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Tuesday, January 24, 2006

Hillary Clinton Revives Hillarycare, Opposes HSAs

Monday, Jan. 23, 2006 11:20 p.m. EST


Sen. Hillary Clinton is reviving her disastrous health care reform crusade, saying she intends to "fix" President Bush's Medicare prescription drug plan, then adding: "I'm determined to do the same with access to affordable health care as well."

In an email sent to supporters on Monday, the former first lady blasts Bush's proposal for private health savings accounts, warning: "Just as they did with their Medicare Drug bill, the Bush Administration is putting the special interests first and wishing everybody else the best of luck."

Clinton declared that she knows a thing or two about the subject at hand, reminding: "Now, I've had some experience with health care. I know that making health care more accessible for every American family will not be easy."

Then, in rhetoric that could have been lifted from her 1994 Hillarycare campaign, Mrs. Clinton complained:

"There are now over 45 million uninsured Americans. There are over 13 million uninsured children . . . Premiums are rising at over twice the rate of inflation and the number of employers offering coverage is dropping."

In another Hillarycare flashback, Mrs. Clinton tells her supporters: "This is a national crisis and a flat-out moral failing."

The top Democrat announced that she's "hosting a roundtable on health care this week in Rochester, New York -- the first in a series" - and asked her supporters to email her office with their own health care horror stories.

Hillary concludes her health care missive by declaring: "We need to make sure all Americans and their representatives know the truth about how our present health care policies are impacting you and your family."


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Sunday, January 22, 2006

You'll get better health care when you foot your own bill

Andrew Carroll
The Arizona Republic
Family Medicine Specialist
Jan. 22, 2006 12:00 AM

Health insurance was invented as a health benefit that employers could offer employees as an incentive to hire on. The theory was that healthy employees would be consistent employees, and the health of their families would be ensured.

Much more today, we see health insurance as a burden, not only to employers but to employees, families, doctors and society.

The rise in health insurance premiums has far outpaced inflation, and yet the health care delivered is no more comprehensive, and likely less so, than even just a few years back.
General Motors used health insurance as a major bargaining chip with the United Auto Workers group recently in its contract negotiations. The union relented and allowed the sweeping changes. However, GM still will pink-slip 30,000 employees.

From a doctor's point of view, we could see it coming. The drive toward technological health care delivery and increased active longevity comes at a high price: research dollars for new scanners, new medications, new chemotherapy agents, and availability of highly subspecialized physicians.

And yet the obesity rate continues to rise and, subsequently, the rate of diabetes, hypertension and heart disease. Cigarette smoking is still at a 20 percent rate in the United States. As we move to being less of a manufacturing society and more of an information-based technological society, our sedentary lifestyles are becoming a huge burden on the system.

Insurance is the great equalizer for patients. For one co-payment, you can see a physician straight out of medical school or a university professor in practice 25 years with a stellar bedside manner. A physician who has been sued 20 times (though less likely to be credentialed with an insurer) with an awful bedside manner will make the same amount of money as a respected pediatric neurosurgeon for an evaluation and management visit. The insurance companies pay them both the same. A standard visit with those doctors will pay about $50 on average. How fair is that?

Patients will continue to see benefits decline for the benefit of insurance company shareholders. They profit at your loss. In my opinion, shareholder-owned for-profit health insurance runs counter to any notion that health care is a public good.

There's only one solution for the system, and that is coming slowly but surely. You will begin to spend your own money for health care.

Health Savings Accounts allow patients to store money, much like an IRA, for use in health care. To make this system work well, though, doctors and patients need to learn what health care really costs. And that's what makes this system much more viable in the long term.

I think the key to this change, though, will be balance billing, which will allow physicians and hospitals to bill above contract rates. This will allow the better and more patient-friendly doctors to bill what they're actually worth. Providers will compete for your business, both from a price and quality-of-care delivery standpoint.

Why is this better? For one, it will help reduce your or your company's premium. It will reduce intervention from the insurance company, like prior authorizations, because it's your money.

It will force doctors to become much more cognizant of the costs of health care because they will no longer be spending big corporation money in your workup, they will be spending yours.

And finally, you, the patient, will become much more involved in your health care because it's coming out of your pocket. Because it's your money, doctors will be much less likely to practice "defensive medicine" and more likely to discuss at length the merits of their workup plan and options.

You will become intimately involved in the decision-making about whether to have a CAT scan done, or an MRI, or a colonoscopy, or picking a brand name vs. a generic medication.

And when you become involved, you're more likely to demand better pricing, better evidence and better behavior from the people that deliver health care to you.

Including the doctors.

Dr. Andrew Carroll is a family medicine specialist in private practice in Chandler. He is also clinical assistant professor at the University of Arizona College of Medicine and a regular guest on "Sonoran Living Live."

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Friday, January 20, 2006

Attorney General Cautions Floridians Against Flood-Damaged Vehicles


Attorney General Charlie Crist has issued a consumer alert cautioning Floridians against buying used vehicles that may have been flood-damaged by Hurricanes Katrina, Rita and Wilma. As many as 600,000 vehicles throughout Louisiana, Mississippi, Alabama and Florida may have been affected by the storms and are now being shipped to other states by auto wholesalers.

A flooded car is the personal property of the owner and it is not illegal to sell it, but both the buyer and the seller should be aware that the car has been flooded. Some sellers may try to scam the buyer by concealing the car's water damage, and the buyer would end up with a car that has serious problems caused by the flood water.

"Citizens should be extra careful when buying an automobile, especially a used car," said Crist. "By concealing the damage, unethical individuals can pass a car off as a good bargain, when in fact it is nothing more than a water-soaked lemon. If a deal seems too good to be true, it probably is."

Safety is one of the primary concerns when buying a flood-damaged car. An unsuspecting buyer could be stuck with a car that does not function properly and could place them and their loved ones in serious danger.

Common problems with flood cars include engines, anti-lock brake systems and airbag systems that may malfunction, ruined electrical components and mold and mildew throughout the air conditioner and heating systems.

Several services are available for consumers and auto dealers to check Vehicle Identification Numbers to help determine if a particular vehicle has a flood-damage record. The National Insurance Crime Bureau has compiled a database of vehicles affected by the hurricanes, which can be searched by the public free of charge. The database is available at Carfax is also helping protect unsuspecting buyers by making all of its flood information available to consumers and dealers free of charge at

Crist said consumers and dealers should be wary of someone trying to sell a car for well below the retail value. One obvious sign is a moldy smell from the seats and carpeting, although determined ripoff artists can conceal this through new carpeting and interior components. Sand, silt and salt under the carpeting is another indication that the car may be a flood car. Buyers should also check the engine compartment, trunk, and inner doors for silt and be aware of any electrical problems that recur or change on a daily basis.

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Ohio Business Groups Push for Workers' Comp Reforms


Business groups in Ohio are pushing lawmakers to enact reforms to the state insurance fund for injured workers that were agreed upon before a scandal broke over the fund's investments, according to a recent account by the Associated Press.

The scandal involved the removal of the agency's longtime administrator, an overhaul of the agency's investment policy and indirectly to the conviction of Ohio Gov. Bob Taft on ethics charges related to gifts he did not report as required under state law.

The Ohio Chamber of Commerce, the Ohio Council of Retail Merchants and the state chapter of the National Federation of Independent Business were among the business groups scheduled to meet with Republican lawmakers Wednesday about the bill. The Ohio Farm Bureau and the Ohio Manufacturers' Association also plan to meet with House and Senate GOP lawmakers who pushed the original reforms.

In June of 2005 a reform package was passed by Senate, just as the scandal including $300 million in investment losses heated up.

In response, lawmakers expanded the agency's oversight committee to include investment experts as part of the state budget approved last summer. Other bills aimed at the investment policies are working their way through the Legislature.

The bill business groups are pushing would reduce the period that workers can file claims for wages lost from on-the-job injuries and claims for medical payments. The legislation would also eliminate some payments for loss of limb. For instance, a worker who loses a leg can also file a claim for loss of a foot. The bill would count both as one limb.

Labor groups and attorneys representing injured workers had decided not to challenge the original bill, but now say it shouldn't go anywhere until the scandal is resolved.

The Ohio Trial Attorneys have said that the agency needs to improve, based the scandel charges. Rep. Stephen Buehrer, sponsor of the legislation, countered that the bill he is sponsoring is "about benefits, not investments."

Source: Bureau of Workers' Compensation

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Wednesday, January 18, 2006

Millions Of Young Adults Forgo Health Insurance


NEW YORK -- In 2003, more than 13 million young adults lived without health insurance -- a decision that could lead to serious consequences later in life.

NBC News reported the combination of expensive health insurance and low entry-level wages force many people to go without insurance. Further, most young people are healthy and don't see the need for health insurance.

"Even though this is the lowest-cost coverage that they're going to face in their careers, it's still high relative to their incomes," said William Custer, a professor of risk management and insurance at Georgia State University.

Custer added, "If they don't feel they're going to need health care, they don't feel they're going to need health insurance."

But that could mean serious health and financial problems in the future.

"I'm afraid our society is playing Russian roulette when young adults go without health insurance," said Joel Miller, senior vice president for operations at the National Coalition on Healthcare. "They deny needed care ... and it increases out-of-pocket expenses for them and their families."

Experts said families should search the Internet for health insurance providers that offer plans specifically designed for young adults.

"Some plans are coming around to the fact that this is the fastest- and largest-growing population of the uninsured population -- they're trying to market some different plans," Miller said.

At the very least, experts advise healthy young adults to carry catastrophic insurance. The plan may require a high deductible with limited or no routine medical coverage, but it will cover serious accidents or illnesses.

"Having a catastrophic plan, even with a large deductible, may mean this individual will have access to health care that can save their life," Custer said.

As with any large purchase, families need to do their research and find the policy that best fits the lifestyle for the young adult in their life.
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State-subsidized House insurance changes coming


By Lesley Stedman Weidenbener
The Courier-Journal

INDIANAPOLIS — House Speaker Brian Bosma said yesterday that, starting next year, he is ending state-subsidized, lifetime health insurance for any House members who leave the body.

The change won't affect the 25 former lawmakers and spouses already taking advantage of the benefit. They get health insurance at the same price — or in some cases an even lower one — than current state employees pay, even if they are eligible for Medicare.

And it will allow members of the House with more than six years of service to retire after their current term and still take advantage of the benefit.

But those elected in November and thereafter — even if they're now serving — will have to pay the full cost with no state subsidy to remain part of the state health-insurance plan when they retire, and then only until they are eligible for Medicare.

That's expected to cause some members to rethink whether to run for re-election in November or retire now to take the insurance.

Rep. Dave Crooks, D-Washington, said there might be a "mass exodus" of lawmakers who decide the retirement deal is too good to pass up.

"If you do the math, it adds up," Crooks said. "It's probably more valuable than any income that legislator may have made in their years of service."

Bosma acknowledged that could happen. But he said he believes members are not serving for the pay or benefits.

"They're here to serve the public, and I do not believe that putting this benefit back where it should be will change that dedication," he said.

Bosma said he has been "uncomfortable" for some time with the insurance program, which was authorized by a series of provisions slipped quietly into bills in 2001 and 2002 and then instituted by former House Speaker John Gregg, D-Sandborn, and Senate President Pro Tem Robert Garton, R-Columbus.

But he didn't want to revoke it for members serving now.

"While I disagree with the current benefit, it was in place when each of us ran for our office in 2004, and is part of the contract between the voter and their elected officials, whether the voter realized it or not," Bosma wrote in a letter distributed to members yesterday.

The program allowed any member retiring with at least six years and one day of service to lock in relatively modest health-insurance rates for the rest of their lives.

Essentially, they would continue to pay the same percentage of the total health-care premium that they did when they were lawmakers. The state would pick up the remaining costs.

This year lawmakers — just like state employees — can choose among health-insurance plans that have a total cost of between $3,826 and $14,511 annually, depending on the amount of coverage they choose and the number of family members covered.

The recipient's share of that total premium can be no higher than 24percent, depending on the plan, with the state picking up at least 76percent, according to the Legislative Services Agency. One plan requires no payment from a lawmaker or employee.

Retired lawmakers (or their surviving spouses) have simply continued to pay the same percentage of the total state premium as when they were actively serving.

The state's share of the current retired lawmakers' insurance premiums costs about $300,000 annually.

Senate President Pro Tem Robert Garton, R-Columbus, also has been looking into the issue. But he hasn't announced any changes for current or former members of his chamber.

Bosma voted for the bills that authorized the speaker and president pro tem to put the subsidized health insurance in place. So did the vast majority of lawmakers.

But in 2004 several Republican candidates for the House used the issue against the Democratic incumbents they were trying to unseat.

Rep. Billy Bright, R-North Vernon, who that year defeated Democrat Markt Lytle of Madison, was one of them.

Yesterday he called Bosma's decision "courageous."

"It was the right thing to do," Bright said.

Rep. Troy Woodruff, R-Vincennes, introduced legislation this year to do away with the health-insurance program, even for the former retirees now using it. Woodruff used the insurance issue in his campaign in 2004 when he defeated Democratic incumbent John Frenz.

Yesterday Bosma said that the legislation probably is not necessary now. However, a future speaker could decide to change Bosma's policy.

Several members said the change will cause them to think about quitting.

Crooks, who owns radio stations in Daviess County, said he will have to evaluate it.

"You'd be foolish not to take a close look at it because of the cost of insurance and the availability of it, and I still have two very young children," Crooks said. "It would be irresponsible not to consider it."

Rep. Bill Cochran, D-New Albany, said he believes the decision will affect the re-election decisions of some lawmakers. But he added that he won't be among them.

"That wouldn't be the reason I'd decide not to run," he said.

House Minority Whip Dennie Oxley, D-English, also said the change won't affect his decision to run again. He said he doubted it would affect many other members.

"A mass exodus?" Oxley said. "I haven't heard of anything like that."
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Health Plan to aid farmers


Cargill AgHorizons will hold a teleconference 7 p.m. Thursday at the Sheraton Hotel in Sioux Falls to introduce a new way for farm families to to pay for health care expenses and save for the future.

The plan, called Harvest Health, combines a health saving account provided by Wells Fargo with funding for the account provided by Cargill. The plan gives farm families the opportunity to more closely manage their own health care spending, control their health insurance premiums and set aside tax-favored dollars for future medical expenses.
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Monday, January 16, 2006

Health Insurance for One


By Morgan Kelly
Staff writer

Without an employer to cushion the blow, the price of individual health insurance can hit an independent buyer rather hard.

“If all of us had to have it, we’d probably be lucky to get it for a couple thousand a month,” said Debbie Kimble of Charleston’s Peanut Shoppe. Fortunately, the store’s three employees — all family — get coverage through spouses or the government.

“Anytime you have to put an extra $2,000 out, it’ll be harder,” she said. “But that’s when you tighten up your belt and cut back somewhere else.”

Although independently sought policies do not fall into most people’s view of reasonable, the average person can buy health coverage without breaking the bank as long as they can part with the usual workplace benefits, insurance experts say.

“If you’re young, the premiums can be relatively modest, but you’re talking about the deductibles in that market being $1,000 sometimes,” said Gary Claxton, director of the Kaiser Family Foundation’s Health Care Marketplace Project.

“You’re not going to get what most of us call a good policy for not a whole lot of money, but you can avoid making mistakes.”

First of all, avoid being roped in by your own health problems, Claxton said. Some insurers won’t sell to people who are already sick. Even if you do manage to secure a policy, there are several ways you can still be left uncovered when you can least afford it.

In West Virginia, insurers can set your premiums based on your health by 30 percent more or less than the standard cost, said Jessica Waltman, director of health policy research for the National Association of Health Underwriters, or NAHU, an insurance trade group.

“The rate you see online is the best-case-scenario rate,” she said.

Companies can also look at your health for the last year and refuse to cover conditions you had before applying for the policy, or pre-existing conditions, Waltman said. These conditions can go on for up to two years.

The point, of course, is to keep people from getting insurance just because they are sick, Waltman said.

But these exclusions can be somewhat arbitrary, said Trudy Lieberman, director of the Center for Consumer Health Choices, part of Consumers Union, which publishes the magazine “Consumer Reports.” A case of asthma could lead an insurer to deny all claims involving respiratory illnesses.

“These can be very minor problems, but you’re still not wanted by insurance providers,” Lieberman said. People looking for a policy should contact a broker who represents more than one company to get a good variety of choices.

The point of group- or work-based insurance is to spread the cost out over a large group of people, Waltman said. The larger the group, the less everyone pays (more or less the principle behind national health coverage). The idea is that if someone gets sick, there will be money flowing in to cover that person’s health needs.

On the other hand, when a single person or a small family gets a policy, the risk of illness shoots up while the chance of having enough cash to cover your health expenses goes down. Therefore, the policy costs more, Waltman said.

Plans employers buy — particularly those with good benefits — are more expensive than the average individual plan, but the employer fronts a lot of the cost, she said.

“It’s not that the [individual insurance] costs more. It’s just what people are used to paying out of pocket themselves,” she said. “Medical costs are still the same. Most people don’t realize what employers were paying for them.”

Until they try to pay for that policy themselves, that is. The Consolidated Omnibus Budget Reconciliation Act, or COBRA, lets people stay on a company’s insurance plan for a year and a half as long as they pay the premium themselves. Premiums can increase by several thousand dollars.

“COBRA is really a rock and a hard place,” Claxton said. “It’s usually too expensive, but it’s good coverage.”

Employees who opt for COBRA can eventually buy an individual policy without worrying about pre-existing conditions, their age or their health, Lieberman said. But you have to stay with your COBRA policy to the very end of its life. You could lose thousands before you start to save anything.

More people are being pushed into the private market as health-care costs skyrocket and employers trim back on health benefits, she said. For older employees, this can mean the inevitable ailments of age become a huge problem, Lieberman said. “The individual market is a pretty dark place.”

As the only employee of Charleston’s Shear Cut barbershop, John Ciampanella would need individual health coverage if not for his wife’s work-based insurance. (In West Virginia, a small business, for insurance purposes, means two to 50 employees, according to NAHU’s Web site.)

With his diabetes, he would be a tough sell to an insurance company.

“If you’ve got diabetes, no insurance company will take you on,” he said. “If I didn’t have [my wife’s insurance] I’d probably be up there standing in line for free shots.”

West Virginians who have been turned down for insurance because of chronic problems like diabetes can join AccessWV. Known as a “high-risk pool,” the rates and deductibles are a tad higher than the state average because mostly everyone in the plan is sick.

For instance, if the average rate is $100, the AccessWV rate would be $125, Waltman said.

On the opposite spectrum, people in good health could consider a health savings account. People going this route buy a cheap policy with a high deductible ($1,000 to $2,700 for individuals), Waltman said. Each year, the account holder can deposit money into the account up to the amount of the deductible.

The theory is that you’ll have a lot of money saved for medical care if you want it or need it. Unfortunately, it really only works if you never get sick, Lieberman said.

“They’re a gamble,” she said. “How many people can say they’ll never get sick? We don’t know.”
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Sunday, January 15, 2006

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Saturday, January 14, 2006

Do Authorities Smell a Rat? Mouse Blamed for Burning Down N.M. House


What sounded a little too good to be true may be just that. Could a mouse on fire be responsible for destroying a New Mexico man's house as first reported over the weekend?

According to KOAT-TV, the story may have more holes in it than a piece of cheese.

An 81-year-old Fort Sumner resident first reported that he had captured a mouse inside his home over the weekend. He then reportedly took the unwanted guest out into a pile of burning refuse and disposed of it. The man then reported that the mouse, on fire, scurried back into the home and found its way into a window area. From there, the mouse reportedly set fire to the home.

When firefighters arrived, the man, who reportedly did not have insurance on the home, was trying to douse the fire with a garden hose. The property was destroyed, but the man escaped injury.

Officials now believe that winds from the refuse fire outside may have spread to the home and ignited the house fire instead of the unwanted guest.


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U.S. Rep. Taylor Joins Lawsuit Against Mississippi Insurer


U.S. Rep. Gene Taylor, D-Miss., has joined the thousands of Mississippians suing State Farm Fire & Casualty Co., challenging the insurance company's refusal to cover property losses resulting from Hurricane Katrina.

Taylor's lawsuit comes less than a month after U.S. Sen. Trent Lott, R-Miss., filed a suit against State Farm. Both Taylor and Lott are represented by Lott's brother-in-law, attorney Richard "Dickie" Scruggs.

Taylor and his wife, Margaret, seek an insurance settlement on their waterfront home in Bay St. Louis. Lott wants a State Farm settlement on his Pascagoula home. Both homes were destroyed on Aug. 29.

"State Farm said (Taylor) had no wind damage," said Beau Jex, Taylor's chief of staff. "It makes you wonder, because all he had left was slab ... it went from a two story home to a slab."

Taylor had lived in the house since 1978 and was insured through State Farm for about 20 years.

Scruggs, best known for his success in taking on tobacco companies, is pursuing a court ruling requiring major insurance companies operating in Mississippi to pay for all damages from the hurricane.

The lawsuit is part of a continuing wind-versus-water-damage debate between insurance companies and policy holders on the coast. The battle has become a personal one for Scruggs.

"Given the fact that I grew up down there, and I raised my family down there, and I lost my home down there and all my neighbors were wiped out not only by Hurricane Katrina, but by hurricane insurance, yeah, it's damn personal," Scruggs said. "I'm very appalled at the corporate culture of the insurers trying to dodge their responsibilities."

A group of law firms have agreed to work together as the Coast Katrina Group. The organization's goal is to assist people who have lost their homes to Katrina and have had their insurance claims denied, Scruggs said.

The number of Mississippi households suing insurance companies continues to grow each day.

"It changes every hour, in terms of the number of people being denied," Scruggs said. "But it's in the range of 3,000 families."

State Farm has become the target of many of the lawsuits, because it is one of the largest and because many policy holders in Mississippi had purchased the standard policy and an additional hurricane endorsement, Scruggs said.

The issue is whether a storm surge should be considered flooding, in which case thousands of hurricane victims would be left struggling to recover from the losses of their homes without help from their insurance providers.

Insurance companies say they shouldn't have to pay for water damage for insurance holders who did not have flood policies. Scruggs insists the damage caused by storm surge cannot be defined as flooding.

State Farm declined to comment on the specifics of the lawsuit.

"Regarding Representative Taylor, there is no question Katrina caused horrific damage in Mississippi and elsewhere along the Gulf Coast," said State Farm spokesman Fraser Engerman. "We cannot comment on this litigation. We handle each claim on its own merits, and we pay what we owe based on our contract with the policy holder."

Gov. Haley Barbour has said he prefers to negotiate with insurance companies, saying lawsuits could force the companies out of Mississippi.

But state Attorney General Jim Hood, who filed a lawsuit on behalf of Mississippians with standard homeowner's policies, says the companies should cover hurricane damage whether the loss is from wind damage or a storm surge. Hood says damages could cost billions.

Scruggs, who also lost his Pascagoula home, has promised to use his clout to get insurance companies to pay up.

Copyright 2006 Associated Press. All rights reserved. 
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Personal Lines Doing Fine, Even Without Price Changes, Suggest P&C Analysts


The year 2005 is looking like it was a relatively good one with solid financial news for property casualty insurers overall, despite record catastrophe losses, and 2006 could bring even better news, according to analysts at a recent New York meeting of executives.

The analysts said that the good news is most apparent in personal lines, where it appears insurers have refrained from typical cyclical behavior of cutting prices to build market share.

For the year just ended, property casualty insurers are likely to show a slight underwriting profit, with a combined ratio around 99. Insurer stocks outperformed the Standard & Poor's 500 by 10 percent, with only utilities and energy coming in better.

According to Franklin Nutter, president, Reinsurance Association of America, results like this made 2005 a "remarkable" year and 2006 looks to be just as remarkable. According to a poll of analysts, there should be another underwriting profit in 2006. Credit Suisse Boston is projecting a return for the property casualty industry in 2006 of 15 percent.

Nutter was among the experts at the annual Property Casualty Joint Industry Forum sponsored by the Insurance Information Institute who wondered how long the good news in personal lines will continue.

"We're in a spot now and for whatever reason, and I think people are smarter about their business and have more data, people are saying, 'We can't grow by cutting prices,'" noted Brian Sullivan, publisher of Auto Insurance Report and Property Insurance Report. So instead they are saying, "let's not do anything," continued Sullivan, who termed 2005 as a "let's not do anything year" when insurers decided to just keep making money.

"It's a very unusual marketplace in personal lines," the noted personal lines authority added.

While he thinks it may not be as profitable as surface numbers suggest, personal lines, particularly auto, is still a good place for insurers right now, according to stock analyst V.J. Dowling.

Auto is seeing returns of 15 percent, he said, not because rates are going up or because settlement costs are going down but because accident frequency is down.

"As long as that keeps happening, results will be stronger than anticipated but at some point you can't keep having fewer and fewer accidents and things will turn," predicted Dowling, whose firm, Dowling & Partners Securities LLC, in Hartford, specializes in property casualty stocks.

Companies may have stopped cutting personal lines prices but that does not mean that the cycle is dead, warned another analyst. "The key is not to get too intoxicated by the good times," said David Schiff, editor of Schiff's Insurance Observer. Schiff stressed that while cycles may be longer and less predictable, they still exist.

Standard & Poor's chief quality officer, Mark Puccia, along with Sullivan and others note that stagnant investment income and the hurricanes kept the pressure on insurers to maintain rather than reduce personal lines prices in 2005.

The analysts also credit insurers' use of better underwriting tools and risk information for the underwriting results in personal lines. "Progressive has more underwriting cells in some states than there are people," commented Sullivan.

History suggests that in a soft market there may be mergers in the agency ranks but Dowling questioned whether there would be much consolidation activity among carriers in the coming year. "Nobody's getting out with 15 percent return on equity," the stock expert said.

S&P's Puccia agreed, maintaining that there are not many "white elephants" in personal lines today that are looking to be bought out and that insurers in personal lines now want to stay in.

Sullivan suggested that mergers don't make as much sense as they did years ago. Today, insurers can grow by simply winning over business from weaker competitors that lack the skills and market presence to compete.

"One of the key factors in personal lines is a lot of companies have recognized that it's more profitable and possible to grow by just taking customers from those 'weak sisters,'" Sullivan said.

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Thursday, January 12, 2006

NAMIC Warns Regulators All-Perils Policy Could Worsen CAT Problems

A "Natural Catastrophe Risk Plan" drafted by the National Association of Insurance Commissioners has the potential to "damage private insurance markets and exacerbate the very problems it seeks to correct," warned the National Association of Mutual Insurance Companies in comments submitted to the NAIC over the weekend.

NAMIC's largest member company is Bloomington, Illinois-based State Farm Insurance Company was recently sued in a Hurricane Katrina related class action suit by policyholders who have purchased an all-perils policy that excludes flooding, according to a recent Insurance Journal story.

However, the NAIC plan is not the same all-perils policy currently offered by many insurance companies. NAIC in its Cat Plan proposal would offer an all-perils policy that have only one exclusion "war," and this policy would be offered to every policyholder across the country. The proposal was a controversial agenda item, debated extensively at the public hearing held in Chicago during the NAIC Meeting in early December.

The Indianapolis-based national insurance trade association submitted its comments in direct response to the NAIC's plan, embodied in a 10-page white paper that the organization released just days before its December meeting.

The NAIC plan calls for the creation of a multi-layered system of risk-bearing capacity to finance losses due to large-scale natural disasters. The first layer of protection, provided by the private insurance industry, would be backstopped by a second layer consisting of a network of state and regional catastrophe reinsurance funds. The second layer would be backstopped by a third layer, consisting of a federally-funded reinsurance program to be administered by a new federal agency.

A central feature of the plan is a provision that would require property insurers to sell, on a nationwide basis, an "all-perils" homeowners policy "containing no exclusions except for acts of war." NAMIC's comment stresses that the plan fails to disclose whether the price of the policy would be determined by market forces or by government fiat.

"If the latter," said NAMIC Public Policy Director Robert Detlefsen, "coverage for property owners in high-risk regions would likely be subsidized by property owners in low-risk regions."

NAMIC's comment identifies three negative consequences that would ensue if insurers were compelled to offer all-perils coverage at prices suppressed through regulation:

*Unless all homeowners are required to purchase an identical all-perils policy, the plan will lead to adverse selection. An all-perils policy whose price does not reflect the greater risk associated with particular perils in particular regions will attract a disproportionately large number of high-risk buyers and a disproportionately small number of low-risk buyers, thus increasing the likelihood that losses will outstrip private sector capacity and trigger recourse to the taxpayer-funded reinsurance mechanisms envisioned by the plan.

*If, on the other hand, all homeowners are required to purchase an all-perils policy, the plan will be unfair to policyholders who choose not to live in high-risk areas.

*The plan would increase the potential loss costs from natural disasters by decreasing incentives for risk mitigation and aggravating moral hazard. For some individuals, the optimal risk mitigation strategy may be to avoid owning property in certain regions altogether. A plan that combines mandatory coverage, cross-subsidies through price suppression, and taxpayer-funded government reinsurance will ultimately discourage risk mitigation. Moreover, if premiums in high-risk areas are artificially low to begin with, providing mandatory discounts and tax credits to policyholders who invest in risk mitigation measures could actually make matters worse.

"Instead of using regulation to force insurers to offer comprehensive homeowners coverage, NAMIC urges policymakers to consider removing government barriers that prevent insurers from offering such coverage voluntarily," said Detlefsen. These include insurers' inability to create dedicated tax-deferred catastrophe reserves, as well as "the current system of government price controls that prevents insurers from pricing coverage based on risk."

NAMIC's comment acknowledges that in high-risk areas, the risk-based price that insurers would need to charge for comprehensive coverage may prove unaffordable for some property owners. In such cases, policymakers "could determine which government interventions, if any, are appropriate."

While the NAIC plan represents one possible approach, NAMIC urges that others be considered as well. For example, programs could be created to provide direct financial assistance to individuals whose insurance costs society wishes to subsidize. Such subsidies could be provided on a means-tested basis and would operate much like current government programs that provide food and housing subsidies for low-income individuals.

"There are a variety of potential public and private responses to the problem of managing and financing natural disaster risk," NAMIC's comment concludes. "All are worthy of careful study and deliberation."

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Wednesday, January 11, 2006

Standard Life chairman to go shortly after flotation

In an unexpected move, UK life insurer Standard Life is coming to terms with the reality that it will lose its chairman within a year of its flotation on the FTSE 100.
11 Jan 2006, 09:33 GMT - According to reports in the UK press, Standard Life's chairman Sir Brian Stewart has decided to leave his position at the insurer within 12 months of its initial public offering in order to concentrate on his other chairmanship role. Mr Stewart is currently also the chairman of major UK brewer Scottish and Newcastle.

Mr Stewart was expected to give up one of his chairs following Standard's float because holding the chairmanship of two FTSE-listed companies at once is seen as running counter to corporate governance standards.

However, the revelation comes as a shock to the mutual life assurer, which had expected Mr Stewart to give up his brewery chairmanship to stay on at Standard. The company had hoped the experienced boardroom head would guide the company in its fledgling years as a public company.

Furthermore to the management disruption, the revelation of Mr Stewart's departure could also damage Standard Life's share valuation when it floats.
Source: Datamonitor Newswire
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Hybrid Health Insurance


Nashville (WVLT) - Governor Bredesen says he wants to focus on helping Tennessee's 600,000 uninsured residents once the special legislative session, which begins Tuesday, ends.

Bredesen, who's up for re-election this year, says he envisions developing a type of hybrid health insurance plan.

In it, the working poor, their employers, the state, and possibly the federal government would each kick-in part of the health insurance premiums.

Details of the plan are still being worked out.

The hope is the new plan would be a partner to the state's current TennCare plan.
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Tuesday, January 10, 2006

Mass. Man's Auto Insurance Fraud Scheme Placed in Park

A Groton, Massachusetts man has pleaded guilty to charges he submitted false documents to an auto insurer to collect insurance money, Attorney General Tom Reilly announced.

Peter Lombardini, 48, of Groton, pleaded guilty Dec. 27 to one count each of motor vehicle insurance fraud and attempted larceny. Middlesex Superior Court Judge Paul Chernoff sentenced him to two years probation and ordered him to pay a $1,000 fine.

Lombardini purchased a 1994 Oldsmobile Achieva on Aug. 10, 2004. He reportedly claimed that on Aug. 20 he left the car at an intersection in Billerica after placing a "for sale" sign in the window.

On Aug. 22, the Billerica Police Department recovered the car at a different location. The car had been burned and completely destroyed. Lombardini filed a police report and a claim with Plymouth Rock Assurance Company.

With the insurance claim, Lombardini reportedly submitted an affidavit for a stolen vehicle stating he had purchased it from an ex-girlfriend for $1,000. He also submitted an invoice from a tire retailer for custom tires and rims totaling $2,189, and a receipt from an auto body shop for $1,400 in bodywork.

The investigation found that Lombardini's submissions to Plymouth were false documents.

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Sunday, January 08, 2006

Health care shake-ups on way

The Atlanta Journal-Constitution
Published on: 01/08/06

Each year, the surest bets in health care are that medical costs will rise, consumers will pay more for insurance, and the number of people without health coverage will rise.

2006 promises to continue those trends but also bring changes that will mean, in some ways, a fundamental rewrite of Georgia's health care system. Experts predict it will be the biggest year of change for the state's health industry and patients.

The new landscape includes renovations of government insurance programs Medicare and Medicaid, more cost-cutting by employers, scrutiny of state retiree health costs, and a potential turf battle between hospitals and general surgeons.

Perhaps Georgia's most sweeping change will come in April, when the state moves 1 million people covered by the Medicaid insurance program for the poor and disabled into HMOs. The overhaul also affects 200,000 children with PeachCare coverage.

The shift of 1.2 million Georgians into HMOs ''by itself is enormous,'' said consumer health advocate Linda Lowe.

But other new and revised programs will affect how hundreds of thousands more get health care in the state.

The whirlwind of 2006 started with last Sunday's debut of Medicare's biggest revision in its history: offering prescription drug coverage to its beneficiaries.

Many state employees and privately insured workers also face revisions in their health plans this year.

Bill Custer, a health insurance expert at Georgia State University, said the momentous changes of 2006 are a product of many years of health care cost inflation, coupled with a recent economic slowdown.

"Medical providers are feeling squeezed; employers, especially small employers, are feeling the pinch; and a higher percentage of our family budgets is going to health care,'' Custer said.

"As health care costs grow, there are fewer options,'' he said. "I think we'll see more years like this."

Reining in Medicaid

Gov. Sonny Perdue, who pushed the cost-cutting HMO initiative, has called Medicaid's annual spending increases ''unsustainable.''

Under the new Medicaid plan, HMOs will closely monitor patient care by connecting them with primary care doctors.

The switch will be good for patients if they get a regular medical home with a doctor, Lowe said.

But Lowe said she's concerned whether there will be enough doctors in the HMO networks, and whether Medicaid members will get accurate information and help during the transition.

Hospital groups say the state now is pressuring hospitals to join the HMO networks — or receive lower payments for medical services.

Meanwhile, Georgia officials may develop another sweeping proposal to alter the funding formula behind Medicaid, in exchange for more flexibility from federal restrictions in running the program. Medicaid's low-income patients could be required to pay more for doctors' visits and prescriptions, and see some benefits reduced. Other states such as Florida are moving ahead on similar reforms.

"There's a lot of experimentation going on,'' said Christopher Kane, a health care consultant with Tatum Partners in Atlanta. The orientation is, 'Let's try something.' "

Medicaid, jointly financed by the state and federal governments, devours more than 40 percent of new state revenue, and state officials point to that fact as an impetus for the program transformation.

Yet consumer advocate Lowe said much of the Medicaid cost increases come from growing enrollment in the program, and that its per-person medical costs are lower than with private insurance. "Medicaid is a tool for solving our health care issues — it's not a problem,'' Lowe said.

Nevertheless, the Medicaid revolution will test medical providers. "We've got more issues involving Medicaid than any year I've been around,'' said Joe Parker, president of the Georgia Hospital Association. "I don't remember a year like this, with all the significant changes coming.''

Medicaid restructuring and related funding issues will create cash-flow problems for rural hospitals, said Jimmy Lewis, CEO of HomeTown Health, an organization of rural hospitals in Georgia. "This will be a year of seismic changes, without a shadow of a doubt,'' Lewis said.

Troubled transitions

Many seniors will save hundreds of dollars by enrolling in the new Medicare drug benefit. But the change has created confusion for patients and instant bottlenecks at pharmacies.

"Some people are not getting their drugs,'' Buddy Harden, executive vice president of the Georgia Pharmacy Association, said during the benefit's chaotic first week.

Medicare's drug benefit, of course, has been launched across the nation. But another new year change affects about 300,000 Georgians. On Jan. 1, the medical network serving state employees, schoolteachers and retirees came under the control of Minnesota-based insurance giant UnitedHealthcare.

The new contract is expected to save the state $60 million annually. And the state emphasizes the United switch helped keep employee premiums at the same level.

The change in networks, though, created tension in weeks leading up to the rollout. Teachers complained their doctors or local hospitals weren't in the United preferred provider organization, or PPO. Peggy Nielson, a state Board of Education member who has tracked the transition closely, predicted that employees will experience ''a rolling crisis,'' driven especially by confusion over whether their longtime medical providers are in the network.

Barbara Haralson, a Gwinnett County teacher, said her family's physician of 14 years has declined to join the United network. But she and her family, members of the state PPO, have decided to keep seeing that doctor, even though they likely will pay hundreds of dollars more in out-of-pocket costs.

"He knows our family and our health problems,'' Haralson said. "We're very upset. I feel like we're being forced to change our doctor or pay more out of pocket.''

United said it has built a comprehensive network of doctors and that it's still adding physicians. Both the insurer and the state Department of Community Health, which oversees the State Health Bene­fit Plan, said the transition is going smoothly so far.

Increasing costs

Private employers, meanwhile, are raising their employees' out-of-pocket costs, including deductibles and co-pays, to rein in spending. A growing number of businesses have also introduced high-deductible policies or health savings accounts to shift more responsibility for medical decisions to their workers.

"These plans are a very attractive product to some small employers and workers who don't have access to large group plans,'' said Custer of Georgia State University. But they are not a silver bullet, Custer said, and their impact will be limited.

And both taxpayers and people with private insurance are picking up the tab for increasing numbers of uninsured getting care in hospital emergency rooms, the most expensive medical setting, he added.

Covering retirees

Lurking in the background this year is a financial wild card: the requirement that Georgia, along with other states and local governments, determine its long-term obligations to pay health benefits for retired public employees. The Governmental Accounting Standards Board, a nonprofit organization that writes accounting rules for the public sector, is requiring governments to publicly report that liability.

The state Department of Community Health says it's in the process of calculating Georgia's figure.

Maryland, for example, recently disclosed its retiree liability at $20 billion. States are scrambling to devise ways to meet this liability, including reducing retiree benefits.

Credit-rating agencies say they will watch how governments handle the liability. That's important for Georgia, one of a only a handful of states that carry the top "AAA" bond rating by all three major agencies.

That "AAA" rating allows Georgia to borrow at the lowest rates of interest.

Other changes

The Georgia General Assembly, meanwhile, may consider a major industry change with an expected bill to allow general surgeons to open ambulatory surgery centers without going through the state certificate-of-need process. The proposal would pit doctors against hospitals.

Now, only surgeons the state considers ''single specialty,'' such as orthopedic surgeons, can do so.

Such health care regulatory fights, though, may slip into next year.

With those and other government and private insurance changes looming, Lewis of HomeTown Health says 2006 may not be the last tumultuous year in Georgia health care.

"It may only be the start of bigger things,'' he said.


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Wednesday, January 04, 2006

Changes for Student Health Insurance

Associated Press

CONCORD, N.H. -- In the months before colon cancer took her life, aspiring teacher Michelle Morse attended Plymouth State University in Plymouth, N.H., full time, often wearing a chemotherapy pump on her hip to class or when she did her student teaching.

To remain covered under her mother's health insurance, Morse had to either maintain a full course load or pay about $550 a month. She chose the former, even though her doctors urged her to cut back.

"I'm scared for my mom and dad," she wrote in her journal in December 2003, just after she was diagnosed. "I want to make this easier on them."

By the time she died in November at age 22, Morse had become a reluctant celebrity, lending her name to a bill aimed at sparing others the tough decision she faced.

"Michelle's Law" would require health insurance companies that cover college students under their parents' plans to continue the coverage if a student takes a medical leave of absence.

Morse's mother, AnnMarie Morse, has become the driving force behind the legislation. "I have a lot of energy," she said in a recent interview. "I knew the odds were against us ... but I knew I had to do something else."

A New Hampshire House committee unanimously recommended the bill in November, and the full House will vote on it today.

Other states have taken a broader approach by allowing young adults to remain on their parents' plans longer, regardless of whether they are in college.

Those laws are aimed at addressing the nation's fastest-growing uninsured population: young people ages 18 to 24, said Laura Tobler, a health policy analyst at the National Conference of State Legislatures.

Thirty percent of Americans in that age group had no health insurance in 2003, according to a report issued in December by the National Center for Health Statistics. Many young people work only part-time or have jobs that do not offer coverage.

Children typically lose health care coverage under their parents' plans when they turn 19, though full-time students often are given an exception. But in the past year, at least 12 states have considered or enacted laws broadening coverage of college-age dependents, Tobler said.

Starting Jan. 1, Colorado residents up to age 25 can be covered under their parents' plans as long as they are unmarried, financially dependent on their parents or living with them.

New York, which already has a law like the one proposed in New Hampshire, is considering raising the maximum age for dependents from 23 to 25. A New Jersey bill would allow dependents up to age 30 to remain on their parents' plans, though companies could charge more for such coverage.

Delaware does not have such a law, but Insurance Commissioner Matt Denn said he supports introduction of one in the upcoming session of the General Assembly.

Such laws will not solve the larger problem but are a good stopgap measure, said Trudy Lieberman, director of the Center for Consumer Health Choices at Consumers Union, which publishes Consumer Reports magazine.

"For people who are betwixt and between jobs and school, until we have a more inclusive system, this is an OK thing to do," she said.

The insurance industry generally hasn't opposed such changes because, aside from expensive cases like Morse's, carriers are getting paid higher family-plan premiums to cover the healthiest segment of the population, said New Hampshire state Rep. Will Infantine, an insurance agent who sponsored the New Hampshire bill.

"Demographically, this is a profitable part of their business," he said.

Realizing that the nature of higher education has changed, many insurance plans are allowing college students to remain on their parents' plans longer, said Larry Akey, spokesman for America's Health Insurance Plans. Students are taking longer to complete their college educations and are increasingly pursuing advanced degrees.

But, he said, the insurance industry has sought to limit the definition of dependents to students or those who are financially dependent on their parents, because opening the definition too widely would result in increases premiums.
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Monday, January 02, 2006

Health-care deductions for self-employed Q&A

Q&A from

Dear Tax Talk,

Health insurance premiums are allowed as an adjustment to earnings for the self-employed. Is the amount paid over the premium for medical services and prescriptions, in the case of a $1,000 deductible and the 20 percent paid out of pocket, tax deductible for the amounts that may exceed the insurance deductible?
-- Ken

Dear Ken,
An individual with self-employment earnings, including self-employment earnings passing through from a partnership, can claim as an adjustment to adjusted-gross income, or AGI, (line 29 of Form 1040) the premiums paid on a health insurance policy maintained under that business.

The deduction arriving at AGI is limited to the earnings from the business reduced by the deduction for one-half of your self-employment tax (line 27 of Form 1040) and any pension plan contributions deducted on line 28 of Form 1040. Only the amount paid for premiums is deductible as an adjustment to AGI. Any medical expenses such as deductibles, prescriptions and patient co-pays are considered medical expenses deductible as an itemized deduction on Schedule A. In addition, any premiums that exceed the deductibility limit because of income limitations can be deducted on Schedule A.

You can also claim on line 29, subject to the income limitations, amounts paid for long-term-care insurance. You can include premiums paid on a qualified long-term-care insurance contract for you, your spouse or your dependents when figuring your deduction. But, for each person covered, you can include only the smaller of the following amounts.

1) The amount paid for that person.
2) The amount shown below. (Use the person's age at the end of the year.)

a) Age 40 or younger - $260
b) Age 41 to 50 - $490
c) Age 51 to 60 - $980
d) Age 61 to 70 - $2,600
e) Age 71 or older - $3,250

A qualified long term care insurance contract is defined as one that only provides coverage of qualified long-term-care services, such as nursing home or in-home nursing care.
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Minn. AG Backs Ban on Insurance Credit Scores


A bill to ban insurance companies from using a consumer's credit score in setting premium for home or auto coverage is backed by Minnesota Attorney General Mike Hatch and two state legislators.

The proposed bill contends that an increasing number of insurance companies utilize credit scoring to deny coverage or bump up the rates for customers who have low credit scores.

State Senator Lary Pogemiller, DFL-Minneapolis, the bill's sponsor in the Senate said that it is not logical for people to have car accidents because of poor credit.

His co-sponsor, Rep. Joe Mullery, DFL-Minneapolis and the House sponsor said the the use of credit scoring unfairly targets lower-and middle income consumers as well as consumers who pay their bills promptly. Mullery said that a low-risk customer should not have to create credit debt to get the best insurance rate

Hatch reported that his office has received hundreds of consumer complaints on the issue. According to Hatch, who plans to run for governor next year, consumers complained that they received higher insurance rates because of a lack of credit history, a low debt level or a credit score that dropped after multiple credit report requests.

The Insurance Federation of Minnesota's Mark Kulda countered Hatch and the sponsors' comments by saying that credit scores actually are more accurate and better predictors than traditional criteria used for determining an insured's risk. Kulda added that a ban would result in a more unfair system for consumers who have been able to reduce their premiums because of good credit scores.


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Hurricane Insurance Will Be of 'Utmost Concern' in 2006

Exclusive from
Florida Insurance Council EVP Predicts Hurricane Insurance Will Be of 'Utmost Concern' in 2006

Hurricane insurance will be the most significant property and casualty issue on a state level in 2006, just as it was in 2005, Sam Miller, executive vice president of the Florida Insurance Council told Insurance Journal.

"Congress, at a higher level, is considering a national hurricane fund seriously for the first time in five years," Miller said. "The eight hurricanes which struck Florida in 15 months, Hurricane Katrina, the largest natural disaster insurance event in world history and one of the largest events period, and the likelihood we face another decade of high hurricane activity, have policymakers and the insurance community struggling to ensure we can continue to finance our hurricane losses."

Miller said everything is on the table. "This includes additional rate increases from private property insurers and a major rate increase package being proposed by Citizens Property Insurance Corp. up to 80 percent for residents in some coastal areas, according to media reports. Citizens' rate should be adequate to reduce subsidization of southeast Florida property by other regions of Florida through the statewide assessments.

"At the same time," Miller said, "policymakers are considering charging more for vacation homes and less for primary residences and providing relief to low income Floridians having trouble paying their insurance premiums, as we provide relief today to help some people pay electricity and telephone bills.

Miller said the "everything is on the table" list includes a plan by the Florida House Democratic Caucus to create a state fund providing hurricane insurance and remove this peril from private insurance companies, although passage is probably not likely.

Other proposals include dedicating a portion of sales tax revenues to the insurance system to supplement insurance premiums. The funds could go to Citizens to prevent a $1 billion 11 percent statewide assessment next year and/or to the Florida Hurricane Catastrophe Fund to rebuild the Fund's $7 billion cash reserves depleted by the 2004 and 2005 hurricane seasons.

Federal issues include a national catastrophe fund, a tax exemption to allow private insurance companies to accumulate hurricane reserves tax-free in years when there is no hurricane, assuming we will ever have a year without hurricanes again; allowing homeowners to set up tax-exempt savings accounts to cover their hurricane deductibles; and reassessing the National Flood Insurance Program.

The Task Force for Long-Term Solutions to Florida's Hurricane Insurance Market, will provide a roadmap on many issues for the Florida Legislature in reports in February and again in April. Other groups are preparing recommendations, including a commission appointed by Governor Jeb Bush to investigate over-development and high hurricane losses in coastal areas; the House Democratic Caucus as noted above; and various insurance community groups, including the Florida Association of Insurance Agents and the Florida Insurance Council.


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N.Y. Rates Auto Insurers on Complaints


The New York State Insurance Department's 2005 Annual Ranking of Automobile Insurance Complaints shows Progressive Insurance Group placed highest among the 10 auto insurers with the largest New York market share, finishing in 16th place.

The three auto insurers with the most complaints in relation to their premiums written were: Long Island Insurance Company (46th), Infinity Property & Casualty Insurance Group (47th), and Empire Insurance Company (48th).

When compiling the ranking, the department analyzes the number of complaints consumers filed against their auto insurer in the previous calendar year, assesses how many were determined to have merit, and calculates these trends in the context of an insurer's total premiums written statewide.

"This is a great time to be an auto insurance consumer in New York. Most drivers saw their premiums decline by anywhere from 3 to 10 percent in 2005," said Insurance Superintendent Howard Mills. "But price is only one factor to consider when purchasing an auto insurance policy and the department's annual complaint ranking gives New Yorkers a sense of an insurer's customer satisfaction level."

The department's Consumer Services Bureau closed a total of 13,023 private passenger complaints in 2004, with 7,233 of them either withdrawn by the consumer or not upheld. Upheld complaints are ones deemed to have had merit after the CSB assessed the facts in each individual case.

New Yorkers spent more than $10 billion in 2004 for auto insurance and the 2005 complaint report found that there was one upheld complaint for every $5 million in premiums written.

The companies at the top of the 2005 report ranked best in terms of consumer complaints closed in 2004. A total of 48 insurance companies or groups of companies were incorporated into the report, with auto insurers having written premiums totaling at least $10 million eligible for ranking.

Among the highlights of the 2005 ranking:

American Modern Insurance Group of Ohio placed first while Electric Insurance Company, a Massachusetts-based insurer, ranked second. Neither American Modern Insurance Group nor Electric Insurance Company received any consumer complaints that were upheld by the New York State Insurance Department in 2004. Amica Mutual Insurance Company of Rhode Island finished in third place.

Progressive Insurance Group placed highest among the 10 auto insurers with the largest New York market share, finishing in 16th place.

The three auto insurers with the most complaints in relation to their premiums written were: Long Island Insurance Company (46th), Infinity Property & Casualty Insurance Group (47th), and Empire Insurance Company (48th).

The report is posted on the department's Web site at

Source: New York State Insurance Department


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Insurers Inflated Med-Mal Claims to Justify Rate Hikes says FTCR


In documents filed with state regulators and in statements to public officials, medical malpractice insurance companies consistently inflated the amount they estimated they would pay out in claims, according to a study by the nonprofit Foundation for Taxpayer and Consumer Rights

The report maintains that insurers then used the overstated figures to justify increases in doctors' premiums and pressure legislators to enact lawsuit restrictions.

The group charges that malpractice insurers inflated their losses by an average 46 percent each year between 1986 and 1994. During that period, insurers reported $39 billion in losses to regulators, but actually paid out only $27 billion in claims, according to the report.

FTCR called for an investigation of industry accounting practices that it said enable insurance companies to misrepresent their financial condition and charge potentially billions of dollars in excessive premiums.

The study, first reported Friday in the Washington Post, is available at:

The study suggests that the alleged inflation of insurers' losses, as reported in the annual statements they submit to regulators, is greater during periodic economic downturns when insurers' investment income falls.

"By inflating their estimated 'losses' as much as 66 percent, medical malpractice insurance companies have misled regulators, lawmakers and the public and overcharged physicians and other health care providers," said FTCR's Harvey Rosenfield. "Because all insurance companies use the same flawed accounting practices, it is likely that the insurance industry is responsible for several billion dollars in premium overcharges over the last few years, a period during which premiums have soared. The nation's economic stability and security demands that the insurance industry's accounting practices be investigated, and reforms put in place such as those that were made after widespread financial fraud was uncovered at Enron, WorldCom, Arthur Andersen and other corporations."

The FTCR compares the dollar amount medical malpractice insurers initially reported they would pay out on policies in effect between 1986 and 1994 with insurers' reports made ten years later of what they actually paid out in claims under policies in effect in each of those years.

FTCR said it examined incurred loss data reported by insurance companies to state insurance regulators and published in A.M. Best's Aggregates and Averages. Jay Angoff, a former insurance commissioner and nationally recognized insurance expert, advised FTCR on the study.

"The study shows that malpractice insurance companies consistently overstate how much they expect to pay in claims and in amounts far beyond the margin of reasonable error," said FTCR's Rosenfield. "By manipulating their books to misrepresent their 'losses,' the insurers have profited in two ways. First, they have used the inflated numbers to justify rate increases that were unnecessary and excessive. Second, they have invoked their exaggerated loss estimates to promote legislation allowing these insurers to limit how much compensation they have to pay out to victims of medical negligence."

FTCR also called for stronger disclosure and regulatory oversight of insurers.

Source: FTCR


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Courts Insurance Headlines in 2005

Exclusive from Insurance Journal
From New England to Virginia, Courts Made Insurance Headlines in 2005

From Maine to Virginia, many of the insurance headlines in 2005 dealt with compensation and reinsurance probes, just as they did across the country, casting the industry's reputation in a bad light.

But much of the most interesting regional and local insurance news in 2005 took place in the courts of law and not in the court of public opinion.

Among the year's noteworthy court developments affecting the insurance industry:

A New Jersey Supreme Court ruling allowing people who suffer permanent injuries in auto accidents to sue over pain and suffering, even if their injuries don't meet a so-called "serious life impact" test caused great concern for the industry.

A Massachusetts court blocked a plan to convert that state's auto reinsurance facility into an assigned risk plan.

A federal jury in July awarded Vermont's insurance commissioner $120 million to distribute to creditors of the Ambassador Insurance Co., which failed more than two decades ago.

A federal court ruled against independent agents who claimed a Massachusetts law governing bank sales of insurance trumped the federal Gramm Leach Bliley provisions.

The Pennsylvania Supreme Court permitted four corporations to bypass the state regulator's liquidation procedures involving failed carrier Legion Insurance Co. and obtain their settlement monies directly from Legion's reinsurers.

Rhode Island Workers' Compensation Court Judge Bruce Q. Morin ordered the owners of the West Warwick nightclub The Station to pay lost wages and funeral expenses to the families of four employees who were among the 100 who died in the fire at the club in February 2003.

A Pennsylvania court ruled unconstitutional a key component of tort reforms enacted in 2002. Commonwealth Court ruled that a measure that abolished joint and several liability was invalid because it was not germane to the DNA testing legislation to which it was attached.

The Supreme Court of the State of New York, County of Nassau, reversed a lower court decision that found an insurance agent could potentially be held responsible for misrepresentations in a life insurance application.

Insurers had to go to court in Rhode Island to challenge a new lead paint law and in Delaware to challenge the commissioner over new restrictions on homeowner policy cancellations.

New York's highest court upheld the plan to convert Empire Blue Cross and Blue Shield into a for-profit company.

The Pennsylvania Supreme Court held that property insurance coverage for the "collapse" of a building is ambiguous and should be construed in favor of policyholders. The court granted coverage in instances where collapse is imminent.

A New York excess lines insurance broker's use of "sham declinations" to skirt the law on placing coverage with a non-admitted carrier could cost the broker a lot more than just regulatory fines, if a Nassau County Supreme Court ruling stands.

The Connecticut Appellate Court upheld the license suspension of a Connecticut man identified as a repeat drunken driver after a driving under the influence of alcohol (DUI) conviction in Vermont.

A Waterbury, Conn. jury awarded $32.1 million to a Bristol construction worker paralyzed in an accident more than a decade ago.

Another jury in Waterbury Superior Court jury awarded $36.5 million to the family of a 6-year-old boy who is blind, brain damaged and suffering from cerebral palsy since he was injured during his delivery via a surrogate mother at Hartford Hospital. The judgment may have set a new record for a Connecticut malpractice award.

The U.S. Supreme Court ruled against Virginia renters who claimed they were sickened by toxic mold in their apartment building, in a decision that clarifies where personal injury cases should be heard.

In one of the largest malpractice verdicts in state history, a Suffolk County, Massachusetts jury awarded $23.8 million to the parents of a girl born with cerebral palsy after a traumatic delivery at Massachusetts General Hospital.

Jurors in New Jersey said Merck & Co. should not be blamed for the death of a 60-year old Idaho postal worker who suffered a heart attack after taking the company's Vioxx painkiller. Merck lost an earlier trial in Texas and was told to pay $253 million to the widow of a Vioxx user. Merck is appealing that verdict.

The Port Authority of New York was negligent in the 1993 terrorist bombing of the World Trade Center and can be sued for damages, according to a New York State Supreme Court jury in Manhattan. The jury decided that the Port Authority, which owned the World Trade Center, should have provided better security for the underground parking garage that was hit by Islamist militants in Feb. 1993. The bombing killed six people and injured more than 1,000.

Spitzer fallout
The multiple investigations begun in 2004 by New York Attorney General Eliot Spitzer may yet end up in court. In the meantime, they tarnished the insurance industry's public image during 2005 but do not appear to have altered the private behavior of most in the industry.

Marsh, Aon and the other large brokerage houses caught up in the investigations paid restitution and agreed to halt certain practices. Connecticut passed a compensation disclosure law. Then for most in the industry in 2005, it was business as usual.

Except it was not exactly business-as-usual for Maurice Greenberg, the former head of AIG, who was forced from that company he helped build into a powerhouse and is still reportedly under investigation by Spitzer. Nor was it business-as-usual for sellers of finite reinsurance, the subject of another of Spitzer's ongoing probes.

AIG's Greenberg was not alone in finding new work in 2005. In New York, New Jersey, Maryland, Pennsylvania, Rhode Island and the District of Columbia, chief regulators resigned or were replaced, while in Delaware, the newly-elected commissioner, Matt Denn, came out swinging.

Pennsylvania Commissioner Diane Koken served double duty as president of the National Association of Insurance Commissioners during a trying year for regulators and was succeeded in the fall by Maine's insurance chief, Alessandro Iuppa.

On the medical malpractice front, state lawmakers in Maryland overrode a gubernatorial veto of reforms. New Hampshire adopted a medical malpractice claims screening system. Pennsylvania renewed its subsidies for malpractice premiums amid signs of an improving market, while New Hampshire reinstated prior approval of rates in response to a report showing the market was not competitive.

Workers' compensation rates held steady or declined. New York's workers' comp system including its insolvency fund showed signs of strain, but lawmakers did not advance reform proposals from Gov. Pataki.

Auto rates, too, stayed even or went down across the region. New Jersey's private passenger auto market continued to attract new companies, including Progressive, and auto insurers in New York continued to lower rates.

Political wars broke out in Massachusetts, within and outside the industry, over whether and how to reform the state's auto system, with Gov. Mitt Romney leading the charge to end what he termed the state's "Soviet-style" price fixing system. The insurance commissioner tried hard to make changes to the residual market through regulation and succeeded on some levels. But by year's end, auto rates were slashed by close to 9 percent and Romney's legislative reforms were stalled on Beacon Hill.

Connecticut officials, unhappy over potential job loses, reluctantly approved the deal in which MetLife acquired Citigroup's Travelers Life & Annuity in Hartford. Soon thereafter, Gov. Jodi Rell created a special agency devoted to maintaining and attracting insurance jobs to the state.

Virginia municipal officials debated the use of cameras at red lights to catch scofflaws, while Rhode Islanders dealt with a report that its laws against drunk driving are among the nation's weakest.

The region's insurers faced more natural storms than political ones during 2005, although none as devastating as what Katrina, Wilma and Rita did to the Gulf Coast and Louisiana. Residents in New Hampshire, Pennsylvania, New Jersey and New York faced severe flooding at times during the year.

While flood victims of 2005 turned to insurers and FEMA for assistance, some of those who were flooded years ago were still fighting over claims. More than 140 victims of the 2003 tropical storm Isabel sued Homeland Security and the National Flood Insurance Program, 17 insurance companies and others charging that these officials conspired and knowingly paid claimants far less they deserved to repair their flooded homes and properties.

New Hampshire implemented changes to its small group health system while controversy swirled about Maine's Dirigo health plan and its costs. Massachusetts Gov. Romney proposed a plan that would require all residents to buy health insurance.

At least two financially-strapped insurers, Pawtucket Mutual in Rhode Island and Mutual Fire Insurance of Carroll County in Maryland, were revived during the year. There were reports that Frontier Insurance Co. in New York would soon be released from rehabilitation as well.

The Green Tree Perpetual Assurance Co., in Philadelphia, one of the nation's oldest insurers with roots in the 1700s and one of only a handful of companies still selling perpetual homeowners insurance policies, terminated all remaining policies in February.


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