Front Page News

Healthcare Cost Slowdown Could Save $770 Billion

staff2 — 2013-05-14T18:58:26Z

People with health insurance saw increases in their medical costs slow from 2009 to 2011, signaling potential structural changes in the industry that could cut healthcare inflation and save the U.S. hundreds of billions of dollars, according to two studies. The studies aim to shed light on why the annual growth of medical spending slowed from a high of about 8.8 percent in 2003 to an average of about 3 percent per capita from 2009 to 2011, according to data reported in January by the U.S. Centers for Medicare and Medicaid Services.

A study by Harvard University health economist David Cutler and Harvard Medical School healthcare policy professor Michael Chernew, published in Health Affairs, reveals that medical costs for people with health insurance grew at a slower rate from 2009 to 2011, attributed to increased use of generic drugs, higher out-of-pocket costs, and improvements in care efficiency, in addition to the recession. Around 37 percent of the slowdown in health costs from 2003 to 2011 could be attributed to the recession, 8 percent to a decrease in private insurance coverage and Medicare payment cuts, and 55 percent to structural changes. If the trend continues, the U.S. may recapture $770 billion in unexpected savings from projected expenditures by 2021, wiping out a fifth of the federal budget deficit.

Healthcare Cost Slowdown Seen Saving Up to $770 Billion (Bloomberg 5/7/13)

Market Scout: Commercial P/C Rates Rose 5% in April

staff2 — 2013-05-14T18:55:32Z

Commercial property/casualty insurance rates rose an average of 5% in April over those of the same month a year earlier, Dallas-based electronic insurance exchange MarketScout reported. Commercial property and workers compensation experienced the most significant rate increases at 6%. Surety and employment liability insurance rose the least at 2% each. Among classes of business, manufacturing increased the most at 7%, while energy and public entity accounts enjoyed the smallest increases at 4% each.
“The market is bumping along in a continued slow but steady path toward overall increases,” said MarketScout CEO Richard Kerr in a statement. “For the rest of 2013, we expect some months with lower composite increases than prior months, but the general direction of rates will be upward, unless new capacity enters the market.”

Buffett Vows to Be Major Force in Commercial Lines

staff2 — 2013-05-14T18:51:56Z

The man who brought the industry GEICO is now vowing to be a major force in commercial lines. Billionaire investor Warren Buffett said Berkshire Hathaway plans on growing its commercial lines insurance business quickly, now that it has added four executives from American International Group (AIG).

“I think you will see us become a very significant factor world-wide in the commercial-insurance business. It could be a business that reaches into the billions,” Buffett said at his annual meeting for shareholders in Omaha. He said Berkshire now has “the right people” and its “got capital like no one else has.” On April 26, news broke that four top AIG executives were leaving that giant insurer and joining Berkshire. Berkshire’s current insurance subsidiaries include General Reinsurance, GEICO, National Indemnity, U.S. Liability Insurance Co., BoatUS and Guard Insurance Group.

Not Renewing TRIA Could Lead to Higher Premiums: Fitch

staff2 — 2013-05-14T18:48:37Z

Failure to renew the Terrorism Risk Insurance Act (TRIA) could induce commercial insurers to retreat from larger metropolitan areas, reducing availability of coverage and raising premium rates. That’s according to an assessment released by Fitch Ratings, Inc. Lack of terrorism reinsurance coverage would leave individual insurers in the short term with commercial property and workers compensation exposure from a potential event above prior risk tolerance levels, the firm said.

If Congress fails to extend TRIA legislation, the impact would be felt in industries such as banking, commercial real estate and construction. A study published by the Real Estate Roundtable points out that in the 14 months between the Sept. 11, 2001 terrorist attacks and the enactment of TRIA, over $15 billion in real estate-related transaction were either stalled or canceled because of lack of terrorism insurance.

PIA was one of the prime advocates of TRIA during its inception in 2002. It is critical that Congress extend the TRIA well before its current expiration of December 31, 2014.

Agent to Agent: Shark Proof, Part 2

staff2 — 2013-05-14T18:43:37Z

In part one of this series, we defined a shark as the kind of producer you don’t want anywhere near your clients. A producer who is a consummate hunter and a true production machine. Sharks are experienced professionals who know the business and are experts at breaking relationships. The 3 I’s of shark proofing that create a near impregnable barrier against sharks and any other lessor competitors are Insulation, Investment and Influence.

In part one we covered Insulation. Part two will cover Investment.

Investment: A universal truth is: The more we invest, the more invested we become. We all know this from previous experiences working with prospects. The more time and effort we put into working with a prospect, the more difficult it is to disengage, even when we know our chances of success are slight. This is because we are invested. The same universal truth applies to our prospects and clients. When it comes to our prospects, the more invested they are in the “quoting process,” the more invested they will be in the outcome. With our clients, the more they have invested in doing business with our agency, the more invested they become in perpetuating that relationship. Keep this universal truth in mind when you try and make it “easy” for your prospects and clients to do business with you by doing everything for them. They must have skin in the game to be invested.

Read the rest of this article by David Connolly of iQ Consulting here:
Shark Proof (part 2)

Johnny Lee Named PIAPAC Person of the Year

staff2 — 2013-05-14T18:26:54Z

The Professional Insurance Agents Political Action Committee (PIAPAC) held its annual fundraising dinner on April 10 in conjunction with the PIA Federal Legislative Summit. The event was hosted by new PIAPAC Chairman Liz Luce, who has succeeded Immediate Past Chairman Bob Shanley.

The recipient of the 2012 PIAPAC Person of the Year award was announced during the event. PIA National President-elect Johnny Lee of Virginia was named the PIAPAC Person of the Year in recognition of his many years of service to PIA of Virginia & D.C. and PIA National, along with his many years of dedication to PIAPAC.

“Every year the PIAPAC nominating committee has the tough decision of choosing one person who stands out above the rest in dedication on behalf of PIAPAC,” said Luce. “That was especially true this year. Johnny Lee has a proven dedication to PIA, serving on all 14 working committees since beginning his membership in 1986. It gives me great pleasure to present this distinguished award to a very deserving individual.”

Big Insurers Wary of New Obamacare Markets

staff2 — 2013-05-07T20:45:00Z

Large U.S. insurers are reluctant to join new state health insurance exchanges under the federal healthcare reform law, which may impede competition when the marketplaces launch on October 1. UnitedHealth, for instance, said it would participate in as few as 10 exchanges and only up to 25 maximum next year, while Aetna submitted applications to offer plans in 14 states. States like California and Washington that have strong markets, however, have received applications from dozens of insurance companies; states dominated by a single insurer may see few changes, according to health economists.

A key principle of President Obama’s health reform is that individuals will have a robust offering of insurance plans to choose from, and that competition for new customers in each state will help keep prices down for consumers. The U.S. Department of Health and Human Services, which is overseeing the exchange effort, said that it is confident the marketplace will be competitive.

The federal government has plans to run 33 exchanges, while 17 states have said that they will run their own. Last week, the government said it would give insurers three more days to file their applications for the federally-run exchanges. Also last week, Gary Cohen, the senior official overseeing the federal insurance exchanges, said 140 health insurance carriers had started the process for an application, but he did not provide details on how they were distributed by state.

Analysis: Big Insurers Wary of Obamacare (Reuters 5/2/2013)

Group to Help Maryland Establish Exchanges Settled with Feds on Fraud

staff2 — 2013-05-07T20:40:00Z

An organization that was chosen by the Maryland Health Benefit Exchange to help the state-instituted agency implement the online insurance exchange, required under federal healthcare reform, admitted to defrauding the U.S. government. Maryland tapped the nonprofit Seedco to help implement healthcare reform despite a $1.7 million settlement the agency agreed to in December to resolve a federal fraud suit.

According to a report in the Baltimore Sun, the U.S. government sued the agency, saying it defrauded a federal employment program by falsely saying it found jobs for hundreds of New Yorkers. As part of the agreement, Seedco admitted to the false reporting. Seedco (Structured Employment Economic Development Corp.) is based in New York and has a Maryland office. Five other organizations will share in a $24 million federal grant as part of the healthcare reform education process in Maryland.

In the New York suit, Seedco was accused of saying it found employment for job seekers who were still unemployed or had found jobs on their own, according to the U.S. attorney’s office in Manhattan. It said Seedco used the inflated numbers to get increased federal funding and as support to open a job placement center. As part of the settlement, Seedco was ordered to institute a compliance program, create an internal fraud hot line and hire an independent consultant to perform annual reviews of the compliance program. A Seedco executive called the New York incident an isolated event in just one of the nearly two dozen programs the organization operates.

Group Settled With Feds over Fraud (Baltimore Sun 5/3/13)

New NFIP Bulletin Restricts Previous Waiver for Sandy-Related Claims

staff2 — 2013-05-07T20:40:00Z

The National Flood Insurance Program (NFIP) issued a bulletin w-13027 on May 3, 2013 that is a clarification of the claims process for Sandy-related claims.

The NFIP previously issued a partial waiver as to what lesser degree of documentation would be needed in a policyholder’s proof of claim filing, when doing so for expedited advance payments of particular claims settlements. This partial waiver was detailed in bulletin w-12092a issued on November 9, 2012.

Now, NFIP is advising in the May 3 clarification bulletin w-13027 that these waived guidelines work, so long as the policyholder accepted the adjusters’ partial & then final claims adjustment! That means that w-12092a was a conditional waiver to be used for an expressed claims circumstance and outcome. It was not issued as an overall general waiver to all Sandy-affected policyholders, for any and all types of claims.

This is a significant change.

Some policyholders took advantage of this advance, partial claims payment process with a limited waiver for claims filing information. But then, they disagreed with the adjuster’s either partial or final claims payment, and as such, filed an appeal. For these NFIP policyholders, when they move to an appeal, the waiver benefits in w-12092a no longer apply. Now, the NFIP claims appeal process will require full filing of evidence for proof of loss to appeal for corrected claims.

What It Means to Agents: This NFIP clarification might give rise to some policyholder claims filing questions. Please advise patbo@pianet.org if this raises issues for your agency or if you have any questions.

California Appeals Court Upholds DOI Right to Set Rates

staff2 — 2013-05-07T20:30:33Z

The California Court of Appeal upheld a ruling by the Los Angeles Superior Court dismissing a lawsuit from Mercury Insurance Co. which challenged the authority of State Insurance Commissioner Dave Jones to reduce the company’s rates. Jones called for the insurer to reduce its homeowners’ rates by 8.18 percent, following a public hearing on the company's request to hike rates by 7.3 percent. According to Jones, “The Court of Appeal clearly affirmed the insurance commissioner's exclusive authority to adjudicate disputes between the Department of Insurance and insurers in an administrative forum and that insurance companies such as Mercury must wait until I render a final decision before seeking judicial intervention.” Mercury declined to comment or state if an appeal of the decision is planned.