Insurelane Insurance Blog

This morning, California Insurance Commissioner Steve Poizner and the chairman of auto and home insurer Mercury will announce rate reductions for more than 1.5 million Mercury policyholders.

Mercury is a Los Angeles-based insurance company who provides auto and homeowners insurance coverage.

They are the third-largest auto insurer in California, reported the Los Angeles Times.

Drivers with a Mercury auto insurance policy will see a savings of about $30 a year, which totals to roughly $41 million for the entire state.

Now with the average price of gas at more than $4 a gallon in the U.S., the rate hikes may help ease the burden of the cost, wrote the Times article.

Homeowners will save anywhere form $83 to $100 a year on their premiums depending on where they live. Renters’ insurance premiums will also go down by 33 percent.

Like many other insurers in California, Mercury has shown strong profits and a reduction in claims, which allows them to reduce rates.

“Mercury is exemplifying consumer-friendly and smart business practices by passing company savings on to their policyholders,” said Poizner.

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Steve Poizner, California’s Insurance Commissioner, is proposing regulations that would require insurance companies to report premium trends over the previous six years, wrote the Los Angeles Times.

The proposal would change a current rule that requires carriers to report premiums in the last three years.

If implemented, the new rules would juggle the formulas that companies use to set insurance premiums — which would result in lower rates for policyholders, promises Poizner. The rules would affect homeowners and auto insurance.

Not everyone thinks the changes will help lower premiums. One consumer advocate contends that having more extensive premium trend reports could actually hurt policyholders. With more data, insurance companies could argue for premium increases.

The new rules don’t require approval from state Legislature — they only need to the go-ahead from California’s Office of Administrative Law.

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The Maryland General Assembly recently approved broad budget expansions for low-income children’s dental care.

Even in the midst of big spending cuts by the state, the Assembly decided to include millions of dollars in additional state funds to expand dental care, reported the Washington Post.

Part of the reason dental care access for low-income residents is limited is due to low reimbursements for Medicaid patients. Maryland has one of the lowest Medicaid reimbursement rates in the country. Many dentists refuse to accept anyone with Medicaid coverage.

To combat this problem, the budget expansion will incrementally increase dentists’ payments for patients with Medicaid. Along with federal funds, there will be a total of $42 million extra in the budget for Medicaid reimbursements.

Some of the state’s new budget will also help public health clinics provide dental care and create dental programs for students.

In addition to these spending increases, another bill will allow public health hygienists to administer preventive dental care — including cleanings, fluoride treatments, and sealants — without the approval of a dentist.

This will help increase the number of health care professionals that can provide routine dental care.

“It’s just a [better] time and cost-effective mechanism for getting treatment to kids who are underserved,” said Leigh Stevenson Cobb, the health policy director of the Advocates for Children and Youth.

The whole reform plan is in the works, and will soon be implemented.

“Everything we asked for, we got,” said Harry Goodman, from the Maryland state Department of Health and Mental Hygiene.

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Arkansas State Senate recently released a report that found over 30 percent of state’s residents had their homeowners and auto insurance rates reduced last year, according to the Arkansas Business Weekly. The reason? Good credit scores.

Insurance companies use credit score as a factor in setting rates because they use it as an indicator of how likely a policyholder is going to pay their bill. The higher the score, the more likely they may be to pay premiums on time.

The state does regulate the practice — requiring insurers to run recent credit checks and prohibits companies from solely using credit scores to determine rates.

From the findings in the report, insurers are rewarding Arkansas policyholders for their good credit behaviors.

But the credit score effect works both ways.

Just over 9 percent of car and homeowners saw their insurance premiums raised because of poor credit.

The Senate report acknowledged that many policyholders with poor credit disagree with using credit score as a rate-setting factor.

“The practice has generated some controversy among consumers, who don’t understand how their credit history can affect whether or not they are safe drivers and whether or not their home is a good or bad risk,“ wrote the report.

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On January 1, 2008, Blue Cross Blue Shield of North Carolina (BCBSNC) will waive copayments for generic drugs and reduce the copays for some brand name drugs, reported the Herald-Sun.

The plan for Blue Cross is to change how they cover prescription drugs to make them more accessible and more affordable.

Currently, Blue Cross puts different medications in four different tiers from lowest to highest copayment — generic drugs, preferred brand name drugs, non-preferred brand name drugs that may have generic alternative, and specialty drugs.

The change would provide generic medications, such as Zocor and Glucophage, for no copayment. It also moves some brand name drugs into a lower cost tier — with an average of $20 to $25 savings for brand names.

Those eligible for the new drug benefit includes anyone covered by a BCBSNC employer group plan and any self-insured groups where Blue Cross operates claims processing.

North Carolina’s largest health insurer made the changes because they believe it will both save in long-term healthcare costs, and help improve residents’ health through preventive medications.

“This is about education and the elimination of barriers. We found a number of well-documented barriers, one of the biggest of which is cost. The other is forgetfulness,” said Ron Smith, BCBSNC’s head pharmacist.

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Yesterday, President George W. Bush signed a bill to extend the Terrorism Risk Insurance Act (TRIA) for another seven years, reported the Insurance Journal. TRIA provides a federal financial backstop for insurance companies in the event of losses from an act of terrorism.

“This seven-year extension brings unprecedented certainty and stability to the terrorism insurance market and keeps in place an extremely successful and important public/private partnership that helps commercial insurance buyers and the entire economy protect themselves from the financial devastation of a future terrorist attack,” wrote senior vice president of the Property Casualty Insurers Association of America, Joseph Annotti.

Insurance companies are eligible for TRIA if they provide commercial property and casualty insurance coverage. In 2007, the law provides coverage for losses greater than $100 million.

The extended bill also includes some revisions — including ridding of the distinction between domestic and foreign terrorism, and also requires studies to determine how to assess the coverage of nuclear, biological, chemical, and radiological attacks.

“The President’s signature today marks the final step and puts in place the long-term program necessary to help protect our nation from the threat of terrorism,” wrote former Montana governor and president of the American Insurance Association, Marc Racicot.

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This week, Nov 5 through Nov 11, is Long Term Care Awareness Week...

Long term care (LTC) is defined by Medicare.gov as “a variety of services that includes medical and non-medical care to people who have a chronic illness or disability.” LTC also includes nursing home care. People over 65 years old have a 40 percent chance of going into a nursing home, and 10 percent of those who do will stay for five years or longer.

But many baby boomers soon headed toward retirement have some misconceptions about insurance coverage for long term care. A survey conducted by America’s Health Insurance Plans (AHIP) found that one in four Baby Boomers think they have insurance coverage for long term care, when they actually do not.

LTC can be very expensive, costing as much as $6,266 for a month’s stay in a nursing home or $19 an hour for an in-home aide, according to AARP.

The survey’s results also found that 54 percent of Baby Boomers believe Medicare will cover all LTC expenses. But Medicare will only cover a limited amount of long term care, and only after most assets are completely spent, said a press release on PRNewswire.

Another 44 percent believe that other insurance will cover LTC — but most plans don’t provide extra coverage for extensive long term care.

“Baby Boomers believe they have more coverage than they actually do, giving them a false feeling of financial preparedness to handle long-term care costs,” said Senior Vice President of StrategyOne, Robert Moran.

“This should be a wake-up call to Baby Boomers. They aren’t factoring expenses for long-term care into their retirement planning and are missing an opportunity to protect themselves,” said AHIP President, Karen Ignagni.

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New York Attorney General Andrew Cuomo and health insurer CIGNA signed an agreement early this week that will show how the insurance company ranks doctors in their network.

Under the agreement, CIGNA will rate doctors their overall performance and quality of health care delivery. They will make this information available to the public and its policyholders. Every six months, an independent national organization will review CIGNA’s rating system, reported USA Today.

“A carefully designed physician-ranking program can provide valuable information to consumers,” said a letter from the Attorney General’s office.

Such review systems have been opposed by most doctors. But under CIGNA’s agreement, doctors will be able to appeal any potentially erroneous ratings.

“[The agreement provides a] balanced approach that acknowledges physician ratings have a risk of error and should not be the sole basis for selecting a physician,” said the president of the American Medical Association, Nancy Nielson.

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Now that the bill to expand the State Children’s Health Insurance Program (SCHIP) has been vetoed — and sustained in the U.S. House of Representatives — Republican lawmakers in the House are reaching out to the Democrats in hopes of passing a compromise bill.

Republican House Minority Leader John Boehner and Republican Minority Whip Roy Blunt recently asked Democratic House Speaker Nancy Pelosi to sit down together and draft a new SCHIP bill.

“On Sept. 19, we sent you a letter expressing our interest in working with you to craft a responsible, bipartisan [SCHIP] bill the president will sign into law. We are still awaiting a response to our letter and have yet to be included in any discussions thus far,” wrote Boehner and Blunt in a new letter to Pelosi.

“We stand ready and willing to meet at a time of your choosing,” they added.

Boehner and Blunt have co-sponsored SCHIP legislation that would provide coverage for only children in families with incomes of less than 200% of the federal poverty level. For children in families that earn an income of 200% to 300% of the poverty level would receive tax credits, reported the Kaiser Network.

But the Speaker of the House has said that she intends to send another bill to the president’s desk soon.

“In the next two weeks, we intend to send the president another bill that provides healthcare for 10 million children,” said Pelosi after the veto was upheld in the House.

She also said she wanted to meet directly with President Bush to negotiate, reported the New York Times.

“We intend to sit down with the president any time he is ready. We hope that will be soon.” said Pelosi.

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Last night, the U.S. Senate unanimously passed a bill that would require health insurance plans to provide equal coverage for physical and mental health conditions. Currently, some health plans have restrictions on coverage for mental healthcare.

In 1996, a similar bill was passed that lifted many restrictions of mental healthcare coverage. This new bill builds upon the ’96 legislation, adding rules for copayments, deductibles, and length of treatment, reported the New York Times.

“This new legislation will bring dramatic new help to millions of Americans who today are denied needed mental healthcare,” said Senator Edward Kennedy.

The House of Representatives will also draw up their own version of a mental healthcare bill. So far, the House bill has over 270 representatives co-sponsoring.

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The United States House of Representatives recently approved a bill to expand the legislation that provides a federal backstop for insurance companies in the event of a catastrophic terrorist attack. The current terrorism reinsurance program, the Terrorism Risk Insurance Act, would be extended 15 years, with added group life insurance and coverage for domestic terrorism.

But these new provisions have prompted recommendations from senior advisors to President George W. Bush that he veto the bill if it came to his desk — but it first must be approved by the U.S. Senate.

“Adding these insurance coverages to the federal reinsurance backstop sends the wrong signal to the marketplace, which instead should be encouraged to find new ways to diversify the risks of doing business,” said one White House senior advisor.

This position of the White House is consistent with their healthcare policy, which wants to minimize the government’s role in the insurance industry.

But proponents of the bill contend that expanding the terrorism reinsurance program is necessary for the economy and quickly rebuilding business.

“Businesses in cities and towns, large and small, from coast to coast would under this proposal be able to purchase terrorism risk insurance more readily, secure in the knowledge that the protection will remain available for many years to come,” said Insurance Information Institute president, Dr. Robert Hartwig.

The current program will expire on Dec 31, 2007 if U.S. Congress does nothing.

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It’s been 2 years since the category 5 hurricane Katrina ravaged the Gulf coast. Louisiana and other states are still feeling the effects today. Katrina is the American insurance industry’s most expensive natural disaster in history.

The total loss for the industry was $40.6 billion — the total paid out for the 1.7 million claims on homeowners, commercial business, and auto insurance policies. Now, roughly 99% of all claims have been paid and settled.

Even though insurers can finally begin to put Katrina behind them, they still must assess risk for future storms. It’s no comfort that experts estimate that the frequency and severity of hurricanes will only increase. As result, so will insurance premiums.

“While 2005 was by far the worst year ever for insured catastrophe losses in the U.S., future storms could prove even costlier, reaching upwards of $100 billion,” said Dr. Robert Hartwig, the president of the Insurance Information Institute (I.I.I.).

But insurance companies aren’t allowed to increase rates for any reason, explained Dr. Hartwig. They’re still subjected to state regulations governing insurance premiums.

“Insurers cannot increase rates to make up for past losses. Rates must be based on projections of future losses in a given state,” said Dr. Hartwig. “Companies must demonstrate that there is an increased risk in a specific state, and losses from one state cannot be used to raise rates in another.”

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The tragic collapse of a busy Minnesota bridge will lead to many insurance claims, but the insurance industry has promised they will pay out all claims without delay.

It’s expected that most claims will be for workers compensation, auto damage, and commercial property damage — in addition to the health and life insurance claims. There may also be claims for business interruption because of suspended barge traffic on the Mississippi River. But the insurance industry says they’re prepared.

“There will be no exclusions, it will all be coverable. The industry wants to take care of this in a timely manner,” said Mark Kulda, who is the vice president of public relations for the Insurance Federation of Minnesota.

Kulda also praised the work and response time of the rescue teams in Minnesota. He said within an hour of the collapse, 200 rescue teams were at the site.

“Everybody who could have been saved was rescued within an hour and a half,” said Kulda. “There was an immediate response with boats and rescue equipment. It was super organized.”

Most of the injured victims were taken to the Hennepin County Medical Center only 6 blocks away from where the bridge collapsed. According to Kulda, it’s Minnesota’s largest and best rated trauma facility.

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Louisiana is the only U.S. state to have an Insurance Rating Commission that regulates property and casualty rates. Many lawmakers see the Rating Commission as a roadblock from reducing premiums for homeowners near the hurricane-ridden coast.

In a recent vote, the Louisiana Senate voted on a previously passed House bill to give the Rating Commission’s regulation duties to the elected insurance commissioner.

The Senate voted 33-5 to pass the measure. They also made amendments to the legislation including consumer protection from policy cancellation and a provision that stated the consumer chief can only be fired by a majority vote from both the House and Senate.

The new amendments will have to go back to the House to be approved.

“I think we have made Louisiana open for business for more insurance companies to come here. But we have also protected the consumer,” said Democratic State Senator Don Cravins, Jr.

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Almost 8,400,000 Americans had their identities stolen last year. U.S. businesses spent over $49,000,000,000 dealing with identity theft. Now the insurance industry is stepping up to do what they do best: offer protection.

Many of the leading insurers — including Travelers, Allstate, and MetLife — are offering identity theft insurance. Premiums are cheap, often falling in the $50 – $70 range. And the policies offer upwards of $20,000 in coverage.

If you’re in the market for identity theft insurance, look for a policy with no deductible. The average cost of resolving identity theft problems is $535, so “(if) the deductible is $1,000 it doesn't really make sense,” as Jay Foley of the Identity Theft Resource Center points out.

When browsing online, take care to only share your information with trustworthy companies. Don’t give out your Social Security number. And remember that most reputable companies will never ask you to share your account information or password in an email.

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