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Tuesday
07/29/08 |
Your Insurance News "Strategic
Relationship"
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Read online at
www.insurancebroadcasting.com.
Read daily by
over 450,000 insurance industry
subscribers.
Walt Podgurski, CLU, CES, Publisher & Editor
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© Copyright Notice
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laws - all rights reserved.
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Daily Quote:
"The object of this
competition is not to be mean to the losers but to find a winner, and
sometimes the truth is perceived as mean." - - Simon Cowell
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Late breaking News
Merrill sets
$5.7 billion write-down, to sell stock
INSURANCE
NEWSCAST HEADLINES
1)
Mutual of Omaha Bank to Acquire Deposits of Failed
First National Bank
2)
Wall St Sees SEC Extending Short-Selling Limits: Report
3)
Websites Batter UK Insurers' Reserves - Report
4)
A.M. Best Special Report: German Occupational
Pensions - A Market Under Pressure
5)
United Health Programs of America Signs Exclusive
Agreement To Distribute CallMD
6)
INSURANCE NEWSLINK Articles
7)
ALG Repositions Vehicle Residual Values to Reflect
High Fuel Costs
8)
Morris, Manning & Martin Establishes Life
Settlements Group; James Maxson Joins to Co-Chair New Group
9)
Max Capital Group to Acquire Imagine's Lloyd's
Vehicle
10)
Massachusetts Association of Health Underwriters
Board Member Responds to Governor's Healthcare Proposal
11)
Grange Insurance Expands Homeowner and Auto Policy
Loyalty Programs
12)
BANK INSURANCE NEWS IN BRIEF
- JULY 28, 2008
14)
Insurance Commissioner Poizner Announces
Availibility Of First Green Homeowners Policy In California
15)
BoCom Wants To Branch Into Insurance, Securities
16)
GMAC Financial Services' SmartEdge Adds Insurance,
Banking to Curriculum
17)
CEI Online Calculator Reveals Sales Needed To
Offset the Cost of Fleet Accidents
18)
Life Brokerage Partners, LLC Removed From AXA
Equitable Lawsuit
19)
U.S. house prices overvalued by up to 20 percent:
IMF paper
20)
INSURANCE NEWSCAST "Pictures
Of The Day"
Note: All Links Below Open A New Window:
21)
Travelers Mourns the Loss of
Carl B. Drake, Jr., Former Chairman of The St. Paul Companies
22)
New Webinar Helps Policy
Service, Customer Service, And Claims Professionals To Watch
Their 'Tone'
23)
"Webinars On Demand" Help
People Get Writing Training When They Want It
24)
MetLife’s Snoopy Three Takes
Off
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M&A / ALLIANCES / EARNINGS
/ CAPITALIZATION |
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The best way to insure volunteers of nonprofit organizations is also
the easiest.
There’s one more good reason, too –
new revenue for your firm! |
That’s why more than 100 agents, brokers and program
administrators are participating in our Volunteers Insurance Service (VIS®)
program. When you enroll the volunteers of your nonprofit customers
through our easy-to-use Website,
www.cimaworld.com/agent, you not only provide your
customers an excellent solution to protecting their volunteers, you also
earn new revenue. We pay you 12% commission on new business that
you write with us, and on the renewal of that business. Once we
receive the initial application, we handle all of the
administration.
VIS® at a glance – For over 40 years,
we have been offering protection for the volunteer workers of nonprofit
organizations. The following coverages are available, separately or in
any combination:
Accident medical
reimbursement -- $25,000 limit, $3.75
per volunteer per year;
Volunteer liability
-- $1,000,000 limit, $1.72 per volunteer per year
Excess auto liability
-- $500,000 limit, $6.04 per volunteer per year
More than 2.5 million volunteers – working for more
than 5,000 nonprofit organizations -- are insured with VIS®. Policy
premiums range from a few hundred dollars to as much as $20,000 for the
larger nonprofits.
Why our program can be the best way to cover
volunteers -- Insuring volunteers through VIS® is a better
solution in most cases than including them on the organization’s own
general liability policy, for three reasons:
Our program
includes coverage for the volunteers’ travel between home and their
place of work;
It includes
coverage for claims made by one volunteer against another;
By insuring
volunteers separately, the organization reduces the risk of sharing
its own limits of insurance with its volunteers.
VIS® also can be a better alternative than
including volunteers on a workers’ compensation policy, because:
-
Volunteers are
covered while traveling to and from their volunteer activities, not
just while volunteering.
-
If
they are injured it won’t affect the organization’s claims
experience.
As far as automobile liability is concerned, the
organization’s own policy usually does not provide protection for
volunteers using their own vehicles. Our policy provides excess
automobile liability coverage over and above the volunteers’ personal
automobile coverage. Our excess automobile liability policy can be
critical, if a volunteer is involved in a serious accident.
Not only the best way, but also the easiest
way, to cover volunteers --
All you need to do is go to
www.cimaworld.com/agent. (This is part of the Website of The
CIMA Companies, Inc., which administers the VIS® program.) You will see
a detailed explanation of the program, and a link to our Producer’s
Agreement. The agreement is brief, and once you click on “I Agree” on
that page, we have an agreement. At that point, you are ready to
complete an online application, which will take you less than five
minutes. You can either submit the app online, or print it to mail
later.
If you have questions, please call Vicki Brooks or
Joan Wankmiller at 1.800.468.4200 or email them at
vbrooks@cimaworld.com, or
jwankmiller@cimaworld.com. We hope you’ll be participating with us
soon!
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Merrill sets $5.7 billion
write-down, to sell stock |
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Mon Jul 28, 2008 7:41pm EDT
By Christian Plumb and Jonathan Stempel
NEW YORK (Reuters) - Merrill Lynch & Co (MER.N: Quote, Profile,
Research, Stock Buzz) said on Monday it will take a $5.7 billion
third-quarter write- down as it unloads huge amounts of risky
debt, and raise $8.5 billion by selling new stock.
The Wall Street investment bank and brokerage announced its
plans less than two weeks after posting a $4.9 billion second-
quarter loss, hurt by more than $9 billion of write-downs.
Merrill said its stock sale includes $3.4 billion to Singapore's
state-run Temasek Holdings Pte Ltd TEM.UL, one of its largest
investors, and may grow to $9.8 billion to meet demand.
Management also plans to buy 750,000 shares, it said.
Monday's write-down and plans to raise capital may raise further
questions about Chief Executive John Thain's ability to turn
around Merrill. The company has lost $19.2 billion in the last
year and suffered more than $40 billion of write-downs from
subprime mortgages and other risky debt.
"Are things that much worse than we were led to believe?" said
James Ellman, president of Seacliff Capital in San Francisco.
"If people were going to believe Thain when he said Merrill
raised more capital than it needed to and had taken conservative
marks on its securities book, I'm not sure they're going to
believe him tomorrow morning."
During a conference call on July 17, Thain said: "Right now we
believe that we are in a very comfortable spot in terms of our
capital."
Earlier this month, Merrill completed the sale of its 20 percent
stake in Bloomberg LP, the news and financial data company, to
Bloomberg Inc for $4.43 billion.
Merrill declined to comment further on the stock offering. The
company's market value was about $23.9 billion as of Monday's
close, based on reported shares outstanding.
Lenders including Merrill, Citigroup Inc (C.N: Quote, Profile,
Research, Stock Buzz) and UBS AG (UBSN.VX: Quote, Profile,
Research, Stock Buzz) have announced more than $400 billion in
write-downs and credit losses since the global credit crisis
began a year ago.
Temasek had invested $5 billion in Merrill in December and
February at $48 per share, but Merrill shares have fallen by
about half since then.
To satisfy provisions under the earlier investment agreement,
Merrill said it agreed to pay Temasek $2.5 billion and Temasek
agreed to reinvest that amount without some protections in case
Merrill raises more capital.
Merrill shares rose 42 cents to $24.75 in after-hours electronic
trading. They fell $3.19, or 11.6 percent, to $24.33 in regular
trading, and were down 54.7 percent this year through the market
close.
WRITE-DOWNS
Merrill said it agreed to sell $30.6 billion of collateralized
debt obligations (CDOs), a kind of repackaged debt, to an
affiliate of private equity fund Lone Star Funds for $6.7
billion. This will result in a $4.4 billion write- down, Merrill
said.
In addition, Merrill said it agreed to help bail out bond
insurer Security Capital Assurance Ltd (SCA.N: Quote, Profile,
Research, Stock Buzz) by agreeing to accept a $500 million cash
payment in exchange for canceling some credit default swaps and
ending related litigation.
Merrill said the settlement, together with the potential
settlement of other CDO hedges, will result in a $1.3 billion
write-down.
It also said holders of $5.4 billion of convertible preferred
shares have agreed to swap their holdings for about 195 million
common shares.
"The sale of the substantial majority of our CDO positions
represents a significant milestone in our risk reduction
efforts," Thain said in a statement.
He said the sale and the stock issuance "will materially enhance
the company's capital position and financial flexibility going
forward."
Thain became chief executive last December following the ouster
in October of his predecessor Stanley O'Neal.
Merrill still has wide exposure to mortgage debt.
As of June 27, it said it had exposures of $33.7 billion to U.S.
prime mortgages, $1.01 billion to U.S. subprime mortgages, $1.54
billion to "Alt-A" mortgages and $7.45 billion to non- U.S.
residential mortgages.
William Smith, president of Smith Asset Management Inc in New
York, said Merrill fetched a "horrendous" price for the CDOs.
"The problem here is with Thain. You can throw him into the
credibility problem camp now," Smith said. "It's tough to call
the bottoms on these things because it seems like it's never
ending, but this could be viewed as the watershed."
Temasek was not immediately available for comment.
(Additional reporting by Doris Frankel, Jonathan Spicer, Dan
Wilchins and Lilla Zuill; editing by Jeffrey Benkoe and Andre
Grenon
© Thomson Reuters 2008 All rights reserved
1.
Mutual of Omaha Bank to
Acquire Deposits of Failed First National Bank
FDIC Closes
First National Bank of Nevada and First Heritage Bank
OMAHA,
Neb.--(BUSINESS WIRE)--Mutual of Omaha Bank has agreed to
acquire from the FDIC the deposits of the failed Reno,
Nev.,-based First National Bank of Nevada and its affiliate,
First Heritage Bank of Newport Beach, Calif., the company
announced.
The transaction
includes all deposits, both insured and uninsured. All former
branches of First National Bank of Nevada (also operating as
First National Bank of Arizona) and First Heritage Bank will
open Monday as branches of Mutual of Omaha Bank, and all
depositors will automatically become depositors of Mutual of
Omaha Bank, said Jeff Schmid, chairman and CEO of Mutual of
Omaha Bank.
Federal
regulators on Friday declared First National Bank of Nevada and
its affiliates insolvent and the FDIC was named receiver. The
FDIC Board of Directors approved the assumption of more than $3
billion in deposits by Mutual of Omaha Bank. FDIC will retain
most of First National’s loan portfolio.
The acquisition
of these accounts aligns with Mutual of Omaha Bank’s growth
strategy of expanding into fast-growing markets where Mutual of
Omaha has a strong brand presence and base of insurance
customers, Schmid said.
Mutual of Omaha
Bank currently has more than $750 in assets and operates 14
retail branches in Nebraska and Colorado with commercial lending
offices in Dallas and Des Moines, Iowa. It is a subsidiary of
Mutual of Omaha, a 99-year-old insurance and financial services
company with more than $19 billion in total assets and very high
ratings from the major ratings agencies.
+++
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2.
Wall St Sees SEC
Extending Short-Selling Limits: Report |
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PHILADELPHIA (Reuters) - Wall Street executives expect the U.S.
Securities and Exchange Commission to extend temporary curbs on
short-selling and widen them to cover additional stocks, the Wall Street
Journal reported.
The limits are set to expire on Tuesday, and financial executives expect
the SEC to expand the limits beyond the 19 financial companies initially
targeted, the WSJ reported in its electronic edition on Sunday.
Wall Street executives, lobbyists and hedge-fund industry
representatives over the weekend had discussed asking the SEC to
reconsider, the newspaper said.
During a call with regulators on Friday, the hedge fund industry trade
group got indications that the SEC planned an extension of the emergency
period and the limits could include insurance, housing-industry and
financial stocks, the newspaper said.
The SEC is also working to make short-selling rules permanent, the
newspaper said. The SEC staff is expected to narrow the options and make
a recommendation to four SEC commissioners as soon as Monday, the
newspaper said.
An
SEC spokesperson was not immediately available to comment.
(Reporting by Jessica Hall; Editing by Clarence Fernandez)
©
Thomson Reuters 2008 All rights reserved |
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3.
Websites Batter UK
Insurers' Reserves - Report |
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LONDON, July 28 (Reuters) - British car insurers could begin to run out
of claim reserves in two years if they continue to use the money to
subsidise policies and fight off pressure from price comparison
websites, a report showed on Monday.
The findings, published by UK-based consultancy EMB, showed insurers
have released 1 billion pound ($2 billion) of reserves in the past year
to help them compete with the comparison sites, with some companies
subsidising their motor account by as much as 30 percent.
EMB said reserves -- money held back in previous years to ensure the
companies can meet future claims -- were now at their lowest since 2001.
"There's bound to be fallout affecting the companies that provide the
comparison sites as well as the insurers themselves," Naeem Ali, a
senior consultant at EMB said.
"In the short run, the motoring public is benefiting from this
competition, but the current position cannot continue indefinitely.
Price rises are inevitable."
Motor insurers have long seen UK premiums kept under pressure by
cut-throat competition that has been exacerbated by a flurry of new
comparison websites -- despite the escalating cost of claims as car
repairs, health and legal fees rise.
Major insurers including Royal Bank of Scotland (RBS.L) have said they see indications the tide is turning
and prices could be set to outpace the cost of claims, but rivals like
Admiral (ADML.L) have said the
pace of change is slow.
(Reporting by Clara Ferreira-Marques; Editing by Erica Billingham)
©
Thomson Reuters 2008 All rights reserved |
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4.
A.M. Best Special
Report: German Occupational Pensions - A Market Under Pressure |
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OLDWICK, N.J.--(BUSINESS WIRE)--Tax reforms are likely to drive
realignment in Germany’s increasingly complex pension sector. Meanwhile,
application of International Financial Reporting Standards (IFRS)
already is impacting occupational pension structures.
*
Larger German employers have entered outsourcing agreements to transfer
book reserves to separate legal entities – Contractual Trust
Arrangements (CTAs).
*
Average funding of German DAX companies’ pension plans in 2006 was 65%,
far less than the EU average; midsize companies’ plans were less than
50% funded.
*
A.M. Best believes conditions may be ripe for insurers and Pensionsfonds
to take over underfunded obligations—for a fee—and provide companies
with long-term flexibility to refill their pension deficits.
*
Longevity risk and EU legislative and regulatory pressures also are
increasing.
BestWeek subscribers can download a PDF copy of all full special reports
at no additional cost or a combination of the PDF copies plus all
related spreadsheet files of the report data at no additional cost from
our Web site at www.bestweek.com.
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5.
United Health Programs
of America Signs Exclusive Agreement To Distribute CallMD
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For Immediate Release: July 25, 2008
Syosset, NY – United Health Programs of America (UHP), the nation’s
leading discount medical provider organization and provider of cost
containment programs for the healthcare marketplace, today announced the
company has executed an exclusive agreement with Americare Services,
Inc. to be the sole distribution partner of Americare Services’ CallMD
physician phone consultation service for the group, affinity and self
insured markets.
“Rising healthcare costs, increased medical-related absenteeism,
treatment delays and after-hour emergencies result in diminished
productivity and diminished profitability. Implementing CallMD is a
proven way to minimize these challenges while increasing the quality of
medical care,” said Jason Krouse, CMO of United Health Programs of
America. “CallMD will provide our loyal broker and consulting
distribution force with a successful tool for helping their clients
reduce and control the most pressing issue on their balance sheet –
healthcare costs.”
Edward Mandel, chairman of Americare Services, Inc., said, “CallMD is
the answer for people with a non-emergency medical question, or those
who need a non-narcotic prescription, and would like a doctor’s advice
at a time that’s convenient for them – without missing work, or spending
hours waiting at the doctor’s office.
“Our call center is staffed with registered nurses who document our
members’ medical concerns and medical history prior to conferencing with
a licensed medical physician from our CallMD network. Physicians are
available for personal one-on-one phone consultations with members of
any age group 24/7/365.
“We are very pleased to join ranks with United Health Programs of
America in making convenient and affordable quality healthcare services
available to individuals, families, businesses and organizations. The
synergy between our organizations is strong. We are equally committed to
providing healthcare programs and services that stand out as timely and
relevant options that make quality medical care more accessible to
millions, particularly to individuals and businesses most afflicted by
our nation’s acute healthcare crisis.”
About Americare Services, Inc.
Americare Services, Inc. offers an affordable, single-source portfolio
of health support services to meet the supplemental healthcare needs of
every company, association member, organization, family and individual.
Americare’s product offerings include: CallMD, a national physician
network for affordable and convenient phone consultation medical advice;
CallRN, on-call registered nurses available by phone 24/7/365; FileMD,
an online electronic health record (EHR) for secure storing and easy
retrieval of up-to-date personal medical information; and DocsServe, an
automated, HIPAA-compliant medical and care-related data management
service. For more information visit
www.americareservicesinc.com.
About United Health Programs of America (UHP)
UHPOA is a national discount medical provider organization and
distributor of cost containment programs to the healthcare marketplace.
UHP works with qualified private-label resellers, insurance brokers and
consultants servicing the direct-to-consumer, union, association,
affinity, healthcare and group marketplaces. UHP, along with Patriot
Health, and Ocean Consulting Group are members of the Cost Containment
Group. United Health Programs of America offers its products through
insurance brokers, agents and consultant. To find out more information
about United Health Programs of America or to become a United Health
representative, please call Robin Lewis at 972-716-9590 x 309 or at
rlewis@ccgfamily.com
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6.
INSURANCE NEWSLINK
Articles |
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Recent articles added to INSURANCE NEWSLINK, the worldwide, strategic
concise intelligence database of over 30,000 articles including
interviews, uniquely analysed by company, market, research, regulatory,
and IT topics.
Please click here for a content overview and a 15-day
free review.
THE TIME EFFECTIVE WAY TO STAY AHEAD
RAC Insurance buys back Suncorp-Metway 50% stake
Guidewire deployed at New Jersey Manufacturers
Household premium rates dip sharply in India
Munich Re profit warning ripples through the market
RBS insurance businesses have less than 50% of being sold says analyst
Swiss Re looking at Barclays closed life book
ABI Customer Impact Panel publishes second annual report
Travelers hit by catastrophes
WellPoint profit down
Allstate net income down 98%
AFLAC improves
Net income down at W.R.Berkley
Half term profit up at Capita
ndia could move on foreign insurer stake increase
Liberty Mutual interim profit down 4.2%
ransatlantic worsens in second quarter
Chubb drops 34%
Good return from Mapfre
Max Capital moves for Imagine
UK
consumers seeking household insurance increasingly going online says
survey
Pre-tax down at Beazley
Net income down at Arch Capital
Aon pleads for transparency standards for all
ABI calls on Chancellor to promote savings and security
Kwik-Fit selects Tealeaf to increase conversions and identify fraudulent
claims
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7.
ALG Repositions Vehicle
Residual Values to Reflect High Fuel Costs |
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SANTA BARBARA, Calif., July 28, 2008 (PRIME NEWSWIRE) -- Automotive
Lease Guide (alg), Inc., a leading provider of residual value forecasts
and consulting services to the automotive industry, today announced a
significant repositioning of its residual value forecasts. The
repositioning is in response to the sharp increase in fuel costs over
the past five months, which has spurred consumers to flee vehicle
segments with poor fuel economy, such as SUVs and full-size pickups, and
to seek more fuel-efficient options.
ALG has been gradually lowering residual values on pickups and SUVs for
several years, as more alternatives such as crossovers have entered the
market and as gasoline prices have increased. However, ALG believes that
the rise in gas prices from approximately $3 per gallon to over $4 per
gallon between February and June of this year, amplified by the
challenging economic conditions and credit crisis, has caused a
structural break in consumer demand for vehicles with low fuel economy.
The new demand dynamics in the industry have had a dramatic effect on
vehicle sales and prices, and ALG has repositioned its residual values
to reflect this new paradigm. John Blair, chief executive officer of ALG,
said, "The auto industry has experienced a shift that will have a
significant impact on long-term used vehicle price trends. We are
confident that implementing this residual value adjustment better
reflects the future demand conditions in the used car market."
ALG has increased residual values on compact cars (including hybrids)
with high fuel economy an average of five percentage points compared to
forecasts made during 2007. Conversely, residual values for full-size
pickup trucks, full-size SUVs and mid-size SUVs have all been shifted
downward an average of eight percentage points versus last year. The
residual repositioning will have a significant impact on the cost of
leasing. In the compact segment, for example, if a $15,000 vehicle that
had a 36-month residual value of 45% a year ago is now expected to
retain 50% of its value after three years, monthly lease payments would
be approximately $20 lower, all else being equal. For a full-size SUV
with a $42,000 sticker price and an 8.5 percentage point decline in its
residual value, monthly lease payments would rise approximately $100,
all else being equal. Changes in manufacturer cash incentives and/or
finance support often materially affect actual lease terms.
Blair said, "The sea change in consumer sentiment away from gas-guzzling
vehicles will continue to drive down used vehicle prices in the truck
and SUV segments. When economic conditions improve, we expect a more
stable environment, but we would not expect used vehicle prices to
return to 2007 levels unless gas prices drop to sub-$3.00 levels for at
least a year." www.alg.com |
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8.
Morris, Manning &
Martin Establishes Life Settlements Group; James Maxson Joins to
Co-Chair New Group |
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Atlanta (July 24, 2008) - James "Jim" Maxson, a leading practitioner
in the life settlement industry, has joined the Atlanta office of the
law firm of Morris, Manning & Martin, LLP. Maxson teams with MMM partner
Ward Bondurant to co-chair a newly formed Life Settlements Group. The
new group will advise domestic and international clients on critical
legal, insurance regulatory, tax and financial issues. Maxson was
formerly Executive Vice President and General Counsel of Habersham
Funding, LLC, a leading life settlement provider.
Life settlements are transactions in which unwanted or unneeded life
insurance policies are sold into a secondary market comprised primarily
of institutional investors. Roughly $12 to $15 billion in life
settlement transactions took place last year. The industry is growing by
25% annually, independent of other economic factors.
"Jim's arrival prompts us to pull together the considerable life
settlement experience existing at the firm," said Mr. Bondurant, the
Group's co-chair. www.mmmlaw.com |
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9.
Max Capital Group to
Acquire Imagine's Lloyd's Vehicle |
|
HAMILTON, Bermuda, Jul 24, 2008 (BUSINESS WIRE) -- Max Capital Group
Ltd. (MXGL) ("Max Capital" or the "Company") today announced that it has
entered into an agreement to acquire Imagine Group (UK) Limited
("Imagine Lloyd's"), a Lloyd's insurance operation, from Imagine
Insurance Company Limited ("Imagine"). The agreement also includes the
acquisition of Imagine Lloyd's operations in Denmark and Japan.
Imagine Lloyd's, through Lloyd's Syndicates 1400, 2525 and 2526,
underwrites a diverse portfolio of specialty risks including property
catastrophe, financial institutions, personal accident, employers' and
public liability, and professional indemnity business. Based in London,
the business Max Capital has agreed to acquire will complement Max
Capital's current operations in Bermuda, Ireland and the United States.
www.maxcapgroup.com |
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10.
Massachusetts
Association of Health Underwriters Board Member Responds to Governor's
Healthcare Proposal |
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GOOD IDEA OR JUST "BAD" POLITICS?
FRAMINGHAM, Mass., July 24, 2008 /PRNewswire-USNewswire via COMTEX/ --
Last week, Governor Deval Patrick issued a proposal asking businesses,
insurers and hospitals to contribute about $100 million to fund the
shortfall resulting from the Massachusetts Healthcare Reform Law.
Massachusetts Association of Health Underwriters (MassAHU) board member
Mark S. Gaunya issued the following statement in response to the
Governor's proposal.
Two years ago, the Massachusetts Healthcare Reform Law went into effect
with the admirable goal of insuring the uninsured, and it asks everyone
to participate -- the government, insurers, providers, employers and
individuals.
Is
it working?
According to the latest press release by the Commonwealth Connector, the
government authority responsible for administering the new law, there
are 340,000 newly insured Massachusetts residents, giving the
Commonwealth one of the lowest uninsured rates across the nation. Some
say this is a universal healthcare model for the rest of the country.
What's wrong?
With all the newly insured people coming into the system so rapidly, we
are having trouble finding enough doctors to treat them, and we are
having trouble finding the money to pay for it. In fact, some estimates
show that the new law is under-funded by as much as $150-$200 million.
What does the Governor propose?
According to some new polls, consumers are supportive of his idea
because they think "others" need to step up and pay "their share,"
suggesting that recent increases in co-payments and deductibles prove
consumers are already doing "their part."
What are the specifics for the Governor's proposal?
The Governor proposes raising $100 million in three ways:
1.
The law currently states employers with more than 10 employees must pay
at least 33% of worker's premiums within their first 90 days "or" have
at least 25% of their worker's covered by an employer plan. The Governor
is proposing changing the "or" for employers to "and." If employers
fail, they must pay a $295 annual assessment for each employee. The
change in the law is projected to raise $33 million.
2.
The Governor also proposes the taxing of health insurance company
reserves, which are used to pay claims. A certain amount must be kept on
hand by each insurer to make sure those claims can be paid. This
additional tax is projected to raise $33 million.
3.
The Governor is seeking to tax hospitals, with the hope of raising
another $28 million.
What's wrong with this plan?
The problem with the Governor's plan is that it is a hidden tax on
consumers, and it does not fix a thing. Why? The government, insurers,
providers, employers and consumers all play an important role in the
health care equation.
Massachusetts collects a big check from the federal government every
year (last year, almost $4 billion) to pay for Medicare and Medicaid
healthcare expenses. The problem is that our state government does not
pay its fair share. They pay about $.80 for what costs $1.00 for doctors
and hospitals to deliver their care.
The big insurers in Massachusetts (BCBS, Harvard Pilgrim, Tufts and
Fallon) are all non-profit. They make about a 1% to 2% profit margin on
every premium dollar they collect from employers and employees and put
those profits into the bank reserves to pay claims. Insurers negotiate
contracts with the government, doctors and hospitals to deliver care to
their members. Because the government only pays 80% of what it should,
doctors and hospitals charge insurers about $1.20 to make up for the
government's shortfall.
The doctors and hospitals also negotiate contracts with the government
and insurers. As we already discussed, they charge insurers more than
the actual cost of care to make up for what the government is not paying
(see estimated figures above).
Employers sponsor health insurance for their employees. Most work with
brokers and consultants to find the best plan for the least amount of
money and, on average, employers pay about 75% -- 80% of the cost for
their workers.
Employees, also known as consumers, pay for about 20% to 25% of the
health insurance premium, and when they use their health plan, they pay
co-payments and deductibles as well.
How is it a hidden tax when the Governor's plan calls for everyone else
to pay?
When you understand who is involved in health care and the role everyone
plays, the impact becomes clearer:
1.
Insurers -- taxing reserve accounts will lower "money in the bank" and
require the insurers to increase health insurance premiums to replace
them.
2.
Hospitals -- faced with already tight budgets, hospitals will be forced
to demand more money from insurers to deliver care. Insurers will have
to comply or risk not being able to offer their members access to "my
doctor" or "my hospital."
3.
Employers -- changing the test from "or" to "and" will increase
assessments (fines), which means employers will have less money to hire,
give raises, and pay for benefits.
4.
Consumers -higher insurance premiums will have to be paid, because
employers cannot afford to pay the premium increases insurers will
demand.
Where do we go from here?
We
need to ask "everyone" to be more prudent with the way they spend their
money, and here is how it would look:
1.
Government -- we need the government to pay its fair share and manage
our money more wisely. It should not be a foreign concept for our
government to spend less than they take in, to balance their budget, to
fund greater access to care, and to help lower what doctors and
hospitals need to ask insurers for.
2.
Insurers -- we need insurers to continue to find ways to reduce their
administrative expenses (now about $.10 on every $1). They also need to
help members get the right care, at the right time, and in the right
place. At the same time, they need to teach them how to live a healthier
lifestyle so they need less care.
3.
Hospitals/Doctors -- we need our providers to also find ways to reduce
their administrative expenses (now about $.25 on every $1) and help
their patients get the right care, at the right time, and in the right
place. They also need to teach their patients how to live a healthier
lifestyle so they need less care. This is what a partnership is all
about.
4.
Consumers -- We need to understand that health care is expensive, and
that relative to the rest of the country, we are not paying more. In
fact, the Boston area has the best health care in the country, and we
really do not pay as much as others do. We need to demand accountability
from everyone in this "food chain," as well as ourselves. It simply the
right thing to do!
In
the end, asking employers, insurers, hospitals and doctors to pay more
taxes to pay for our new health care law is just another way of taxing
us. It is bad politics and a hidden tax, so hold onto your wallets!
SOURCE Mark S. Gaunya
Copyright (C) 2008 PR Newswire. All rights reserved |
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11.
Grange Insurance
Expands Homeowner and Auto Policy Loyalty Programs
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COLUMBUS, Ohio (July 25, 2008) - Grange Insurance today has announced
the expansion of their Homeowners Partner Plus loyalty endorsement
program and the personal auto policy Loyal Customer endorsement program.
Beginning in most states in July, existing, qualified policyholders will
be eligible for additional homeowners and auto policy coverage under the
two loyalty programs.
"By expanding these endorsement programs, we're hoping to reward
existing customers for their loyalty to Grange not to mention do our
part to help our customers combat rising costs of gas and food prices,"
said Alan Brannan, President, Property Casualty for Grange Insurance.
"Although it's a small drop in the bucket of today's rising expenses, we
hope it will help give our customers peace of mind and provide the
resources needed in the event they should need to file a claim."
www.grangeinsurance.com |
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12.
BANK INSURANCE NEWS IN BRIEF - JULY 28, 2008
|
TODAY'S BANK INSURANCE IN BRIEF" is provided each week courtesy of
Michael White Associates @www.bankinsurance.com. To read these stories
, visit
http://www.bankinsurance.com/editorial/news/default.htm .
HEALTHY ANNUITY COMMISSIONS HELP COMMUNITY BANKS BOOST
INVESTMENT PROGRAM INCOME
MUTUAL OF OMAHA ADOPTS DEPOSITS OF TWO FAILED BANKS
WELLS FARGO VAUNTS 27% HIKE IN INSURANCE FEES
MORTGAGE INSURANCE SUB HURTS SUNTRUST’S 2Q EARNINGS
FIRST BANCORP’S NET INCOME JUMPS 39% DESPITE DIP IN INSURANCE RESULTS
CULLEN/FROST BANKERS REPORTS 7.2% GROWTH IN INSURANCE BROKERAGE FEE
INCOME
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14.
Insurance Commissioner
Poizner Announces Availibility Of First Green Homeowners Policy In
California
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LOS ANGELES Insurance Commissioner Steve Poizner today joined
Fireman’s Fund Insurance Company and the U.S. Green Building Council to
announce his approval of the first green homeowners insurance policy in
California. Commissioner Poizner applauded Fireman’s Fund for being the
first company to offer a green homeowners policy in California, and
encouraged other insurers to explore environmentally-friendly options
for consumers. |
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15.
BoCom Wants To Branch
Into Insurance, Securities |
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BEIJING, July 28 (Reuters) - China's Bank of Communications hopes to
expand into securities and insurance this year as part of its strategy
for moving beyond bread-and-butter banking, a senior official with
China's fifth-largest lender said on Monday.
At
home, BoCom (601328.SS) (3328.HK) has already entered the trust,
fund management and leasing sectors, while overseas it has branched into
insurance and investment banking, Vice-President Qian Wenhui told a news
conference.
"We hope to make initial investments in the domestic securities and
insurance sectors this year, as long as we can get regulatory approval,"
he said.
BoCom first announced in March it had applied for regulatory approval to
buy a controlling stake in an insurer.
It
said at the time that it hoped to get the go-ahead in the first half of
the year. (Reporting by Jason Subler; Editing by Alan Wheatley)
©
Thomson Reuters 2008 All rights reserved |
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16.
GMAC Financial
Services' SmartEdge Adds Insurance, Banking to Curriculum |
|
Web site redesigned and updated to reflect new content
DETROIT, July 25 /PRNewswire/ -- GMAC Financial Services has expanded
its financial literacy program, SmartEdge, to now include curriculum on
insurance and banking. SmartEdge, which reached more than one million
people in 2007 with its automotive finance and mortgage curriculum, is
now poised to expand its reach in educating consumers on key personal
finance matters.
GMAC has made a commitment to educating consumers through SmartEdge
seminars, online efforts and community outreach. A version of SmartEdge
was introduced in 2002 with education tools on automotive financing.
Mortgage education was added in the fall of 2007 and insurance and
banking is now rounding out the program. In addition, the program's Web
site,
http://www.SmartEdgeByGMAC.com has been redesigned and updated with
the new content. |
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17.
CEI Online Calculator
Reveals Sales Needed To Offset the Cost of Fleet Accidents |
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TREVOSE, PA, JULY 25, 2008 -- CEI has created an online calculator to
help fleet and safety managers determine the extra sales revenue a
company needs to generate to make up for the cost of fleet accidents.
The calculator being hosted by Bobit Business Media on its Safety
Channel at http://www.automotive-fleet.com/Channel/Safety-Accident-Management.aspx.
The Safety Channel can be reached from the following fleet magazine
websites: Automotive Fleet.com, Work Truck.com, Government Fleet.com,
Business Fleet.com and Fleet Financials.com.
To
calculate the sales figure, users enter the number of fleet accidents
they’ve had over the last 12 months and their company’s operating profit
margin. The calculator multiplies the number of accidents entered by
the average cost per fleet accident as estimated by the National Highway
Traffic Safety Administration. Alternatively, users can enter either
their own average accident cost, or their total annual fleet accident
costs as the basis for the computation.
www.ceinetwork.com. |
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18.
Life Brokerage
Partners, LLC Removed From AXA Equitable Lawsuit |
|
OLDSMAR, Fla., July 25 /PRNewswire/ -- On Friday, July 18, 2008, AXA
Equitable, through its attorneys, filed an Amended Complaint in the
Southern District of Florida Federal Court removing all allegations
against Life Brokerage Partners, LLC ("LBP"). The result of AXA's
Amended Complaint is that LBP is no longer a party to and has no
involvement in the lawsuit. "We are pleased with AXA's decision to
remove Life Brokerage Partners from the lawsuit. AXA understands that
LBP had no involvement in the policies AXA has challenged in the suit
and that pursuing groundless allegations against LBP would serve no
legitimate purpose. LBP faithfully adheres to all of its legal and
ethical duties and responsibilities to its insurance clients and the
companies with whom LBP works," stated Ravi Malick, President of Life
Brokerage Partners, LLC.
The removal of LBP from this lawsuit confirms that it does not promote,
broker, or process Stranger Originated Life Insurance (STOLI) or
Investor Owned Life Insurance (IOLI) transactions. LBP will not do
business with or process any business for any licensed agent LBP
believes is conducting or party to these types of transactions. LBP
will continue to remain aligned with the pervasive industry stance on
STOLI/IOLI, and will process only carrier approved premium finance and
traditional non-premium finance life insurance products. Mr. Malick
stated, "We believe that STOLI/IOLI transactions are bad for the
industry and will not associate with it." http://www.lifebrokeragepartners.com / |
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19.
U.S. house prices
overvalued by up to 20 percent: IMF paper |
|
Fri Jul 25, 2008 8:06pm EDT
WASHINGTON (Reuters) - The downward spiral of U.S. housing prices still
has a way to go and homes were overvalued by between 8 percent to 20
percent in the first quarter of this year, according to research by an
International Monetary Fund economist published on Friday.
In
his report "What goes up must come down? House price dynamics in the
United States," IMF economist Vladimir Klyuev used several economic
techniques to determine by how much U.S. home prices are overvalued.
Klyuev drew from a government study of single-family home prices to
conclude that values were "around 14 percent above equilibrium in the
first quarter of 2008, with a plausible range of 8 to 20 percent."
His research showed that home prices became considerably overvalued from
2001 and while the housing market has started to correct itself, there
is still a long way to go.
U.S. policy-makers are now trying to guide the housing market into a
soft-landing after a five-year run-up in home values that ended in 2006.
The report also said that it is likely home prices will swing well below
their equilibrium level before they start to recover.
Klyuev's research included data gathered by the U.S. Office of Federal
Housing Enterprise Oversight which regulates mortgage-finance companies
Fannie Mae and Freddie Mac and collects purchase price data.
Klyuev analyzed the dynamics of home prices and found the
inventory-to-sales ratio the most important driver of changes in
property values in the short run.
"Starts in foreclosures, which obviously add to inventory, seem to also
exert additional downward pressure on prices," he added.
According to the research the bloated inventory-to-sales ratio, high
foreclosure rates, and inertia in housing markets imply that recent
price declines are likely to continue.
The research also considered whether the current fall in U.S. housing
prices represented a nationwide bust.
"While the national price level is falling on every measure, there is an
opinion that this decline might reflect oversized drops in a few
isolated markets rather than a countrywide phenomenon," it said.
(Reporting by Lesley Wroughton; editing by Gary Crosse)
©
Thomson Reuters 2008 All rights reserved |
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20.
INSURANCE NEWSCAST "Pictures Of The Day"
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Spill closes Miss. River, shuts off exports.
Members of the Coast Guard attempt to contain a fuel oil spill in the
Mississippi River at the Port of New Orleans, Louisiana July 24, 2008.
REUTERS/Sean Gardner
Read Entire Story!!!
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Beijing shrouded in haze 11 days before Olympics.
An aerial view of the haze shrouded city from Jingshan Park in Beijing
July 28, 2008. REUTERS/Claro Cortes IV
Read Entire Story!!!
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Cambodia Prime Minister Hun Sen casts his ballot
at a polling station during the general election at Takmoa town in
Kandal province, on the outskirts of Phnom Penh July 27, 2008.
(CAMBODIA) REUTERS/? Chor Sokunthea / Reuters
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Pope Benedict XVI watches at the Schutzer's
performance as he arrives for his annual holidays in Bressanone,
northern Italy July 28, 2008. REUTERS/Alessandro Garofalo (ITALY)
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A man stands on a highway damaged by Typhoon Fung-Wong
near Ilan July 28, 2008. A typhoon dumped up to 700 mm (28 ins) of rain
on Taiwan on Monday, killing one person, injuring five, causing
widespread flooding and closing businesses and financial markets.
REUTERS/Stringer (TAIWAN)
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Philippine President Gloria Macapagal Arroyo is
displayed on video screens during her State of the Nation Address at the
House of Representatives in Quezon City, Metro Manila July 28, 2008.
REUTERS/Cheryl Ravelo (PHILIPPINES)
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Tuvan shamans perform an ancient ceremony known
among locals as Kamlanie during the opening of the ethno-cultural
festival Khoomei at the Kundustug springs near the city of Kyzyl in the
Tuva region near the Mongolian border some 804 km (500 miles) south of
Krasnoyarsk July 26, 2008. Tuvans were originally nomadic people who
today populate some regions of Siberia, Mongolia and China. (RUSSIA)
REUTERS/? Ilya Naymushin / Reuters
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A Cambodian soldier stands guard on the grounds
of the Preah Vihear temple, about 250 km (152 miles) northeast of Siem
Reap, July 27, 2008. Cambodians voted on Sunday in an election likely to
bestow another five-year term on long-time Prime Minister Hun Sen, whose
standing has been boosted by a nationalist spat with Thailand over a
900-year-old temple. The ruins themselves are claimed by both countries
but were awarded to Cambodia in 1962 by the International Court of
Justice, a ruling that has rankled in Thailand ever since. (CAMBODIA)
REUTERS/? Adrees Latif / Reuters
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Members of the Spanish Air Force acrobatic group
'Patrulla Aguila' fly over San Lorenzo beach in Gijon, northern Spain,
during an aerial exhibition, July 27, 2008. REUTERS/Eloy Alonso (SPAIN)
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A woman paddles her boat during sunrise at the
Hammar marsh in Nassiriya, 300 km (185 miles) southeast of Baghdad, July
27, 2008. Picture taken July 27, 2008. REUTERS/Thaier al-Sudani (IRAQ)
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