Saturday, January 31, 2009
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.
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Wednesday, January 28, 2009
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!”
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.
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.
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.
Posted By Chaoran Hu
Tuesday, January 27, 2009
Crash Course: More drivers are going without insurance in down economy, Jan. 4, 2009. Cheapest Car Insurance, Jan. 26, 2009. http://cheapest-cars-insurance.blogspot.com/2009/01/crash-course-more-drivers-are-going.html
More Drivers Going Without Insurance, Jan. 19, 2009. CarInsurance.com, Jan. 23, 2009. http://www.carinsurance.com/news/content4211.aspx
Recession Affecting Auto Insurance Premiums, Dec. 10, 2008. iBankCoin.com, Jan. 26, 2009. http://www.ibankcoin.com/peanut_gallery/index.php/2008/12/10/recession-affecting-auto-insurance-premiums/
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.
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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.
- 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.
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.
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 (insure.com). 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. Insure.com
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.”
Posted by: Stephen Mills. Group1a
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
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.
Posted 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.
By MARY WILLIAMS WALSH
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: http://www.nytimes.com/2008/11/13/business/13insure.html
Posted by: Allison Franklin, Group 1A
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.
By LESLEY ALDERMAN
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 Building-Cost.net. 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
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.
Posted by Kaitlin Lanier
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
Posted by Shu Zheng
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. http://money.cnn.com/magazines/moneymag/money101/lesson20/index3.htm
Which Companies, (n.d.) Insurance Information Institute, Jan. 26, 2009.
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.
Sunday, January 25, 2009
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
Wednesday, January 14, 2009
Posted by Jen Lynch
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.