon Progress Board.
The estimated total of 609,000 residents with no medical coverage is the most since the agency started tracking statewide trends in 1990. Seventeen percent of Oregonians are uninsured, an increase from 14 percent two years ago.
For the first time in a decade, Oregon appears to have a greater proportion of uninsured residents than the nation as a whole. The most recent national estimate is 15.6 percent, based on 2003 data.
Analysts cite three intertwined factors: a sputtering economy, a shrinking Oregon Health Plan for low-income residents and escalating health care costs for all.
"This is very sobering -- and sad," said Dr. Bruce Goldberg, head of the Office for Oregon Health Policy and Research, which advises the governor and the Legislature on health issues.
Goldberg said the numbers "reinforce that the leading unsolved health policy problem in Oregon is our failure to provide an adequate level of health care to every citizen."
The new numbers come from the 2004 Oregon Population Survey, based on interviews with about 4,500 Oregon households in August and September. The question on health insurance has a margin of error of less than 1 percentage point. The Progress Board will release the complete results today.
The survey covers about 90 measures -- from jobs and education to child care and use of technology -- that collectively paint a portrait of Oregon and its people.
Besides the 609,000 Oregonians who lacked insurance at the time of the survey, another 257,000 said they had gone without coverage at some point during the past year.
The survey divides Oregon into eight regions. The uninsured rate ranges from 13.5 percent in five southwestern counties -- Coos, Curry, Douglas, Jackson and Josephine -- to 24.6 percent in four counties in Eastern Oregon -- Baker, Malheur, Union and Wallowa.
The Portland area ranks in between. In Clackamas, Multnomah, Washington and Yamhill counties, 16.5 percent of residents have no health insurance.
Among them are Vern and Cheryl Smith of Northeast Portland. Vern Smith, 50, is unemployed and has chronic illnesses, including diabetes, kidney disease and liver problems.
The Smiths moved off the Oregon Health Plan last year, when Cheryl took a job as a nursing assistant at a residential care center. The downside: They lost health insurance because her new employer doesn't provide coverage.
Most are not poor
Like the Smiths, most uninsured are not officially poor. Their household incomes exceed the federal poverty level of about $19,000 for a family of four.
The survey suggests that four out of five uninsured Oregonians are employed or live in a household where someone has a job.
But with medical costs outpacing inflation, fewer employers offer health coverage as a benefit, and fewer workers can afford the premiums for optional insurance.
Nationwide, employer-sponsored health insurance premiums jumped 11 percent last year, the fourth straight year of double-digit increases.
Joe and Valinda Butterfield and their two college-age sons have gone without health insurance since Joe was laid off as a Pitney Bowes sales representative in late 2002. He works at a car dealership in Ashland, but company-paid health insurance does not come with the job.
"We're part of that statistic," said Valinda Butterfield, referring to Oregon's burgeoning uninsured population.
In between
With a household income of about $40,000 a year, the Butterfields are not eligible for the Oregon Health Plan. Valinda Butterfield runs a small business designing greeting cards out of their home in Jacksonville.
They're too young for Medicare, too "affluent" for Medicaid and too strapped to pay the employee premiums for insurance offered through Joe Butterfield's job.
Coverage for their family of four would cost about $500 a month, Valinda Butterfield said. They've decided, for now, to remain uncovered and put that $6,000 a year toward college tuition -- both sons attend Oregon State University -- and other uses.
"You really concentrate on being healthy and hoping nobody gets an appendicitis," she said.
The only doctor appointment Joe Butterfield has had since he lost health coverage was the one required when he bought a life insurance policy. Valinda Butterfield has had none -- "no routine physical, no gynecological exam, no Pap test."
"If you did that and they found something, what do you do then?" she said.
Catastrophic coverage
The Butterfields, both in their late 40s, are considering a cheaper policy with an annual deductible of $7,500 that would not pay for routine care but would protect against the cost of treating a major illness or injury.
"It would keep us from having our house taken away" in the event of catastrophic medical bills, Valinda Butterfield said.
"The leading cause of personal bankruptcy today is inability to pay medical bills," said former Gov. John Kitzhaber, a doctor who championed the Oregon Health Plan during the 1990s.
The health plan started in 1994 as a bold reform aimed at expanding Medicaid to include the working poor while limiting coverage to the most cost-effective treatments. It had immediate impact.
The health plan helped reduce Oregon's rate of uninsured from 18 percent in 1992 to 11 percent in 1996. But the trend reversed direction in 2000, and the number of uninsured Oregonians has been growing since.
Health plan shrinks
OHP Standard, the part of the health plan for low-income adults who don't qualify for federally mandated coverage, is shrinking rapidly under budget constraints. To contain costs, the state trimmed benefits and added premiums during the past legislative session. On Aug. 1, it closed enrollment to new applicants.
Enrollment has fallen from 100,000 to 39,000 in two years.
"We've basically gone back to the old Medicaid program," Kitzhaber said.
Studies have shown that uninsured people are less likely than others to get timely care -- and more likely to die sooner.
"There's an implied assumption that when people lose health insurance they simply go away," Kitzhaber said. "They don't.
"The fact is, they end up in the hospital emergency room."
DON COLBURN
One in six Oregonians lacks health insurance, the highest rate since 1992, according to a new survey by the Oregon Progress Board.
The estimated total of 609,000 residents with no medical coverage is the most since the agency started tracking statewide trends in 1990. Seventeen percent of Oregonians are uninsured, an increase from 14 percent two years ago.
For the first time in a decade, Oregon appears to have a greater proportion of uninsured residents than the nation as a whole. The most recent national estimate is 15.6 percent, based on 2003 data.
Analysts cite three intertwined factors: a sputtering economy, a shrinking Oregon Health Plan for low-income residents and escalating health care costs for all.
"This is very sobering -- and sad," said Dr. Bruce Goldberg, head of the Office for Oregon Health Policy and Research, which advises the governor and the Legislature on health issues.
Goldberg said the numbers "reinforce that the leading unsolved health policy problem in Oregon is our failure to provide an adequate level of health care to every citizen."
The new numbers come from the 2004 Oregon Population Survey, based on interviews with about 4,500 Oregon households in August and September. The question on health insurance has a margin of error of less than 1 percentage point. The Progress Board will release the complete results today.
The survey covers about 90 measures -- from jobs and education to child care and use of technology -- that collectively paint a portrait of Oregon and its people.
Besides the 609,000 Oregonians who lacked insurance at the time of the survey, another 257,000 said they had gone without coverage at some point during the past year.
The survey divides Oregon into eight regions. The uninsured rate ranges from 13.5 percent in five southwestern counties -- Coos, Curry, Douglas, Jackson and Josephine -- to 24.6 percent in four counties in Eastern Oregon -- Baker, Malheur, Union and Wallowa.
The Portland area ranks in between. In Clackamas, Multnomah, Washington and Yamhill counties, 16.5 percent of residents have no health insurance.
Among them are Vern and Cheryl Smith of Northeast Portland. Vern Smith, 50, is unemployed and has chronic illnesses, including diabetes, kidney disease and liver problems.
The Smiths moved off the Oregon Health Plan last year, when Cheryl took a job as a nursing assistant at a residential care center. The downside: They lost health insurance because her new employer doesn't provide coverage.
Most are not poor
Like the Smiths, most uninsured are not officially poor. Their household incomes exceed the federal poverty level of about $19,000 for a family of four.
The survey suggests that four out of five uninsured Oregonians are employed or live in a household where someone has a job.
But with medical costs outpacing inflation, fewer employers offer health coverage as a benefit, and fewer workers can afford the premiums for optional insurance.
Nationwide, employer-sponsored health insurance premiums jumped 11 percent last year, the fourth straight year of double-digit increases.
Joe and Valinda Butterfield and their two college-age sons have gone without health insurance since Joe was laid off as a Pitney Bowes sales representative in late 2002. He works at a car dealership in Ashland, but company-paid health insurance does not come with the job.
"We're part of that statistic," said Valinda Butterfield, referring to Oregon's burgeoning uninsured population.
In between
With a household income of about $40,000 a year, the Butterfields are not eligible for the Oregon Health Plan. Valinda Butterfield runs a small business designing greeting cards out of their home in Jacksonville.
They're too young for Medicare, too "affluent" for Medicaid and too strapped to pay the employee premiums for insurance offered through Joe Butterfield's job.
Coverage for their family of four would cost about $500 a month, Valinda Butterfield said. They've decided, for now, to remain uncovered and put that $6,000 a year toward college tuition -- both sons attend Oregon State University -- and other uses.
"You really concentrate on being healthy and hoping nobody gets an appendicitis," she said.
The only doctor appointment Joe Butterfield has had since he lost health coverage was the one required when he bought a life insurance policy. Valinda Butterfield has had none -- "no routine physical, no gynecological exam, no Pap test."
"If you did that and they found something, what do you do then?" she said.
Catastrophic coverage
The Butterfields, both in their late 40s, are considering a cheaper policy with an annual deductible of $7,500 that would not pay for routine care but would protect against the cost of treating a major illness or injury.
"It would keep us from having our house taken away" in the event of catastrophic medical bills, Valinda Butterfield said.
"The leading cause of personal bankruptcy today is inability to pay medical bills," said former Gov. John Kitzhaber, a doctor who championed the Oregon Health Plan during the 1990s.
The health plan started in 1994 as a bold reform aimed at expanding Medicaid to include the working poor while limiting coverage to the most cost-effective treatments. It had immediate impact.
The health plan helped reduce Oregon's rate of uninsured from 18 percent in 1992 to 11 percent in 1996. But the trend reversed direction in 2000, and the number of uninsured Oregonians has been growing since.
Health plan shrinks
OHP Standard, the part of the health plan for low-income adults who don't qualify for federally mandated coverage, is shrinking rapidly under budget constraints. To contain costs, the state trimmed benefits and added premiums during the past legislative session. On Aug. 1, it closed enrollment to new applicants.
Enrollment has fallen from 100,000 to 39,000 in two years.
"We've basically gone back to the old Medicaid program," Kitzhaber said.
Studies have shown that uninsured people are less likely than others to get timely care -- and more likely to die sooner.
"There's an implied assumption that when people lose health insurance they simply go away," Kitzhaber said. "They don't.
"The fact is, they end up in the hospital emergency room."
Low-income drivers focus of outreach
Insurance Commissioner John Garamendi is scheduled to announce a new outreach effort today to help low-income drivers with good records get affordable auto insurance.
Garamendi will hold a news conference at the corner of 7th and Mission streets in San Francisco next to the U.S. District Court of Appeals Building, the city intersection with the most injury collisions, officials said.
The Low Cost Auto Insurance Program was created in 1999 with the establishment of pilot programs in San Francisco and Los Angeles.
Garamendi has sponsored legislation in Sacramento to expand the current pilot program to six additional counties, including Alameda.
While California law mandates all drivers be insured, many low-income motorists do not have insurance. There are approximately 75,000 uninsured motorists in the city, according to the commissioner's office figures.
Garamendi will hold a news conference at the corner of 7th and Mission streets in San Francisco next to the U.S. District Court of Appeals Building, the city intersection with the most injury collisions, officials said.
The Low Cost Auto Insurance Program was created in 1999 with the establishment of pilot programs in San Francisco and Los Angeles.
Garamendi has sponsored legislation in Sacramento to expand the current pilot program to six additional counties, including Alameda.
While California law mandates all drivers be insured, many low-income motorists do not have insurance. There are approximately 75,000 uninsured motorists in the city, according to the commissioner's office figures.
Tuesday, January 18, 2005
Safeco & Progressive kick off insurance earnings
SAN FRANCISCO (CBS.MW)
Safeco Corp. and Progressive Corp. are expected to report strong fourth-quarter earnings next week as the property and casualty insurance industry continues to benefit from high prices and lower-than-expected claims.
Still, with competition heating up among insurers flush with capital, analysts said they'll be looking for comments from management on whether prices are sliding and premium growth slowing.
Safeco (SAFC: news, chart, profile), which specializes in personal and commercial auto insurance and homeowners insurance, is expected to earn $1.30 per share, according to 24 analysts polled by Thomson First Call. That's up from $1.19 a share in the fourth quarter of 2003.
"Like a lot of other P&C firms, Safeco is benefiting from increased prices and lower-than-expected claims," Matt Nellans, an equity analyst at Morningstar. "That two-pronged trend is pumping up their returns."
Progressive (PGR: news, chart, profile), the third-largest auto insurer, is forecast to report fourth-quarter earnings of $1.67 per share, up from $1.62 a year earlier, according to 21 analysts surveyed by Thomson First Call.
Progressive reports monthly results, so earnings from October and November are already known.
Shares of the company slid Dec. 10 after it released November results that showed premium growth was slowing - a sign of increased competition.
"Progressive's premium growth rate has slipped into the mid-single digits and should continue its deceleration in the fourth quarter," Jay Cohen, an analyst at Merrill Lynch, said in a note to clients Wednesday.
As firms fight for new business, insurance rate increases have begun to dwindle and prices will likely fall in 2005, according to a fall survey by investment bank Fox-Pitt Kelton.
Auto insurance prices climbed 1.7 percent on average, the lowest level since the spring of 2000 and down from the 4.8 percent gain in the spring 2004 poll, Fox-Pitt Kelton added.
"Personal auto price increases have stopped and price competition is slowly heating up," Merrill's Cohen noted.
Margins should remain "quite good" because the frequency and severity of claims are still "favorable," he added.
Safeco Corp. and Progressive Corp. are expected to report strong fourth-quarter earnings next week as the property and casualty insurance industry continues to benefit from high prices and lower-than-expected claims.
Still, with competition heating up among insurers flush with capital, analysts said they'll be looking for comments from management on whether prices are sliding and premium growth slowing.
Safeco (SAFC: news, chart, profile), which specializes in personal and commercial auto insurance and homeowners insurance, is expected to earn $1.30 per share, according to 24 analysts polled by Thomson First Call. That's up from $1.19 a share in the fourth quarter of 2003.
"Like a lot of other P&C firms, Safeco is benefiting from increased prices and lower-than-expected claims," Matt Nellans, an equity analyst at Morningstar. "That two-pronged trend is pumping up their returns."
Progressive (PGR: news, chart, profile), the third-largest auto insurer, is forecast to report fourth-quarter earnings of $1.67 per share, up from $1.62 a year earlier, according to 21 analysts surveyed by Thomson First Call.
Progressive reports monthly results, so earnings from October and November are already known.
Shares of the company slid Dec. 10 after it released November results that showed premium growth was slowing - a sign of increased competition.
"Progressive's premium growth rate has slipped into the mid-single digits and should continue its deceleration in the fourth quarter," Jay Cohen, an analyst at Merrill Lynch, said in a note to clients Wednesday.
As firms fight for new business, insurance rate increases have begun to dwindle and prices will likely fall in 2005, according to a fall survey by investment bank Fox-Pitt Kelton.
Auto insurance prices climbed 1.7 percent on average, the lowest level since the spring of 2000 and down from the 4.8 percent gain in the spring 2004 poll, Fox-Pitt Kelton added.
"Personal auto price increases have stopped and price competition is slowly heating up," Merrill's Cohen noted.
Margins should remain "quite good" because the frequency and severity of claims are still "favorable," he added.
Spotting a shady mortgage lender
By Jay MacDonald, Bankrate.com
Johnny Bell had a new deck and other home improvements in mind when he refinanced his home in Oxford, Miss., last summer.
Make that almost refinanced.
Bell spotted attractive terms on a television ad, contacted the lender and locked in a cash-out refi at 5.125% with $350 upfront as a processing fee toward a 45-day closing.
Then trouble began. First, the company delayed the closing, saying it was behind on the paperwork. Then it asked for proof of reserve funds and Bell complied. After 90 days, the company informed Bell that his "locked" rate had gone up to 6.2%.
"I got angry," Bell recalls. "I told them I was definitely not paying more interest. They started making excuses for why it had taken so long, putting the blame on Fannie Mae for requiring the reserves. But the interest rate didn't have anything to do with the reserves."
After two more months of futile telephone calls, Bell walked away from the deal, received his $350 back and built his deck out of pocket.
"It was bait and switch," he said. "It took me five months to not refinance."
Signs of a bad loan
Bell's experience isn't isolated. For the last couple of years, low interest rates, aggressive marketing tactics, scant industry oversight and investors who want to put their money into real estate instead of the stock market have contributed to the ideal operating environment for predatory lenders.
In many cases, it's all too easy for a trusting homeowner anxious to leverage a home's value or lock up a low rate to fall prey to less-than-upfront lenders. W.C. Fields maintained that you can't cheat an honest man. But when it seems that everyone is getting a loan and you've been promised rock-bottom interest rates and negligible fees, it's hard to resist.
Some deals, however, are indeed too good to be true.
According to the Federal Trade Commission, you may be signing on for trouble if a lender:
Encourages you to falsify your application information to get the loan.
Urges you to borrow more than you need.
Pushes you to accept payment terms that you can't realistically meet.
Fails to give you the required disclosures (e.g., APR, rescission rights, etc.).
Shows up at closing with a totally different loan product than you agreed to.
Asks you to sign blank forms. ("It'll speed things up. We'll fill in the blanks later, trust me.")
Denies you copies of documents you signed.
And if you miss a warning sign early in the process, a bad loan often resembles the Tar Baby from an Uncle Remus story: The further in you get, the harder it can be to get out. Bad lenders are counting on the likelihood that the farther you travel down the loan-process road, the more you will have invested in earnest money, deposits, inspection fees, design plans and contingencies that accelerate your momentum to close.
Chicago real estate attorney Tom Polinski recalls a recent closing where the buyers found out that their lock had expired four days earlier and their interest rate would be 1.5% higher.
"We were at the closing table, and they didn't want to walk away. Had they done that, they would have been in breach of contract and the seller would have had to decide if he wanted to sue them for specific performance because he, in turn, was buying another house. You always get that domino effect. It would have been a mess," he says.
With little recourse, the buyers settled for a $750 reduction in fees and closed, vowing to refi at the earliest opportunity.
"I see a lot of it," Polinski admits. "I can't tell you the last time I went to a closing where the buyer has known a reasonable time in advance, even 24 hours or more, what their bottom-line closing costs were going to be. The lenders are notoriously slow in getting those figures to the closing, so we have to try to estimate what the buyer is going to need. And estimate on the high side, because if it's short, they won't let you close."
Preying on the powerless
Predatory lending practices are most visible in the subprime market, which serves lower-income individuals with credit problems.
Respectable subprime lenders serve an important social function by offering credit on fair terms to individuals who otherwise might never be able to build home equity. Predatory lenders, however, are a scourge on these same neighborhoods, taking advantage of elderly, less-educated and non-English-speaking individuals by offering egregious loan terms that would drain equity and eventually lead to foreclosure on their homes.
Norma Garcia, senior attorney for the nonprofit Consumers Union, has been fighting for more than a decade to stop predatory lenders from preying on the powerless. In her March testimony before the House Committee on Financial Services, Garcia expressed concern at the tremendous growth of the subprime market in general and subprime refis in particular.
Nationally, subprime originations increased from less than 5% ($35 billion) in 1994 to nearly 13% ($160 billion) in 1999. The predatory hot spots, Texas and California, were even worse: Texas subprime refis grew from 6% of all refis in 1997 to 33% in 2000, California subprime lending grew from 4% in 1993 to 20% in 2000.
"Not all subprime loans are predatory," Garcia points out, "but virtually every predatory loan we have seen is a subprime loan."
That's because shady lenders, like predators everywhere, tend to target the easiest prey, people with poor credit who have few other options. But Garcia notes that individuals with spotless credit also fall victim to bad loans.
"Loans that are good subprime loans might in another sense be predatory for someone who has good credit. We see this a lot among the elderly and in communities of color -- people with perfectly good credit who don't have a sense of what's happening out there in the lending world," she says.
Garcia says that to simply spout "buyer beware" isn't enough.
"There are definitely people who are ripping others off. To the extent that there are individuals who are being placed in loans with interest rates and fixed fees that are much higher compared to that person's credit-risk profile, that should be a crime," she says.
"Some states require lenders to put borrowers into the best loans for which that buyer may qualify. We would love to have that be extended to all loans, but it isn't and there is a lot of resistance and pushback from the lending lobby to protect against new laws aimed at regulating the industry."
California is currently in the midst of a test case to see if a weaker state anti-predator statute should supersede a tougher ordinance passed by the city of Oakland that fills in the gaps left by the state law. Garcia has similar concerns about any minimum industry standards that could one day be forthcoming at the federal level.
"We can see that minimum standards might be a good thing, but we don't want to prevent states that have serious problems from closing the gap," she says.
Firing the 'bad actors'
The mortgage industry has dug in its heels against government regulation at any level that would restrict access to credit.
A.W. Pickel, president of the National Association of Mortgage Brokers, says a few "bad actors" shouldn't spoil it for an industry that is committed to providing as many financing options to as many customers as possible. In addition to calling for more pre- and post-license training, NAMB has put forth its own solution to the predator problem.
"We promote the ability to do a national registry that would basically keep bad guys out of the business," he says. "For instance, we now actually register every loan officer. Unfortunately, we don't register loan officers inside a bank. So you could have a bad actor who would be working for a licensed broker or mortgage broker but then they go to a bank and they don't have to be licensed."
Although Pickel admits he would never use an online lender, he defends their right to peddle their products. The problem, he says, is not the shady deals, but the public's inability to accept what mortgage brokers take for granted: If it seems too good to be true, it probably is.
"What amazes me is that people don't use their common sense. Somehow people think that this person who is giving them 5% is telling the truth when everybody else in town doesn't have it. You ought to call guys in your local community and check their references. Even in your own community, you want them to put it in writing. You want them to stand by their word."
Johnny Bell had a new deck and other home improvements in mind when he refinanced his home in Oxford, Miss., last summer.
Make that almost refinanced.
Bell spotted attractive terms on a television ad, contacted the lender and locked in a cash-out refi at 5.125% with $350 upfront as a processing fee toward a 45-day closing.
Then trouble began. First, the company delayed the closing, saying it was behind on the paperwork. Then it asked for proof of reserve funds and Bell complied. After 90 days, the company informed Bell that his "locked" rate had gone up to 6.2%.
"I got angry," Bell recalls. "I told them I was definitely not paying more interest. They started making excuses for why it had taken so long, putting the blame on Fannie Mae for requiring the reserves. But the interest rate didn't have anything to do with the reserves."
After two more months of futile telephone calls, Bell walked away from the deal, received his $350 back and built his deck out of pocket.
"It was bait and switch," he said. "It took me five months to not refinance."
Signs of a bad loan
Bell's experience isn't isolated. For the last couple of years, low interest rates, aggressive marketing tactics, scant industry oversight and investors who want to put their money into real estate instead of the stock market have contributed to the ideal operating environment for predatory lenders.
In many cases, it's all too easy for a trusting homeowner anxious to leverage a home's value or lock up a low rate to fall prey to less-than-upfront lenders. W.C. Fields maintained that you can't cheat an honest man. But when it seems that everyone is getting a loan and you've been promised rock-bottom interest rates and negligible fees, it's hard to resist.
Some deals, however, are indeed too good to be true.
According to the Federal Trade Commission, you may be signing on for trouble if a lender:
Encourages you to falsify your application information to get the loan.
Urges you to borrow more than you need.
Pushes you to accept payment terms that you can't realistically meet.
Fails to give you the required disclosures (e.g., APR, rescission rights, etc.).
Shows up at closing with a totally different loan product than you agreed to.
Asks you to sign blank forms. ("It'll speed things up. We'll fill in the blanks later, trust me.")
Denies you copies of documents you signed.
And if you miss a warning sign early in the process, a bad loan often resembles the Tar Baby from an Uncle Remus story: The further in you get, the harder it can be to get out. Bad lenders are counting on the likelihood that the farther you travel down the loan-process road, the more you will have invested in earnest money, deposits, inspection fees, design plans and contingencies that accelerate your momentum to close.
Chicago real estate attorney Tom Polinski recalls a recent closing where the buyers found out that their lock had expired four days earlier and their interest rate would be 1.5% higher.
"We were at the closing table, and they didn't want to walk away. Had they done that, they would have been in breach of contract and the seller would have had to decide if he wanted to sue them for specific performance because he, in turn, was buying another house. You always get that domino effect. It would have been a mess," he says.
With little recourse, the buyers settled for a $750 reduction in fees and closed, vowing to refi at the earliest opportunity.
"I see a lot of it," Polinski admits. "I can't tell you the last time I went to a closing where the buyer has known a reasonable time in advance, even 24 hours or more, what their bottom-line closing costs were going to be. The lenders are notoriously slow in getting those figures to the closing, so we have to try to estimate what the buyer is going to need. And estimate on the high side, because if it's short, they won't let you close."
Preying on the powerless
Predatory lending practices are most visible in the subprime market, which serves lower-income individuals with credit problems.
Respectable subprime lenders serve an important social function by offering credit on fair terms to individuals who otherwise might never be able to build home equity. Predatory lenders, however, are a scourge on these same neighborhoods, taking advantage of elderly, less-educated and non-English-speaking individuals by offering egregious loan terms that would drain equity and eventually lead to foreclosure on their homes.
Norma Garcia, senior attorney for the nonprofit Consumers Union, has been fighting for more than a decade to stop predatory lenders from preying on the powerless. In her March testimony before the House Committee on Financial Services, Garcia expressed concern at the tremendous growth of the subprime market in general and subprime refis in particular.
Nationally, subprime originations increased from less than 5% ($35 billion) in 1994 to nearly 13% ($160 billion) in 1999. The predatory hot spots, Texas and California, were even worse: Texas subprime refis grew from 6% of all refis in 1997 to 33% in 2000, California subprime lending grew from 4% in 1993 to 20% in 2000.
"Not all subprime loans are predatory," Garcia points out, "but virtually every predatory loan we have seen is a subprime loan."
That's because shady lenders, like predators everywhere, tend to target the easiest prey, people with poor credit who have few other options. But Garcia notes that individuals with spotless credit also fall victim to bad loans.
"Loans that are good subprime loans might in another sense be predatory for someone who has good credit. We see this a lot among the elderly and in communities of color -- people with perfectly good credit who don't have a sense of what's happening out there in the lending world," she says.
Garcia says that to simply spout "buyer beware" isn't enough.
"There are definitely people who are ripping others off. To the extent that there are individuals who are being placed in loans with interest rates and fixed fees that are much higher compared to that person's credit-risk profile, that should be a crime," she says.
"Some states require lenders to put borrowers into the best loans for which that buyer may qualify. We would love to have that be extended to all loans, but it isn't and there is a lot of resistance and pushback from the lending lobby to protect against new laws aimed at regulating the industry."
California is currently in the midst of a test case to see if a weaker state anti-predator statute should supersede a tougher ordinance passed by the city of Oakland that fills in the gaps left by the state law. Garcia has similar concerns about any minimum industry standards that could one day be forthcoming at the federal level.
"We can see that minimum standards might be a good thing, but we don't want to prevent states that have serious problems from closing the gap," she says.
Firing the 'bad actors'
The mortgage industry has dug in its heels against government regulation at any level that would restrict access to credit.
A.W. Pickel, president of the National Association of Mortgage Brokers, says a few "bad actors" shouldn't spoil it for an industry that is committed to providing as many financing options to as many customers as possible. In addition to calling for more pre- and post-license training, NAMB has put forth its own solution to the predator problem.
"We promote the ability to do a national registry that would basically keep bad guys out of the business," he says. "For instance, we now actually register every loan officer. Unfortunately, we don't register loan officers inside a bank. So you could have a bad actor who would be working for a licensed broker or mortgage broker but then they go to a bank and they don't have to be licensed."
Although Pickel admits he would never use an online lender, he defends their right to peddle their products. The problem, he says, is not the shady deals, but the public's inability to accept what mortgage brokers take for granted: If it seems too good to be true, it probably is.
"What amazes me is that people don't use their common sense. Somehow people think that this person who is giving them 5% is telling the truth when everybody else in town doesn't have it. You ought to call guys in your local community and check their references. Even in your own community, you want them to put it in writing. You want them to stand by their word."
Insurance Rates
Banning use of credit ratings won't end unfairness
January 18, 2005
Gov. Jennifer Granholm ought to get serious about controlling urban insurance rates. Sending a legislative panel a set of proposed rules to prohibit insurers from using credit scores, as she did last week, won't cut it.
As many or more people would lose from the change as would benefit. More to the point, it would do little or nothing to narrow the gross disparities between urban and suburban insurance rates, even if base rates go down.
Granholm and Financial and Insurance Services Commissioner Linda Watters believe the use of credit scores has driven up insurance rates. The proposed rule change would ban their use, and good credit discounts would go, in effect, toward lowering the base rates charged to all.
But about 60 percent of all policyholders, including those in urban areas like Detroit, get good credit discounts on auto insurance. Credit histories are considered along with driving records, locale, age and other factors. Eliminating credit histories would raise insurance rates for some urban policyholders and lower them for others. But overall, the premiums paid by Detroiters and others would change little, if at all.
The insurance industry has conducted studies showing that credit histories are a reliable indicator of risk. Critics don't see the connection, and even insurance companies can only speculate.
It's also true that credit reports are not always accurate, though banks, mortgage companies and even employers continue to use them. If, because of public skepticism, the Legislature wants to ban the insurance industry from using credit histories, fine, but it won't fix the bigger price problem.
Something must be done. Shelling out $4,000 a year or more for coverage is not unusual in Detroit. Low-income people simply can't afford these rates. That's why more than half the drivers in some neighborhoods drive uninsured -- and that's bad news for everyone.
Government can help. Legislators could rethink the unlimited medical coverage now required by state law. Another, more constructive measure would be to legally restrict how much insurance rates could vary from territory to territory. Politically, that's a tough sell, because policyholders in ZIP codes where claims are lower would probably pay more.
Calling for a ban on the use of credit histories is easy, but it won't get the job done. Granholm owes the state a better answer to this problem.
January 18, 2005
Gov. Jennifer Granholm ought to get serious about controlling urban insurance rates. Sending a legislative panel a set of proposed rules to prohibit insurers from using credit scores, as she did last week, won't cut it.
As many or more people would lose from the change as would benefit. More to the point, it would do little or nothing to narrow the gross disparities between urban and suburban insurance rates, even if base rates go down.
Granholm and Financial and Insurance Services Commissioner Linda Watters believe the use of credit scores has driven up insurance rates. The proposed rule change would ban their use, and good credit discounts would go, in effect, toward lowering the base rates charged to all.
But about 60 percent of all policyholders, including those in urban areas like Detroit, get good credit discounts on auto insurance. Credit histories are considered along with driving records, locale, age and other factors. Eliminating credit histories would raise insurance rates for some urban policyholders and lower them for others. But overall, the premiums paid by Detroiters and others would change little, if at all.
The insurance industry has conducted studies showing that credit histories are a reliable indicator of risk. Critics don't see the connection, and even insurance companies can only speculate.
It's also true that credit reports are not always accurate, though banks, mortgage companies and even employers continue to use them. If, because of public skepticism, the Legislature wants to ban the insurance industry from using credit histories, fine, but it won't fix the bigger price problem.
Something must be done. Shelling out $4,000 a year or more for coverage is not unusual in Detroit. Low-income people simply can't afford these rates. That's why more than half the drivers in some neighborhoods drive uninsured -- and that's bad news for everyone.
Government can help. Legislators could rethink the unlimited medical coverage now required by state law. Another, more constructive measure would be to legally restrict how much insurance rates could vary from territory to territory. Politically, that's a tough sell, because policyholders in ZIP codes where claims are lower would probably pay more.
Calling for a ban on the use of credit histories is easy, but it won't get the job done. Granholm owes the state a better answer to this problem.
Auto insurers blame state's regulation
By Bruce Mohl, Globe Staff | January 18, 2005
Only two of the 20 companies selling auto insurance in Massachusetts will offer discounts to good drivers this year.
Amica Insurance, of Lincoln, R.I., and tiny Electric Insurance, of Beverly, have notified state regulators that they intend to offer drivers in the best classification, Step 9, discounts of 5 percent. That's about $53 off the statewide average premium of $1,063.
The number of companies offering good-driver discounts and the size of those discounts have been steadily shrinking since 1999. One analyst said the trend is an ominous sign as Governor Mitt Romney and most of the state's auto insurers push for a competitive auto insurance market.
''It doesn't bode well for a shift to competition any time in the near future," said Stephen D'Amato, executive director of the Center for Insurance Research in Cambridge. ''In fact, it probably suggests we'd see an uptick in rates if we do shift to competition."
Romney has a task force working on sweeping proposals to overhaul the auto insurance system. He wants to attract national insurers to Massachusetts by reducing state regulation and letting insurers set premiums themselves.
''Our constituents will know when the job is done," Romney told lawmakers in his State of the State speech last week. ''National insurers, whose advertisements we see every day on television, will finally come back to Massachusetts. Better drivers will see better rates. We in Massachusetts should be able to buy reasonably priced auto insurance, just like everybody else."
Massachusetts is the only state that sets all auto insurance rates by regulation, but companies are allowed to engage in limited competition for customers by offering voluntary discounts. During the 1990s, companies sought to increase their market share by offering discounts of as much as 20 percent, but since 1999 the size of the discounts has steadily declined, along with the number of companies offering them. Auto insurers say the drop-off reflects an inadequate rate structure and an unfriendly regulatory climate.
Last year, three companies offered good-driver discounts; two are doing so this year. Fireman's Fund Insurance, which briefly flirted with pulling out of the state last year, dropped its 2 percent good-driver discount.
The one piece of good news on the discount front was Amica's saying it would increase its good-driver discount to 5 percent, from 4 percent.
Last year, in lowering its discount from 6 to 4 percent, Amica said it couldn't offer more because rates overall were inadequate and it was losing money covering its share of the losses from high-risk drivers.
Most insurers are continuing to offer discounts to members of groups and associations and to employees at various companies. The most popular group discount is the 5 percent reduction offered by Commerce Insurance, of Webster, to members of the American Automobile Association.
Plymouth Rock Assurance Co., of Boston, offers 10 percent discounts to members of the Conservation Law Foundation and the Massachusetts Audubon Society, while Premier Insurance, of Worcester, offers a 10 percent discount to employees of Boston University.
A list of approved group discounts is at www.state.ma.us/doi. Select ''consumer service" and then ''auto."
While group discounts continue, officials at several companies said their ability to keep offering them may be jeopardized by changes recently approved by Romney's insurance commissioner in the way high-risk drivers are apportioned among companies. Many of those changes will not take effect until next year.
Commerce, the largest auto insurer operating in the state, with 28 percent of the market, has sued Insurance Commissioner Julianne M. Bowler to block the new rules.
Only two of the 20 companies selling auto insurance in Massachusetts will offer discounts to good drivers this year.
Amica Insurance, of Lincoln, R.I., and tiny Electric Insurance, of Beverly, have notified state regulators that they intend to offer drivers in the best classification, Step 9, discounts of 5 percent. That's about $53 off the statewide average premium of $1,063.
The number of companies offering good-driver discounts and the size of those discounts have been steadily shrinking since 1999. One analyst said the trend is an ominous sign as Governor Mitt Romney and most of the state's auto insurers push for a competitive auto insurance market.
''It doesn't bode well for a shift to competition any time in the near future," said Stephen D'Amato, executive director of the Center for Insurance Research in Cambridge. ''In fact, it probably suggests we'd see an uptick in rates if we do shift to competition."
Romney has a task force working on sweeping proposals to overhaul the auto insurance system. He wants to attract national insurers to Massachusetts by reducing state regulation and letting insurers set premiums themselves.
''Our constituents will know when the job is done," Romney told lawmakers in his State of the State speech last week. ''National insurers, whose advertisements we see every day on television, will finally come back to Massachusetts. Better drivers will see better rates. We in Massachusetts should be able to buy reasonably priced auto insurance, just like everybody else."
Massachusetts is the only state that sets all auto insurance rates by regulation, but companies are allowed to engage in limited competition for customers by offering voluntary discounts. During the 1990s, companies sought to increase their market share by offering discounts of as much as 20 percent, but since 1999 the size of the discounts has steadily declined, along with the number of companies offering them. Auto insurers say the drop-off reflects an inadequate rate structure and an unfriendly regulatory climate.
Last year, three companies offered good-driver discounts; two are doing so this year. Fireman's Fund Insurance, which briefly flirted with pulling out of the state last year, dropped its 2 percent good-driver discount.
The one piece of good news on the discount front was Amica's saying it would increase its good-driver discount to 5 percent, from 4 percent.
Last year, in lowering its discount from 6 to 4 percent, Amica said it couldn't offer more because rates overall were inadequate and it was losing money covering its share of the losses from high-risk drivers.
Most insurers are continuing to offer discounts to members of groups and associations and to employees at various companies. The most popular group discount is the 5 percent reduction offered by Commerce Insurance, of Webster, to members of the American Automobile Association.
Plymouth Rock Assurance Co., of Boston, offers 10 percent discounts to members of the Conservation Law Foundation and the Massachusetts Audubon Society, while Premier Insurance, of Worcester, offers a 10 percent discount to employees of Boston University.
A list of approved group discounts is at www.state.ma.us/doi. Select ''consumer service" and then ''auto."
While group discounts continue, officials at several companies said their ability to keep offering them may be jeopardized by changes recently approved by Romney's insurance commissioner in the way high-risk drivers are apportioned among companies. Many of those changes will not take effect until next year.
Commerce, the largest auto insurer operating in the state, with 28 percent of the market, has sued Insurance Commissioner Julianne M. Bowler to block the new rules.
Sunday, January 16, 2005
Communities back health insurance plan
Health coverage pool would include businesses, towns, self-employed
By Paul Swiech
METAMORA -- About 30 small municipalities in Illinois -- including Metamora, Dwight and Emden -- are backing a plan to reduce health insurance premium increases by putting small businesses and towns, self-employed individuals and people without access to health insurance in the same pool.
Metamora Village President Matt O'Shea co-wrote a letter to nearly 1,100 Illinois mayors and village presidents asking for their support of Healthy Illinois.
"Health care costs are skyrocketing for our village, as they are for others," O'Shea said Monday. "This would be a way to create a pool for small businesses and municipalities, which would reduce rates for employees and costs to taxpayers."
Metamora has 20 full- and part-time employees and their premium increases averaged 24 percent in 2004, he said.
This year, projections call for increases averaging 18 percent, he said.
Meanwhile, O'Shea also is seeing costs go up to the four employees of his business, Illini Automation, which provides building automation software for business and institutional clients.
Short-term, municipalities and businesses are looking at raising deductibles and doing other things to switch the burden to employees. But long-term, pooling employees of small businesses and towns, self-employed workers and those without access to job-related health insurance may be the best solution, he said.
Legislation calling for the initiative will be introduced to the Illinois General Assembly late this month or early February, said Lindsey Marcus, campaign director of Illinois for Health Care. Illinois for Health Care (part of the Service Employees International Union) and the organization Citizen Action/Illinois are behind Healthy Illinois and are getting small businesses, governments and community organizations involved, she said.
"We targeted the small municipalities because they are facing a crunch because of rising health care costs and are looking for ways to control the budgets because of the increasing burden on taxpayers," Marcus said. The Service Employees' union includes secretaries, janitors and health care workers.
If approved by the General Assembly and governor, Healthy Illinois would create a pool that would spread the insurance risk over a large population and keep cost increases down. O'Shea said 2 million people could be eligible for the pool.
By Paul Swiech
METAMORA -- About 30 small municipalities in Illinois -- including Metamora, Dwight and Emden -- are backing a plan to reduce health insurance premium increases by putting small businesses and towns, self-employed individuals and people without access to health insurance in the same pool.
Metamora Village President Matt O'Shea co-wrote a letter to nearly 1,100 Illinois mayors and village presidents asking for their support of Healthy Illinois.
"Health care costs are skyrocketing for our village, as they are for others," O'Shea said Monday. "This would be a way to create a pool for small businesses and municipalities, which would reduce rates for employees and costs to taxpayers."
Metamora has 20 full- and part-time employees and their premium increases averaged 24 percent in 2004, he said.
This year, projections call for increases averaging 18 percent, he said.
Meanwhile, O'Shea also is seeing costs go up to the four employees of his business, Illini Automation, which provides building automation software for business and institutional clients.
Short-term, municipalities and businesses are looking at raising deductibles and doing other things to switch the burden to employees. But long-term, pooling employees of small businesses and towns, self-employed workers and those without access to job-related health insurance may be the best solution, he said.
Legislation calling for the initiative will be introduced to the Illinois General Assembly late this month or early February, said Lindsey Marcus, campaign director of Illinois for Health Care. Illinois for Health Care (part of the Service Employees International Union) and the organization Citizen Action/Illinois are behind Healthy Illinois and are getting small businesses, governments and community organizations involved, she said.
"We targeted the small municipalities because they are facing a crunch because of rising health care costs and are looking for ways to control the budgets because of the increasing burden on taxpayers," Marcus said. The Service Employees' union includes secretaries, janitors and health care workers.
If approved by the General Assembly and governor, Healthy Illinois would create a pool that would spread the insurance risk over a large population and keep cost increases down. O'Shea said 2 million people could be eligible for the pool.
Allstate ads shoot for young men
By Theresa Howard, USA TODAY
NEW YORK — While most of America is thinking football, Allstate Insurance is thinking basketball — NCAA basketball, to be exact.
On Tuesday the company will announce the Allstate Alumni 3 on 3 Challenge, a promotion that will let former college stars relive their glory days and generate sales leads for the No. 2 home and auto insurance company behind State Farm. National ads begin Jan. 22. Men and women can register for the four-city tournament at www.allstate3on3.com.
The promotion aims to reach mostly younger men, who continue to be elusive for many marketers. "We, like many other companies, are looking at ways to go after this audience," says Pam Hollander, Allstate's director of sponsorship. "What better way to really engage them in the sport they are passionate about than to have our own event?"
The event includes four regional tournaments to be played in Charlotte, San Francisco, New York and Chicago. Winning three-player teams from each region will then compete for the championship during the NCAA Final Four championship April 2 and 4 in St. Louis. Allstate will donate $10,000 to the winning men's and women's teams' alumni associations.
Ads feature Duke University's "Coach K" — Mike Krzyzewski — and Syracuse University's Orangemen mascot "Otto." In one ad, guys play a game in a driveway and replay Christian Laettner 's last-minute 1992 overtime shot that put Duke over Kentucky to get into the Final Four. As they celebrate, Coach K emerges from the bushes to join in the revelry. In a second ad, a masseuse gives "Otto" a rubdown as the mascot watches a game. In both ads, the announcer tells viewers to sign up at the tournament Web site.
The ads will run on sports broadcasts along with Allstate's ongoing "Our Stand" ads with actor Dennis Haysbert. Hollander says the two messages work together and that the tournament is a long-term effort.
"We're trying to reach these guys in a different way," she says. "This is a program we look to grow over the next few years."
NEW YORK — While most of America is thinking football, Allstate Insurance is thinking basketball — NCAA basketball, to be exact.
On Tuesday the company will announce the Allstate Alumni 3 on 3 Challenge, a promotion that will let former college stars relive their glory days and generate sales leads for the No. 2 home and auto insurance company behind State Farm. National ads begin Jan. 22. Men and women can register for the four-city tournament at www.allstate3on3.com.
The promotion aims to reach mostly younger men, who continue to be elusive for many marketers. "We, like many other companies, are looking at ways to go after this audience," says Pam Hollander, Allstate's director of sponsorship. "What better way to really engage them in the sport they are passionate about than to have our own event?"
The event includes four regional tournaments to be played in Charlotte, San Francisco, New York and Chicago. Winning three-player teams from each region will then compete for the championship during the NCAA Final Four championship April 2 and 4 in St. Louis. Allstate will donate $10,000 to the winning men's and women's teams' alumni associations.
Ads feature Duke University's "Coach K" — Mike Krzyzewski — and Syracuse University's Orangemen mascot "Otto." In one ad, guys play a game in a driveway and replay Christian Laettner 's last-minute 1992 overtime shot that put Duke over Kentucky to get into the Final Four. As they celebrate, Coach K emerges from the bushes to join in the revelry. In a second ad, a masseuse gives "Otto" a rubdown as the mascot watches a game. In both ads, the announcer tells viewers to sign up at the tournament Web site.
The ads will run on sports broadcasts along with Allstate's ongoing "Our Stand" ads with actor Dennis Haysbert. Hollander says the two messages work together and that the tournament is a long-term effort.
"We're trying to reach these guys in a different way," she says. "This is a program we look to grow over the next few years."
Friday, January 14, 2005
Prozac may be hazardous to your health insurance
from MSN money
If you've had even a mild bout of depression, you may find buying an individual health insurance policy a challenge. Here's how to succeed in the process.
Imagine that many years ago, you suffered mild depression when you broke up with your significant other. You briefly sought mental health help.
Now you're happy and healthy, but you get a rude awakening when you try to buy individual health insurance: One by one, your applications are denied based on the six counseling sessions you had a decade ago, which are permanently recorded in your medical history.
You've all but forgotten about your ex, so how can this seemingly insignificant episode be coming back to haunt you? Are you really on your way to becoming uninsured? Over this?
You very well could be if your only choice is individual health insurance, according to Karen Pollitz, a Georgetown University researcher who co-authored a 2001 study on the individual health insurance market for the Kaiser Family Foundation with Richard Sorian and Kathy Thomas.
Individual insurers may deny you coverage based on your medical history if it includes:
Use of prescription drugs to treat anxiety, depression or a physical condition, including Ativan, Klonipin, Paxil, Prozac, Serzone, Zoloft, Xanax and Wellbutrin.
Counseling for anxiety, depression, grief or an eating or sleep disorder. Even if you briefly sought counseling as a way to cope with the Sept. 11 terrorist attacks, you could be denied individual health insurance, according to researchers with Georgetown's Health Privacy Project.
"People who've always had group health insurance are completely unprepared when they're forced to seek coverage in this (individual health insurance) market," says Pollitz. "They think they're going to get the same coverage they had in their jobs, except they'll just have to pay a little more money. It's absolutely not like that at all. The individual health insurance market is unpredictable, inconsistent and expensive."
Dr. Deborah Peel has seen the unpredictability of the individual health insurance market up close. Peel, currently president of the Appeal for Patient Privacy and formerly president of the National Coalition of Mental Health Professionals and Consumers, recalls a young graduate student whose sleep apnea was treated with antidepressant medication. When he was dropped from his parents' group health insurance plan due to his age, he began applying for a policy in the individual market. He was turned down several times because his medical records showed he had taken an antidepressant, even though the medication was for a physical rather than mental condition.
If you've had even a mild bout of depression, you may find buying an individual health insurance policy a challenge. Here's how to succeed in the process.
Imagine that many years ago, you suffered mild depression when you broke up with your significant other. You briefly sought mental health help.
Now you're happy and healthy, but you get a rude awakening when you try to buy individual health insurance: One by one, your applications are denied based on the six counseling sessions you had a decade ago, which are permanently recorded in your medical history.
You've all but forgotten about your ex, so how can this seemingly insignificant episode be coming back to haunt you? Are you really on your way to becoming uninsured? Over this?
You very well could be if your only choice is individual health insurance, according to Karen Pollitz, a Georgetown University researcher who co-authored a 2001 study on the individual health insurance market for the Kaiser Family Foundation with Richard Sorian and Kathy Thomas.
Individual insurers may deny you coverage based on your medical history if it includes:
Use of prescription drugs to treat anxiety, depression or a physical condition, including Ativan, Klonipin, Paxil, Prozac, Serzone, Zoloft, Xanax and Wellbutrin.
Counseling for anxiety, depression, grief or an eating or sleep disorder. Even if you briefly sought counseling as a way to cope with the Sept. 11 terrorist attacks, you could be denied individual health insurance, according to researchers with Georgetown's Health Privacy Project.
"People who've always had group health insurance are completely unprepared when they're forced to seek coverage in this (individual health insurance) market," says Pollitz. "They think they're going to get the same coverage they had in their jobs, except they'll just have to pay a little more money. It's absolutely not like that at all. The individual health insurance market is unpredictable, inconsistent and expensive."
Dr. Deborah Peel has seen the unpredictability of the individual health insurance market up close. Peel, currently president of the Appeal for Patient Privacy and formerly president of the National Coalition of Mental Health Professionals and Consumers, recalls a young graduate student whose sleep apnea was treated with antidepressant medication. When he was dropped from his parents' group health insurance plan due to his age, he began applying for a policy in the individual market. He was turned down several times because his medical records showed he had taken an antidepressant, even though the medication was for a physical rather than mental condition.
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