The health insurance industry, which initially held its tongue from criticizing President Obama's push to overhaul the nation's health care system, is beginning to speak out against the administration's proposed reforms.
In a letter to four key senators responsible for overseeing health care reform on Capitol Hill, two industry trade groups warned against implementing a proposed government-run health-benefits program — a critical component of the administration's reform plans.
Such a move would damage the private health insurance sector and "thwart the ability of the health care sector to implement meaningful delivery system reforms," says the letter by America's Health Insurance Plans (AHIP) — the nation's largest health insurance lobby — and the Blue Cross and Blue Shield Association.
The groups added that allowing the government to compete with private insurance companies would "exacerbate the cost-shift from public programs to consumers and employers in the private market, and destabilize the employer-based system."
The letter was sent to Senate Finance Committee Chairman Max Baucus, Montana Democrat; ranking Republican Charles E. Grassley of Iowa; Senate health committee Chairman Edward M. Kennedy of Massachusetts; and ranking Republican Michael B. Enzi of Wyoming.
Despite the warning, the heads of both trade groups — who have taken part in ongoing health care reform talks on Capitol Hill in recent months — said they will remain at the table.
"The health plan community is united in support of comprehensive health care reform that ensures all Americans have high-quality, affordable health care," said AHIP President and Chief Executive Karen Ignagni and Blue Cross and Blue Shield Association President and Chief Executive Scott P. Serota, who signed the letter.
Food and drug fight
The Food and Drug Administration has refuted claims by Sen. Charles E. Grassley that the agency's boss used an internal memo to threaten employees against speaking out about their problems.
"Absolutely not," said FDA spokeswoman Judy Leon. "In terms of the intent of the acting commissioner's memo, the intent was simply to provide a reminder that we have a fundamental responsibility to protect information that exists in the category of confidentially, like patient confidentiality."
FDA Acting Commissioner Frank M. Torti sent a memorandum this month telling employees that federal laws and policies "require that certain information in the agency's possession be kept confidential."
"Violation of these provisions can result in disciplinary sanctions and/or individual criminal liability," Mr. Torti added. "Improper disclosure could also result in FDA being sued for damages."
Upon learning of the memo, Mr. Grassley, an Iowa Democrat and chairman of the powerful Senate Finance Committee, fired off a letter to Mr. Torti last week warning him not to stifle whistleblowers. Mr. Grassley, a longtime advocate of whistleblowers, said any attempt to silence FDA employees from exposing wrongs within the agency would be illegal and have a "chilling effect" on employees who want to speak up about their problems.
Mr. Grassley said the tone and tenure of the memo go "beyond legitimate privacy concerns and [appear] to run contrary to many statutes protecting executive branch communications with members of Congress."
The senator added he also was "concerned" about the timing of the March 13 memo in respect to several recent high-profile cases in which FDA employees publicly exposed failures within the agency.
However, Ms. Leon said the memo was in response to President Obama's recent request to agencies to follow established guidelines for releasing information to the public.
"Dr. Torti's message was nothing more than a prudent reminder of that obligation, and we do that every so often," Ms. Leon said.
HHS reforms
A new report released Monday by the Health and Human Services Department calls for comprehensive health care reform this year. Titled "The Costs of Inaction," the report includes several statistics regarding the high cost of health care, diminished access to care and the persistent gaps in health care quality, such as:
• An estimated 87 million people — one in every three Americans under the age of 65 — were uninsured at some point in 2007 and 2008.
• The United States spent about $2.2 trillion on health care in 2007, or $7,421 per person. This comes to 16.2 percent of gross domestic product (GDP), nearly twice the average of other developed nations.
• Health care costs doubled from 1996 to 2006 and are projected to rise to 25 percent of GDP in 2025 and 49 percent in 2082.
• Up to 98,000 Americans die each year as a result of medical errors, more than from motor vehicle accidents, breast cancer and AIDS.
Tuesday, March 31, 2009
GEORGIA STATE FARM INSURANCE: POOR SERVICE TESTIMONY
A couple of Saturday’s ago one of State Farm Insurance’s customers backed into my vehicle while I waited in a bank drive-through lane. Yes, backed into me in a one-way drive-thru lane.
As a matter of course I called the local Statesboro police and asked that a police report be written up. The police responded quickly and I and the other driver were on our way in about 20 minutes.
This is where the story gets murky.
On the following Monday I call my local insurance company and stop by for them to take a look at the car. I was told I should go through State Farm.
I am not going to name names as to who I dealt with locally, because the following isn’t really their fault. However, it is about State Farms poor handling of claims at their central claims office.
I went over to the local State Farm office and before the door had closed completely I was greeted warmly and after a short introduction and explanation I was advised that (direct quote) “I would receive the best service I had ever experienced ”. At the moment I was quite happy, however, that feeling soon changed.
The claim service representative (main office I am assuming) called me the same day and asked a couple of questions and that he would call back shortly with a claim number so that I could have the vehicle repaired.
I would estimate that about 10 days past and the claims representative had not called back. Per the local office’s instructions I called them directly and received a claim number and was told to take it to one of the local State Farm “Premiere” repair shops.
Being that I had business out of town I dropped the card off and felt confident that upon my return my vehicle would be repaired.
A week later I returned and called the repair shop. I inquired about my vehicle being ready and was told that nothing had been done to the vehicle and was told “We called the claim representative and was told that the claim was on hold till further notice”.
I called the State Farm 800 number to speak with the claim representative Daniel Addis (800-578-8001 ext 4183770) and got voice mail. As you can imagine at this point I am not a very happy camper at all.
I left a stern but polite voice-mail for Mr. Addis pointing out the fact that I had a police report for the accident and that I had no problem filing a complaint with the John Oxendine’s Office (Georgia Insurance Commissioner) and if need be would take further steps to ensure that State farm repaired my vehicle.
I decided to call the State Farm 800 again and see if I could actually talk to a human being and managed to speak with another claim representative. After discussing the issues and poor customer service with her, she put me on hold to talk with Mr. Addis (he was actually in his office). After 4 or 5 minutes she advised me that the repair center would be receiving the paperwork and that work on the vehicle would begin ASAP.
As you can imagine the extremely poor customer service that I had received put a bad taste in my mouth and I would never consider buying State Farm Insurance even if it was the cheapest in town. To add insult to injury during my initial visit the local State Farm office they tried selling me insurance. Thanks, but no thanks.
I am quite happy with my insurance company and in nearly 10 years I have never had a problem or issue with claims or otherwise. You couldn’t pay me to switch. But this isn’t about them it is about State Farms lackluster customer service. Too bad they don’t understand making customers or others happy is the key to profitability and that word of mouth marketing can help or hurt depending on the situation. I have found that many large corporations forget that the customers number one.
End Note
If you can’t get results that you were expecting from an insurance company the Georgia (or other states) insurance commissioners office is a great way to get the companies attention.
Georgia Insurance Commissioner Consumer Services - (404) 656-2070 or 800-656-2298
Written by SBM Staff
As a matter of course I called the local Statesboro police and asked that a police report be written up. The police responded quickly and I and the other driver were on our way in about 20 minutes.
This is where the story gets murky.
On the following Monday I call my local insurance company and stop by for them to take a look at the car. I was told I should go through State Farm.
I am not going to name names as to who I dealt with locally, because the following isn’t really their fault. However, it is about State Farms poor handling of claims at their central claims office.
I went over to the local State Farm office and before the door had closed completely I was greeted warmly and after a short introduction and explanation I was advised that (direct quote) “I would receive the best service I had ever experienced ”. At the moment I was quite happy, however, that feeling soon changed.
The claim service representative (main office I am assuming) called me the same day and asked a couple of questions and that he would call back shortly with a claim number so that I could have the vehicle repaired.
I would estimate that about 10 days past and the claims representative had not called back. Per the local office’s instructions I called them directly and received a claim number and was told to take it to one of the local State Farm “Premiere” repair shops.
Being that I had business out of town I dropped the card off and felt confident that upon my return my vehicle would be repaired.
A week later I returned and called the repair shop. I inquired about my vehicle being ready and was told that nothing had been done to the vehicle and was told “We called the claim representative and was told that the claim was on hold till further notice”.
I called the State Farm 800 number to speak with the claim representative Daniel Addis (800-578-8001 ext 4183770) and got voice mail. As you can imagine at this point I am not a very happy camper at all.
I left a stern but polite voice-mail for Mr. Addis pointing out the fact that I had a police report for the accident and that I had no problem filing a complaint with the John Oxendine’s Office (Georgia Insurance Commissioner) and if need be would take further steps to ensure that State farm repaired my vehicle.
I decided to call the State Farm 800 again and see if I could actually talk to a human being and managed to speak with another claim representative. After discussing the issues and poor customer service with her, she put me on hold to talk with Mr. Addis (he was actually in his office). After 4 or 5 minutes she advised me that the repair center would be receiving the paperwork and that work on the vehicle would begin ASAP.
As you can imagine the extremely poor customer service that I had received put a bad taste in my mouth and I would never consider buying State Farm Insurance even if it was the cheapest in town. To add insult to injury during my initial visit the local State Farm office they tried selling me insurance. Thanks, but no thanks.
I am quite happy with my insurance company and in nearly 10 years I have never had a problem or issue with claims or otherwise. You couldn’t pay me to switch. But this isn’t about them it is about State Farms lackluster customer service. Too bad they don’t understand making customers or others happy is the key to profitability and that word of mouth marketing can help or hurt depending on the situation. I have found that many large corporations forget that the customers number one.
End Note
If you can’t get results that you were expecting from an insurance company the Georgia (or other states) insurance commissioners office is a great way to get the companies attention.
Georgia Insurance Commissioner Consumer Services - (404) 656-2070 or 800-656-2298
Written by SBM Staff
TEXAS INSURANCE INDUSTRY LOST OVER $1 BILLION IN 2008
The Texas insurance industry lost nearly $1.4 billion in 2008 as the state was hammered by three hurricanes as well as several other major weather events.
According to figures released Monday by the Texas Department of Insurance, for every dollar the state's insurance industry took in it paid out $1.65.
"It was a tough year for the industry after several profitable years," said Ben Gonzalez, a spokesman for the Texas Department of Insurance. "These things balance out. There are good years and bad years."
But 2008 proved to be a particularly bad year, with a hurricane season that was devastating for many parts of Texas as three major storms made landfall.
Dolly hit the Texas-Mexico border in July. Gustav slammed the Texas-Louisiana line on Labor Day. Ike, the most destructive of the three hurricanes, barreled ashore near Galveston on Sept. 13, wreaking havoc throughout Southeast Texas.
State officials estimate damages from last year's hurricane season to be more than $29 billion.
Ike and Dolly resulted in nearly 1 million insurance claims alone, said Mark Hanna, a spokesman for the Insurance Council of Texas,
"Throwing (in) all of the severe thunderstorms in North and Central Texas last spring, you can see why weather played such a pivotal role in homeowners insurance in Texas," he said. "We can be thankful Texas had a string of good years prior to 2008 so that the industry was able to meet its financial obligations in the aftermath of these weather related catastrophes."
The Texas Department of Insurance data showed that while the industry earned nearly $5.2 billion in premiums, it had losses of nearly $6.6 billion.
Data also showed the industry had an incurred loss ratio (which is the percentage of losses versus the premiums collected) of 127 percent. Hanna said anything under 65 is profitable for the industry.
Data also showed the industry had a combined loss and expense ratio (which takes into account a company's expenses for agent commissions, overhead and administrative costs) of 165 percent. Anything over 100 percent and the industry loses money, Hanna said.
The last time those two ratios were over 100 percent was in 2002, when the state was dealing with billions of dollars in mold-damage claims.
But Alex Winslow of Texas Watch, a consumer group active in insurance issues, called the data incomplete and misleading because it did not include something called reinsurance recoveries, which is basically insurance for insurance companies.
"This data has more holes than a block of Swiss cheese," Winslow said. "TDI fails to consider significant reinsurance recoveries, which will lower the industry's losses; uses an inflated loss number that does not reflect actual claims paid after the insurance industry employs its well-documented deny, delay, and underpayment tactics; and focuses on the combined loss ratio, which includes industry expenses like bloated overhead expenses, CEO salaries, and fat agent commissions that consumers shouldn't have to pick up the tab for."
Texas historically has been among the most expensive for home insurance. Industry officials blame Texas' unpredictable weather, which includes hurricanes, hailstorms and tornadoes. The rash of mold claims several years ago also drove up rates.
Gonzalez had no comment on Winslow's statement.
"The reinsurance issue is a very weak way of attacking the fact that Texas had a horrendous year," Hanna said. "The industry, despite all this damage, despite all these claims, did a tremendous job of handling these claims."
Hanna said more than 90 percent of claims from Hurricane Ike have been paid and out of the nearly 800,000 claims filed as a result of that disaster, there have been only 1,500 complaints filed.
According to figures released Monday by the Texas Department of Insurance, for every dollar the state's insurance industry took in it paid out $1.65.
"It was a tough year for the industry after several profitable years," said Ben Gonzalez, a spokesman for the Texas Department of Insurance. "These things balance out. There are good years and bad years."
But 2008 proved to be a particularly bad year, with a hurricane season that was devastating for many parts of Texas as three major storms made landfall.
Dolly hit the Texas-Mexico border in July. Gustav slammed the Texas-Louisiana line on Labor Day. Ike, the most destructive of the three hurricanes, barreled ashore near Galveston on Sept. 13, wreaking havoc throughout Southeast Texas.
State officials estimate damages from last year's hurricane season to be more than $29 billion.
Ike and Dolly resulted in nearly 1 million insurance claims alone, said Mark Hanna, a spokesman for the Insurance Council of Texas,
"Throwing (in) all of the severe thunderstorms in North and Central Texas last spring, you can see why weather played such a pivotal role in homeowners insurance in Texas," he said. "We can be thankful Texas had a string of good years prior to 2008 so that the industry was able to meet its financial obligations in the aftermath of these weather related catastrophes."
The Texas Department of Insurance data showed that while the industry earned nearly $5.2 billion in premiums, it had losses of nearly $6.6 billion.
Data also showed the industry had an incurred loss ratio (which is the percentage of losses versus the premiums collected) of 127 percent. Hanna said anything under 65 is profitable for the industry.
Data also showed the industry had a combined loss and expense ratio (which takes into account a company's expenses for agent commissions, overhead and administrative costs) of 165 percent. Anything over 100 percent and the industry loses money, Hanna said.
The last time those two ratios were over 100 percent was in 2002, when the state was dealing with billions of dollars in mold-damage claims.
But Alex Winslow of Texas Watch, a consumer group active in insurance issues, called the data incomplete and misleading because it did not include something called reinsurance recoveries, which is basically insurance for insurance companies.
"This data has more holes than a block of Swiss cheese," Winslow said. "TDI fails to consider significant reinsurance recoveries, which will lower the industry's losses; uses an inflated loss number that does not reflect actual claims paid after the insurance industry employs its well-documented deny, delay, and underpayment tactics; and focuses on the combined loss ratio, which includes industry expenses like bloated overhead expenses, CEO salaries, and fat agent commissions that consumers shouldn't have to pick up the tab for."
Texas historically has been among the most expensive for home insurance. Industry officials blame Texas' unpredictable weather, which includes hurricanes, hailstorms and tornadoes. The rash of mold claims several years ago also drove up rates.
Gonzalez had no comment on Winslow's statement.
"The reinsurance issue is a very weak way of attacking the fact that Texas had a horrendous year," Hanna said. "The industry, despite all this damage, despite all these claims, did a tremendous job of handling these claims."
Hanna said more than 90 percent of claims from Hurricane Ike have been paid and out of the nearly 800,000 claims filed as a result of that disaster, there have been only 1,500 complaints filed.
TEXAS STATE FARM TESTIMONY: CUSTOMERS WERE UNDERBILLED
State Farm Insurance, facing state allegations that it overcharged customers by hundreds of millions of dollars, raised the possibility Monday that some customers weren't charged enough for their policies.
State Farm attorneys, who vigorously denied the charges of excessive rates in a hearing before state Insurance Commissioner Mike Geeslin, also contended that the company was not required to show "clear and convincing evidence" that its rates were fair.
The company first made that claim in a brief filed with the commissioner's office just before it closed Friday – a legal maneuver that brought criticism not only from state attorneys but also from Geeslin, who noted that the case has already dragged on for several years.
Geeslin halts hearing
Lawyers for the Texas Department of Insurance accused State Farm, the largest property insurer in the state, of trying to "confuse and delay" the case by filing the eleventh-hour brief, and Geeslin decided to halt the hearing at midday while he considers the new arguments advanced by the company. The hearing will reconvene Wednesday.
Geeslin called the last-minute filing by State Farm "troubling," saying he was concerned that the new twist could lead to more appeals in a case that began in the fall of 2003.
"I don't want to add years and years of litigation to a case that has already gone on for years and years," he said.
The State Farm brief raised the possibility that the company – the largest property insurer in Texas – is entitled to recover undercharges for policies that may have been priced too low from 2006 to 2008, when State Farm was ordered not to raise rates without prior approval from the insurance commissioner.
An attorney for the insurance department and Public Insurance Counsel Deeia Beck, a state official who represents insurance consumers, both argued during Monday's hearing that State Farm has no legal right to seek compensation for allegedly being forced to undercharge customers on homeowner policies.
"State law does not allow State Farm to recover premium undercharges through this proceeding," said Elizabeth Rett, representing the state agency.
State Farm attorney Susan Conway argued that the company never overcharged its customers and does not owe any refunds, as the state contends. Some officials have estimated that the overcharges could total nearly $650 million, including penalty interest.
"State Farm maintains that its rates are not excessive and have never been excessive," Conway told the commissioner. "Any rate reduction would be unreasonable, and no rate reduction is warranted."
6-year legal fight
The alleged overcharges stem from an order by the insurance department in 2003 that called on State Farm to reduce its rates for home insurance statewide by 12 percent. The company refused and launched a legal battle against the state that has continued for nearly six years.
Monday's hearing before Geeslin was scheduled after a state appeals court ruled that State Farm was denied its due process rights when the insurance department first ordered the rate reductions.
State attorneys argued that the legal burden is on State Farm to show "by clear and convincing evidence" that its rates are "just, reasonable, adequate, not excessive and not unfairly discriminatory."
State Farm, on the other hand, is arguing that the "preponderance of evidence" from the hearing will determine whether its rates are excessive and whether it owes refunds to customers. The state contends that State Farm bears the burden of proof in arguing that its rates are justified.
State Farm attorneys, who vigorously denied the charges of excessive rates in a hearing before state Insurance Commissioner Mike Geeslin, also contended that the company was not required to show "clear and convincing evidence" that its rates were fair.
The company first made that claim in a brief filed with the commissioner's office just before it closed Friday – a legal maneuver that brought criticism not only from state attorneys but also from Geeslin, who noted that the case has already dragged on for several years.
Geeslin halts hearing
Lawyers for the Texas Department of Insurance accused State Farm, the largest property insurer in the state, of trying to "confuse and delay" the case by filing the eleventh-hour brief, and Geeslin decided to halt the hearing at midday while he considers the new arguments advanced by the company. The hearing will reconvene Wednesday.
Geeslin called the last-minute filing by State Farm "troubling," saying he was concerned that the new twist could lead to more appeals in a case that began in the fall of 2003.
"I don't want to add years and years of litigation to a case that has already gone on for years and years," he said.
The State Farm brief raised the possibility that the company – the largest property insurer in Texas – is entitled to recover undercharges for policies that may have been priced too low from 2006 to 2008, when State Farm was ordered not to raise rates without prior approval from the insurance commissioner.
An attorney for the insurance department and Public Insurance Counsel Deeia Beck, a state official who represents insurance consumers, both argued during Monday's hearing that State Farm has no legal right to seek compensation for allegedly being forced to undercharge customers on homeowner policies.
"State law does not allow State Farm to recover premium undercharges through this proceeding," said Elizabeth Rett, representing the state agency.
State Farm attorney Susan Conway argued that the company never overcharged its customers and does not owe any refunds, as the state contends. Some officials have estimated that the overcharges could total nearly $650 million, including penalty interest.
"State Farm maintains that its rates are not excessive and have never been excessive," Conway told the commissioner. "Any rate reduction would be unreasonable, and no rate reduction is warranted."
6-year legal fight
The alleged overcharges stem from an order by the insurance department in 2003 that called on State Farm to reduce its rates for home insurance statewide by 12 percent. The company refused and launched a legal battle against the state that has continued for nearly six years.
Monday's hearing before Geeslin was scheduled after a state appeals court ruled that State Farm was denied its due process rights when the insurance department first ordered the rate reductions.
State attorneys argued that the legal burden is on State Farm to show "by clear and convincing evidence" that its rates are "just, reasonable, adequate, not excessive and not unfairly discriminatory."
State Farm, on the other hand, is arguing that the "preponderance of evidence" from the hearing will determine whether its rates are excessive and whether it owes refunds to customers. The state contends that State Farm bears the burden of proof in arguing that its rates are justified.
Monday, March 30, 2009
WASHINGTON INSURANCE: REGULATORS HELP INSURERS
State regulators trying to help life insurance companies cope with the financial crisis have granted $6 billion of relief from requirements meant to ensure financial stability, according to data released yesterday.
The top recipients were Allstate Life Insurance Co. with $1.4 billion; Jackson National Life Insurance Co. with $825.6 million and Hartford Life Insurance Co. with $655.2 million, according to the National Association of Insurance Commissioners.
The relief typically came in the form of accounting changes that allowed companies to pad their financial cushions, in effect making them appear stronger than they otherwise would. Insurance companies are required to maintain such cushions, known as capital and surplus, to absorb losses and pay claims.
Much of the padding involves increased counting of potential tax benefits that could end up being worthless to the companies.
For the top three recipients, the regulatory relief accounted for 42.6 percent, 22 percent and 16.1 percent, respectively, of their financial cushions as of Dec. 31, 2008, according to an analysis of the NAIC data.
Like other investors and financial institutions, life insurance companies have seen the value of their investments reduced by the financial crisis. Unlike banks, though, insurers have yet to receive federal bailouts to replenish lost capital.
Industry leaders have argued that regulatory relief could help insurers weather the crisis. They have expressed hope that it will stave off downgrades to their credit ratings, which can be damaging to their business. They also want to avoid having to raise capital from investors, which could cost a lot of money and dilute the value of shareholders' stock.
Critics such as the Consumer Federation of America have argued that the relief could weaken insurance companies and leave policyholders at greater risk.
The American Council of Life Insurers, an industry group, sought blanket relief earlier this year from the NAIC, an umbrella group for state regulators. When the NAIC refused, many state regulators filled the breach, granting special dispensations to individual companies headquartered in their states.
Some state regulators said they wanted to make sure their home-state companies weren't left at a competitive disadvantage.
The result is an accounting hodgepodge that makes it harder to compare insurers and gives some companies an edge over others.
When insurers' finances deteriorate below certain levels, state regulators can take a number of steps, such as requiring companies to submit a recovery plan or taking them over altogether. With few exceptions, the relief granted by regulators did not allow companies to escape increased supervision, the NAIC data suggest.
The data were culled from annual reports filed recently with state regulators. Some companies received extensions and have not yet filed.
The relief was generally granted this year but made retroactive to Dec. 31.
Other big recipients included Pacific Life Insurance Co. with $529.8 million, Transamerica Life Insurance Co. with $505 million, Metlife Insurance Co. of Connecticut with $396.1 million, and Lincoln National Life Insurance Co. with $313.4 million, according to the NAIC data. Many of the companies listed are part of larger families, such as the MetLife group, that operate multiple insurers.
Pacific Life said it requested the regulatory action "to allow it more financial flexibility to better respond to the market volatility."
"This action does not affect Pacific Life's ability to meet its obligations to contract owners and policyowners," the company said in a statement. Like other insurers, Pacific Life said standard regulatory requirements are overly conservative.
In a recent securities filing, Allstate said its dispensations involve areas where "statutory accounting is not reflective of the underlying economics during this period of extreme market conditions."
Property and casualty insurers also received relief.
At a U.S. subsidiary of troubled Scottish Re, Delaware's decision to grant $197.2 million of regulatory relief accounted for 99.9 percent of the company's $197.4 million financial cushion, according to the NAIC data.
Scottish Re, a reinsurance company that backstops life insurers, sought the relief to offset financial setbacks related to the diminished value of subprime and other mortgage-related investments.
The action "in no way impacts our ability to satisfy our obligations" to client companies, said Meredith Ratajczak, chief executive of Scottish Re's U.S. unit.
Ohio insurance regulator Mary Jo Hudson said in a statement last week that her department granted special dispensations "only where they would make strong companies stronger."
In a competitive market, that approach could have the unintended effect of making weak companies weaker.
The Ohio Department of Insurance reported that it gave several property and casualty subsidiaries of Nationwide relief totaling $447.5 million.
Regulators allowed many companies to count as capital so-called deferred tax assets that otherwise would be treated as worthless because they can be used only when companies have sufficient income to apply the deductions to their tax bills.
Giving companies more credit for the tax assets is a case of making lemonade out of lemons. One thing many companies have in abundance is deferred tax assets, because declining investment values can give rise to deferred tax assets.
The top recipients were Allstate Life Insurance Co. with $1.4 billion; Jackson National Life Insurance Co. with $825.6 million and Hartford Life Insurance Co. with $655.2 million, according to the National Association of Insurance Commissioners.
The relief typically came in the form of accounting changes that allowed companies to pad their financial cushions, in effect making them appear stronger than they otherwise would. Insurance companies are required to maintain such cushions, known as capital and surplus, to absorb losses and pay claims.
Much of the padding involves increased counting of potential tax benefits that could end up being worthless to the companies.
For the top three recipients, the regulatory relief accounted for 42.6 percent, 22 percent and 16.1 percent, respectively, of their financial cushions as of Dec. 31, 2008, according to an analysis of the NAIC data.
Like other investors and financial institutions, life insurance companies have seen the value of their investments reduced by the financial crisis. Unlike banks, though, insurers have yet to receive federal bailouts to replenish lost capital.
Industry leaders have argued that regulatory relief could help insurers weather the crisis. They have expressed hope that it will stave off downgrades to their credit ratings, which can be damaging to their business. They also want to avoid having to raise capital from investors, which could cost a lot of money and dilute the value of shareholders' stock.
Critics such as the Consumer Federation of America have argued that the relief could weaken insurance companies and leave policyholders at greater risk.
The American Council of Life Insurers, an industry group, sought blanket relief earlier this year from the NAIC, an umbrella group for state regulators. When the NAIC refused, many state regulators filled the breach, granting special dispensations to individual companies headquartered in their states.
Some state regulators said they wanted to make sure their home-state companies weren't left at a competitive disadvantage.
The result is an accounting hodgepodge that makes it harder to compare insurers and gives some companies an edge over others.
When insurers' finances deteriorate below certain levels, state regulators can take a number of steps, such as requiring companies to submit a recovery plan or taking them over altogether. With few exceptions, the relief granted by regulators did not allow companies to escape increased supervision, the NAIC data suggest.
The data were culled from annual reports filed recently with state regulators. Some companies received extensions and have not yet filed.
The relief was generally granted this year but made retroactive to Dec. 31.
Other big recipients included Pacific Life Insurance Co. with $529.8 million, Transamerica Life Insurance Co. with $505 million, Metlife Insurance Co. of Connecticut with $396.1 million, and Lincoln National Life Insurance Co. with $313.4 million, according to the NAIC data. Many of the companies listed are part of larger families, such as the MetLife group, that operate multiple insurers.
Pacific Life said it requested the regulatory action "to allow it more financial flexibility to better respond to the market volatility."
"This action does not affect Pacific Life's ability to meet its obligations to contract owners and policyowners," the company said in a statement. Like other insurers, Pacific Life said standard regulatory requirements are overly conservative.
In a recent securities filing, Allstate said its dispensations involve areas where "statutory accounting is not reflective of the underlying economics during this period of extreme market conditions."
Property and casualty insurers also received relief.
At a U.S. subsidiary of troubled Scottish Re, Delaware's decision to grant $197.2 million of regulatory relief accounted for 99.9 percent of the company's $197.4 million financial cushion, according to the NAIC data.
Scottish Re, a reinsurance company that backstops life insurers, sought the relief to offset financial setbacks related to the diminished value of subprime and other mortgage-related investments.
The action "in no way impacts our ability to satisfy our obligations" to client companies, said Meredith Ratajczak, chief executive of Scottish Re's U.S. unit.
Ohio insurance regulator Mary Jo Hudson said in a statement last week that her department granted special dispensations "only where they would make strong companies stronger."
In a competitive market, that approach could have the unintended effect of making weak companies weaker.
The Ohio Department of Insurance reported that it gave several property and casualty subsidiaries of Nationwide relief totaling $447.5 million.
Regulators allowed many companies to count as capital so-called deferred tax assets that otherwise would be treated as worthless because they can be used only when companies have sufficient income to apply the deductions to their tax bills.
Giving companies more credit for the tax assets is a case of making lemonade out of lemons. One thing many companies have in abundance is deferred tax assets, because declining investment values can give rise to deferred tax assets.
CLEVER WAYS TO SAVE ON AUTO INSURANCE
You’ve got to have auto insurance in order to drive your vehicle legally in the United States. For many people, though, the cost of insurance is a tough pill to swallow. However, comparison shopping and smart planning can help you save hundreds of dollars a year on your auto insurance premium.
Comparison Shop For The Best Deal
It may sound obvious, but comparison shopping for auto insurance is the fastest and most effective way to save money on your policy. Every single insurance provider uses a different formula for calculating auto insurance premiums, so getting quotes from various competitors will help you choose the most affordable rate for your needs.
Know Your Needs
When you begin your search for the lowest price on auto insurance, be sure you have all the details of your current policy handy. You’ll want to match those exact requirements line by line in order to accurately compare premiums. Often, when a quote sounds too good to be true, it is.
Be sure to list your desired coverage amounts for the following:
• Deductible
• Liability coverage amount (for bodily injury and property damage)
• Collision coverage amount
• Comprehensive (for vandalism, theft, fire, etc.)
• Medical Payments
• Rental reimbursement (when applicable)
• Uninsured/underinsured motorist and property coverage
Once you’ve got all these elements listed, you can evaluate which policy is truly more affordable. Also, be sure that you are comparing the same duration terms, as some policies are quoted for one-year periods and others for six months.
Consider a Higher Deductible
Another major way to reduce your auto insurance premium is to choose a higher deductible. If you total a $30,000 vehicle, does it really matter whether you pay $500 or $1,000 out of pocket? According to AAA auto club, you can save $200 to $800 a year on the average policy by bumping up to the next deductible level.
Eliminate Unnecessary Costs
If you own your vehicle with a low resale value (under $2,500 for example), you may consider carrying only liability insurance instead of full coverage. On average, this adjustment can save you 40 to 60 percent on your annual premium. Keep in mind, though, that liability will only cover the expenses of the other driver involved. You must be sure that you can replace your car with your own money if it is totaled, as well as cover your own medical costs.
Find Discounts
Always ask for additional discounts from your auto insurance provider. Popular discounts include those for good drivers, students, union members, teachers and other professionals, multiple driver households and multiple policyholders. You can also receive discounts by taking defensive or mature driver classes, installing an anti-theft device on your vehicle and housing it in a garage.
Comparison Shop For The Best Deal
It may sound obvious, but comparison shopping for auto insurance is the fastest and most effective way to save money on your policy. Every single insurance provider uses a different formula for calculating auto insurance premiums, so getting quotes from various competitors will help you choose the most affordable rate for your needs.
Know Your Needs
When you begin your search for the lowest price on auto insurance, be sure you have all the details of your current policy handy. You’ll want to match those exact requirements line by line in order to accurately compare premiums. Often, when a quote sounds too good to be true, it is.
Be sure to list your desired coverage amounts for the following:
• Deductible
• Liability coverage amount (for bodily injury and property damage)
• Collision coverage amount
• Comprehensive (for vandalism, theft, fire, etc.)
• Medical Payments
• Rental reimbursement (when applicable)
• Uninsured/underinsured motorist and property coverage
Once you’ve got all these elements listed, you can evaluate which policy is truly more affordable. Also, be sure that you are comparing the same duration terms, as some policies are quoted for one-year periods and others for six months.
Consider a Higher Deductible
Another major way to reduce your auto insurance premium is to choose a higher deductible. If you total a $30,000 vehicle, does it really matter whether you pay $500 or $1,000 out of pocket? According to AAA auto club, you can save $200 to $800 a year on the average policy by bumping up to the next deductible level.
Eliminate Unnecessary Costs
If you own your vehicle with a low resale value (under $2,500 for example), you may consider carrying only liability insurance instead of full coverage. On average, this adjustment can save you 40 to 60 percent on your annual premium. Keep in mind, though, that liability will only cover the expenses of the other driver involved. You must be sure that you can replace your car with your own money if it is totaled, as well as cover your own medical costs.
Find Discounts
Always ask for additional discounts from your auto insurance provider. Popular discounts include those for good drivers, students, union members, teachers and other professionals, multiple driver households and multiple policyholders. You can also receive discounts by taking defensive or mature driver classes, installing an anti-theft device on your vehicle and housing it in a garage.
Stranger-Originated Life Insurance Florida: Be very Careful
Earlier this year, Rosemary Bennett got a personal invitation in the mail for a complimentary consultation in her home with "Florida's foremost authority on advising affluent seniors."
She was intrigued with one of the "unique wealth creation and preservation strategies available only to affluent seniors" mentioned in the letter described as using "your insurability to make hundreds of thousands of dollars."
"For allowing him to come to our home to tell us about this investment, we were to receive a $200 gift card from one of five restaurants," the 68-year-old North Port resident wrote.
After seven weeks of voice messages and e-mails, Bennett says they still don't have the gift card. "We didn't lose anything but we didn't get what was promised either," she said.
I had a lengthy conversation with this individual who says he's been doing business for over 20 years without one complaint. Claiming the Bennetts were sent the gift card but admitting not tracking its use, he's agreed to send out another card for $100 as a compromise.
Rosemary, take the $100 and enjoy a nice dinner with your husband. But far more important for you and everyone reading today's column is to understand what this controversial "strategy" is all about. What appears to be a risk-free variation of a traditional life insurance policy settlement transaction may wind up costing many times the value of that free meal.
Why would an insurance salesman take so much time to meet with you one-on-one and offer $200 out of his pocket? For the thousands of dollars he'd earn in commissions by selling Stranger-Originated Life Insurance (SOLI).
He's looking for high-net-worth individuals -- usually over 70 -- in good health, able to qualify for lowered preferred rates. But this insurance policy isn't ultimately for them. They don't even want nor need it.
It's for total strangers wagering on the death of the insured; strangers who legally can't currently make the investment themselves because they don't have the required "insurable interest."
In a complex transaction, one stranger finances the premiums past a two-year "contestability period" and then another stranger buys the policy for less than the death benefit with the seller pocketing a nice profit with no cash outlay. Sometimes there's even an upfront cash bonus.
So what's wrong with that?
"For openers, investor-initiated life insurance is fraud," writes attorney and financial services consultant Stephen R. Leimberg. "It's unlawful for strangers to buy insurance on your life. Your participation makes you complicit in doing something illegal."
"These arrangements circumvent public policy requirements behind insurable interest laws," notes the Florida Office of Insurance Regulation on its Web site. "The Office is now in the process of assessing whether those arrangements require specific regulation, and, if so, what are possible
next steps for regulating such arrangements in Florida."
But even if STOLI transactions are not made outright illegal, there are other reasons to avoid them. Besides the divulgence of private confidential medical information or possibly being sued by an insurance company, Leimberg cautions about taxes that might have to be paid on the economic value of the insurance coverage as well as on the gain of the sale of the policy. There's also potential estate tax liability.
Before considering even a legitimate life settlement cash payout for more than the surrender value on a long-existing insurance policy, consult with an independent financial or estate planner and consider all options including accelerated death benefits.
There's a wealth of information on the Florida Department of Financial Services' "Safeguard our Seniors Task Force" Web site at www.flseniors.net under "resources."
Elders Home, Health and Life Insurance: Questions and Answers
Question
Should we get a home equity line of credit in order to have money to pay for a nursing home, until we can get the parent's home sold?
Answer
Should we get a home equity line of credit in order to have money to pay for a nursing home, until we can get the parent's home sold?
Answer
There is no question that selling a house in the current real estate market is a challenge. Many people find themselves in your situation when loved ones need to move out of the house into a long term care facility, and their house is their only asset.
A home equity line of credit is an option, if your parents can qualify. To qualify, your parents will need to demonstrate that they have enough income to cover the monthly payments. They also need to have a good credit score, which many seniors lack. Sometimes, a local bank where your parents have been good customers will be able to structure a loan. Or if you are willing to co-sign the loan, your bank may accept that.
Because this situation is becoming more common, there are new programs springing up to help. Some realtors will guarantee to buy the house for cash if they cannot sell it within a predetermined time period. Other companies aggregate relatives and friends to jointly borrow the money. These programs may be available in your area.
***
Question
If someone cannot pay their Medicare premium can they get an extension or will their plan be terminated? If they can't pay what will their termination date be? If an extension is granted how many days will they get?
Answer
It is hard to tell from your question which type of Medicare premium you are asking about. There are three kinds of bills you might have to pay: a monthly premium for Part B coverage; a Medicare Part D prescription drug plan; and a monthly premium for both Medicare Part A and B coverage through a Medicare Advantage managed care plan. But whichever of these Medicare programs you have, there is help available if you cannot afford the premiums.
Most people have their Medicare Part B premiums automatically deducted from their monthly Social Security benefits check. But some people who are not collecting Social Security benefits have to pay their Medicare Part B premium directly; they get a bill for their Medicare Part premium every three months. If you are one of these people but cannot afford the premiums, you can apply for one of several programs that can pay the premiums for you. These programs are Medicaid, Qualified Medicare Beneficiary (QMB), Specified Low-Income Medicare Beneficiary (SLMB) and Qualifying Individual (QI). These same programs can also help you if you are enrolled in a Medicare Advantage HMO or other managed care plan.
If you have a Medicare Part D prescription drug plan and are having trouble paying the premium, there is another special program that might help you. This is called the low-income beneficiary program.
You may qualify for one or more of these programs if you have low monthly income and few savings or other assets. Depending on which program you qualify for, you might get not only your Part B premium paid but also all your Medicare deductibles and copayments. If you qualify for a low-income subsidy, it may not only pay your premium but also reduce the cost of your drugs. Fortunately, you can apply for all of these programs at one time and in one place, at your state's own Medicaid office, which is usually at a local county social service or social welfare office.
To find out where to apply for Medicaid and these other programs in your state, go to the Benefits.gov web site and click on the name of your state. This will take you to a page which gives information about the local office where you apply for Medicaid, and tells you how to contact them so you can learn what paperwork, about your income, assets, and medical expenses, to bring with you when you file your application. You can also get free information about where and how to apply by calling the Eldercare Locator toll-free at 800-677-1116.
Another place to get excellent help with this is your local office of the State Health Insurance Program (SHIP) or Health Insurance Counseling and Advocacy Program (HICAP). This non-profit counseling service provides free, expert assistance with questions regarding Medicare, Medicaid and related programs. You can get the number of your state office of SHIP or HICAP from the Medicare web site's directory; the state office can then direct you to the local office nearest you.
Homeowners: Protecting your home in the recession
Rising food and gas prices are leaving American homeowners with less money to spend and more concerns about the future.
That is why in addition to suggesting smarter ways to spend a dollar, MainStreet also looks for ways to stretch dollars, too. How so with homes? "People have a lot of opportunities to reduce their home owners [insurance] premium if they invested in certain equipment and protective services in their house," says Peter Spicer of Chubb Insurance (CB). "It’s a good time for people to look to see if they have taken advantage of all these credits and services."
Home improvements can also increase your asking price when you sell, and can result in your home being sold sooner than later. (Of course, where your house is located should always be considered before you begin recession-proofing your home, not every home will benefit from home improvements in the same way.)
Here are a few tips to recession-proof your abode:
ALARM YOURSELF
Safety can save you. Not only can a security protection system protect you from a robber or fire, installing one can also lower your monthly insurance payments. The benefits depend on what type of system you have in place, be it a deadbolt or something more. Your premium can dip by as much as 20% if you install a sophisticated sprinkler system, and a fire and burglar alarm that rings a monitor station, according to the Insurance Information Institute. That could mean $400 annual savings if your insurance plan costs $2,000.
CURB APPEAL
Spend a little time on landscaping. "Within the first 30 seconds, people are passing judgment on your house," says Dan Dunleavy, CEO of Fix to Flip. If you’re a do-it-yourself type, then this will cost you absolutely nothing for labor. A quick trip to Sears (SHLD) is a good place to start for landscaping tips. Hiring a landscape artist on, say, Craigslist might cost you $22 an hour and up. The payoff is a house that might be easier to sell.
GET BEAUTIFUL ON THE INSIDE
"Flooring, painting, carpeting and molding" are the first things you see when you walk through the door, says Dunleavy. It should be "eye candy," which means no carpet that predates the birth of its homeowner. Other rooms to modernize? The kitchen and the bathroom. "People want a bathroom that looks appealing," says Dunleavy. "They don’t want a stone age bathtub or sink." A contractor might hit your wallet "pretty hard" but there are websites, such as the Do It Yourself Network that can help you with your own home improvements. And even though a new toilet from Home Depot (HD) might cost you $149, the added value is real. "Bathrooms are a big deal," says Dunleavy.
STAY DRY
Mother nature's monsoons might be unpredictable, but a water leak is detectable. A water leak detection device can save you about 2% on insurance, if there is a monitor system in place. That’s a 30 year savings of $1200, for a detection device that costs around $600 to install. (Not to mention the savings you get from detecting and preventing water damage before it starts.)
Remember, reducing the amount you spend on your home, and increasing its value, means more money for essentials, like gas and groceries.
That is why in addition to suggesting smarter ways to spend a dollar, MainStreet also looks for ways to stretch dollars, too. How so with homes? "People have a lot of opportunities to reduce their home owners [insurance] premium if they invested in certain equipment and protective services in their house," says Peter Spicer of Chubb Insurance (CB). "It’s a good time for people to look to see if they have taken advantage of all these credits and services."
Home improvements can also increase your asking price when you sell, and can result in your home being sold sooner than later. (Of course, where your house is located should always be considered before you begin recession-proofing your home, not every home will benefit from home improvements in the same way.)
Here are a few tips to recession-proof your abode:
ALARM YOURSELF
Safety can save you. Not only can a security protection system protect you from a robber or fire, installing one can also lower your monthly insurance payments. The benefits depend on what type of system you have in place, be it a deadbolt or something more. Your premium can dip by as much as 20% if you install a sophisticated sprinkler system, and a fire and burglar alarm that rings a monitor station, according to the Insurance Information Institute. That could mean $400 annual savings if your insurance plan costs $2,000.
CURB APPEAL
Spend a little time on landscaping. "Within the first 30 seconds, people are passing judgment on your house," says Dan Dunleavy, CEO of Fix to Flip. If you’re a do-it-yourself type, then this will cost you absolutely nothing for labor. A quick trip to Sears (SHLD) is a good place to start for landscaping tips. Hiring a landscape artist on, say, Craigslist might cost you $22 an hour and up. The payoff is a house that might be easier to sell.
GET BEAUTIFUL ON THE INSIDE
"Flooring, painting, carpeting and molding" are the first things you see when you walk through the door, says Dunleavy. It should be "eye candy," which means no carpet that predates the birth of its homeowner. Other rooms to modernize? The kitchen and the bathroom. "People want a bathroom that looks appealing," says Dunleavy. "They don’t want a stone age bathtub or sink." A contractor might hit your wallet "pretty hard" but there are websites, such as the Do It Yourself Network that can help you with your own home improvements. And even though a new toilet from Home Depot (HD) might cost you $149, the added value is real. "Bathrooms are a big deal," says Dunleavy.
STAY DRY
Mother nature's monsoons might be unpredictable, but a water leak is detectable. A water leak detection device can save you about 2% on insurance, if there is a monitor system in place. That’s a 30 year savings of $1200, for a detection device that costs around $600 to install. (Not to mention the savings you get from detecting and preventing water damage before it starts.)
Remember, reducing the amount you spend on your home, and increasing its value, means more money for essentials, like gas and groceries.
Homeowners Insurance: Rebuilding costs may affect coverage
If you're a homeowner, your money can be at risk in more ways than you may think. In today's declining housing market, home values have gone south, even if you can find a qualified buyer. With severe spring weather followed by the tropical season, there's much to learn about potential damage to your home.
Consider these common scenarios:
- High winds cause a large tree to crash into your home.
- A kitchen fire damages several rooms.
- A lightning strike destroys your home.
- A tornado reduces your home to splinters.
How much will it cost to bring your home back to normal?
The market value of your home before the incident was $150,000. Now, it's $100,000 due to the economy and its effect on housing. How much will the repairs cost?
According to a new study by Xactware, a Utah company that keeps up with housing and repair costs, to rebuild a damaged home went up 3.95 percent nationwide last year.
The report found of the top five states by building cost increases, the leader was Alaska at more than 8 percent. Nevada was second at more than 6 percent followed by Georgia, Texas and Hawaii, all above 5 percent.
The exact rebuilding cost is usually expressed in dollars-per-square-foot.
For instance, to build a 2,000-square-foot home at $100 per square foot equals $200,000.
To calculate the cost to rebuild your house, first consider that the issue has nothing to do with what it's worth today because this is about reconstruction costs, not market value. You'll need to know the following:
- The per-square-foot cost in your neighborhood to build and to rebuild. Keep in mind expensive extras such as high-end appliances; cabinets and other materials can put the cost per square foot upwards of $500 to $600 for very expensive homes.
- How much damage has your home sustained? Before the rebuilding process begins, the damage must be removed and disposed of and the home must be prepared for rebuilding.
A 12-by-15-foot room equals 180 square feet, and the per-square-foot cost can increase by as much as 50 percent for readying a space for reconstruction. So the $100 per-square-foot cost goes up to about $150.
As an example, if 500 square feet of your home is destroyed, the replacement cost could be $75,000.
- What is covered by your homeowners insurance policy? If a tree falls into your home and rain pours in, that water damage would be covered. However, if floodwaters enter your home, without flood insurance, there is no coverage for damage resulting from raising water.
Also to obtain the full amount for personal belongings, a detailed home inventory is important.
- Where will you live while your home is under repair? Your insurer or agent will explain your additional living expenses portion of your policy. This will cover such items as payment for temporary housing, food costs before you obtain living quarters with a kitchen, and other items. The details of your policy will address how long additional living expenses can be covered and how you get your reimbursement. Receipts will be important to document your expenses.
You will probably find that the amount of insurance you obtain will be a function of the appraisal value when you purchased the home, but keep in mind the insurer looks at the home itself, not the value of the land.
Typically, your homeowners' policy has built-in escalators to keep up with the cost of construction and building materials over the years, but you should check periodically.
That's why market value at the moment is not considered. It's all about rebuilding costs and demolition.
These are fundamental questions that are better to know ahead of time instead of after damage occurs.
The time you spend with your agent or company will help you and your family in many ways should a disaster occur.
Consider these common scenarios:
- High winds cause a large tree to crash into your home.
- A kitchen fire damages several rooms.
- A lightning strike destroys your home.
- A tornado reduces your home to splinters.
How much will it cost to bring your home back to normal?
The market value of your home before the incident was $150,000. Now, it's $100,000 due to the economy and its effect on housing. How much will the repairs cost?
According to a new study by Xactware, a Utah company that keeps up with housing and repair costs, to rebuild a damaged home went up 3.95 percent nationwide last year.
The report found of the top five states by building cost increases, the leader was Alaska at more than 8 percent. Nevada was second at more than 6 percent followed by Georgia, Texas and Hawaii, all above 5 percent.
The exact rebuilding cost is usually expressed in dollars-per-square-foot.
For instance, to build a 2,000-square-foot home at $100 per square foot equals $200,000.
To calculate the cost to rebuild your house, first consider that the issue has nothing to do with what it's worth today because this is about reconstruction costs, not market value. You'll need to know the following:
- The per-square-foot cost in your neighborhood to build and to rebuild. Keep in mind expensive extras such as high-end appliances; cabinets and other materials can put the cost per square foot upwards of $500 to $600 for very expensive homes.
- How much damage has your home sustained? Before the rebuilding process begins, the damage must be removed and disposed of and the home must be prepared for rebuilding.
A 12-by-15-foot room equals 180 square feet, and the per-square-foot cost can increase by as much as 50 percent for readying a space for reconstruction. So the $100 per-square-foot cost goes up to about $150.
As an example, if 500 square feet of your home is destroyed, the replacement cost could be $75,000.
- What is covered by your homeowners insurance policy? If a tree falls into your home and rain pours in, that water damage would be covered. However, if floodwaters enter your home, without flood insurance, there is no coverage for damage resulting from raising water.
Also to obtain the full amount for personal belongings, a detailed home inventory is important.
- Where will you live while your home is under repair? Your insurer or agent will explain your additional living expenses portion of your policy. This will cover such items as payment for temporary housing, food costs before you obtain living quarters with a kitchen, and other items. The details of your policy will address how long additional living expenses can be covered and how you get your reimbursement. Receipts will be important to document your expenses.
You will probably find that the amount of insurance you obtain will be a function of the appraisal value when you purchased the home, but keep in mind the insurer looks at the home itself, not the value of the land.
Typically, your homeowners' policy has built-in escalators to keep up with the cost of construction and building materials over the years, but you should check periodically.
That's why market value at the moment is not considered. It's all about rebuilding costs and demolition.
These are fundamental questions that are better to know ahead of time instead of after damage occurs.
The time you spend with your agent or company will help you and your family in many ways should a disaster occur.
Maine Home Insurance: Snow load threat
While the Maine River Flow Advisory Commission met this week to discuss the possibility of spring flooding in the state, at least one insurer is reminding residents to keep an eye on what’s over their heads.
“Rain is possible in some parts of Maine later this week, increasing the need to remind property owners of the excessive weight created by snow that has piled up on rooftops, porch roofs, shelters, camps, homes and commercial property,” representatives of OneBeacon Insurance Co. wrote in a snowpack alert sent to clients around the state. “Areas found in Aroostook have the greatest concern with greater than four feet of snow pack.”
At the National Weather Service in Caribou, the official snow depth as of yesterday was at 22 inches, nearly 10 inches less than last year when heavy snowfalls in The County resulted in several building collapses, including two commercial structures in Fort Kent.
“No one wants to ever have to file a claim for a roof that’s collapsed under the weight of ice or snow,” said Ann Ouellette, personal line team leader with Thibodeau’s Insurance Agency in Fort Kent. “The buildup of ice and snow can cause severe water and structural damage.”
Ouellette encouraged property owners to take steps to avoid that buildup, especially on older homes that may not be capable of carrying a heavier snow load.
While no significant accumulation is in the immediate forecast, weather service meteorologist Todd Lericos did say March, along with February, is still a prime month for nor’easters.
“One of those storms can come in and lay down a foot of snow,” Lericos said. “It all depends if we bounce into a storm track that could bring some substantial amounts.”
When it comes to roofs and snow, it’s not the amount of snow cover so much as the weight.
As a general rule and assuming an average snow moisture density of 25 percent, 1 square foot of snow an inch deep weighs 1¼ pounds.
Ice buildup can add greatly to that weight, bringing in an additional 5.2 pounds for every inch in thickness.
“Once the snow starts to settle under its own weight you lose a lot of the air and fluff factor out of it,” Lericos said. “As it compresses it gets denser but not heavier.”
He cautioned that the snowpack has a holding capacity. The snowpack, Lericos said, acts like a combination sponge and bucket, holding moisture, especially when it rains.
The northern Maine snowpack now contains 5.6 inches of liquid water.
“But if we get some rain, that water content could shoot up, and that’s when weight becomes the problem on roofs,” Lericos said.
The weather service was forecasting some sleet and freezing rain over the northern Maine region Friday night with little or no ice accumulation expected.
“Rain is possible in some parts of Maine later this week, increasing the need to remind property owners of the excessive weight created by snow that has piled up on rooftops, porch roofs, shelters, camps, homes and commercial property,” representatives of OneBeacon Insurance Co. wrote in a snowpack alert sent to clients around the state. “Areas found in Aroostook have the greatest concern with greater than four feet of snow pack.”
At the National Weather Service in Caribou, the official snow depth as of yesterday was at 22 inches, nearly 10 inches less than last year when heavy snowfalls in The County resulted in several building collapses, including two commercial structures in Fort Kent.
“No one wants to ever have to file a claim for a roof that’s collapsed under the weight of ice or snow,” said Ann Ouellette, personal line team leader with Thibodeau’s Insurance Agency in Fort Kent. “The buildup of ice and snow can cause severe water and structural damage.”
Ouellette encouraged property owners to take steps to avoid that buildup, especially on older homes that may not be capable of carrying a heavier snow load.
While no significant accumulation is in the immediate forecast, weather service meteorologist Todd Lericos did say March, along with February, is still a prime month for nor’easters.
“One of those storms can come in and lay down a foot of snow,” Lericos said. “It all depends if we bounce into a storm track that could bring some substantial amounts.”
When it comes to roofs and snow, it’s not the amount of snow cover so much as the weight.
As a general rule and assuming an average snow moisture density of 25 percent, 1 square foot of snow an inch deep weighs 1¼ pounds.
Ice buildup can add greatly to that weight, bringing in an additional 5.2 pounds for every inch in thickness.
“Once the snow starts to settle under its own weight you lose a lot of the air and fluff factor out of it,” Lericos said. “As it compresses it gets denser but not heavier.”
He cautioned that the snowpack has a holding capacity. The snowpack, Lericos said, acts like a combination sponge and bucket, holding moisture, especially when it rains.
The northern Maine snowpack now contains 5.6 inches of liquid water.
“But if we get some rain, that water content could shoot up, and that’s when weight becomes the problem on roofs,” Lericos said.
The weather service was forecasting some sleet and freezing rain over the northern Maine region Friday night with little or no ice accumulation expected.
Maine Health Insurance: Many lost coverage 2007 to 2008
A new report released today takes a different perspective on Maine's uninsured population. Most studies are a snapshot of how many Mainers are uninsured at a given time. But the report from Families USA, an advocacy group pushing for universal health care, looked at how many people lost their health coverage from 2007 through 2008 - a far higher number.
"There were approximately 280,000 people in the state who were uninsured at some point in that two year period," says Ron Pollack, Executive Director of Families USA. "That constitutes more than one out of every four people in the state under 65 years of age, and more than two thirds of them were uninsured for at least six months."
"Just looking at people who are uninsured for a full year doesn't tell the full picture of the impact and harm to consumers on an everyday basis," says Joe Ditre Director of the Maine advocacy group Consumers for Affordable Health Care, which runs a help line for people struggling to get health coverage. "We have people who have called us who have lost their job for just one month, sometimes less, and had an illness that they could not take care of that resulted in medical bills during the period that they were uninsured that they are now in bankruptcy over."
More than three-quarters of Maine's uninsured are working. People such as 34-year-old Tera Cooley of Buxton, who holds down part-time jobs as a receptionist and sales representative for a marketing company. Cooley moved back to Maine from Los Angeles at the end of last year to be with her family.
To cut down costs, she's living with her siblings right now, but she still doesn't have enough money to pay for her thyroid medication or the bridge work she needs for her teeth. "You know, I'm doing my best to survive but it's definitely very difficult not having health insurance and having health issues, and knowing that basically that I'm not properly caring for myself because I don't have health insurance and I simply don't have the money to spend several hundred dollars on my tests and my meds and everything right now."
Stories like Cooley's can be heard throughout the state. But on the whole, Maine's uninsured rate is considerably lower than most other states -- 10.5 percent, compared to a national average that's seven points higher, according to the Robert Wood Johnson Foundation.
A report released this week by the Foundation shows that the number of uninsured Mainers fell by more than 22,000 from 1994 to 2007. One of the things Maine has done in that period is increase the number of people eligible for health insurance through the state's Medicaid program.
But, says Democratic Maine Congresswoman Chellie Pingree, "There's nobody in Maine I don't think who feels consoled anymore knowing that we have a slightly higher rate of coverage when most people have a story at some point in their life, if not right now, of falling between the cracks and just going uninsured, or those who have insurance kind of worry everyday if they're going to be able to keep paying for it."
Pingree says she's excited about President Obama's decision to include $630 billion in his budget to finance health care reform, calling it a "serious downpayment for affordable health care." Congress is expected to begin debating the president's budget next week.
"There were approximately 280,000 people in the state who were uninsured at some point in that two year period," says Ron Pollack, Executive Director of Families USA. "That constitutes more than one out of every four people in the state under 65 years of age, and more than two thirds of them were uninsured for at least six months."
"Just looking at people who are uninsured for a full year doesn't tell the full picture of the impact and harm to consumers on an everyday basis," says Joe Ditre Director of the Maine advocacy group Consumers for Affordable Health Care, which runs a help line for people struggling to get health coverage. "We have people who have called us who have lost their job for just one month, sometimes less, and had an illness that they could not take care of that resulted in medical bills during the period that they were uninsured that they are now in bankruptcy over."
More than three-quarters of Maine's uninsured are working. People such as 34-year-old Tera Cooley of Buxton, who holds down part-time jobs as a receptionist and sales representative for a marketing company. Cooley moved back to Maine from Los Angeles at the end of last year to be with her family.
To cut down costs, she's living with her siblings right now, but she still doesn't have enough money to pay for her thyroid medication or the bridge work she needs for her teeth. "You know, I'm doing my best to survive but it's definitely very difficult not having health insurance and having health issues, and knowing that basically that I'm not properly caring for myself because I don't have health insurance and I simply don't have the money to spend several hundred dollars on my tests and my meds and everything right now."
Stories like Cooley's can be heard throughout the state. But on the whole, Maine's uninsured rate is considerably lower than most other states -- 10.5 percent, compared to a national average that's seven points higher, according to the Robert Wood Johnson Foundation.
A report released this week by the Foundation shows that the number of uninsured Mainers fell by more than 22,000 from 1994 to 2007. One of the things Maine has done in that period is increase the number of people eligible for health insurance through the state's Medicaid program.
But, says Democratic Maine Congresswoman Chellie Pingree, "There's nobody in Maine I don't think who feels consoled anymore knowing that we have a slightly higher rate of coverage when most people have a story at some point in their life, if not right now, of falling between the cracks and just going uninsured, or those who have insurance kind of worry everyday if they're going to be able to keep paying for it."
Pingree says she's excited about President Obama's decision to include $630 billion in his budget to finance health care reform, calling it a "serious downpayment for affordable health care." Congress is expected to begin debating the president's budget next week.
Thursday, March 26, 2009
Homeowners Insurance: What amount of coverage is needed?
How much would it cost you to restore your life if you lost everything you owned in a fire, flood or other disaster?
That’s the question you should ask yourself when you consider how much homeowners insurance you need.
When buying homeowners insurance, you always have to think about the worst-case scenario and make that your target coverage. Odds are high that any claim you make will be for much less, but a good policy should protect you in the event of a total loss.
Most insurers offer several levels of coverage. On the lower end of the spectrum are the “named perils” policies. These only protect against the risks specifically outlined in the policy such as fire, theft, vandalism, lightening, etc. A basic named perils policy usually covers 11 risks, and a broad named perils policy usually covers 17. An “open perils” policy is more valuable because it covers all possible perils, except the ones specifically excluded, such as earthquake or water damage.
This is the best level of coverage, but it does cost a little more.
There are three basic types of coverage provided in homeowners policies: home structure, possessions and liability.
Home Structure Coverage
This is the most basic coverage provided and is typically required to obtain financing. To determine how much coverage you need on your home’s structure, you have to calculate current replacement costs (avoid cash value policies). Some people make the mistake of basing their level of coverage on the market value of their home, but that’s often not enough.
Particularly now, when home prices are falling so rapidly, it may cost significantly more to rebuild your home than your home is worth on the market. Talk to a local contractor or contact a building association to find out the going cost per square foot to rebuild a home like yours.
Remember to update your policy as costs change with inflation, or you could end up underinsured in just a few years.
Possession Coverage
Determining how much coverage you need for the contents of your home requires a complete inventory of your possessions. Estimate how much they would cost to replace at current prices (not what you paid). Most policies will cover your possession at 50 to 75% of the coverage of your home’s structure, but you can buy coverage more if needed. Make sure to buy a policy that provides replacement protection, not “actual cash value.” Cash value coverage factors in depreciation and rarely provides enough to replace what’s been lost.
Liability Coverage
Liability coverage protects you if someone is injured in your home and sues. Standard liability protection in homeowners insurance is usually between $100,000 and $300,000, but that may not be enough. You need at least as much coverage as your net worth (assets minus debts) if not more. If you need more coverage, buy an umbrella liability policy. An umbrella policy provides extra protection to your home and auto insurance. You can usually add on a $1 million umbrella policy for a few hundred dollars a year.
What’s Not Covered?
It’s important to know what is not covered in a standard policy so that you can buy extra coverage if needed. Some natural disasters, like earthquakes, floods and mudslides, are not covered. You can buy earthquake and flood policies to add onto your homeowners insurance if you live in a risk area. Additionally, you’ll need to take out a rider to cover pricey items like jewelry, art, antiques, etc. The value of these items can push you over the standard maximum coverage in your policy.
That’s the question you should ask yourself when you consider how much homeowners insurance you need.
When buying homeowners insurance, you always have to think about the worst-case scenario and make that your target coverage. Odds are high that any claim you make will be for much less, but a good policy should protect you in the event of a total loss.
Most insurers offer several levels of coverage. On the lower end of the spectrum are the “named perils” policies. These only protect against the risks specifically outlined in the policy such as fire, theft, vandalism, lightening, etc. A basic named perils policy usually covers 11 risks, and a broad named perils policy usually covers 17. An “open perils” policy is more valuable because it covers all possible perils, except the ones specifically excluded, such as earthquake or water damage.
This is the best level of coverage, but it does cost a little more.
There are three basic types of coverage provided in homeowners policies: home structure, possessions and liability.
Home Structure Coverage
This is the most basic coverage provided and is typically required to obtain financing. To determine how much coverage you need on your home’s structure, you have to calculate current replacement costs (avoid cash value policies). Some people make the mistake of basing their level of coverage on the market value of their home, but that’s often not enough.
Particularly now, when home prices are falling so rapidly, it may cost significantly more to rebuild your home than your home is worth on the market. Talk to a local contractor or contact a building association to find out the going cost per square foot to rebuild a home like yours.
Remember to update your policy as costs change with inflation, or you could end up underinsured in just a few years.
Possession Coverage
Determining how much coverage you need for the contents of your home requires a complete inventory of your possessions. Estimate how much they would cost to replace at current prices (not what you paid). Most policies will cover your possession at 50 to 75% of the coverage of your home’s structure, but you can buy coverage more if needed. Make sure to buy a policy that provides replacement protection, not “actual cash value.” Cash value coverage factors in depreciation and rarely provides enough to replace what’s been lost.
Liability Coverage
Liability coverage protects you if someone is injured in your home and sues. Standard liability protection in homeowners insurance is usually between $100,000 and $300,000, but that may not be enough. You need at least as much coverage as your net worth (assets minus debts) if not more. If you need more coverage, buy an umbrella liability policy. An umbrella policy provides extra protection to your home and auto insurance. You can usually add on a $1 million umbrella policy for a few hundred dollars a year.
What’s Not Covered?
It’s important to know what is not covered in a standard policy so that you can buy extra coverage if needed. Some natural disasters, like earthquakes, floods and mudslides, are not covered. You can buy earthquake and flood policies to add onto your homeowners insurance if you live in a risk area. Additionally, you’ll need to take out a rider to cover pricey items like jewelry, art, antiques, etc. The value of these items can push you over the standard maximum coverage in your policy.
Should Obama tax employee healthcare benefits?
The past review of President Barack Obama's flip-flop on taxing employer health-care benefits is on the mark. Health-care spending in this country topped $2 trillion in 2005, which was about 17% of GDP.
Mr. Obama is looking for new funding to pay for an expansion of government-run health care and is hinting at taxing corporate-provided health insurance. If he does, he'll miss a large slice of the work force. Government employees (federal, state and local) receive more than twice the health-care benefits of the average American, and no one is talking about taxing their health benefits.
The best answer to America's health-care crisis is to open more medical schools, have patients pay doctors directly, and have patients bid for their own health-insurance programs. The managed health-care approach adds no value, though it does mask the true cost of care.
The government needs to create better incentives. A good start would be to create a tax credit (say, $5,000 per person) for everyone to use to buy health insurance. Pay for the credit with a tax on corporate and government health insurance.
This system would benefit average Americans, businesses, and the American health-care system as a whole. Under this plan, our economy would come out ahead.
Burr LeChevet Wilton, N.Y.
Mr. Obama is looking for new funding to pay for an expansion of government-run health care and is hinting at taxing corporate-provided health insurance. If he does, he'll miss a large slice of the work force. Government employees (federal, state and local) receive more than twice the health-care benefits of the average American, and no one is talking about taxing their health benefits.
The best answer to America's health-care crisis is to open more medical schools, have patients pay doctors directly, and have patients bid for their own health-insurance programs. The managed health-care approach adds no value, though it does mask the true cost of care.
The government needs to create better incentives. A good start would be to create a tax credit (say, $5,000 per person) for everyone to use to buy health insurance. Pay for the credit with a tax on corporate and government health insurance.
This system would benefit average Americans, businesses, and the American health-care system as a whole. Under this plan, our economy would come out ahead.
Burr LeChevet Wilton, N.Y.
More Workers without health insurance
A new study says employers are passing along the rising cost of health insurance, and more working people are uninsured. In this region that trend is most evident in New Jersey. About 14 percent of New Jersey workers were uninsured is the mid-1990s. By 2007 that number rose to 17 percent, or more than 741,000 people.
Hyman: You have to understand of course, that since that time we’ve had the economic downturn, thousands of people in the state have lost jobs and with that have lost insurance, so this problem has gotten even more worse than our numbers are able to show.
Andy Hyman is an insurance expert from the Robert Wood Johnson Foundation, which documented trends across more than a decade. The study found that New Jersey residents are paying some of the highest health insurance premiums in the country. Local experts say those insurance costs have risen far faster than worker incomes.
Hyman: You have to understand of course, that since that time we’ve had the economic downturn, thousands of people in the state have lost jobs and with that have lost insurance, so this problem has gotten even more worse than our numbers are able to show.
Andy Hyman is an insurance expert from the Robert Wood Johnson Foundation, which documented trends across more than a decade. The study found that New Jersey residents are paying some of the highest health insurance premiums in the country. Local experts say those insurance costs have risen far faster than worker incomes.
Reduce Auto Insurance: 5 ways to save
Tips on saving money on auto insurance during trying economic times.
Too many people set their auto insurance policies and forget about them.
This results in extraneous costs that drivers continue to pay year after year all because they haven't taken the time to review their current polices and revaluate their insurance needs. It's the equivalent to throwing money out the window.
The good news is that there are simple steps that every driver can take to lower their rates.
There are five easy ways that drivers can save money on their auto insurance this year and the most it takes is a little bit of time and a phone call or two.
To cut your auto insurance costs down and put some much needed money back in your pocket implement the following tips.
1. Shop around - Regardless if you never had a ticket or accident many insurance companies charge you more if you don't have a college degree, don't work in a "white collar" high paying job, have a poor credit score or don't own your own home. Also, if you use an agent or broker - they only represent a certain number of insurance companies and don't have the ability to effectively shop around to compare rates for you.
2. Review your current policy - If you don't have assets to protect, you may not have a need to purchase large limits for liability. For example, the state of New Jersey allows every driver to purchase a Basic Policy which allows you to buy a policy with no liability insurance coverage.
3. Drop the physical damage coverage for your car - If you drive a car that is seven years old or older consider dropping your collision and / or comprehensive coverage since the vehicle's market value has significantly decreased and any claims that you may not exceed the deductible amount.
4. Assume more risk - Request a higher deductible. Increasing your deductible from $500 to $1,000 could decrease your premium by up to 30 percent. Remember collision deductibles generally only cause you to pay if the accident is your fault.
5. Look for different discounts - Discounts for a secure garage and off -street parking are examples of the unique benefits that CURE auto insurance offers. The discounts can be significant especially in urban areas where you pay much more for insurance due to the location alone.
Too many people set their auto insurance policies and forget about them.
This results in extraneous costs that drivers continue to pay year after year all because they haven't taken the time to review their current polices and revaluate their insurance needs. It's the equivalent to throwing money out the window.
The good news is that there are simple steps that every driver can take to lower their rates.
There are five easy ways that drivers can save money on their auto insurance this year and the most it takes is a little bit of time and a phone call or two.
To cut your auto insurance costs down and put some much needed money back in your pocket implement the following tips.
1. Shop around - Regardless if you never had a ticket or accident many insurance companies charge you more if you don't have a college degree, don't work in a "white collar" high paying job, have a poor credit score or don't own your own home. Also, if you use an agent or broker - they only represent a certain number of insurance companies and don't have the ability to effectively shop around to compare rates for you.
2. Review your current policy - If you don't have assets to protect, you may not have a need to purchase large limits for liability. For example, the state of New Jersey allows every driver to purchase a Basic Policy which allows you to buy a policy with no liability insurance coverage.
3. Drop the physical damage coverage for your car - If you drive a car that is seven years old or older consider dropping your collision and / or comprehensive coverage since the vehicle's market value has significantly decreased and any claims that you may not exceed the deductible amount.
4. Assume more risk - Request a higher deductible. Increasing your deductible from $500 to $1,000 could decrease your premium by up to 30 percent. Remember collision deductibles generally only cause you to pay if the accident is your fault.
5. Look for different discounts - Discounts for a secure garage and off -street parking are examples of the unique benefits that CURE auto insurance offers. The discounts can be significant especially in urban areas where you pay much more for insurance due to the location alone.
Massachusetts Auto Insurance Market: Many problems remain
Massachusetts is one year into a new competitive auto insurance market, but there are more and more bumps on the road, including a change coming up next month that has some urban agents complaining thousands of low-income and minority drivers could lose coverage.
Industry estimates are that this could begin affecting 12,000 drivers a month starting April 1, those who get their policies through agents called "exclusive representative producers." That was a system set up in the 1970s to prevent insurers from refusing to write policies in certain neighborhoods or to higher-risk drivers who still have valid licenses and registrations. Governor Deval L. Patrick's administration wants to phase out that system, and says this is about reform, choice, and cutting costs. But some agents say this is tantamount to allowing redlining.
Uphams Corner in Boston's Dorchester section is where Linda L. Webster's written car insurance policies for 32 years, many under a state plan covering risky inner-city drivers most insurers would normally shun. But come April, she warns many of them, and thousands across Massachusetts, will lose their coverage.
"These are the worst times that we have been in for many many years,'' Webster said in an interview on Wednesday. "To go after the people of the inner city, the urban policy holders, and say, 'You are the people we are not going to renew,' '' is extraordinarily unfair, Webster says.
It's related to new "managed competition," but overwhelmingly hitting drivers in low income and minority areas. Webster, who is a leader with the Urban Insurance Agents of Massachusetts trade association, keeps track of where policies are getting canceled on a map with pushpins.
"Springfield, Worcester, New Bedford, Fall river ... urban, inner- city areas. Not suburbs. (Affluent suburbs like) Wellesley and Andover and those areas are not on this map.''
Massachusetts Insurance Commissioner Nonnie S. Burnes insists this is not redlining, but a reform that will save money and expand choice. Instead of dumping high-risk drivers in an industry pool, it'll assign them to individual carriers, making insurers more accountable to drivers and vice versa.
Kofi Jones, spokeswoman for Executive Office of Housing and Economic Development Secretary Greg Bialecki, who is Burnes's boss, issued a statement: "High-risk drivers live all over the Commonwealth, in every community, and they will all continue to have access to auto insurance.
Drivers can shop for new insurance by working with their current agent and using the Massachusetts Auto Insurance Program, or they can shop for new insurance through a different agent or through their own research in the competitive marketplace. No one, anywhere in Massachusetts, will lose the right to auto insurance as we create an assigned risk plan that is equitable and fair for everyone. These changes are helping us transform our auto insurance market and make it more flexible and nimble, and best practices in the industry indicate that this type of assigned risk pool provides the best service to high-risk drivers. For drivers in the high-risk category, these changes will create better customer service by allowing them to build a relationship with one company, and in the long run create the opportunity for them to receive better insurance and reap the benefits of the transition to managed competition."
But Roxbury, Mass., agent Jason Calianos, whose family has been in the insurance business in Dudley Square for 55 years, warns that under the changes, many of his customers will soon have to pay 25 percent down on insurance, up from 10 percent under most policies now. That's hundreds of dollars more that is onerous for people living paycheck to paycheck or government benefit check to government benefit check.
"You have to pay this big insurance bill now? Something's gotta give. And I think the insurance bill's going to give, and there's going to be people driving without insurance. absolutely.''
Howe: Now, if you live out in the suburbs or rural parts of Massachusetts, why should you care about inner-city residents losing car insurance? Because more accidents involving uninsured drivers means premiums go up for everybody -- including you.
Calianos says, "If you get hit by an uninsured driver, it costs your company more and ultimately it will cost your policy more.''
Burnes has said she's very concerned about injustice but remains convinced this is a good plan. Urban insurers just want her to wait six months and come up with a fairer system.
One analogy to what the Patrick Administration hopes this plan does for uninsured drivers is health coverage for uninsured people. Instead of insurers just paying millions into a welfare-hospital pool, they actually start real business relationships with thousands of individual people.
That means more accountability and more responsibility both ways.
Massachusetts State Senator Jack Hart from South Boston is pushing for legislative action to impose that six-month freeze. Just this month, we saw Commissioner Burnes back away from another controversial plan ... that was to get rid of a state appeal board where you can challenge an insurance company saying an accident is your fault, something NECN covered in this story on business day.
The commissioner does have a track record of at least hearing out and sometimes acting on a public outcry.
Industry estimates are that this could begin affecting 12,000 drivers a month starting April 1, those who get their policies through agents called "exclusive representative producers." That was a system set up in the 1970s to prevent insurers from refusing to write policies in certain neighborhoods or to higher-risk drivers who still have valid licenses and registrations. Governor Deval L. Patrick's administration wants to phase out that system, and says this is about reform, choice, and cutting costs. But some agents say this is tantamount to allowing redlining.
Uphams Corner in Boston's Dorchester section is where Linda L. Webster's written car insurance policies for 32 years, many under a state plan covering risky inner-city drivers most insurers would normally shun. But come April, she warns many of them, and thousands across Massachusetts, will lose their coverage.
"These are the worst times that we have been in for many many years,'' Webster said in an interview on Wednesday. "To go after the people of the inner city, the urban policy holders, and say, 'You are the people we are not going to renew,' '' is extraordinarily unfair, Webster says.
It's related to new "managed competition," but overwhelmingly hitting drivers in low income and minority areas. Webster, who is a leader with the Urban Insurance Agents of Massachusetts trade association, keeps track of where policies are getting canceled on a map with pushpins.
"Springfield, Worcester, New Bedford, Fall river ... urban, inner- city areas. Not suburbs. (Affluent suburbs like) Wellesley and Andover and those areas are not on this map.''
Massachusetts Insurance Commissioner Nonnie S. Burnes insists this is not redlining, but a reform that will save money and expand choice. Instead of dumping high-risk drivers in an industry pool, it'll assign them to individual carriers, making insurers more accountable to drivers and vice versa.
Kofi Jones, spokeswoman for Executive Office of Housing and Economic Development Secretary Greg Bialecki, who is Burnes's boss, issued a statement: "High-risk drivers live all over the Commonwealth, in every community, and they will all continue to have access to auto insurance.
Drivers can shop for new insurance by working with their current agent and using the Massachusetts Auto Insurance Program, or they can shop for new insurance through a different agent or through their own research in the competitive marketplace. No one, anywhere in Massachusetts, will lose the right to auto insurance as we create an assigned risk plan that is equitable and fair for everyone. These changes are helping us transform our auto insurance market and make it more flexible and nimble, and best practices in the industry indicate that this type of assigned risk pool provides the best service to high-risk drivers. For drivers in the high-risk category, these changes will create better customer service by allowing them to build a relationship with one company, and in the long run create the opportunity for them to receive better insurance and reap the benefits of the transition to managed competition."
But Roxbury, Mass., agent Jason Calianos, whose family has been in the insurance business in Dudley Square for 55 years, warns that under the changes, many of his customers will soon have to pay 25 percent down on insurance, up from 10 percent under most policies now. That's hundreds of dollars more that is onerous for people living paycheck to paycheck or government benefit check to government benefit check.
"You have to pay this big insurance bill now? Something's gotta give. And I think the insurance bill's going to give, and there's going to be people driving without insurance. absolutely.''
Howe: Now, if you live out in the suburbs or rural parts of Massachusetts, why should you care about inner-city residents losing car insurance? Because more accidents involving uninsured drivers means premiums go up for everybody -- including you.
Calianos says, "If you get hit by an uninsured driver, it costs your company more and ultimately it will cost your policy more.''
Burnes has said she's very concerned about injustice but remains convinced this is a good plan. Urban insurers just want her to wait six months and come up with a fairer system.
One analogy to what the Patrick Administration hopes this plan does for uninsured drivers is health coverage for uninsured people. Instead of insurers just paying millions into a welfare-hospital pool, they actually start real business relationships with thousands of individual people.
That means more accountability and more responsibility both ways.
Massachusetts State Senator Jack Hart from South Boston is pushing for legislative action to impose that six-month freeze. Just this month, we saw Commissioner Burnes back away from another controversial plan ... that was to get rid of a state appeal board where you can challenge an insurance company saying an accident is your fault, something NECN covered in this story on business day.
The commissioner does have a track record of at least hearing out and sometimes acting on a public outcry.
Chicago Illinois Auto Insurance: Should uninsured drivers be punished?
Many people criticize Chicago's plan to ticket uninsured drivers because of the perception of unfairness to people who can't afford insurance.
Besides being required under state law, that insurance is part of the cost and responsibility of operating a vehicle. When there is no insurance to pay for the damages, the victims (or sometimes the taxpayers) end up footing the bill.
More than 20 years ago, I was involved in a multiple-car accident on the Kennedy Expressway that was caused by an uninsured driver. My insurance paid my medical bills and the value of my totaled car; then it dropped me for excessive claims, despite the fact that this was my first claim in 15 years. When I finally found someone who would insure me, I paid higher premiums that amounted to more than four times my former rate. Eventually I again returned to lower rates, but the damage to my spine and nervous system still affect me.
We need to stop making excuses for drivers who refuse to take responsibility for their driving and recognize them for the scofflaws they are by ignoring the risks they pose to other drivers, pedestrians and property.
Besides being required under state law, that insurance is part of the cost and responsibility of operating a vehicle. When there is no insurance to pay for the damages, the victims (or sometimes the taxpayers) end up footing the bill.
More than 20 years ago, I was involved in a multiple-car accident on the Kennedy Expressway that was caused by an uninsured driver. My insurance paid my medical bills and the value of my totaled car; then it dropped me for excessive claims, despite the fact that this was my first claim in 15 years. When I finally found someone who would insure me, I paid higher premiums that amounted to more than four times my former rate. Eventually I again returned to lower rates, but the damage to my spine and nervous system still affect me.
We need to stop making excuses for drivers who refuse to take responsibility for their driving and recognize them for the scofflaws they are by ignoring the risks they pose to other drivers, pedestrians and property.
Wednesday, March 25, 2009
Cheapest Car/Auto Insurance Online: The Ideal Buying Process
It is the normal practice for individuals to buy insurance on assets they already own. In such cases, the asset owner wishes to initially exercise the right whether to insure or not. However, if you intend to buy a car in the United States, the right not to insure effectively does not exist as most U.S. states require that all cars out of the dealers shop must have a form of auto insurance coverage.
For anyone in the U.S. who would rather purchase their automobile before insuring it, the cost could be pretty high as they would have to buy the expensive temporary insurance which new & uncovered car buyers can get on the spot at the car dealerships. High convenience, even higher cost!
Clearly, the safest way to buy auto insurance is to get it even before a car purchase. That is, beginning the process before buying the car.
How do you go about this?
Some may believe they can afford to start the process with the first insurer they talk to, settling for the first quote they get. But by doing this, they deny themselves a lot of savings that could have come their way via quote comparison.
The Ideal process is:
1. CAR RESEARCH AND DECISION
A car is too expensive a product to be bought on impulse! So, be sure you know all the technical details about your preferred vehicle brand and model. This information is required when you approach insurers.
2. AUTO INSURANCE COMPARISON
Shop around online using insurance comparison sites like. They will give you free quotes from established insurance companies operating in your locality. This gives you the power to choose the most friendly rate for you.
3. INFORMING YOUR PREFERRED INSURER
Contact the insurance provider whose rates you prefer and give them information about the car you are about to buy. Also provide the insurer with contact information of the dealer from whom you will be buying the car.
4. GETTING A BINDER
This is the crucial part. Upon getting information about the proposed car, the insurance provider should be able to offer a binder, which is a temporary insurance contract that provides proof of coverage until you secure a permanent policy. Evidence of this binder must be forwarded to the dealer to act as the proof of insurance coverage most car dealerships require before you can take delivery of a car.
5. TAKING POSSESSION OF THE CAR
By now you are ready and secure in taking possession of your car from the dealer.
You may then continue the process with the insurer towards sealing up a permanent auto insurance policy.
Best of Luck.
Article by Seyi Gabriel
For anyone in the U.S. who would rather purchase their automobile before insuring it, the cost could be pretty high as they would have to buy the expensive temporary insurance which new & uncovered car buyers can get on the spot at the car dealerships. High convenience, even higher cost!
Clearly, the safest way to buy auto insurance is to get it even before a car purchase. That is, beginning the process before buying the car.
How do you go about this?
Some may believe they can afford to start the process with the first insurer they talk to, settling for the first quote they get. But by doing this, they deny themselves a lot of savings that could have come their way via quote comparison.
The Ideal process is:
1. CAR RESEARCH AND DECISION
A car is too expensive a product to be bought on impulse! So, be sure you know all the technical details about your preferred vehicle brand and model. This information is required when you approach insurers.
2. AUTO INSURANCE COMPARISON
Shop around online using insurance comparison sites like. They will give you free quotes from established insurance companies operating in your locality. This gives you the power to choose the most friendly rate for you.
3. INFORMING YOUR PREFERRED INSURER
Contact the insurance provider whose rates you prefer and give them information about the car you are about to buy. Also provide the insurer with contact information of the dealer from whom you will be buying the car.
4. GETTING A BINDER
This is the crucial part. Upon getting information about the proposed car, the insurance provider should be able to offer a binder, which is a temporary insurance contract that provides proof of coverage until you secure a permanent policy. Evidence of this binder must be forwarded to the dealer to act as the proof of insurance coverage most car dealerships require before you can take delivery of a car.
5. TAKING POSSESSION OF THE CAR
By now you are ready and secure in taking possession of your car from the dealer.
You may then continue the process with the insurer towards sealing up a permanent auto insurance policy.
Best of Luck.
Article by Seyi Gabriel
Sunday, March 15, 2009
Ohio: Less Insurance complaints past year
The number of complaints from Ohio insurance-policy holders declined in 2008, according to the Ohio Department of Insurance.
There were 6,506 complaints last year, an 8.9 percent drop from the 7,140 made to the state in 2007.
"It's hard to say exactly why," said Mary Jo Hudson, director of the state department. "But I can say over the last two years we have significantly increased the consumer information released to the public."
As a result of actions the department took after receiving the complaints, it said it saved or recovered $9.7 million for residents.
The 2007 total was $10.7 million.
"This is good news and shows that the industry is responsive to the needs of policyholders," said Mary Bonelli, spokeswoman for the Ohio Insurance Institute, which represents property-and-casualty insurance companies.
She added that the drop in complaints came in the midst of the state's biggest natural disaster in many years, the Sept. 14 windstorm from Hurricane Ike. The storm has resulted in about 230,000 claims and losses estimated at $1.1 billion.
In 2,794 cases, the complaint received by the state department was decided in favor of the consumer; in 2,670, the state sided with the insurer. The remainder were neutral, outside its jurisdiction or routed to other agencies.
The most common complaint was about denial of a claim; that was the subject of 29.7 percent of all calls.
Accident/health insurance policies were the subject of the most calls: 41 percent; second-most common were complaints about auto policies: 24.3 percent.
Hudson thinks the large number of calls related to health-care coverage is because the policies "are becoming more and more limited, people have to pay more, and more claims are being denied due to changes in policy terms."
This is a trend, said UnitedHealthcare spokeswoman Debora Spano.
"Employers are moving more towards consumer-driven health care, and this gives people more responsibility for their own benefits, and they don't fully understand this yet," she said. "We spend a lot of time getting information out to employers and their employees."
The overall reduction in complaints is part of an industry effort toward better customer service, said Phil Urban, president and CEO of Grange Insurance.
"In the old days, I think, companies did the minimum," he said. "Now, customers are more knowledgeable and demanding, and it's become a standard business practice to deliver the best-possible customer service."
There were 6,506 complaints last year, an 8.9 percent drop from the 7,140 made to the state in 2007.
"It's hard to say exactly why," said Mary Jo Hudson, director of the state department. "But I can say over the last two years we have significantly increased the consumer information released to the public."
As a result of actions the department took after receiving the complaints, it said it saved or recovered $9.7 million for residents.
The 2007 total was $10.7 million.
"This is good news and shows that the industry is responsive to the needs of policyholders," said Mary Bonelli, spokeswoman for the Ohio Insurance Institute, which represents property-and-casualty insurance companies.
She added that the drop in complaints came in the midst of the state's biggest natural disaster in many years, the Sept. 14 windstorm from Hurricane Ike. The storm has resulted in about 230,000 claims and losses estimated at $1.1 billion.
In 2,794 cases, the complaint received by the state department was decided in favor of the consumer; in 2,670, the state sided with the insurer. The remainder were neutral, outside its jurisdiction or routed to other agencies.
The most common complaint was about denial of a claim; that was the subject of 29.7 percent of all calls.
Accident/health insurance policies were the subject of the most calls: 41 percent; second-most common were complaints about auto policies: 24.3 percent.
Hudson thinks the large number of calls related to health-care coverage is because the policies "are becoming more and more limited, people have to pay more, and more claims are being denied due to changes in policy terms."
This is a trend, said UnitedHealthcare spokeswoman Debora Spano.
"Employers are moving more towards consumer-driven health care, and this gives people more responsibility for their own benefits, and they don't fully understand this yet," she said. "We spend a lot of time getting information out to employers and their employees."
The overall reduction in complaints is part of an industry effort toward better customer service, said Phil Urban, president and CEO of Grange Insurance.
"In the old days, I think, companies did the minimum," he said. "Now, customers are more knowledgeable and demanding, and it's become a standard business practice to deliver the best-possible customer service."
Why Texas needs the stimulus money
Texas needs the federal stimulus money for nursing homes, schools, roads, broadband access and unemployment benefits, people told a state legislative committee Saturday at an all-day public hearing.
But some of the more than 300 people packed into a University of Texas at Arlington meeting room opposed taking the money, saying it showed too much reliance on the government. Some held signs that read, "No Fed Unemploy Stimulus."
"Accepting any of this stimulus money will burden Texas citizens for many generations to come. ... Like the Great Depression years this will only extend the pain of the economic downturn," Dave McElwee of the Tarrant Alliance for Responsible Government said to loud applause and cheers.
Saturday's hearing, the first of several planned across the state by the House Select Committee on Federal Economic Stabilization Funding, came two days after Gov. Rick Perry said he will turn down $555 million that would expand state unemployment benefits. He said it would increase the tax burden on Texas businesses.
Critics have countered that the state's faltering unemployment insurance fund will likely be in deficit by this fall, triggering an unemployment tax increase on businesses next year to make up for the deficit.
State lawmakers can still try to accept the money through a federal law provision. But they risk gubernatorial veto unless they can get a veto-proof two-thirds majority on a resolution announcing their intentions and legislation for the required expansion of unemployment benefits.
Some residents attended the meeting Saturday because they said they received a telephone message from Gov. Rick Perry, urging them to go and oppose the stimulus package.
"I'm sorry I missed you, but this Saturday you'll have the chance to voice your frustration about the federal stimulus and the heavy cost it's going to place on Texans," Perry said in the automated message. "It'll force Texas to impose higher tax burdens on employers and burden all Texans with bigger, more intrusive government."
Perry's spokesman did not immediately return a call to The Associated Press on Saturday.
The chairman of the committee hosting the meeting, state Rep. Jim Dunnam, D-Waco, said "anything that gets people to come and listen is good."
Becky Moeller, president of the Texas American Federation of Labor and Congress of Industrial Organizations, urged lawmakers to use the stimulus money to "reform the outdated unemployment system."
"This economic crisis didn't start yesterday, and it's hurting every economic class," she said as the audience applauded and whistled.
Loretta Roberts, administrator for Forest Lane Healthcare Center in Dallas and a member of the Texas Health Care Association, said about 50 of the state's 1,000 nursing homes do not have sprinkler systems. She said residents in facilities along the coast were without power for two weeks after Hurricane Ike because they had no generators.
While those are one-time funding options, Roberts said a pressing need is money to care for Medicaid residents — about 60,000 in Texas nursing homes — whose costs have increased the past decade without necessary funding from the state.
"This federal stimulus money must be used for filling the widening gap," Roberts told the committee.
The House Select Committee will relay the public comments to legislative committees that will vote on how to spend the roughly $17 billion slated for Texas in President Barack Obama's $787 billion stimulus bill. The committee's next meeting is March 21 in San Antonio.
"It's important that the committee comes out of Austin and around the state," said state Rep. Chris Turner, D-Arlington. "There are so many issues and there's a wide array of interests, and it's important that we hear from people what's on their minds."
But some of the more than 300 people packed into a University of Texas at Arlington meeting room opposed taking the money, saying it showed too much reliance on the government. Some held signs that read, "No Fed Unemploy Stimulus."
"Accepting any of this stimulus money will burden Texas citizens for many generations to come. ... Like the Great Depression years this will only extend the pain of the economic downturn," Dave McElwee of the Tarrant Alliance for Responsible Government said to loud applause and cheers.
Saturday's hearing, the first of several planned across the state by the House Select Committee on Federal Economic Stabilization Funding, came two days after Gov. Rick Perry said he will turn down $555 million that would expand state unemployment benefits. He said it would increase the tax burden on Texas businesses.
Critics have countered that the state's faltering unemployment insurance fund will likely be in deficit by this fall, triggering an unemployment tax increase on businesses next year to make up for the deficit.
State lawmakers can still try to accept the money through a federal law provision. But they risk gubernatorial veto unless they can get a veto-proof two-thirds majority on a resolution announcing their intentions and legislation for the required expansion of unemployment benefits.
Some residents attended the meeting Saturday because they said they received a telephone message from Gov. Rick Perry, urging them to go and oppose the stimulus package.
"I'm sorry I missed you, but this Saturday you'll have the chance to voice your frustration about the federal stimulus and the heavy cost it's going to place on Texans," Perry said in the automated message. "It'll force Texas to impose higher tax burdens on employers and burden all Texans with bigger, more intrusive government."
Perry's spokesman did not immediately return a call to The Associated Press on Saturday.
The chairman of the committee hosting the meeting, state Rep. Jim Dunnam, D-Waco, said "anything that gets people to come and listen is good."
Becky Moeller, president of the Texas American Federation of Labor and Congress of Industrial Organizations, urged lawmakers to use the stimulus money to "reform the outdated unemployment system."
"This economic crisis didn't start yesterday, and it's hurting every economic class," she said as the audience applauded and whistled.
Loretta Roberts, administrator for Forest Lane Healthcare Center in Dallas and a member of the Texas Health Care Association, said about 50 of the state's 1,000 nursing homes do not have sprinkler systems. She said residents in facilities along the coast were without power for two weeks after Hurricane Ike because they had no generators.
While those are one-time funding options, Roberts said a pressing need is money to care for Medicaid residents — about 60,000 in Texas nursing homes — whose costs have increased the past decade without necessary funding from the state.
"This federal stimulus money must be used for filling the widening gap," Roberts told the committee.
The House Select Committee will relay the public comments to legislative committees that will vote on how to spend the roughly $17 billion slated for Texas in President Barack Obama's $787 billion stimulus bill. The committee's next meeting is March 21 in San Antonio.
"It's important that the committee comes out of Austin and around the state," said state Rep. Chris Turner, D-Arlington. "There are so many issues and there's a wide array of interests, and it's important that we hear from people what's on their minds."
Auto Insurance Savings in this recession
Sometimes, saving money can come in the most unlikely place - such as auto insurance even in high rate markets like Dallas, Texas; Allen, Texas; Richardson, Texas and Plano, Texas.
There are several ways to cut auto insurance costs. Higher deductibles can lower auto insurance premiums as will selecting only the coverages that are needed. Many insurance companies offer different discounts. Here are a few. When shopping for auto insurance, be sure to ask about the availability of these discounts and whether the insurer offers them.
There are several ways to cut auto insurance costs. Higher deductibles can lower auto insurance premiums as will selecting only the coverages that are needed. Many insurance companies offer different discounts. Here are a few. When shopping for auto insurance, be sure to ask about the availability of these discounts and whether the insurer offers them.
* New business discount: May offer a discount as a new policyholder if the new policyholder has been accident-free for a specific period of time.
* Accident-free: Policyholders who have been accident-free while being insured with the same insurance company for several years may be eligible for reduced premiums.
* Discounts for other insurance lines: Premiums may be reduced if the policyholder insures a home, life or health with the same company that covers the car.
* Multiple cars: Premiums may be reduced if there are two or more private passenger cars in the household insured by the same company.
*Air bag/passive restraint: Cars that are 1993 or older and are equipped with air bags or automatic seat belts may receive this discount. Certain makes and models of newer vehicles may receive the Vehicle Safety Discount because of the lower medical payments associated with them. The Vehicle Safety Discount is for autos 1994 or newer. Certain makes and models may have a decrease in their premiums because of lower medical payments associated with those specific makes/models.
*Antitheft devices: Some insurance companies offer discounts on comprehensive coverage premiums when certain antitheft devices are installed or built into a vehicle.
*Defensive driving course: Premium discounts sometimes are offered for the voluntary completion of specified driver improvement courses.
*Good student: Full-time students (high school or higher level) maintaining at least a "B" average may qualify for reduced premiums with many companies.
These are just a few of the common discounts offered by insurance companies.
Friday, March 13, 2009
Texas Lawmakers push over 24 homeowners insurance reform bills
Six years after the Legislature voted to make it easier for insurers to change rates for homeowners, some lawmakers are trying to tighten the system.
Legislators in a news conference Thursday outlined some of more than two dozen homeowners insurance reform bills they say will protect homeowners already struggling in a volatile economy.
One bill would require the state insurance commissioner to approve all insurance rate changes before they are passed to the public.
The current file-and-use system approved in 2003 allows insurers to changes rates as soon as they file a notice with the Texas Department of Insurance.
Comment
I wish we could get a roll back on rates. I know there has been a lot of damage in Texas from Rita & Ike, but those far enough from the coast, that didn't sustain any damage (no claims) shouldn't have to pay higher rates to cover those who do. But guess that is what insurance is all about.
Spread the cost to everyone, so everyone can hopefully be able to afford it.
Legislators in a news conference Thursday outlined some of more than two dozen homeowners insurance reform bills they say will protect homeowners already struggling in a volatile economy.
One bill would require the state insurance commissioner to approve all insurance rate changes before they are passed to the public.
The current file-and-use system approved in 2003 allows insurers to changes rates as soon as they file a notice with the Texas Department of Insurance.
Comment
I wish we could get a roll back on rates. I know there has been a lot of damage in Texas from Rita & Ike, but those far enough from the coast, that didn't sustain any damage (no claims) shouldn't have to pay higher rates to cover those who do. But guess that is what insurance is all about.
Spread the cost to everyone, so everyone can hopefully be able to afford it.
$325m Stimulus money to boost Michigan Homeowners
Michigan expects to get more than $325 million from the Obama administration for home weatherization and home energy projects.
The cash comes via the federal stimulus bill. State officials say it should lead to at least seven times as many low-income families getting insulation, window repairs and other improvements that could cut heating bills by as much as one-third. Making the improvements, in turn, should put people to work.
The weatherization program is available for people making up to twice the poverty level.
To take part, call the state's Community Action Agency Association at 517-321-7500.
The cash comes via the federal stimulus bill. State officials say it should lead to at least seven times as many low-income families getting insulation, window repairs and other improvements that could cut heating bills by as much as one-third. Making the improvements, in turn, should put people to work.
The weatherization program is available for people making up to twice the poverty level.
To take part, call the state's Community Action Agency Association at 517-321-7500.
California Energy Regulators Save Homeowners
California energy regulators on Thursday denied a request from the state's big electric utilities to make homeowners pay a bigger share of the funding for several social programs.
Although few of them realize it, utility customers in California help pay the electric and gas bills for people who have trouble affording the service. But early last year, the state's three investor-owned utilities asked state regulators to change the funding formula. The changes would have shifted some of the funding burden away from the utilities' business customers and onto residential customers.
That infuriated consumer advocates, who claimed the businesses were trying to avoid paying their fair share. The utilities countered that the change would help lower the cost of doing business in California. On Thursday, the California Public Utilities Commission sided with consumer advocates and rejected the utilities' request.
Although few of them realize it, utility customers in California help pay the electric and gas bills for people who have trouble affording the service. But early last year, the state's three investor-owned utilities asked state regulators to change the funding formula. The changes would have shifted some of the funding burden away from the utilities' business customers and onto residential customers.
That infuriated consumer advocates, who claimed the businesses were trying to avoid paying their fair share. The utilities countered that the change would help lower the cost of doing business in California. On Thursday, the California Public Utilities Commission sided with consumer advocates and rejected the utilities' request.
Better flood protection for homeowners considered
Homeowners try to find middle ground between protecting their homes and their view.
Engineers are trying to nail down a flood protection plan on one of the last neighborhoods in jeopardy from high waters, and homeowners need to decide which plan they prefer.
What kind of flood protection wall should go up was the main focus of Wednesday's discussion for homeowners between 32nd and 40th Avenues east of University Drive in south Fargo.
Connie Molony says it's a hard decision. She loves the view from her home but she understands people need to be protected from high water and high flood insurance rates.
Connie Molony/Fargo: "It is difficult because we want to see the city safe, but on the other hand, in all the years we have lived there, since 1991, we've only had to sandbag once and it was taken care of very effectively."
Mark Bittner/Fargo City Engineer: "The goal is to protect as many people as possible and that's why we're here. There are easier decisions to be made, but it doesn't protect as many people."
Engineers want a permanent floodwall with no openings, but many homeowners openings that provide a view of the river. There are a couple of options to accommodate that including additional panels on top of a flood wall and large openings that provide a view of the Red River.
FEMA does have some concerns about the openings including access to the wall for closure and seepage issues.
The permanent floodwall proposals range in price from 34 to 37 million dollars. Engineers hope to give their flood recommendation to Fargo city commissioners within six weeks.
Engineers are trying to nail down a flood protection plan on one of the last neighborhoods in jeopardy from high waters, and homeowners need to decide which plan they prefer.
What kind of flood protection wall should go up was the main focus of Wednesday's discussion for homeowners between 32nd and 40th Avenues east of University Drive in south Fargo.
Connie Molony says it's a hard decision. She loves the view from her home but she understands people need to be protected from high water and high flood insurance rates.
Connie Molony/Fargo: "It is difficult because we want to see the city safe, but on the other hand, in all the years we have lived there, since 1991, we've only had to sandbag once and it was taken care of very effectively."
Mark Bittner/Fargo City Engineer: "The goal is to protect as many people as possible and that's why we're here. There are easier decisions to be made, but it doesn't protect as many people."
Engineers want a permanent floodwall with no openings, but many homeowners openings that provide a view of the river. There are a couple of options to accommodate that including additional panels on top of a flood wall and large openings that provide a view of the Red River.
FEMA does have some concerns about the openings including access to the wall for closure and seepage issues.
The permanent floodwall proposals range in price from 34 to 37 million dollars. Engineers hope to give their flood recommendation to Fargo city commissioners within six weeks.
Many Low-income U.S. Dads haven't health insurance
A new study shows that more than half of low-income U.S. fathers have no health insurance, and even those with jobs do not always have access to affordable coverage.
Few studies involve low-income fathers, because most surveys of households have not included data on nonresident fathers and even fewer studies make a distinction between public health insurance and private insurance, according to study co-author Kelly Noonan, Ph.D.
Noonan is a professor of economics at Rider University in Lawrenceville, N.J., and a research associate at the National Bureau of Economic Research in Cambridge, Mass. The study appears in the February issue of the Journal of Health Care for the Poor and Underserved.
The study evaluated 1,653 low-income (defined as no more than twice the federal poverty level) fathers through the Fragile Families and Child Wellbeing Study, a national survey that randomly selects families of babies born in urban areas. The survey included questions about health insurance and overall health.
Twenty-nine percent of the men had private health insurance. Fourteen percent had public insurance such as Social Security disability benefits, or if they lived with their children, either Medicaid or the State Children’s Health Insurance Program (SCHIP). Fifty-eight percent of men had no insurance.
The survey found that more than a third of the fathers said that they were in less than good health, 15 percent were disabled and 8 percent said they had screened positive for having depression in the past 12 months. Uninsured fathers tended to be younger, less educated, more likely to have very low incomes and less likely to be employed.
Fathers were more likely to be uninsured than the rest of their families, the study found. Thirty-seven percent of the mothers had no health insurance and 14 percent of the children were uninsured.
“Notably, fathers’ uninsurance is a risk factor for children not having insurance,” the study found. “Of the 228 children who were uninsured [when followed up in the survey], 68 percent had fathers without insurance.”
“Public policy does not look at the needs of men,” Noonan said. She added that the low rate of private insurance is not surprising given that low-income jobs are less likely to offer health insurance, or if they do, the premiums might be too expensive.
Few studies involve low-income fathers, because most surveys of households have not included data on nonresident fathers and even fewer studies make a distinction between public health insurance and private insurance, according to study co-author Kelly Noonan, Ph.D.
Noonan is a professor of economics at Rider University in Lawrenceville, N.J., and a research associate at the National Bureau of Economic Research in Cambridge, Mass. The study appears in the February issue of the Journal of Health Care for the Poor and Underserved.
The study evaluated 1,653 low-income (defined as no more than twice the federal poverty level) fathers through the Fragile Families and Child Wellbeing Study, a national survey that randomly selects families of babies born in urban areas. The survey included questions about health insurance and overall health.
Twenty-nine percent of the men had private health insurance. Fourteen percent had public insurance such as Social Security disability benefits, or if they lived with their children, either Medicaid or the State Children’s Health Insurance Program (SCHIP). Fifty-eight percent of men had no insurance.
The survey found that more than a third of the fathers said that they were in less than good health, 15 percent were disabled and 8 percent said they had screened positive for having depression in the past 12 months. Uninsured fathers tended to be younger, less educated, more likely to have very low incomes and less likely to be employed.
Fathers were more likely to be uninsured than the rest of their families, the study found. Thirty-seven percent of the mothers had no health insurance and 14 percent of the children were uninsured.
“Notably, fathers’ uninsurance is a risk factor for children not having insurance,” the study found. “Of the 228 children who were uninsured [when followed up in the survey], 68 percent had fathers without insurance.”
“Public policy does not look at the needs of men,” Noonan said. She added that the low rate of private insurance is not surprising given that low-income jobs are less likely to offer health insurance, or if they do, the premiums might be too expensive.
NM title insurance reforms for price competition
Home buyers could see lower closing costs on their mortgages under legislation unanimously approved by the House on Friday to bring price competition to title insurance in New Mexico.
House Speaker Ben Lujan, D-Santa Fe, said the proposed changes should make the title insurance system "more consumer friendly" but not hurt title insurance agents.
People pay for title insurance when buying or refinancing a home. The insurance is to provide a guarantee against losses in case of a problem with the ownership records of the property.
Currently, state regulators determine the cost of title insurance and establish a uniform rate all title insurance companies must charge. New Mexico is among three states in which the government sets the price for the insurance.
Under the legislation, which has been sent to the Senate for consideration, the state will continue to establish a price for title insurance but insurers can charge a lower rate in a county if it's approved by the superintendent of insurance, who runs the division of insurance in the Public Regulation Commission.
Regulators also are to provide the public with information about title insurance rates for residential property. A listing of rates on the PRC's Web site will allow consumers to shop for the best price, Lujan said.
Another provision in the legislation will provide for greater discounts on title insurance policies for homeowners refinancing their loans.
The state also regulates commissions for title insurance agents. The bill guarantees agents can keep at least 80 percent of gross premiums as commissions, with the remainder going to the insurer. Starting in July, agents would get 81 percent of the price paid for the insurance.
The legislation will prohibit title insurance agents from paying fees or providing something of value to other parties, such as a real estate firm or contractors, to refer customers to them.
Lujan said the legislation was a compromise developed through negotiations with the title insurance industry, regulators and an advocate for rate-setting reforms, Think New Mexico. The Santa Fe-based independent think tank issued a study in 2007 that concluded consumers could save millions of dollars if there was price competition in the title insurance market.
House Speaker Ben Lujan, D-Santa Fe, said the proposed changes should make the title insurance system "more consumer friendly" but not hurt title insurance agents.
People pay for title insurance when buying or refinancing a home. The insurance is to provide a guarantee against losses in case of a problem with the ownership records of the property.
Currently, state regulators determine the cost of title insurance and establish a uniform rate all title insurance companies must charge. New Mexico is among three states in which the government sets the price for the insurance.
Under the legislation, which has been sent to the Senate for consideration, the state will continue to establish a price for title insurance but insurers can charge a lower rate in a county if it's approved by the superintendent of insurance, who runs the division of insurance in the Public Regulation Commission.
Regulators also are to provide the public with information about title insurance rates for residential property. A listing of rates on the PRC's Web site will allow consumers to shop for the best price, Lujan said.
Another provision in the legislation will provide for greater discounts on title insurance policies for homeowners refinancing their loans.
The state also regulates commissions for title insurance agents. The bill guarantees agents can keep at least 80 percent of gross premiums as commissions, with the remainder going to the insurer. Starting in July, agents would get 81 percent of the price paid for the insurance.
The legislation will prohibit title insurance agents from paying fees or providing something of value to other parties, such as a real estate firm or contractors, to refer customers to them.
Lujan said the legislation was a compromise developed through negotiations with the title insurance industry, regulators and an advocate for rate-setting reforms, Think New Mexico. The Santa Fe-based independent think tank issued a study in 2007 that concluded consumers could save millions of dollars if there was price competition in the title insurance market.
Arizona healthcare cuts may increase premiums
Further cuts to health care in Arizona could result in higher insurance premiums for everyone in the state, according to a study commissioned by the Arizona Chamber Foundation.
The study by the Virginia-based Lewin Group found that private insurers in Arizona pay 40 percent above the costs of treating patients in order to cover shortfalls left by Medicare and the Arizona Health Care Cost Containment System, the state's Medicaid program.
That shortfall was $1.3 billion in 2007, the study said, and was passed on to consumers in the form of higher premiums. Underpayments resulted in increases of 8.8 percent to insured Arizonans, the study reported, or $361 per insured person. The study was released on a day that lawmakers approved legislation that restored $16.5 million in funding for rural hospitals, graduate medical education and hospitals serving large numbers of uninsured patients.
But with the state facing a $3 billion deficit for the fiscal year that begins July 1, hospital officials worry AHCCCS funding could again be on the chopping block.
"Cuts to funding of public-health programs like AHCCCS and Medicare have a direct connection to the cost of health-insurance premiums," said Mary Semma, vice president at Blue Cross Blue Shield of Arizona. "With this new Lewin Group report, we now have the facts to back that up."
Reginald M. Ballantyne III, senior corporate officer at Vanguard Health Systems, said cuts to AHCCCS would threaten hospitals across the state.
"Hospitals are economic engines," said Ballantyne, a former chairman of the American Hospital Association. "To further cut back on such an important portion of our economy I believe would be counterproductive."
The study by the Virginia-based Lewin Group found that private insurers in Arizona pay 40 percent above the costs of treating patients in order to cover shortfalls left by Medicare and the Arizona Health Care Cost Containment System, the state's Medicaid program.
That shortfall was $1.3 billion in 2007, the study said, and was passed on to consumers in the form of higher premiums. Underpayments resulted in increases of 8.8 percent to insured Arizonans, the study reported, or $361 per insured person. The study was released on a day that lawmakers approved legislation that restored $16.5 million in funding for rural hospitals, graduate medical education and hospitals serving large numbers of uninsured patients.
But with the state facing a $3 billion deficit for the fiscal year that begins July 1, hospital officials worry AHCCCS funding could again be on the chopping block.
"Cuts to funding of public-health programs like AHCCCS and Medicare have a direct connection to the cost of health-insurance premiums," said Mary Semma, vice president at Blue Cross Blue Shield of Arizona. "With this new Lewin Group report, we now have the facts to back that up."
Reginald M. Ballantyne III, senior corporate officer at Vanguard Health Systems, said cuts to AHCCCS would threaten hospitals across the state.
"Hospitals are economic engines," said Ballantyne, a former chairman of the American Hospital Association. "To further cut back on such an important portion of our economy I believe would be counterproductive."
Marylanders earn too little for health insurance coverage
Marylanders are not getting paid enough to cover their health insurance, making the need for reform even more urgent, according to a new report.
The report, prepared by officials from Health Care for America Now, a national advocacy group, documented how rising health premiums are straining Maryland residents and businesses.
Maryland was one of 40 states to receive a report.
The average premium for family coverage in Maryland was $13,068 last year, and it is expected to reach nearly $24,000 by 2016, according to the report.
Projections have shown that the federal economic stimulus bill will bring $3.8 billion to the state over a 27-month period, with about $1.3 billion for Medicaid, a federal health program for families with low incomes.
"The economic recovery bill is a big help, but it's not enough. … Costs have gotten out of control," said Matthew Weinstein, Maryland coordinator for the organization. "Even people who have good health coverage can't afford the rising premiums."
From 2000 to 2007, health insurance premiums in Maryland increased by more than 64 percent, while median yearly wages rose 21 percent. In 2007 the median annual wage in Maryland was $36,723 and the average health care premium for a family was nearly $12,000, according to the report, which did not make specific recommendations on what other reforms are needed.
Also in 2007, 19 percent of all state spending went toward Medicaid and the State Children's Health Insurance Program. There are about 20,000 Anne Arundel County children enrolled in the plan, which provides coverage for children and pregnant women who meet income guidelines.
The tough economic conditions also have filtered down to those who provide health care. In 2005, nurse practitioner Sandi Shanahan opened a weekly free clinic in Annapolis to aid uninsured children in the county. Her workload has increased, but financial contributions have not.
"We get some grants and I ask each family to donate $35 when they come," Shanahan said.
"Most of the families have been able to do that, but now we're getting donations of $5 and $10."
The report also painted a bleak picture for Maryland business owners, saying that the rising cost of premiums endangers the livelihoods of 66 percent of employers in the state who provide health insurance. Companies spend an average of $8,341 per year per employee for family coverage, the report stated.
The 17 employees who work at Chesapeake Consulting Inc. in Severna Park have health insurance benefits, but it has not been easy for owner John Covington to supply them. The costs have continued to rise and he's considered switching to a boutique insurance plan, which provides services for a flat fee, or moving his business out of the state altogether.
"I have absolutely no confidence in the (state) legislature or the health insurance companies in Maryland to improve the situation," Covington said, adding that the situation is dire in several other states as well. "Over a 30-year period of time, we somehow managed to take something that used to work and messed it up."
The report, prepared by officials from Health Care for America Now, a national advocacy group, documented how rising health premiums are straining Maryland residents and businesses.
Maryland was one of 40 states to receive a report.
The average premium for family coverage in Maryland was $13,068 last year, and it is expected to reach nearly $24,000 by 2016, according to the report.
Projections have shown that the federal economic stimulus bill will bring $3.8 billion to the state over a 27-month period, with about $1.3 billion for Medicaid, a federal health program for families with low incomes.
"The economic recovery bill is a big help, but it's not enough. … Costs have gotten out of control," said Matthew Weinstein, Maryland coordinator for the organization. "Even people who have good health coverage can't afford the rising premiums."
From 2000 to 2007, health insurance premiums in Maryland increased by more than 64 percent, while median yearly wages rose 21 percent. In 2007 the median annual wage in Maryland was $36,723 and the average health care premium for a family was nearly $12,000, according to the report, which did not make specific recommendations on what other reforms are needed.
Also in 2007, 19 percent of all state spending went toward Medicaid and the State Children's Health Insurance Program. There are about 20,000 Anne Arundel County children enrolled in the plan, which provides coverage for children and pregnant women who meet income guidelines.
The tough economic conditions also have filtered down to those who provide health care. In 2005, nurse practitioner Sandi Shanahan opened a weekly free clinic in Annapolis to aid uninsured children in the county. Her workload has increased, but financial contributions have not.
"We get some grants and I ask each family to donate $35 when they come," Shanahan said.
"Most of the families have been able to do that, but now we're getting donations of $5 and $10."
The report also painted a bleak picture for Maryland business owners, saying that the rising cost of premiums endangers the livelihoods of 66 percent of employers in the state who provide health insurance. Companies spend an average of $8,341 per year per employee for family coverage, the report stated.
The 17 employees who work at Chesapeake Consulting Inc. in Severna Park have health insurance benefits, but it has not been easy for owner John Covington to supply them. The costs have continued to rise and he's considered switching to a boutique insurance plan, which provides services for a flat fee, or moving his business out of the state altogether.
"I have absolutely no confidence in the (state) legislature or the health insurance companies in Maryland to improve the situation," Covington said, adding that the situation is dire in several other states as well. "Over a 30-year period of time, we somehow managed to take something that used to work and messed it up."
Health Insurance in Commonwealth Care program to dip a little
Health insurance premiums charged by insurers providing coverage in a pioneering Massachusetts program that provides state-subsidized coverage to about 165,000 low-income residents will dip slightly next year, according to the agency that runs the Commonwealth Care program.
While state officials originally projected an average rate increase of 2% for the next year, which begins July 1, negotiations resulted in a slight decrease. In the current year, rates increased by an average of about 9%, and since the program started in 2006, the average annual increase has been about 4.5%, according to the Commonwealth Health Insurance Connector Authority, the program's administrator.
About 70% of enrollees with the lowest incomes pay no premiums, with the cost picked up by the state. Other enrollees receive partial premium subsidies based on income.
Enrollees selecting the lowest-priced plans next year will see no increase in their monthly premiums, while those selecting higher-priced plans will pay a bit less. Five health insurers will provide plans next year, up from four this year.
Commonwealth Care was created by the 2006 Massachusetts' health care reform law. Its central goal is to move the state to near-universal coverage. Last year, more than 97% of residents had coverage, compared with about 90% in 2006.
While state officials originally projected an average rate increase of 2% for the next year, which begins July 1, negotiations resulted in a slight decrease. In the current year, rates increased by an average of about 9%, and since the program started in 2006, the average annual increase has been about 4.5%, according to the Commonwealth Health Insurance Connector Authority, the program's administrator.
About 70% of enrollees with the lowest incomes pay no premiums, with the cost picked up by the state. Other enrollees receive partial premium subsidies based on income.
Enrollees selecting the lowest-priced plans next year will see no increase in their monthly premiums, while those selecting higher-priced plans will pay a bit less. Five health insurers will provide plans next year, up from four this year.
Commonwealth Care was created by the 2006 Massachusetts' health care reform law. Its central goal is to move the state to near-universal coverage. Last year, more than 97% of residents had coverage, compared with about 90% in 2006.
Florida Home Insurance rates sure to spark debate
Too high? Too low? Debate on homeowner insurance rates might devolve into a shouting match when state lawmakers convene Tuesday for the 2009 session of the Legislature.
A gaping canyon seems to divide opinions on the topic. No middle ground seems to exist, especially regarding Citizens Property Insurance, the state-backed insurer of last resort for many Pasco residents.
Carolyn Hersh, the owner of the Hersh insurance agency in Hudson, plans to join about 15 agents from Pasco and Hernando counties on a lobbying trip to Tallahassee March 9 and 10.
About 300 agents statewide could descend on the state capital to visit lawmakers.
Hersh was reading news items Wednesday reporting that more insurers might follow the lead of State Farm Florida and quit writing property insurance policies in the state.
State Farm Florida announced it would withdraw from the state's property insurance market after state regulators denied the company a rate hike averaging 47 percent.
Insurance executives at a Florida Chamber of Commerce summit in Orlando this week argued they could lose their shirts unless the state loosens regulations on homeowner insurance rates and fully finances Florida's Hurricane Catastrophe Fund.
Other commentators in recent months have described Citizens as a coastal welfare agency because of the two-year freeze on its rates the Legislature ordered.
This has kept premiums artificially low, in the view of many insurance executives.
Yet a proposal to extend the Citizens rate freeze for a third year looks like it could well sail through the Legislature.
The chances of the Citizens rate freeze extension bill passing "are pretty encouraging," Greg Giordano, chief legislative assistant to state Sen. Mike Fasano, said Wednesday, Fasano, R-New Port Richey, is the architect of the Senate version of the bill.
The legislation faces relatively few hurdles in three committees, Giordano said.
"His belief is, especially right now, when people are financially strapped, the last thing we need to do is increase their rates," Giordano said of Fasano's attitude on insurance premiums.
Some lawmakers are questioning the "huge sums" State Farm Florida paid for the reinsurance it purchased from the State Farm parent company, Giordano mentioned.
State Farm Florida executives insist the company would become insolvent by 2011 without a rate increase.
Florida Office of Insurance Regulation officials, however, have said they review companies for solvency implications before ruling on a rate increase request.
After State Farm announced its exit from the Florida property insurance, Fasano sponsored another bill to outlaw "cherry picking" by insurers. State Farm wants to continue selling other lines of insurance, such as auto and life, after leave the property market.
If Fasano's bill passes, State Farm could be barred from doing any business at all in Florida.
Another proposal would place a 2 percent cap per year on the number of cancellations of homeowner insurance policies.
In the meantime, Fasano plans to float a "trial balloon" to create a separate, windstorm insurance pool in the state, Giordano said.
Regional or national catastrophe funds have their proponents, including Pasco County Commission Chairman Jack Mariano.
Congress, however, would have to pass legislation creating a catastrophe fund.
A gaping canyon seems to divide opinions on the topic. No middle ground seems to exist, especially regarding Citizens Property Insurance, the state-backed insurer of last resort for many Pasco residents.
Carolyn Hersh, the owner of the Hersh insurance agency in Hudson, plans to join about 15 agents from Pasco and Hernando counties on a lobbying trip to Tallahassee March 9 and 10.
About 300 agents statewide could descend on the state capital to visit lawmakers.
Hersh was reading news items Wednesday reporting that more insurers might follow the lead of State Farm Florida and quit writing property insurance policies in the state.
State Farm Florida announced it would withdraw from the state's property insurance market after state regulators denied the company a rate hike averaging 47 percent.
Insurance executives at a Florida Chamber of Commerce summit in Orlando this week argued they could lose their shirts unless the state loosens regulations on homeowner insurance rates and fully finances Florida's Hurricane Catastrophe Fund.
Other commentators in recent months have described Citizens as a coastal welfare agency because of the two-year freeze on its rates the Legislature ordered.
This has kept premiums artificially low, in the view of many insurance executives.
Yet a proposal to extend the Citizens rate freeze for a third year looks like it could well sail through the Legislature.
The chances of the Citizens rate freeze extension bill passing "are pretty encouraging," Greg Giordano, chief legislative assistant to state Sen. Mike Fasano, said Wednesday, Fasano, R-New Port Richey, is the architect of the Senate version of the bill.
The legislation faces relatively few hurdles in three committees, Giordano said.
"His belief is, especially right now, when people are financially strapped, the last thing we need to do is increase their rates," Giordano said of Fasano's attitude on insurance premiums.
Some lawmakers are questioning the "huge sums" State Farm Florida paid for the reinsurance it purchased from the State Farm parent company, Giordano mentioned.
State Farm Florida executives insist the company would become insolvent by 2011 without a rate increase.
Florida Office of Insurance Regulation officials, however, have said they review companies for solvency implications before ruling on a rate increase request.
After State Farm announced its exit from the Florida property insurance, Fasano sponsored another bill to outlaw "cherry picking" by insurers. State Farm wants to continue selling other lines of insurance, such as auto and life, after leave the property market.
If Fasano's bill passes, State Farm could be barred from doing any business at all in Florida.
Another proposal would place a 2 percent cap per year on the number of cancellations of homeowner insurance policies.
In the meantime, Fasano plans to float a "trial balloon" to create a separate, windstorm insurance pool in the state, Giordano said.
Regional or national catastrophe funds have their proponents, including Pasco County Commission Chairman Jack Mariano.
Congress, however, would have to pass legislation creating a catastrophe fund.
Homeowners’ Hurricane Insurance Initiative Champions Reform
More than two dozen organizers of the grassroots Homeowners’ Hurricane Insurance Initiative converged on the State Capitol Wednesday to plead for insurance reform along the repeatedly ravaged Gulf Coast.
Members of HHII were asked to testify before the Alabama House Banking and Insurance Committee regarding the impact of soaring insurance premiums on coastal residents since back-to-back hurricanes pummeled the area in 2004 and 2005.
Almost four years later, HHII organizers contend unaffordable premiums—especially those required in areas prone to wind and hail damage—are aggravating an already precarious real-estate climate that could potentially drive longtime residents from the region and ultimately cripple the state’s tourism industry.
About 30 participants—some of whom would be unable to make the early morning trek to Montgomery on Wednesday—gathered Monday evening at Spanish Fort Presbyterian Church to discuss logistics and strategy for the trip.
The legislative presentation represents 18 months of investigation by members of the Coastal Baldwin Churches’ Community Organization, a member of All Churches Together, or ACT-II.
Stan Virden, a Gulf Shores resident and active advocate for the initiative, said the issue is a simple one of misperception.
“There’s this perception that everybody down here is a millionaire living on the beach, golfing and swimming and living in half-a-million dollar houses, and that simply isn’t true,” Virden said.
In fact, the majority of folks who tend to take advantage of the area’s amenities are welcomed tourists, he said, but that experience relies on the hard work and availability of locals to keep the economy churning.
“It’s the residents who have taken the hit,” he said, adding, “We have a number of people well below the median income level, experiencing difficulty keeping up with their mortgages.”
According to the 2000 U.S. Census, Baldwin County’s median income is $40,250 per household and $47,028 per family.
In his own case, Virden said recent insurance increases have added almost $500 per month to his housing costs.
In 1996, when he moved to Gulf Shores from Cincinnati, Virden said his financial insurance responsibilities totaled less than $1,000 per year and fell “easily within” his budget at the time.
Today that same coverage—including homeowners, property, flood and wind damage – is approaching $6,000 annually.
“Now I’m having to dip into my equity,” said Virden, who has lived a migratory life complete with 49 residences and, therefore, little time to build equity prior to relocating to the Gulf Coast.
“I’m 75 years old with 25 years left on a 30-year mortgage I can’t keep up if I can’t keep up my insurance,” he said.
And even though he has never filed an insurance claim on his West Canal Street home despite the occurrence of seven hurricanes during his residence, Virden is dealing with his fourth insurance company in 12 years. The first three declined to renew his coverage following inclement weather events, he said.
“My house has survived seven hurricanes. I’ve never put in a claim, and what little damage has been done I’ve been able to fix myself,” he said. “It means when I pass on, I will have a lot less to leave for my wife, and she’ll be in an even worse situation than we are in now.”
Deborah Benton is an Elberta-based Realtor who survived her own foreclosure proceedings and is working to educate others in Baldwin and Mobile counties about resources available for ailing homeowners.
HHII legislation, she said, is imperative if Baldwin County residents intend to reverse the insurance crisis confronting them, especially considering homeowners who live as far north of the Gulf Coast as 80 miles have received notice of either non-renewal or significant wind-and-hail coverage increases since Hurricanes Ivan and Katrina.
Several months ago, for instance, coverage for a $130,000 home would have run about $1,800 annually but now is closer to $4,000, adding several hundred dollars to a homeowner’s mortgage payment and in some instances negatively impacting a potential buyer’s income-to-debt ratio.
Earl Janssen, who moved to Foley from Iowa in 1996, is a charter member of Grace Lutheran Church in Gulf Shores and has been working with HHII since its inception 18 months ago.
Janssen, who was among those unable to attend the legislative presentation, said the planning meeting in Spanish Fort set an “upbeat” tone once new participants understood the ground rules.
“We have a problem sometimes with people wanting to come to our meetings because they want answers immediately, and this is not the sort of issue where that’s going to happen,” he said.
“This insurance crisis wasn’t created overnight, and we’re not going to solve it overnight, but there are solutions available to us.”
Janssen said he became involved with the initiative in October 2007 through Grace Lutheran when insurance concerns “bubbled to the top” for local parishioners and then among surrounding communities.
“We know this is an issue affecting everyone in our area, but people have to understand that we want to do this right and make sure we follow the proper protocol for getting legislation passed, and that’s going to take time,” he said.
Specifically, Janssen said HHII organizers would like to see the insurance burden spread more evenly across the state rather than placing it squarely on the shoulders of coastal residents.
Virden agreed.
“We need to see premiums come down to affordable levels that are reasonable, and we need to be able to depend on our insurance companies; but it’s the premiums that are driving people into the ground right now,” Virden said.
“If people start moving out of here then the tourism industry is going to decline, too because it relies on the people who live here to function.”
Members of HHII were asked to testify before the Alabama House Banking and Insurance Committee regarding the impact of soaring insurance premiums on coastal residents since back-to-back hurricanes pummeled the area in 2004 and 2005.
Almost four years later, HHII organizers contend unaffordable premiums—especially those required in areas prone to wind and hail damage—are aggravating an already precarious real-estate climate that could potentially drive longtime residents from the region and ultimately cripple the state’s tourism industry.
About 30 participants—some of whom would be unable to make the early morning trek to Montgomery on Wednesday—gathered Monday evening at Spanish Fort Presbyterian Church to discuss logistics and strategy for the trip.
The legislative presentation represents 18 months of investigation by members of the Coastal Baldwin Churches’ Community Organization, a member of All Churches Together, or ACT-II.
Stan Virden, a Gulf Shores resident and active advocate for the initiative, said the issue is a simple one of misperception.
“There’s this perception that everybody down here is a millionaire living on the beach, golfing and swimming and living in half-a-million dollar houses, and that simply isn’t true,” Virden said.
In fact, the majority of folks who tend to take advantage of the area’s amenities are welcomed tourists, he said, but that experience relies on the hard work and availability of locals to keep the economy churning.
“It’s the residents who have taken the hit,” he said, adding, “We have a number of people well below the median income level, experiencing difficulty keeping up with their mortgages.”
According to the 2000 U.S. Census, Baldwin County’s median income is $40,250 per household and $47,028 per family.
In his own case, Virden said recent insurance increases have added almost $500 per month to his housing costs.
In 1996, when he moved to Gulf Shores from Cincinnati, Virden said his financial insurance responsibilities totaled less than $1,000 per year and fell “easily within” his budget at the time.
Today that same coverage—including homeowners, property, flood and wind damage – is approaching $6,000 annually.
“Now I’m having to dip into my equity,” said Virden, who has lived a migratory life complete with 49 residences and, therefore, little time to build equity prior to relocating to the Gulf Coast.
“I’m 75 years old with 25 years left on a 30-year mortgage I can’t keep up if I can’t keep up my insurance,” he said.
And even though he has never filed an insurance claim on his West Canal Street home despite the occurrence of seven hurricanes during his residence, Virden is dealing with his fourth insurance company in 12 years. The first three declined to renew his coverage following inclement weather events, he said.
“My house has survived seven hurricanes. I’ve never put in a claim, and what little damage has been done I’ve been able to fix myself,” he said. “It means when I pass on, I will have a lot less to leave for my wife, and she’ll be in an even worse situation than we are in now.”
Deborah Benton is an Elberta-based Realtor who survived her own foreclosure proceedings and is working to educate others in Baldwin and Mobile counties about resources available for ailing homeowners.
HHII legislation, she said, is imperative if Baldwin County residents intend to reverse the insurance crisis confronting them, especially considering homeowners who live as far north of the Gulf Coast as 80 miles have received notice of either non-renewal or significant wind-and-hail coverage increases since Hurricanes Ivan and Katrina.
Several months ago, for instance, coverage for a $130,000 home would have run about $1,800 annually but now is closer to $4,000, adding several hundred dollars to a homeowner’s mortgage payment and in some instances negatively impacting a potential buyer’s income-to-debt ratio.
Earl Janssen, who moved to Foley from Iowa in 1996, is a charter member of Grace Lutheran Church in Gulf Shores and has been working with HHII since its inception 18 months ago.
Janssen, who was among those unable to attend the legislative presentation, said the planning meeting in Spanish Fort set an “upbeat” tone once new participants understood the ground rules.
“We have a problem sometimes with people wanting to come to our meetings because they want answers immediately, and this is not the sort of issue where that’s going to happen,” he said.
“This insurance crisis wasn’t created overnight, and we’re not going to solve it overnight, but there are solutions available to us.”
Janssen said he became involved with the initiative in October 2007 through Grace Lutheran when insurance concerns “bubbled to the top” for local parishioners and then among surrounding communities.
“We know this is an issue affecting everyone in our area, but people have to understand that we want to do this right and make sure we follow the proper protocol for getting legislation passed, and that’s going to take time,” he said.
Specifically, Janssen said HHII organizers would like to see the insurance burden spread more evenly across the state rather than placing it squarely on the shoulders of coastal residents.
Virden agreed.
“We need to see premiums come down to affordable levels that are reasonable, and we need to be able to depend on our insurance companies; but it’s the premiums that are driving people into the ground right now,” Virden said.
“If people start moving out of here then the tourism industry is going to decline, too because it relies on the people who live here to function.”
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