Insurance Claims And Issues

FHA Waives Waiting Period, Offers Mortgage Insurance on Foreclosed Homes.

     The Federal Housing Administration is modeling parts of a new law that previously passed the House of Representatives and is apparently awaiting action in the Senate.  The FHA reportedly adopted a narrowly focused new policy to last one year.  Under the new, temporary and narrowly focused policy, the FHA will waive its established 90-day waiting period for new ownership of a home.  This means that the FHA will offer immediate Mortgage Insurance to buyers of homes that have been foreclosed.  See Alison Vekshin, "U.S. Lifts Limits on Insurance for Foreclosed Homes (Update 1)" (Bloomberg.com, Friday, June 13, 2008).

     The housing bill that passed the House and is awaiting action by the Senate contains many other provisions besides the particular provision affecting the FHA waiting period.  Vikas Bajaj, "As Bill Evolves, Default Rate is Snowballing" p. 1, col. 1 (New York Times Nat'l Ed., Sunday, June 29, 2008, published online as "As Housing Bill Evolves, Crisis Grows Deeper").  83 Senators recorded their support for the entire housing bill, including of course the provisions that would affect the FHA.  It is apparently one of the few bills on which the Senate successfully voted to end a filibuster apparently only by Republican Senators.

     After that, however, one Senator, also a Republican, insisted that an amendment be added to the housing bill that would extend credits for renewable energy.  The amendment, still pending at the time of this post, is co-sponsored by a Democrat.  However, she is not reportedly insisting on halting the housing bill.  The House previously rejected the same amendment several times as it passed the housing bill and sent it to the Senate.  In the face of amendment insistence from the one Senator, the Senate adjourned for its Fourth of July recess without taking up the housing bill.  Lori Montgomery & Jeffrey H. Birnbaum, "Political Maneuvers Delay Bill After Bill in Senate" (Washington Post Online, Saturday, June 28, 2008).

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Credit Ratings Equality Foreshadows No More Bond Insurance.

     Unnamed "investors and analysts" see no need for Bond Insurance whatsoever if a credit ratings company rates Municipal Bonds by the same assessments that it uses to rate Corporate Bonds, it is definitely reported by Michael McDonald, "Moody's Muni Ratings Overhaul Undermines MBIA, Ambac (Update 1)" (available at www.Bloomberg.com, Friday, June 13, 2008).

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Earthquake Shakes Up Some Insurance Coverage Expectations.

     A newspaper report about Insurance Coverage and Catastrophe Claims following the Sichuan earthquake in China, highlights issues important to people in the United States who face the real possiblity of having to make Catastrophe Claims.

    Concentrating on two types of Insurance, it is reported that holders of Property Insurance Policies are left with little more than uncovered Catastrophic Damage, while the much smaller group of Chinese Life Insurance Policyholders have fared much better.  Life Insurance Policies in China, as elsewhere including in the United States, generally pay benefits upon an accidental death regardless of cause.  Earthquakes as a cause of loss are almost always Excluded in Property Insurance Policies in China, however.

     "[A]s in California," in order to obtain Coverage for losses caused by Earthquakes, for example, "you have to buy a special policy and pay extra."  "In China, Few Are Covered by Earthquake Insurance," by Don Lee (Los Angeles Times Online, Tuesday, June 24, 2008). 

     These differences are illustrated in the newspaper report by convincing numbers.  First, so far about a quarter of a million Property Insurance Claims have been presented to China Property Insurers as a result of this Catastrophe.  Most of those CatClaims are reportedly on account of damage to personal property.   In addition, some Three Million houses were destroyed.  Approximately $15 Billion to $20 Billion of Property Damage is estimated as a result of the Sichuan earthquake.  Property Insurance Companies have paid out $20 Million in CatClaims.

     With regard to Claims on Life Insurance Policies, on the other hand, an unreported number of Claims has been presented since the Sichuan earthquake.  It is reported that "only a tiny fraction of people hold such policies."  Reportedly, Life Insurance Companies paid out $26 Million in Claims resulting from the earthquake.

     Finally, it is of more than passing interest to Homeowners seeking Property Insurance Coverage outside of China, that the Earthquake Exclusion was reportedly adopted after a 1996 meeting of "earthquake scholars" and "experts".  In that meeting, participants predicted that earthquakes would trouble China for the next ten to twenty years.  The Property Exclusion was almost immediately written in response, it is reported.

     In the United States, one of the central and largely unreported battlegrounds concerning Property Insurance Coverage, particularly for CatClaims, has been the use of new Catastrophe Models that result in predictions of more Catastrophes such as Hurricanes, and in higher Premiums or Exclusions, than seem justified by authorized and fact-based Catastrophe Models that have been relied on by Insurance Departments, Insurance Companies, Agents and Brokers, and of course ultimately, relied on by Policyholders.  Events associated with that battleground and other largely unreported areas of interest to Insurance Coverage for Catastrophes have been reported here in the categories of "CatClaims" and "Catastrophe Models," along with "Property Insurance" and many other related kinds of Insurance.

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Health Insurance Coverage for Anorexia or Bulimia?

     Can anorexia or bulimia be covered under Health Insurance Policies?  They can if the Legislature mandates Coverage.  There is an act that recently reached  the desk of the Governor of Illinois, which would reportedly make Illinois the 17th State to mandate Health Insurance Coverage for anorexia and bulimia, if the Governor signs the law.  See Bonnie Miller Rubin & Ahsley Wiehle, "Anorexia, Bulimia May Soon Become Part of Mandatory Health Insurance in Illinois" (chicagotribune.com, Tuesday, June 24, 2008).

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Different Business, Different CatClaim Preparations.

     Different businesses get ready for Catastrophe Claims in different ways, it is reported in "Getting Ready for Storms is Major Job For Big Businesses" p. C1, col. 5 "Central Florida Business" Section (Orlando Sentinel, Friday, June 13, 2008), published online as "Past Storms Taught Lessons Big Businesses Won't Forget".

     Something these businesses all have in common with each other, and with every individual as well:  Finding and keeping Insurance Coverage for Catastrophe Claims in the near future now, and in future days far ahead.

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Some Issues to Explore in Obtaining Individual Health Insurance Coverage.

     Applying for individual Health Insurance Coverage presents at least two issues addressed by David Lazarus, "Consumer Confidential/Gender Can Cost You in Individual Health Insurance" (Los Angeles Times Online, Sunday, June 22, 2008).

     One issue in applying for individual Health Insurance Coverage that is addressed in this newspaper article is that part time employees may need individual Health Insurance since most employers will not offer either a Health Insurance Plan or the expensive benefit of paying all or part of Premiums for Health Insurance Coverage for part time employees.

     The other issue addressed in this newspaper article is gender.  Women are charged higher Premiums than men for individual Health Insurance Coverage as explained by the newspaper reporter who wrote this article.

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ERISA Plan Administrators' Conflict of Interest Now in Plain View.

     In a landmark opinion released yesterday, the Supreme Court of the United States changed the factors to review in employee challenges to adverse disability benefit decisions.  The High Court ruling was by an overwhelming vote, 6 to 3.  From now on, judicial review of a plan administrator's denial of benefits must include the administrator's conflict of interest, it is reported by Mary Williams Walsh, "In a Ruling on Benefits, Justices Aid the Worker" p. C3, col. 6 (New York Times Nat'l Ed., Friday, June 20, 2008).

     Plan administrators are hired by employers to run group health and disability plans for insurance benefits given to employees.  By statute, plan administrators are mandated to act in the best interests of the employee, it is reported, when they decide whether the employer's plan extends the requested insurance benefits to that particular employee.   The review applied before yesterday's decision allowed Federal Courts to overturn an administrator's decision only if the decision was proven to be "arbitrary, capricious or unprincipled," in basic terms.  The Supreme Court's ruling adds another factor into the mix for a Court reviewing a plan administrator's insurance benefit decisions. 

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Crop and Flood Losses Bring Claims to Midwest.

     Several of the larger Crop Insurance Companies in the United States are Wells Fargo, Ace Ltd., and Deere & Co.  Jeff Wilson, "Corn-Crop Losses Widen as U.S. Midwest Fields Flood (Update 1)" (Bloomberg.com, Tuesday, June 17, 2008).  Wells Fargo & Co.'s Rural Community Insurance Services alone is reported to have already received this year triple the amount of Flood-loss claims for farms that it received in the year 2007.

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To and From Each According to Their Abilities.

     The idea of underperforming corporate executives giving back some or all of their pay, in exchange for the opportunity that exists now of receiving enormous bonuses and other payments when the corporation performs well financially (and now, actually, even if it does not), has been joined by, among others, the president of a New York investment firm quoted in Gretchen Morgenson, "Fair Game/Approve This Deal, or Else" p. 1, col. 3 "SundayBusiness" Section (New York Times Nat'l Ed., Sunday June 15, 2008.

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Munis to Receive Equal Credit Rating Treatment?

     The credit of Municipal Bonds may soon be rated the same exact way that the credit of Corporate Bonds has always been rated.  This may mean that there is no longer a need for Bond Insurance.  See Vikas Bajaj, "Moody's May Align Municipal Debt Ratings With Corporate" p. C5, col. 1 "Business Day" Section (New York Times Nat'l Ed., Friday, June 13, 2008).

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