Insurance Claims And Issues

Totally Overtreated.

     The State Health Access Data Assistance Center at the University of Minnesota has just released a study comparing two things in the past 5 years:  Earnings and Health Insurance Premium contributions by the employees reporting those earnings.  Lisa Girion, "Workers' Health Insurance Costs Soar" (Los Angeles Times Online, Tuesday, April 29, 2008).

     The researchers report that the Health Insurance costs increased 10 times more than earnings in the past 5 years.

     Their findings are that wages increased by 3% while the employees' contributions to Health Insurance Premiums rose by 30%.  And that comparison does not pretend to report the total amount paid for Health Insurance Premiums.  For one thing, it does not include the employer's contribution.

"Overtreated," a book by Ms. Shannon Brownlee, is an excellent and well-written study of the problems with Health Care and Health Insurance since the current ways of doing both began.  It is eye-opening.  I hope it will cause some needed changes.

Postscript on May 1, 2008:

The findings in Florida are little different from the rest of the United States.  The headline of this linked newspaper article says it all:  Bob LaMendola, "Soaring Costs Force Many Florida Workers to Drop Health Insurance" (South Florida Sun-Sentinel.com, Tuesday, April 29, 2008).

Please Read The Disclaimer.

Debt Securities Albatross Causes Drowning Insurance Results.

     Hartford Financial Services Group Inc. reportedly lost 83% in 1Q 2008 profit due to its investment losses.

     Hartford has also already reportedly lost 18% of its share value in 2008.

     These plunging financial results are blamed on the universal writedown of Bonds "linked to mortgages and other debt securities."  Andrew Frye, "Hartford's Profit Plunges 83% on Investment Losses (Update 1)" (Bloomberg.com, Monday, April 28, 2008).

Please Read The Disclaimer.

Credit Raters Examined!

      Many specifics and lots of broad implications about the workings of credit rating corporations including their roles in Insurance are discussed in Roger Lowenstein, "Triple-A Failure," p. 36 (New York Times Sunday Magazine, April 27, 2008).  One thing is hardly mentioned but fairly clear:   While the credit rating corporations recognize that their models of evaluating subprime mortgages and collateralized debt obligations were inadequate if not counterproductive by providing a rating structure on paper or in theory, but not in reality, it does not appear that any of the credit rating companies ever declined even one opportunity to be paid large amounts of money to rate the credit of even one "asset-backed" financial product including Insurance.  Not one.

Please Read The Disclaimer.

Insurance Regulation Lowers Premiums.

"Optional" No Insurance Regulation And Premiums Skyrocket.

    Automobile Insurance Regulation over the last two decades has been studied exhaustively by the Consumer Federation of America.  Its study has just been released:   Download ConsumerFederationofAmerica.state_auto_insurance_release.pdf.

    Premium Rates for Automobile Insurance Policies are directly related to the amount of scrutiny they receive from a State Insurance Department, the study found.  The more a given State has regulated Automobile Insurance, the lower the Premium for Automobile Insurance Policies in that State.  The less a State has regulated Automobile Insurance, the higher the Premium for it.

    The people currently in charge of the Federal government have a theoretical proposal based on how they think power should flow in this regard.  They have proposed that control over Insurance be taken away from the States for the first time in 150 years, and given to them.  This is how they imagine the financial system of the United States would be made better.    They also propose not to look at Insurance Policy Premium Rates at all, i.e., not to regulate them in any way.

    The likely result is a flood of new Insurance Premium Rates across the board based on actual experience over the last two decades. 

 Please Read The Disclaimer.

California State Government Department Reviews Health Insurance Policy Rescissions ...

... And It's NOT the California Department of Insurance Performing this Review.

    The California Department of Managed Health Care, responding to numerous accounts of cancellations and rescissions of Health Insurance Policies in California after Claims were made, announced that it would submit Health Insurance Policies rescinded over the last 4 years by each of California's 5 major Health Insurance Companies "to an independent arbiter."  Lisa Girion & Marc Lifsher, originally published online under the headline, "State to Review Canceled Health Insurance Policies" changed to, "Hope For Patients Who Lost Insurance Policies" (Los Angeles Times Online, Friday, April 18, 2008).

    If the "independent arbiter," not otherwise identified or explained in the linked newspaper article, determines that a given Health Insurance Policy was wrongly canceled then that Policy reportedly will be reinstated "and the insurers would be responsible for medical bills incurred while patients were without coverage".

    It is reported that California officials do not have a clue how many Health Insurance Policies were rescinded in California in the past 4 years, but they apparently believe that the number is in the thousands.

Please Read The Disclaimer.

Title Insurance: Pricing, Products Coverage Confusing to Many.

    Title Insurance Policies, including Premiums and various Products' Insurance Coverage, are examined in Binyamin Appelbaum, "Title Insurers Face Criticism Over Pricing/Do You Really Need an Owner's Policy?" (Boston Globe, Sunday, April 13, 2008).   In Massachusetts, as in many States or Commonwealths, it is mandatory to purchase a Title Insurance Policy at the closing on a real estate deal for a house, for example, that protects the lender.  It is ordinarily optional, however, to also purchase a Title Insurance Policy that protects the buyer-owner.  The two kinds of Title Insurance provide different Coverages and they come with different Premiums, all touched upon in the linked newspaper article.

Please Read The Disclaimer.

Big Advertising Budgets May Portend Big Premiums for Fewer Insurers.

     The Liberty Mutual takeover of Safeco has inspired a new prediction:  Bigger may be better.  Okay, not so new.  Property and Casualty Insurance Companies may consolidate more frequently now in order to advertise more and more and more, it is reported by Erik Holm, "Safeco Buyout May Make Mercury, Hanover Next Targets (Update 2)" (Bloomberg.com, Thursday, April 24, 2008).  Does this mean, though, as was written in the linked news report, that even the biggest Insurance Companies have "money to spend on price cuts"?  (Prediction:  That sentence will be edited by the time you link to the news report.)

     Safeco has surely benefited from Liberty Mutual's takeover.  In the latest New York Times Interactive "Sector Snapshot, Insurance," Safeco is the only Insurance Company clearly shown as both ahead over the last year and also ahead over the last week.  Link here:  Go to  the Times's "Multimedia" for "Today's Sector," then select "Category" - "Financials," and finally click on "Insurance".

Please Read The Disclaimer.

Federal Administration, Big Insurers Want Price Hike Options Before 2008 Hurricanes.

    The current Federal government proposal to take over regulation of Insurance Premiums by not regulating Insurance Premiums at all is supported by the two largest U.S. Insurance Companies, Allstate and State Farm.  Reported by Jeffrey H. Birnbaum, "Insurers Are at Odds Over Paulson Plan" (washingtonpost.com, Sat., April 19, 2008).   The current Federal government proposal is dubbed an "option" between no limit on Premiums if they are put in charge, or continued regulation by the States which is the way Insurance Companies have pretty successfully been regulated for some 150 years.

    That is, by measuring success from the standpoint of the millions of people who live in the United States.

    It appears that most Insurance Companies, and all or almost all Insurance Agents and Brokers, are not so short-sighted.  They instead see their Premium profits maximized over the long term by the present system of Insurance Premium requests to State regulators who know their industry.

    Apparently the supporters of success are unwilling to believe that an opportunity for obscenely higher Premiums is a good thing in the long run for the Insurance Industry.  The people who are marketing this proposal as a new opportunity for limitless Premiums, have not earned a lot of confidence.  Many of them in the not-too-distant past enabled what is now a financial fiasco for everyone but the richest people.  The analogy is not lost.

    If something looks too good to be true, it probably is.

Please Read The Disclaimer.   

Bond Insurance Companies Pull Down Citigroup Financial Results.

    Citigroup lost $5,100,000,000.00 or $5.1 Billion in 1Q2008.  Since the first day of 2008, Citigroup has also announced 13,200 related job eliminations.  In the 1Q2008, Citigroup further reported downgrading $6,000,000,000.00 or $6 Billion on subprime mortgages and another $1.5 Billion "related to exposure to bond insurers," among other markdowns to zero.  The role of Bond Insurance Companies in shaping the continuing financial free-fall is no longer the largest, but it is significant still.  Associated Press Copyrighted Story Published Online by the Los Angeles Times, "Citigroup Reports $5.1 Billion Loss on Hefty Write-Downs," Friday, April 18, 2008.

Please Read The Disclaimer.

Premium, Claim, Rescission of Health Insurance in California: Lawsuit.

     Hyping the Health Insurance Company bottom line by canceling or rescinding Policies after a Premium is collected and a Claim for benefits is made, are conduct that is frowned upon in California.   The Los Angeles City Attorney has filed a lawsuit based on such allegations including an apparent fraud cause of action perpetrated upon 500,000 Policyholders by California's "largest for-profit health insurer".  The lawsuit was filed in Los Angeles County Superior Court.  The City Attorney reportedly seeks restitution and penalties.  Before the lawsuit was filed, the City Attorney's Office established a web site at which it received information regarding Health Insurance Company claim practices, at www.protectingtheinsured.org.  Lisa Girion, "Anthem Blue Cross Sued Over Rescissions" (Los Angeles Times Online, Thursday, April 17, 2008).

Please Read The Disclaimer.