Saturday, January 31, 2009

Why Insurers Need Not Fear Recession

Posted By: Stephen Mills; Group 1A

On the New Year’s Eve just passed, 1,147 vehicles were torched on the streets of France, almost a third more than the year before. Brits too, are more partial to burning cars in times of economic strife, according to Andrew Torrance, head of British operations at Allianz, an insurer. There was an alarming rise in fires during both of the past two slowdowns (see chart). Arson is just one of the behavioural changes that drive up claims against insurance companies when economic growth stalls. Other types of crime rise. People and companies become more litigious. Firms offering credit protection are exposed to bankruptcies. At the same time, demand falls. For property insurers, say, there are fewer new factories and houses to insure. And life insurers struggle to sell policies when people are penny-pinching.

This combination of higher claims and lower new business written would appear to be toxic for underwriters. But as you might expect from the insurance industry, it is a lot more complicated than that, because recessions also tend to depress some types of claims. People drive less, reducing the number of motor accidents. The industries that often shrink most in a recession—construction and manufacturing—are among the most dangerous for workers. That means fewer payouts for insurers that have written protection against injuries. And for commercial and industrial property, though damage to premises rises, the cost of finding alternative facilities is lower.

Moreover, says Robert Hartwig, of the Insurance Information Institute, an American trade body, most existing non-life policies are nondiscretionary. In developed countries if you want to drive a car, employ a worker, or buy a house with a mortgage, you usually need insurance. At the same time, the credit crisis has eaten into insurance firms’ capital—although the industry has managed its assets better than the banks have. Less surplus capital should improve underwriting discipline, pushing up rates. By most accounts this process has begun.

Click for full Article

Wednesday, January 28, 2009

Children's health legislation expected to pass

By Jen Lynch

The Senate is expected to pass legislation tomorrow, reauthorizing the State Children's Health Insurance Program (SCHIP), previously vetoed by President Bush. 

The program currently only covers 7 million children who are on or close to the poverty line, and it expires on March 31 this year. President Obama promised to obtain coverage for all children in the country, and the passing of SCHIP will begin this process. The new bill will give coverage to an additional 4 million children who are not eligible for Medicaid, and it will cost approximately $32 billion over the next 4 1/2 years.

Republicans tried to fight the legislation, stating their disagreement with several aspects concerning immigrants and taxpayers. Democrats want to drop the 5-year waiting period for insurance that illegal immigrants must currently undergo, which is clearly not aligned with conservative values. Republicans argue against the method of funding for the program, which will be paid for by increasing the cigarette tax by 61 cents a pack ($0.39 to $1). They also believe that middle-income families who are making enough to afford private insurance, will simply choose SCHIP instead, further burdening taxpayers for possible expanding coverage in the future and increasing dependence on the government. However, these suggested alternatives were immediately rejected, this one by a 65-32 vote. 

Those against SCHIP believe that we need to choose between fixing the economy or fixing the healthcare system, but many believe that by fixing healthcare, the economy will also improve. Sure the costs of implementing a new process and system will be high at first, but universal health care will help balance medical costs and allow our government to control costs and eventually lower overall health care spending.  Plus, children who are currently unable to receive necessary medical attention, will now be able to stay healthy, therefore substantially lowering the chance of additional health issues in the future. We need to make sure all of our children are healthy now, so that as their generation ages, the need for expensive medications or aid from the government will decrease.  

Sources for this post:
Washington Post Article

Health Insurance for your dog?

By Jen Lynch

The Associated Press

NEW YORK — It’s a common remark for those devoted to their pooches: “I spend more on my dog’s health care than I do on my own!”

Dog owners can expect to pay a few hundred dollars a year for routine veterinary care, but a serious illness could send the bills soaring into the thousands.

One way to protect yourself is to buy pet health insurance.

It’s still not that common. Fewer than 1 percent of pets are insured in the U.S., according to Petplan USA — one of just 13 plans available in the U.S.

Most people don’t start looking for pet insurance until they face a big vet bill, said Michael Hemstreet, who runs Pet Insurance Review, a Web site for comparative shopping.

“But not one of the companies will cover a pre-existing condition,” he said. “It’s like if I don’t have car insurance and get in an accident, and then try to apply for auto insurance.”

AIG Executive Sentenced to Prison

By Shu Zheng

A former vice president at American International Group Inc. was sentenced to four years in prison for defrauding shareholders, avoiding a possible life term.

Christian Milton, 61, was convicted Feb. 25 with four former executives of General Reinsurance Corp. of using a sham transaction in 2000 to help AIG improve its balance sheet. The judge could have given Milton a life sentence after ruling that the fraud cost AIG shareholders as much as $597 million.

Milton asked U.S. District Judge Christopher Droney for a “minimal” term, citing his good work in the community. Droney said that while life in prison would be too severe, the sentence must deter other executives, and that Milton’s conduct showed a “stark lack of honesty and respect” for investors.

by Jane Mills and David Voreacos (Bloomberg)

A Relief in Health Care

By Shu Zheng

The stimulus plan that is working through Congress is not only a package of tax cut, but also a tool for rewriting the social contract with the poor, the uninsured, and the unemployed. The government plans to create a temporary new entitlement allowing workers getting unemployment checks to qualify for Medicaid, the health program for low-income people. In addition, the government would offer a subsidy to help laid-off workers retain the same health plans they had from their former employers. The economic recovery bill, as known, would expedite $127 billion over the next two and a half years to individuals and states for health care alone. It seems like a tremendous health assistant for the public, and it is undoubted that this plan will boost the economy for a short period of time, but it won’t eventually solve the problems that exist in the pool of health insurance.

The stimulus program is designated to assist the laid-offs and low-income population, however, the uprising costs of health cares and medications will eventually bring us to a deeper concern. Due to the downfall of sale affected by the current economy, small business owners have now been struggling to keep on paying high insurance premiums for themselves and their employees. As the economy turns worse, the proportion of small businesses that do not offer health insurance to workers has now increased significantly from 74% in 2007 to 85%. According to recent news, health insurance premiums will most likely double by 2016, and the average costs of employer-paid health insurance will jump from $11,381 to $24,291 in the future seven years. Facing the skyrocketing insurance prices, small business owners are looking to see what else they can cut in order to keep their businesses going. And often, they cut the costly health insurance.

So looking back on the stimulus package, even it seems to be a great relief for the public, especially the jobless, the rising costs of health care and medication will eventually come in the way. Providing the jobless population with insurance coverage will result in a positive outcome, however, in the long run, more actions are required in order to boost the insurance market.





Is your money safe?

By Jenny Sutton

In current economic crisis, many people wonder if their money is safe in failing banks. Fortunately, the Federal Deposit Insurance Corporation (FDIC) insures banks throughout the United States. More importantly, it is crucial to know what exactly is insured and the limits to the FDIC.
With quick research, an investor can discover that their checking deposits, NOW accounts, savings accounts, and time deposits are all covered up to $250,000 in insured banks. Looking more closely, money invested in stocks, bonds, life insurance, mutual funds, annuities and more are not accounted for under the FDIC. This may be deceiving since they are bought through an insured bank, yet they are still risky endeavors. Furthermore, if a joint account exists, the FDIC insures up to $500,000 ($250,000) for each of the accountholders.
To relate the current crisis with the past, we can look back to find the origination of the FDIC. President Franklin Roosevelt called for this deposit insurance in response to the bank panic in 1933. With the creation of the FDIC, as well as other government regulation, the panic soon was resolved and the economy got back on its feet. The question is, can we handle today’s crisis in a similar way?

The U.S. Banking Panic of 1933 and Federal Deposit Insurance by Julio J. Rotemberg and Sabina M. Ciminero. Harvard Business School.

FDIC limits

Posted by Jenny Sutton

Government Affects Financial Crisis

Posted By Chaoran Hu

Government plays an important role in the financial structure and economy. All the government acts will more or less affect the economy. However, in a 60 minutes interview of Barack Obama. When asked about the financial crisis problem, he argued that the problems were caused by the deregulations. Actually, Government is also a victim of the economy recession.As Bloomberg recently updated, after the Federal Deposit Insurance Corp announced that they will mange the so-called bad bank plan so that the Obama administration is likely to set up as it tried to break the back of the credit crisis. Meanwhile, the U.S. stocks gained, since this act boost the confidence of the government. The Standard & Poor's 500 Stock Index rose 2.2 percent to 864.25 as of 11:48 am in New York. CitiGroup Inc. which has fallen 47 percent this year climbed 18 percent.Since government contributes to the economy changes, it now has to take lead of the economy; the only one who can rescue the economy recession is the government. The government will assist to boost the economy for the next couple of years.
Sources: U.S. Treasuries Drift Lower Ahead of FOMC Statement
Obama Says Not a ‘Moment to Spare’ on Stimulus Plan

Tuesday, January 27, 2009

Recession Affecting Auto Insurance Decisions

By Kaitlin Lanier

With the economic downfall, drivers are illegally deserting their car insurance, putting themselves and other drivers in danger. As the jobless list increases, people are dropping their insurance or looking for discount auto insurance, in order to save money. As a result, drivers that are insured will end up paying more, with the costs of the uninsured drivers being distributed among the insured. If an uninsured driver hits an insured operator, the victim may need to sue to recover damages, causing more trouble and a longer process for the insured. All of this could mean 3 million more uninsured drivers on the road in 2010 than in 2005, based on U.S. Department of Transportation data.
In order to combat against these uninsured drivers, you can make sure you have extra coverage that compensates you if you are hit by an uninsured motorist. Also, setting your own liability insurance amount to be equal with your assets will help determine the limit of your uninsured motorist coverage. Some states are required drivers to carry uninsured motorist coverage, but it is recommended if your state does not, although it may increase your premium. Uninsured drivers are dangerous and could lead to potential disasters. Therefore, it is ideal to take the necessary steps to protect yourself against such careless drivers.


Crash Course: More drivers are going without insurance in down economy, Jan. 4, 2009. Cheapest Car Insurance, Jan. 26, 2009.

More Drivers Going Without Insurance, Jan. 19, 2009., Jan. 23, 2009.

Recession Affecting Auto Insurance Premiums, Dec. 10, 2008., Jan. 26, 2009.

Insurers to be next credit crunch victims

Posted by Yi Xin Jin (Lily)

The life insurance industry is one of the biggest victims of the credit crisis. The future of the industry is at a crossroad. Given what’s happened to AIG, the world’s largest insurance company, many people are reluctant to buy insurance today. One of the main reasons behind this issue is because people lost their confident in the insurers. Individuals are unsure of “where will the industry end up? How much potential exists in the traditional segments, traditional products, and traditional distribution channels? Will they fade away or simply fragment the market further? What's on the horizon for substitutes?” (SRI Consulting) These uncertainties derived mainly from the life insurer’s exposure to the extremely volatile and risky financial markets. In the past, approximately 15 to 20 percent of most insurance companies’ revenue derives from investments. The huge downturn in the stock market and heavy losses in asset backed securities has had a severe impact on insurance companies.

In response to the crisis of confidence among investors, central banks around the world has announced a series of actions that will provide more liquidity and effective set of instruments to stabilize conditions in both strained markets and troubled institutions. Most economically developed countries haven’t seen a crisis like this since the great depression. However, today’s crisis is nothing new but a inherent result of the captialist system. Josh Lees, a writer for Socialist Magazine writes in his article “Understanding Marxism: why capitalism is a system of crisis” that “Economic crisis is a recurring feature of capitalism. Every economic boom ends in a slump, every "golden age" crumbles into recession.” Even though, capitalism has brought wealth and opportunities for many but in the past the system has also created periods of crisis. Many economists believe that there’s no long term detriment from our current crisis; instead there can be an opportunity for change in our markets.


Do Life Insurers Need Resuscitation?

Posted by Yi Xin Jin (Lily)

Needham, Mass. — Has the financial crisis in the United States has claimed yet another victim? According to a new report, "Guilt by Association or Real Trouble? Outlook for US Life Insurer's Profitability and Spending" from TowerGroup, U.S. life insurers—among the largest institutional shareholders in the world—have written off major investments in struggling financial firms. As a result, the life insurance industry is facing a number of challenges to profitability in the wake of the financial crisis, and needs to look to initiatives that will prevail though 2009 as the industry recovers.

The report's author, Rachel Alt-Simmons, research director, insurance for the Needham, Mass.-based firm, says that, in general, the highly capitalized life insurance industry in the United States has largely been thought to be immune to the credit crisis. But like many other financial institutions, the interconnectedness of banks, asset managers, brokerage firms and other insurers is proving to have a much greater impact than previously anticipated.

Click to read more

Facing up to the costs of long-term care

Posted by Pin-yu Liao

Some insurance decisions are easy. Take life insurance. You know you need it to replace the income your spouse and kids would lose if you died. Insurers don't have much leeway to dispute claims for death benefits because "deceased" is a pretty definite condition.
After you decide how much to buy, you can compare various term policies, see which are the cheapest and most practical, and buy the least expensive one that fits your needs.

Home Insurance: What You Need to Know

- By Kevin Yu

After reading several articles about strategies for insuring homes from the New York Times, I have gained some knowledge of different strategies for insuring a home cheaply and the general idea about home insurance.

Nowadays, the cost of home insurance is rising especially in coastal areas where are vulnerable to hurricanes and flooding. People are likely to find a way to reduce their home insurance’s cost. One strategy that I learn from the article of how to lower insurance cost is by improving roofs, installing roof shingles, and strengthening garage doors. As a result of these implements, one person can lower premiums by 45 percent off the highest rates.

On the other hand, I also learn what are the necessary components that a person need to know about home insurance. Generally, a standard homeowner’s policy has four components:

Coverage for the structure – This is the most important aspect of the policy because it covers the damages to a person’s house from fire or other insured disasters.

Coverage for contents – Most plans will also cover the cost of replacing personal belongings if they are stolen or lost in a fire or other insured disasters. (The standard coverage limit is equal to 50 percent of the value of the structure of a person’s home.)

Liability protection – A standard policy covers a person in three ways. 1.) It covers damage to other people’s property 2.) It covers personal liability 3.) It also covers medical expenses for injuries suffered by others

Reimbursement for additional living expenses - Under this policy, your plan will cover your expenses if a fire or any other insured calamity destroy your home and force you to leave.





Health Cost Effects

Post by Pin-yu Liao

While inflation has been still occurring, the health insurance premiums have been increasing to surpass the cost of inflation, even though at a slow pace.
According to the latest annual survey from the Kaiser Family Foundation., the slowing growth of health insurance premiums are shown by increasing 6.1 percent. The employers and the employees are suffering from the growing health costs.
It is costly for the workers to pay a large amount of money to be insured while experiencing inflation. In order to get a coverage, single workers have to depend on themselves by paying an average of 694 dollars. Married employees who work at small companies pay more on average for the cost of family coverage ($4,236 annually), as opposed to larger firms ($2,831 annually). As for single coverage, they at small firms pay $561/year, when people who work at large firms spend $759. Moreover, in a survey that was conducted in 1000 people, 28 percent asserted that the rising costs of health insurance made it hard for them to pay for housing, heat and food.
The cost-sharing method that companies adopted resulted in employees’ pressures. Dallas L. Salisbury, the President of the Employee Benefit Research Institute, commented, “Employees who were paying nothing are now paying something, and those who were paying something are paying more."
U.S. employers spend more money on health costs than any employers from other countries. The companies are burdened with the speeding health costs. They have been reporting losses due to health costs. Overall, health costs are becoming a burden and an issue to all people to the question of whether it can be affordable.

Factors That Affect Your Auto Insurance Rates

Posted by: Lauren Cappelli, Group 1A

Auto insurance rates vary depending on various characteristics of the holder and their automobile. Some of these characteristics include the age of the holder, where they live, the type of vehicle they drive and how they use their vehicle.

Age has a big influence on the cost of auto insurance. Insurance companies feel that certain age brackets hold a greater risk when it comes to driving an automobile, therefore increasing the rates. “Traditionally, males under 25 years of age represent the highest risk, while married, middle-aged, non-smoking mothers represent the lowest” (MSN Autos).

The place in which the holder lives also has an influence on the premium they will pay. Generally the more urban the area the holder lives in, the higher the rates. This is due to the increased number of cars and the higher occurrence of accidents. The amount of thefts in an area affects the premium as well.

The type of vehicle that the holder drives is also a factor that affects the premium paid. The model, color, and cost of repair are three big factors that play a role in the price of the insurance ( Traditionally sporty, luxury cars will result in higher premiums.

Lastly, how the vehicle is used is another determinant in the cost of a premium. The more miles driven, the greater the chance that an accident will occur therefore increasing the risk. An increased risk results in a higher premium.

Shopping for Auto Insurance. MSN Autos

Which Cars Cost More (Less) to Insure.

Obama Will Ease Restraints on States’ Health Insurance Programs for Children

- By Kevin Yu

WASHINGTON — Within days of taking office, President-elect Barack Obama will rescind a Bush administration policy that has impeded state efforts to provide health insurance to children from low- and middle-income families, aides and advisers said Monday.

Skip to next paragraphThe policy, issued in August 2007, is one of many that the new administration hopes to change or withdraw in its first weeks in office.
Some of the policies may take more time to revise because they are in regulations that have already taken effect and have the force of law.

Mr. Obama has said, for example, that he objects to a last-minute Bush administration rule that grants sweeping new protections to health workers who refuse to help perform abortions, dispense contraceptives or provide other care because of their “religious beliefs or moral convictions.”

Life Insurance How To's
Posted by: Stephen Mills. Group1a

Life Insurance

It turns out that choosing life insurance is a lot more complicated of a process than that of most types of insurance. Also a majority of life insurance holders do not buy the correct type of life insurance.
Some people make mistakes right from the get go, for instance a common mistake is to just accept whatever policy your job offers assuming that it’s the right plan for you. This is a common mistake because it takes the thought process out of buying life insurance by assuming your place of work has done the proper research. Many people like this type of life insurance path because the money is automatically deducted from their paychecks so ultimately this whole process takes very little effort on their part.
There are two common reasons why most people do not choose the correct life insurance policy. The first reason being the fear of the inevitable; death. It has been said by some insurance agents that some of their clients rush through the policy choosing process because they don’t feel comfortable talking about their death. Another major mistake when choosing a life insurance policy is not choosing one at all. A lot of people just try to ignore the fact that someday they are going to pass away thus never thinking to buy a plan.
Buyers beware, for those who do choose to buy a life insurance policy. “Even most insurance agents and financial planners rely on rules of thumb or unsophisticated worksheets -- or put the onus on clients to decide how much insurance to carry.” (BusinessWeek p2) It turns out that even professional life insurance agents use general guidelines when helping people choose policies.
The overall consensus is that there really isn’t a one size fits all plan for life insurance or a standard age to start a policy. Plans have to be customized to each individual depending on several factors; number of beneficiaries, type of required lifestyle and age. A common rule of thumb is to start a life insurance policy once you have a beneficiary such as a significant other or child. As far as how much to insure yourself for, well a common rule of thumb is five to ten times that of your annual salary but once again that is just a common rule of thumb and the actual amount is something that only you can decide depending on your way of life.

• "5 Life Insurance Blunders to Avoid." 5 life insurance blunders to avoid. Ed. BusinessWeek. 28 Feb. 2007. Businessweek. 27 Jan. 2009 .
• Coy, Peter. "Scared to Death of Life Insurance." 21 Feb. 2005. Businessweek. 27 Jan. 2009 .
• "Top things to know." Money 101 Lesson 20: Life Insurance. 2007. 27 Jan. 2009 .

What Obama's Health Care Plan Means for You - and What's Next

by Rebecca Ruiz
Tuesday, November 11, 2008

Successful heath care reform eluded both Presidents Bill Clinton and George W. Bush. It could be argued that one tried a bit harder at it than the other, but there's little question that the issue will command a significant amount of Barack Obama's attention after he's sworn into office--in large part because the people who elected him care so much about it.

Though 62% of voters ranked the economy as their chief concern, according to exit polls conducted Tuesday by the Associated Press and major television networks, 9% of voters listed health care as a primary concern. That trailed the number of voters worried about Iraq by only 1% and tied the percentage of those troubled by terrorism.

Read More

Posted by: Thomas Gillick

Insurance and Financial Planning

By: Thomas Gillick
When creating a financial plan people usually focus on expenses versus how much income they are spending. A crucial piece within the budget which some people overlook is insurance and insurance policies. Insurance can protect against accidents, ailments and aid in dealing with the death of a loved one. Auto, homeowner’s, health, liability and life insurance are just a couple examples of insurances that might be necessary. Homeowner’s insurance protects your house from some damages and liability issues such as someone getting injured on your property. Homeowner insurance ranges from HO-1 to HO-8 all having different amount of coverage. Auto insurance protects you from car accident damages and incidental damages done to your car. Car insurance is mandatory in order to have a vehicle on the road. Auto insurance policies are very different and depend on the characteristics of the policyholder. Liability insurance is usually held by higher income families in order to have lawsuit and liability coverage. Life insurance helps protect loved ones after someone dies in the family. Life insurance can provide dependents to maintain their standard of living and protect against expensive medical bills. Health insurance is also very important usually provided by employers in a benefits package. Insurance is a key component in any financial plan as it is as costly as it is important.

Life Insurers Facing Cuts in Ratings

Posted by: Lauren Cappelli, Group 1A

Published: November 12, 2008

Life insurance companies, hobbled by real estate investments and committed to paying some costly retirement contracts, face more cuts in their credit ratings before the year is up and have little choice but to seek capital in unforgiving markets.

Companies have until Friday to apply for federal help under the Troubled Asset Relief Program, or TARP, but only about half of the life insurance industry will even be allowed to apply. The Treasury has said life insurers must be affiliated with banks or thrifts that are regulated at the federal level.

Some big state-chartered insurers that are interested, like Hartford Financial Group, appear to be shut out. Two other companies, Lincoln Financial, based in Philadelphia, and Genworth of Richmond, Va., have said they were interested, but would not be eligible.

Most life insurers have been unwilling to say whether they want to apply or not, for fear of sending a signal that they might need financial assistance. MetLife, one of the nation’s largest insurers, declined to comment on its interest through a spokesman, but many observers expect the company to apply for federal money, not because it is teetering, but to build a war chest for acquisitions.

The shares of the largest life insurers have been taking a pounding again this week, reaching new lows in some cases, after a report by Goldman Sachs suggested investors sell virtually all of them except for MetLife.

For full article click:

Types of Insurance

Posted by: Allison Franklin, Group 1A

When most people think of insurance they do not realize how many different types exist. Today, insurance can be purchased for just about anything you can think of. However, there are a few common insurance types that everyone should be familiar with and have. These are:

1) Health Insurance- Health Insurance helps people cover the costs of their medical expenses. With the rising costs of health care, it is extremely important that people have good health coverage. Health insurance can be expensive, but many employees offer it to their employees as part of a benefit package and it is something that needs to be taken advantage of.

2) Life Insurance- Life Insurance provides money to the family of an individual after he/she passes away. The money can be specified to a go to a specific beneficiary in the family and it can be used to cover the funeral expenses. Another important aspect of Life Insurance is that some build cash value, which means they can be borrowed against by the insured if a situation arises where he/she needs money.

3) Homeowners’ Insurance- Homeowners’ Insurance protects the value of the home as well as the belongings inside of the home against loss or damage if a natural disaster hits. Everyone should have some Homeowners’ Insurance as the home is the largest investment that a person makes, and it needs to be protected. However, depending on what part of the country a person lives in he/she may need extra coverage.

4) Auto Insurance- In the United States it is usually mandatory to have auto insurance. Auto Insurance protects the person if his/her car is damaged in an accident and can also cover medical expenses related to the accident. Having auto insurance also protects the individual’s liability in the accident as the insurance helps to protect them if the accident is their fault.

There are many other types of insurance, these are just the four most important.
3) "Types of Insurance Policies."

Homeowners' Insurance

Posted by Allison Franklin, Group 1A

Home Insurance: What You Need to Know

Published: January 26, 2009

Your home is probably your largest and most important investment — not to mention that it’s also the roof over your head. Here’s how to make sure you get the right coverage.
While plans may vary from insurer to insurer, a standard homeowner’s policy generally has four components.

¶ COVERAGE FOR THE STRUCTURE This is the most important aspect of any policy. It covers damage to your house from fire, storms and other disasters (see exceptions below). It’s wise to insure your home for 100 percent of what it would cost to rebuild it. If destruction is complete — if, for example, your home burns to the ground — you will then have adequate funds. To determine what that amount would be, hire a local builder who can give you an estimate. Or figure it out yourself by using the free calculator at A basic policy will insure your home against major disasters, except for flood, earthquake, war or nuclear accident. (For flood and other coverage, see below.) In addition, it will cover other structures on your property like a separate garage or shed. Some companies cover you at just 10 percent of the value of the structure of your home.

To read the full article click here

Monday, January 26, 2009

Forecast for 2009: Insurance industry leaders predict what’s ahead

By Jennifer C. Rankin

What a difference three months makes. During the first nine months of 2008, consumers, corporate execs, and media pundits felt uneasy about a wide variety of economic indicators, but hopeful. That all changed in September, when the credit crunch ballooned into Wall Street’s biggest crisis since the Great Depression, setting into motion an astonishing chain of financial failures and exposing the vulnerable underbelly of the world’s financial infrastructure.

On December 1, America’s bi-partisan National Bureau of Economic Research confirmed the U.S. is in a full-blown recession (and has been for a year). Stock indexes continue to yo-yo wildly. And venerable financial institutions are reaching out for federal financial aid, reinventing themselves as commercial banks, laying off tens of thousands of employees, putting themselves up for sale, and more.

It’s against this backdrop that Resource asked insurance industry leaders to share their thoughts on what the year ahead holds for sales, profitability, technology and customer service. The executives who participated in our annual forecast included a cross-section of members of the LL Global board of directors plus several industry analysts.

Click here to read more

Posted by Kaitlin Lanier

Laid-Off Workers to get Help with Health Insurance

Plan aids jobless with health costs
Posted by Stephen Mills; Group1a

By Julie Appleby, USA TODAY
Laid-off workers could get help with health insurance through the stimulus package under debate in Congress.
States would receive federal funds to open Medicaid health programs to the unemployed. And workers laid off between Sept. 1, 2008, and Dec. 31, 2009, could qualify for help paying 65% of the cost of keeping coverage under their former employers' insurance.

Under current law, many workers who lose their jobs can stay on their employers' health insurance for 18 months — if they can afford to pay the full tab plus a 2% administrative charge ..

The stimulus plan would helpworkers pay for that coveragewith temporary subsidies — 12 months under the House version and nine months under the Senate's .

"A subsidy is critically important," says Ron Pollack head of advocacy group Families USA, which says premiums can equal 84% of the average unemployment check.

The stimulus package also allows workers 55 and older and those with at least 10 years at an employer to extend coverage under their former employers' insurance at their own expense until they reach Medicare age or get other jobs.

"They're taking the opportunity of a fast-moving stimulus package to make a very big change in health policy," says economist Paul Ginsburg of the Center for Studying Health System Change, a non-partisan research group.

Employers object to that extension, saying it would raise their costs.That's because workers who retain coverage are likely to be older or sicker than those who seek other insurance, says Peter Lee, of the Pacific Business Group on Health, a business coalition.

About 9% of workers eligible for coverage through the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) enroll, according to a recent Commonwealth Fund study. The law applies to firms with 20 or more workers.

Still, the COBRA subsidy and letting workers stay on their former plans until Medicare age could help some, says Karen Davis, president of the Commonwealth Fund.

"Not having COBRA expire at 18 months could be an important bridge (to Medicare) for older adults," Davis says

Link to Article

Things to Know When Buying Life Insurance Policy

Posted by Shu Zheng

Life insurance is classified into two categories – temporary and permanent. Temporary life insurance is also known as term insurance, and the permanent insurance is the combination of universal, whole life, and endowment life insurance. When people purchasing a life insurance, it is important to know the types of insurance as well as some bargain strategies.

Term insurance, which provides coverage for a specific period of time, does not accumulate cash value. The three key factors to be considered in term insurance are: face amount (protection of death benefit), premium to pay (cost to the insured), and length of coverage (term). Two common types of term insurance include annual reward term and mortgage insurance (Wikipedia).

Permanent insurance remains in force until the insurer fails to pay the premium. The policy cannot be canceled for any reason except fraud in the application, and the cancellation must incur within a specific period of time required by law. Unlike term insurance, the permanent one carries cash value, and the owner can access money by withdrawing, borrowing cash value, or surrendering the policy. Now as mentioned earlier, the permanent insurance exists in three basic forms: whole life, universal, and endowment. Whole life is the most common one among the three. The advantages of this policy include guaranteed death benefits, cash values. Even though premium is higher than terms, but the accumulative premiums are equal if policy is kept in force. Universal insurance is a new insurance product with greater flexibility and higher interest return. It exists in forms of interest-sensitive, equity-sensitive, and variable universal, all of which have close relationship with the market (Wikipedia).

When buying a life insurance, the agents generally want to push the sell of whole life because of high premium and commission. Although insurer can keep whole life policy for the rest of their life and build up cash in them with tax-free advantage, the high fees and commissions built into whole life along with surrender charges often leave people with little cash value after 10 or 15 years. So it is generally recommended for the average public to buy 20- or 30- years term policies since it is no long difficult to find (Buying Strategies). However, another factors such as health, smoking condition, income and ages of family members also have to be taken for account in terms of the coverage length. When it comes the time of purchase, people can consider providers such as Metlife, Prudential Financial, New York Life Insurance, TIAA-CREF and so forth (Which Companies).



Buying Strategies, (n.d) CNN Money, Jan. 26, 2009.

Which Companies, (n.d.) Insurance Information Institute, Jan. 26, 2009.

No Just Crash Protection, but Prevention

By Matt Nauman
Mercury News
Posted by Shu Zheng

A car that can brake itself to avoid a fender-bender during the morning commute might seem far into the future.

Except it goes on sale in March.

That's when City Safety, a low-speed collision-avoidance technology becomes available on the new 2010 Volvo XC60, a crossover utility.

City Safety is just one of several new technologies designed to prevent car crashes and save lives. Auto sales are at a nearly two-decade low, but the pace of safety innovations continues unabated. Whereas air bags, anti-lock brakes and electronic stability control were the standard for a safe car until very recently, automakers continue to raise the stakes.

Radar, lasers and cameras work with computers and sophisticated software to do tasks unheard of just a few years ago. They tell you if you're falling asleep at the wheel, or if a car is in your blind spot. If you drift from your lane, they warn you, and in some instances, nudge you back into your lane. And modern cruise control doesn't just keep a steady speed, but can help your car keep a steady distance with the car in front of you.

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Sunday, January 25, 2009

How to assess your life insurance needs

By Ginger Applegarth

What's your life worth? If you've shopped for life insurance, that's sort of what you're trying to find out. Chances are, you've heard different people suggest vastly different calculations on how to reach the right number.

The problem is that every person's situation is different, and although your financial situation may look the same as your colleague's, your needs are different.

MSN Money's Life Insurance Needs Estimator is based on a time-tested method used by reputable agents and financial planners for decades: the capital-needs analysis. The beauty of the capital-needs analysis is that it takes into account all of the quirks that make you and your situation unique.
Figuring out how much life insurance you need shouldn't be a guessing game. You can assess your needs -- and the needs of your loved ones -- and make a calculated assessment.
The Needs Estimator walks you through typical costs, such as a funeral (the average funeral in the U.S. is now about $6,500, though the true sum can easily reach $10,000 once a burial plot, flowers and other costs are included), to the atypical, such as the special-needs slush fund most people should include in their insurance calculations. (A safe estimate is about $20,000 to $25,000 to cover unexpected expenses.)

Tuesday, January 20, 2009

$68 Billion Yearly: Medical Insurance Fraud

By Jen Lynch

To illustrate the escalating incidence of medical-related fraud, let me explain a recent case involving false injury claims. An employee of Mutual of Omaha was just sentenced to two years in prison for orchestrating false insurance claims with a policy holder in Vermont. This scheme started in 2001, and resulted in close to $1.4 million in medical payments over five years. The employee backdated each of the fraudulent claims to make it appear as though they happened at the time the client's policy was in effect. The policy holder received approximately $1,396,000 in the mail from Mutual of Omaha as reimbursement for the false medical expenses. The Mutual of Omaha employee was paid $95,600 by the client, for her assistance in the crime. This is just one example of the multitude of ways people are committing insurance fraud.

According to the Coalition Against Insurance Fraud, the following statistics are cases reported by the news media, by type of fraud, in 2008. (Click on the chart to see enlarged version)

The top two types of fraud are involved with healthcare. Surprising? The National Health Care Anti-Fraud Association states that the U.S. spends more than $2 trillion on healthcare annually, and in 2008, at least 3 percent of that spending, $68 billion, is lost to fraud every year. The problem with the statistics above is that they are only expected to increase in the future. Consumer attitudes towards insurance fraud are becoming more tolerant, and more people are expressing negative feelings about insurance companies.

The Coalition Against Insurance Fraud is asking that any new medical legislation introduced this year have strong anti-fraud provisions attached, and that all states adopt insurance fraud statutes. According to the Insurance Information Institute (III),  41 states and the District of Columbia have set up fraud bureaus to combat all types of insurance fraud. These agencies have reported increases in suspected fraud referrals, cases opened, convictions and court-ordered restitution. Hopefully these new agencies will help lower the outstanding amount of money lost to fraud, and help patch the holes in both the insurance and healthcare systems. 

Wednesday, January 14, 2009

This SCHIP will sail, State Children's Health Insurance Program pushed by Obama

Posted by Jen Lynch

Obama hailed the 289 to 139 vote and nudged the Senate to act with the "same sense of urgency so that it can be one of the first measures I sign into law when I am president."

The president-elect vowed as a candidate to provide health coverage to every child, and the expansion of the State Children's Health Insurance Program, known as SCHIP, is a major down payment toward meeting that goal. "In this moment of crisis, ensuring that every child in America has access to affordable health care is not just good economic policy, but a moral obligation we hold as parents and citizens," Obama said.

The House legislation would cost nearly $33 billion over 4 1/2 years and would be funded in part by a cigarette tax increase of 61 cents to $1 per pack. Bush vetoed two similar bills in 2007, objecting to the tax increase and the expansion of government health care. The Senate Finance Committee will take up a similar measure today, with floor action expected to begin next week.