The Milliman Medical Index publication released in May, 2011  indicated that annual health care costs has increased by more than 50 percent since 2002. The publication further indicated that  financing health care is nearly 8% percent more expensive today than it was last year. Of greater concern is the fact that in just under a decade, the health care cost is 50 percent more expensive than what it used to be nine years ago. However, this rate appears to have declined in the recent years with the annual MMI increase rate declining from last year.

Contributions from both employers and their employees were included in this report. Employees have been worst affected as they now pay more than double what they used to pay in 2002. Compared to last year, the MMI has this year increased by nearly $1400.00.  Employee overall contribution to the total cost has also increased over a six-year period to nearly 40% percent up from 37 percent in 2005. In this year’s MMI, outpatient and impatient spending accounted for over 60 percent of the total healthcare costs.

This trend shows an increasing expenditure on health care costs for both the employers and employees although it is the employees who are getting beat up the most.  This year alone, there has been a nearly 10% increase in payroll cuts for settling insurance costs. The employer contribution has, however, dipped in the last two years by an average of 7% percent in 2010. MMI also points out that family healthcare costs differ significantly across the different states. Some areas are above the national average, while others fall below the national average. MMI says an average family of four spends about 15 percent of their total health costs on pharmacy, over 30% as medical fees to physicians, 31 percent on inpatient expenses and  over 15 percent on outpatient bills.

With these increasing costs in family health care costs, families are now striving to get greatest benefits from federal healthcare reforms. MMI researchers, however, say that the healthcare reforms have not yielded much in bringing down healthcare costs. They nevertheless, show that a few provisions of the reform including scrapping lifetime benefit limits and lifting co-payments on preventive care services may be beneficial in reducing family health costs. They assert that the overall family health cost is still high as the benefits of healthcare reforms are insignificant.

On a personal note; although the MMI indicates a 50  increase healthcare costs and a rise in employee contributions – the cost of Health Insurance Premiums have sky-rocketed.  InsureDirect.com now spends 4 times more on HealthCare Insurance than it did just 4 years ago.  We have seen a consistent increase of about 25% until last year.  At out most recent renewal our premium nearly doubled.  Quite frankly; I hate to see what’s in store for 2012.  Only time will tell…..

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

 The American Medical Association (AMA) has discovered significant errors in payments of insurance claims according to their latest National Health Insurer Report Card which was  release yearly. In their report, the AMA estimated health insurance carriers pay 20 percent more –about $17 billion –in claims as a result of errors. 2011 has seen the error rate shoot up by 2 percent compared to the previous year. This translates to an extra $3.6 million lost, as well as a further $1.5 billion used to finance the health system. An official from AMA, urged health insurance carriers to be more thorough with the when it comes to paying claims as this would save untold millions and significantly reduce administration related expenses.

The AMA says a majority of health insurance Companies did not show any improvement in accuracy except for the Health Care Giant; United Healthcare.  It appears United Healthcare was the only firm to show any major improvement. In fact; United Healthcare was the best performer, scoring 90.23 percent in the accuracy rating. At the far end of the spectrum was Anthem Blue Cross Blue Shield.  Anthem Blue Cross Blue Shield which scored an accuracy rating of 61.05 percent. Other insurance carriers who took part in the survey rating included the Regence Group, CIGNA, Health Care Service Corporation, Medicare and Humana.  The AMA monitors all  the national health insurance providers yearly and benchmarks their claims processing systems to improve efficiency in processing claims payments.  They highlighted the following major findings in their report:

Various health insurance providers responded to claims within a range of between six and 15 days. Two providers: Humana and CIGNA, were noted to have reduced their average claim response time by half.

Health physicians lose out on approximately 23 percent of claims filed. Health insurers may reject payment of claims from physicians for various reasons. They may refer some claims to the patients or edit others. The report which covered the months of February and March noted that majority of the non-paid claims were passed on to the patients because of the deductable requirements until they exceed dollar limits.

A number of providers registered a decrease in claim denials. CIGNA remained the top provider with lower denial rates of less than one percent. The rest of the health insurance providers also registered a reduction in denial rates with United Healthcare reducing its denial rate to 1.05%. Most denial cases arose from ineligibility of patients.

The report for the first time included the accuracy of contract fee reports to physicians by the health insurance providers besides the correctness of overall processing of claims. UnitedHealthcare appeared to have consistently improved in capturing contract fees accurately for the fourth year running. The rest of health insurance providers, with the exception of Anthem Blue Cross Blue Shield, registered minor declines.

Lastly, the AMA report highlighted CIGNA as leading in claims which required administrative approvals by physicians before offering medical services to patients. AMA had earlier indicated that these approvals caused unnecessary delays in administration of medical services to patients and negatively impacted on the general efficiency.

–Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Chief Executive officer of a California Life Settlement Firm trading as Christian Stanley Inc., reportedly operated a pyramid scheme worth $4.5 million. Details of his expenditure reveal that he used close to $5,000 to register for a dating service, about $21,000 to settle his school loans and splurged a farther $5,000 on fancy shoes.

The Securities and Exchange Commission (SEC), acted swiftly to freeze $4.5 million worth of assets belonging to Daniel C.S. Powell  by obtaining a legal order from the US District Court in the Central District of California. A court proceeding has now been slated for the 15^th of September to determine if an injunction will be effected by this court through Judge George H. King.  Judge King also appointed Robb Evans & Associates to be the receiver managers for Christian Stanley and its related entities after confirming temporary court order barring Daniel C.S. Powell from running his company as well as accessing any monies associated with Christian Stanley Inc.

In their complaint, SEC authorities indicated that through Christian Stanley, Daniel C.S. Powell, duped investors into believing that the company operated a lucrative business in life investment where in actual sense, Christian Stanley had no financial base and only relied on collections from investors. Moreover, Daniel C.S. Powell, spent investors’ money to bankroll his personal luxurious and other activities that are not in anyway related to the expectations of the investors.

SEC indicated that more that 50 people had invested in Christian Stanley Inc. and were assured of getting good returns from their investment at an interest rate ranging from 5% to 15.5 % per annum, for a fixed period of five years. To assure their investors of security of their investment, Daniel C.S. Powell   alleged that his company had mineral resources worth $11.8 billion.

According to SEC, Daniel C.S. Powell has been misleading their investors for seven years that Christian Stanley is a legal life settlement company. SEC however asserts that Christian Stanley has at no time sold as brokerage, any life settlement and neither has it ploughed back any revenue from the business entities it claims to operate. SEC further states that rather than dealing in life settlement brokerage, Daniel C.S. Powell   engaged in activities such as pyramid and ponzie scheme and offering sales commissions yet these are not in any way related to investor expectations.

– Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Although our nations economy is at historic lows and joblessness is at 9%; more jobs could be available in Ohio if a plan proposed by the Ohio Bureau of Worker’s Compensation sees the light of the day. This fiscal growth program seeks to present new Ohio companies with workers’ compensation insurance premium discounts amounting to 50 percent or more. The plan dubbed “Grow Ohio” will upon approval will offer qualified Ohio employers an immediate discount of 25 percent in form of workers compensation premiums. Ohio employers will also get direct access for involvement in the rating program for group experience. Even if a company does not have an experience MOD; one will be assigned based on the type of work being performed.  This is only if they have no intention to join another program that is not in tandem with the discount rate of Grow Ohio. The premium reduction will be applied within the period for the payment, within which the coverage comes to effect as well as four other six-month pay roll periods that run together.

New employers in the state will have an alternat ve to have immediate participation in the new Ohio rating program. This offer is however inaccessible to new companies until such a time their policy is up for annual renewal. According to the plan, employers are essentially given up to one month to agree upon whether the best way to go is to adopt group rating or would prefer to go for a discount of 20 per cent. This is left for them decide depending on how favorable or unfavorable they find each of the options to be.

Opting for group rating reduces premiums to 51 percent which is  the maximum allowable amount for the insurance policy year that ends July 1. If the board happens to approve the initiative on September 29, then the offer will be applicable to both new for businesses from other states that were entered in the report pay roll before, on or after 1^st July, 2011. The incentives will be featured on the bills employers starting from February 2012.

Although I am bringing this story to the attention of my Ohio Customers, InsureDirect.com does not market Workers Compensation in Ohio.   We do have Workers Compensations products available in Pennsylvania and New Jersey.  InsureDirect.com does offer Commercial Auto Insurance, Private Passenger Car Insurance and Homeowners nationwide.  Give us a call!

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

According to Ohio Lieutenant Governor and Director of the Department of Insurance Mary Taylor, Ohio has earned a top grade for its property and casualty insurance regulatory environment courtesy of the Heartland Institute based on its 2011 report. Property & Casualty Insurance Products encompass many types of insurance products such as Car Insurance, Commercial Auto Insurance and Homeowners Insurance Products. The Institute factored in the freedom of consumers to select property and casualty insurance products of their choice, and the freedom of insurance carriers to offer said property and casualty insurance products that consumers wanted. Ohio ranked highly in meeting these two criteria compared to most states in the US.

Lieutenant Governor Taylor acknowledged the results of the Heartland Institute study, saying that Ohio’s vision is to develop “a robust, competitive and stable insurance market”. She appreciated  the top grade was a clear indicator that the state is on the right track in the insurance industry, but reiterated that more effort will be put into improving the insurance market in Ohio “to provide more choices for consumers and create more jobs for Ohioans”.

The Heartland Institute study ranked the states’ insurance regulatory environment according to nine variables, including market concentration, loss ratio stability, credit scores and territorial restrictions of each state’s homeowners and auto insurance policies. Each of the variables were weighted according to their importance in preserving fee and competitive insurance markets, with greater weight placed on variables that the Institute believes to matter most to consumers.

Ohio scored its high-ranking due to having consistent and clear rules governing its insurance industry, having a healthy variety of competitors, as well as a highly flexible regulatory environment that allows rate reviews and market forces to dictate the insurance premiums. Progressive Insurance Company which primarily markets Auto Insurance Products nationwide is base out of Cleveland, Ohio.  Progressive Insurance Company is the 3rd Largest Car Insurance Carrier in the Nation and the largest auto insurance company in Ohio.

The Heartland Institute report also indicated that the Buckeye State has steadily improved in rankings over the last four years due to clarity in the insurance industry’s regulations. The state also has a very competitive insurance environment for Ohioans, regardless of the numerous domestic carriers that mainly operate in their own states.

The 2009 property and casualty market share report released by the National Association of Insurance Commissioners (NAIC) ranked Ohio at 8^th place in the nationwide total premiums. The Ohio Department of Insurance manages about 970 property and casualty insurance carriers in the state.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Three forums are set to be held in August by the Pennsylvania Insurance Department in a bid to get public opinion on health insurance exchanges. Different locations have been set across the state where the forums will take place. The first one slated for Aug 9 at the Doubletree Hotel Pittsburgh Monroeville Convention Center in downtown Monroeville, Pa. This will be followed by another forum on Aug. 11 at the Crowne Plaza Liberty Convention Center in King of Prussia, Pa. the culmination of these crucial discussions on public health exchanges will see the third forum being held on August, 23rd at the Sheraton Harrisburg Hershey in Harrisburg, Pa. The three forums have been scheduled to run during the day starting from 9am to 3pm each day to give as many people as possible an opportunity to attend and put their ideas across to state officials. Registration will start at 8:30am.

One of the issues that will be on top of the discussion is whether the exchange requires state level regulation or should be regulated by the Department of Health ad Human Services. The latter option had been proposed by a lobbyist working with the Pennsylvania Association of Health Underwriters (PAHU).  Another key thing that is set for discussion is the structure of the exchange, whether it should independent or a sub set of the Pennsylvania Insurance Department. The forums will also address the issues of governance in efforts to look for the most appropriate model for the exchange. According to Philips, there are two options to choose from, the first one being the minimalist model in Utah and the other one going the Massachusetts’ way.

State officials will be banking on comments and research findings from studies in the preparation of a plan to be presented to the Pennsylvania General Assembly. According to Pennsylvania Insurance Commissioner Mike Consedine, states are at liberty to create their own insurance exchanges as stipulated in the federal health care reform. He adds that the PA Insurance Department has stepped up efforts in looking for more productive option for PA health care consumers and those employers which pay for health coverage for their employers.

**The Pennsylvania Insurance Department protects insurance consumers in the state. All rates for Auto Insurance, Homeowners Insurance, Motorcycle Insurance, Boat/marine  and recreational vehicle insurance  must be approved by the Department before they are published and charged to the customer by the Insurance Companies. All the Insurance Carriers registered to do business in PA and represented by InsureDirect.com are licensed and approved by the PA Insurance Department.

– Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

The Insurance Service Office of  Florida’sInsurance Industry has created new Protection Class Homeowners Ratings for  those high risk counties in the state of Florida.  The Florida Insurance Rating Agency which provides the state’s Insurance Carriers with vital claims statistics, underwriting and actuarial data for setting  an insurance company’s policy rates, has made it difficult for those rural Florida residents to acquire Homeowners Insurance Coverage.

More rural areas of florida have now been rated as a Protection Class 10.  Protection Class 10 are homes that are over 1000 feet from a fire hydrant or 5 miles away from a fire station. The Insurance Service Office determined that it would take over 15 minutes for the fire department to reach these homes in the event a fire broke out.  To provide you with a little context , most of us whom live in an urban or suburban area of the state. Our homes are located in a city or neighborhood where fire protection services are always available. These ares are considered a Protection Class of 1 to 8A.  This means there is a fire hydrant near your home and a fire station or water source is close by.  Once your home is located in a Protection class 9 or above – you find it more difficult secure Homeowners Insurance Coverage. Protection Class does not have an effect on Cheap Online Car Insurance, Direct Commercial Auto Insurance, Motorcycle Insurance, Boat Insurance, or Renters Insurance.

Polk County, which is in rural Florida, is one of the areas affected by the new ratings. The new rating has placed over 3,000 homes in the county in this high risk zone. This translates into about 8 percent of the county’s residents who will see an increase in their homeowners insurance rates. In response to the new ratings, an informal survey was conducted by the fire department in Polk County. The survey revealed that homeowners in the county within the Class 10 designation might be required to pay over $100 more on their existing premiums and over $150 more for newer properties.

Insurability is already a problem for rural Florida areas in genera.  With the existing difficulty of rural Floridians getting Homeowners Insurance coverage, the new Protection Class will make it more difficult.  Homeowners insurance customers will be forced to buy specialty or surplus lines type of coverage. which might take longer to obtain and be more expensive for the homeowners.

As of now, the recently designated Protection Class 10 homeowners have been left on their own in the face of new ratings and overall insurance market. Insurance carriers also face the challenge of providing these homes with enough fire insurance coverage.

-Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

According to the Insurance Information Institute, state-run insurance providers may not have adequate financial ability to cover Hurricane Irene losses. However, private insurers have sufficient resources to pay claims attributed to the storm.  State run insurers stand to suffer due to several factors; including their operations in the residual market where they offer premium rates that often do not reflect the actual costs of risks coverage and often work without much surplus even in the case of small scale catastrophes.

Carriers offering coverage for auto, homeowners and businesses saved $564 billion in surplus during the first quarter of the year, but the policyholders’ surplus is expected to reduce in the second quarter. Unfortunately, due to the increased number of natural disasters, which included the April to June tornadoes, insurance carriers are expected to pay for claims amounting to an estimated $15 billion.

Private insurers have also been affected as its major revenue source, the equity markets, have experienced great turmoil in the first quarter of the year and in turn decreased the amount of surplus available for their use. The good news, is that even with the decrease in surplus, the private run insurers still has over half trillion in its surplus. State run insurers have nowhere near this amount and therefore their ability to support disaster claims is greatly impaired.

The Wall Street Journal reported that state-run carriers had increased in exposure since 2005, covering almost $760 billion in property since Hurricane Katrina hit the East Coast. Most of these insurers offer last resort plans and have a surplus of $775 billion for the Hurricane Irene catastrophe. 

As at the end of August 2011, the Hurricane Irene damage estimates have been set at about $10 billion in wind, flood and other storm related damages. This news comes in the light of even more disasters such as fires and flooding in various parts of the US.

-Mike 

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602

Sinkhole payment abuse has caused a huge increase in insurance premiums for homeowner insurance policies in Florida.  This type of fraud has now forced insurance companies in Florida to come up with better ways of addressing this problem and reduce losses. A spokesman for a florida based homeowners insurance carrier recently stated; “not only is rising premiums a consequence of sinkhole fraud, but there is also a need for accountability for any money issued to affected parties”. He added that a majority of insurance carriers are now opting to “pay the company that performs the repairs directly” instead of issuing payment to the policyholder, thus reducing chances of misuse of funds.

Insurance Carriers have recently carried out investigations concerning sinkhole fraud and discovered that in most cases, insurance providers do not follow up how their payments have been used by the policyholders. A 2010 report by the Office of Insurance Regulation indicated that sinkhole claims have cost $1.4 billion between 2006 and 2010, from data acquired from 211 insurers and almost 25,000 open and closed sinkhole claims. Sinkholes have proven to be the leading cause of insurance losses and considered a criminal offense in the state of Florida. In May 2011, Florida Governor Rick Scott initiated changes to the property insurance bill, which was approved by the Senate on the 5^th of the same month. The bill received applause from the insurance industry in the state and actively sought to curb sinkhole and other insurance fraud in Florida.

The new law, among other things, allows insurance to make homeowners pay for needed repairs using their own resources before getting reimbursement and also reduces the time for making sinkhole damage claims. Sinkhole damage cover will also be made for the home only, and not for driveways, patios or other structures if affected by sinkholes, beginning January 1, 2012. The new law places greater responsibility to the homeowner rather than the insurance provider, such as by requiring policyholders to sign contracts to stabilize the property and fix the foundation of the home within 3 months after insurers confirms payment. These regulations seek to reduce losses and potentially decrease homeowners’ premiums in Florida.

– Mike

Many InsureDirect.com customers throughout Pennsylvania, New Jersey, Delaware and Maryland and parts of Ohio experienced losses from Hurricane Irene. It seems like no one was immune regardless if you lost your car, home, motorcycle or boat to wind or flooding.  My family home I lost its power for four days and many of my neighbors in the Bucks County Area of Pennsylvania experienced severe flooding and extensive property damage. I also have many  other customers in Wilkes Barre, PA  whom suffered much more since that area was evacuated as a result of the severe storms.

Connecticut Governor Daniel P. Malloy has indicated  Connecticut has entered into negotiations with some a number of Homeowners Insurance Companies in the state to ask them to waive  Homeowners Insurance,  Auto Insurance and Commercial Insurance deductibles for their hurricane policy that have come about as a result of damages to coastal properties arising from Hurricane/Tropical storm Irene.  Auto, homeowners and business owners in the area who happened to have their property destroyed or damaged are set to benefit from the waiver.

Irene’s drenching resulted in the destruction of some 244 homes according to Malloy. The total damage to public property has been pegged at some $16 million according to state officials with the figure being expected to rise as the storm subsides. By the time of filing this report, estimations of damages arising from the storm to private property had not yet been accurately calculated. This damage is however expected to be substantial.  Insurance analysts have even hinted that federal disaster aid could be required for at least seven of the eight counties in the state.  

President Barrack Obama had assented to a disaster declaration for the state of Connecticut which had effectively availed disaster relief  by FEMA for five of the eight counties. However, the Federal Emergency Management Agency was quick to allay fears that other counties would be left out of the disaster relief efforts by indicating that assessments of the damage in the other counties was already underway and help would be on the way soon.

Five reputable insurance companies involved in writing insurance policies and who are major players in the industry had already agreed to have the deductibles waived according to governor Malloy. This was however specific to policies of coastal homeowners that covered hurricanes. The deductibles are usually a percentage of the total cost of the home which means that homeowners are eventually required to fork out thousands of dollar before the coverage for the hurricane can be deemed to have begun.

Without these waivers, the joint figure for all homeowners could have been as high as $ 100 million. This is according to a review carried out by the state insurance department. Irene has caused extensive damage to cars, trucks, boats,  infrastructure such as road and power lines and left two people dead in its wake. Heavy flooding has also been reported as far north as New England.  

– Mike

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602