Wednesday’s Post 11/30/11 –   A report recently issued by the Insurance Research Council (IRC) stated that auto and home insurers were able to save $200 million during the first five years after this new law was enforced. This provision was made under the Bad faith Act prohibiting third parties from making further claims in cases where they felt that the insurer was had made an unfair settlement. An alternative was given in such cases where the claimants are required to file a complaint to the Insurance commissioner. The state officials are mandated by law to conduct an investigation into the claims. If the claimant’s grievances are verified to be true the state imposes fines on the insurers. The Act gave the state commission authority to determine the economic damage to be awarded to third parties. The insurers may be required to pay up to a figure of $10,000 to the offended party. This legislation has brought about changes; the IRC has reported that injury claims have reduced significantly over the past five years. During 2000 to 2004 loss costs in West Virginia were 47 percent above the national average figure. However, in 2010 this figure dropped to 7 percent above the national average. IRC officials think that the drop is as result of a reduction of bodily injuries reported. The reports are an indicating that the 2005 law has taken effect, with claims having dipped by 8% from 2006 to 2010. Other states have not registered the same results as there is a steady increase of these claims. The findings clearly depict that the law has had a positive impact on settlement process .A senior official of IRC stated that other legislators should borrow a leaf and enact similar reform in their states. This move by West Virginia officials was driven by the fact that there were many claims which were causing an increase in premiums which even top motor insurance firms had to impose. Regulators have praised this law because it has caused rate reductions and a 9.8% premium cost drop which was achieved after a period of one year. This is indeed a course for celebration among West Virginia insurers.

-Mike

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

Tuesday’s Post 11.29.11 –  Archives of Internal Medicine indicates that many patients with health insurance coverage are increasingly being turned away by doctors citing delays in Insurance Company reimbursements that is outpaced by the rates of medical spending and  administrative complexities associated with private health insurance. The research was led by a medical doctor at New York-Presbyterian Hospital and an assistant professor at Weill Cornell Medical College. Physicians have turned away patients with their own private health insurance coverage as far back as 2005. Access to health care is becoming difficult to insured patients and this could present new challenges to Doctors with Practices of all sizes. It’s surprising that doctors are increasingly rejecting patients with private health insurance policies, compared to those with Medicare. Considering that the medical industry has been for long dissatisfied with Medicare, the general expectation has been an increased rejection of Medicare patients. But to the contrary, this hasn’t been the case as doctors turned away only a fair number of these patients. The data used in this research was obtained from the Center for Disease Control and the National Center for Health Statistics.  Among the findings of the study, was an increasingly declining number of patients with insurance being rejected by doctors. In the period staring from 2005 to 2008, 3 % of Medicare patients were rejected by doctors. In the same period, the number of Medicaid patients accepted by doctors also declined steadily. The patients on private insurance registered a higher rate of rejection by doctors. The legislation of enhanced benefits and rights by the United States of America government through Patient Protection and Affordable Care Act of 2010 will greatly help many Americans secure better health insurance services.

Health advocacy groups and the general consumers to be wary of this emerging trend and urges them to direct more effort in working towards improved access and quality in medical health care. She says that at this time in the history of America when near-universal coverage is in the wings, quality of access care by patients could suffer due to the current conflicts between medical industry professionals and the insurance industry. Various players now need to find ways ofdealing with these conflicts.

-Mike

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

Monday’s Post 11.28.11 –  There’s nothing worse than not being prepared.  This is why a massive earthquake drill was recently conducted in the Western United States the morning of October 20, 2011. The massive earthquake gathered an estimate of 8.7 million people who came from the states of California, Nevada, Guam, Oregon, Idaho and British Columbia. Series of simple steps like “drop cover, and hold on” are advised during the conduct of the drill to protect the people when at work, school and home. Way back, this practice began in Southern California last 2008 to involve the populace in a large-scale emergency management exercise.

An Auto Insurance &  Homeowners Insurance Claims section manager of State Farm Insurance noted that exercises like this could serve both as an effective and marketing tool for the insurance industry since this gives the picture of the essence of preparedness when disasters strike. This would also open doors for discussion not only with people, but with businesses, public institutions, and those in the industry per se. The partners for this event are State Farm and the California Earthquake Authority. In the group’s website, materials are available specifically designed for agents and brokers in discussing preparedness with business, community groups, individuals and families. Buchanan added that partnership with Earthquake Authority aims to increase the number of Californians that will secure insurance account with the company, given that the current data of the number of homeowners in California with CEA insurance is less than 12 percent.  The drill was developed by a team of experts which was based on an earthquake with a 8 magnitude quake along the San Andres Fault. Southern California Earthquake Center (SCEC) conceptualized the earthquake simulations which were used as an estimate of the potential losses and casualties as it portrays to the public how the shaking might affect the vicinity of the place. SCEC is domiciled at the University of Southern California and is primarily funded by the National Science Foundation (NSF) and United States Geological Survey (USGS).

-Mike

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

Sunday’s Post 11.27.11 –  A study from Virginia based Highway Loss Data Institute (HLDI), notes that hybrid vehicles, which are typically weightier than non-hybrids of similar make, offer better protection for occupants during car crashes. The report revealed that the odds of sustaining serious injury during car accidents are 25 percent lower for hybrid occupants than for passengers in normal automobiles. Nevertheless, hybrids have a higher chance of hitting pedestrians due to their quieter engines.  According to the vice president of HLDI, who co-authored the report, hybrids load gives them an edge over normal automobiles during accidents. Typical hybrid models are roughly 10 percent heavier than standard cars. Extra bulk, from the battery, motor and electronic components; makes them safer than their gasoline counterparts during crashes. Hybrids have the same size as standard fuel vehicles of the same make, but internal components add to their overall weight. For instance, a mid-size Honda Accord sedan weights about 480lbs less, than its exact hybrid counterpart does. A conventional Toyota Highlander on the other hand, weights roughly 4,170lbs, 430lbs less than its hybrid design. In an accident scenario involving two vehicles of different sizes and weight, the bigger, bulkier model has the obvious advantage.  The scope of the study featured over twenty five hybrid and conventional automobile models manufactured from 2003 to 2011. All the car models featured in the study had at least one injury related claim, filed under personal injury protection or Medicare during the same period.

Auto insurance policies with collision coverage compensate both at fault and not at fault drivers, when they run into other vehicles or inanimate objects. The Personal Injury Protection (PIP) part of a car insurance policy settles medical costs for all car crash victims, regardless of who is to blame for the incident. Conversely, medical pay (MedPay) reimburses the cost of treatment for third parties who sustain injuries, whereby the driver is at fault. PIP insurance policies are available in states with no-fault insurance systems, while medical pay is offered in tort states. According to this study, collision related claims were 27 percent lower for hybrids than gasoline cars with similar PIP claims. They were also 25 percent lower than collision related claims with medical payments. Despite of this, hybrids also have their risky side. The study revealed that hybrids are 20 percent more likely to hit pedestrians than normal gasoline vehicles. Since their engines are quieter, pedestrians may fail to hear them approach and react when it is too late. In fact, hybrids are responsible for over 25,000 injury liability claims filed from 2002 to 2010. The National Highway Traffic Safety Association asserts that pedestrian crashes have become more frequent with the advent of hybrids on the road. In the early months of 2011, congress tasked the agency to develop a policy for fitting hybrids and electric cars with alert systems for unwary pedestrians.

-Mike

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

Saturday’s Post 11.26.11 –  After an intensive review of its North Carolina portfolio, Allstate Insurance Company has decided to non-renew homeowner’s coverage for a record 45,000 customers.  According to the insurer’s spokesperson, the company took the decision with a view to managing better, the risks of more than 400,000 other households insured under it. Allstate filed a document of intent at the North Carolina Department of Insurance, stating their decision non-renew coverage for 30,400 standard homeowners policies, 10,500 landlord packaged policies and 4,900 mobile homes. The affected homeowners all have one thing in common–Allstate Insurance Company does not cover their automobiles. However, there is no need for anxiety over the matter since the insurer will not leave anyone in the cold. Allstate reached a deal with Universal North America Insurance Company to absorb a number of homeowners affected by the move. Accordingly, Universal will offer quotes to 26,150 former Allstate customers. The Denver based company will also give quotes to 9,300 landlords, whose policies are also due for cancellation from Allstate. Mobile homeowners on the other hand, have the option to insure their abodes with the American Modern Insurance Group. The spokesperson for North Carolina’s Department of Insurance felt that although the decision was seemingly controversial, Allstate was within its rights to do so. Insurance companies have no legal obligation to renew policies they believe too risky or in breach of their terms of service. Thus, their decision to tell the Department of Insurance was merely out of professional courtesy. Allstate hopes to improve service delivery and adjust their rates to policyholders, once they have a better grasp of North Carolina’s prevalent risks.

-Mike

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

Friday’s Post 11.25.11 –  Regulators in South Dakota have embarked on providing much-needed clarity in medical benefits that are covered by auto insurance firms in the health and motor industry. There is a general concern especially when it comes to vehicle accidents. The officials agree that this problem is now wide-spread and is being experienced in most states. Some of the issues policy holders have cited include: claims, billing and confusion on what coverage is to be applied in such circumstances. The stake holders were engaged in a fact-finding and brain storming hearing in the beginning of the year. They sought to show the depth of this issue and to possibly come up with changes that could offer a solution. After the delegation, they reported that no lasting remedy was arrived at.  The deputy director issued a statement in an interview and said that they were unable to come up with workable proposals. Normally, a health cover is expected to cover medical expenses such as surgeries and funeral costs. The uncertainty or confusion comes in where the benefits are duplicated. Regulators based in South Dakota report that there has been complaints where auto insurance companies have failed to honor claims which are outlined in the policy agreements.  In most states, regulatory agencies are responsible for educating and addressing the issues of auto insurance policy holders and the car insurance providers. Investigations into these auto insurance claims have been conducted and the findings show that there is no consistency in handling medical and health covers. This is largely attributed to the fact that there is a general lack of knowledge due to the fact that there are no clear-cut rules and guidelines. Randy the Deputy Director asserted that this issue was looked into in a delegation of National Association of Insurance Commissioners (NAIC). This was after regulators from different states had voiced their sentiments. They agreed to hold another meeting in March and further look into this problem. The way forward will be provided in the (NAIC) gathering. All the parties are waiting in anticipation for the proposed changes to be arrived at after the March discussion. It can only be hoped that a lasting solution and concrete answers will be reached at to put an end to the confusion.

-Mike

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

Friday’s Post 11.25.11 –  The chairman of the Insurance Association of China says that China is most likely to open up its auto insurance market to foreign companies come next year. China is the world’s largest auto market and now allows mandatory auto insurance from its own insurance carriers.  Chinese insurers including the PICC Property and Casualty Company, Ping , an auto insurer, among others, dominate the 200 billion Yen auto insurance market, which translates to $31.5 billion american dollars. Insurance regulators would open up the market as a way of boosting competition in the region. At a business event in Taipei, Jin Jianqiang mentioned to Reuters in an aside that foreign firms are only allowed to sell commercial car insurance, and that “we want to make it possible for them to do both commercial and mandatory insurance” similar to local auto insurance carriers. Jianqiang also mentioned that there is a good chance to also include insurance companies from nearby Taiwan as well. The introduction of foreign insurance providers in China offering mandatory coverage stands to improve competition essentially due to the insurance buying habits of car owners, who tend to buy both mandatory and commercial insurance from one provider. Foreign insurers may therefore compete with Chinese carriers more effectively in selling their policies.  In China, commercial car insurance policies can cover various kinds of risks for the policyholder, but it is not compulsory to buy. Car owners looking for more coverage above their mandatory policy seek out commercial auto insurance carriers, or look for insurance companies that offer both under one roof. Some analysts, however, say that such changes would not have a significant impact on the Chinese insurance industry since there is already an established sales network and after sale services used by China’s own carriers.

Zeng Sufen, an analyst at Industrial Securities Co., says that there may not be any major impact in the short-term should China open the insurance market. Zeng also stated that “it takes time for foreign insurers to steal market share from big players”, who in this case are PICC and Ping An. As of now, there are 19 foreign insurers operating in China offering property and casualty insurance. These include RSA Insurance Group, Tokio Marine & Nichido Fire Insurance Company. Foreign insurers recorded over 4 billion Yuan, an equivalent of $675 million, in total premiums in the year 2010. This translated to only 1% of the total premiums collected by the 34 Chinese insurers.  The move to open up the Chinese car insurance industry may be motivated by the losses that Chinese car  insurers have made due to the high cost of selling mandatory policies, as reported by Chinese media.

Thursday’s Post 11/24/11 – Citizens Property Insurance, the largest property insurance provider in Florida, presents challenges to the state due to its sheer size and accessibility to consumers. This was demonstrated when the Citizens board of governors agreed on implementing far-reaching changes to insurance regulations. The Citizens board is pushing for change via the state legislators with advice from Florida’s governor Rick Scott, who had recently aired his concerns about the insurance provider. Citizens Property Insurance may be disadvantaged at pushing for the changes due to the controversial election year, but may succeed due to the Governor’s backing. The insurance provider has close to 1.5 million policy holders, homeowners included, and Governor Scott, as well as other legislators, would prefer a reduction in these numbers. This is due to the risk of Citizens encountering major losses should a hurricane or other natural disaster hit the state of Florida.  Citizens is also state created and state-run, which also implies that in the case of losses, the insurer has the power to surcharge almost every insurance bill on Florida. This is not the case for private insurance companies, and it proves a threat in the face of natural disasters, as well as financial difficulties for the overall insurance industry in the state.

Citizens chairman of the board, and former Miami legislator Carlos Lacasa, acknowledged that it is time for the insurer to cut in its size, and that “there is political pressure for us to contract”. Lacasa also alluded to a previous controversial insurance bill, asking legislators to reconsider it given the current state of affairs. The bill would allow Citizens Property Insurance to raise its rates by more than 10% every year as a way of both raising enough financial security and reducing the number of policyholders with the insurer. Should this bill be passed, it would mean that homeowners would not be eligible for Citizens insurance unless private insurance companies offer their rates at 25% or higher. The current law states that homeowners are eligible for Citizens if alternative policy rates are 15% higher, which has proved a contributing factor in the rise of policyholders with Citizens.

The insurer also has changes that could be carried out without the approval of Florida legislators, including the controversial sinkhole coverage, among others. The insurer seeks to increase the deductibles on sinkhole coverage, with one proposed change being that the homeowner pay at least 10% of the cost before the sinkhole insurance coverage is allocated. The changes are already receiving mixed reactions from legislators, with the New Port Richey Senator Mike Fasano saying that the proposed changes would not cut the number of policyholders as private insurers already avoid covering sinkhole affected areas such as Tampa Bay. He alluded strongly to the hypocrisy of private insurers, saying that the residents of “Tampa Bay area would love to have a choice” but they have none. On the other hand some Citizens board members including John Rollins, also an insurance actuary, asserted that statewide statistics show more insurance providers adding policies, not only in Tampa Bay.

-Mike

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

Wednesday’s Post 11.23.11 – The state of New Jersey has saved nearly $60 million through their anti-fraud effort launched March this year, according to state officials. The anti-fraud Program was part of the state’s campaign to cut down on wasteful spending in fraudulent unemployment insurance payouts. A lofty endeavor.  New Jersey’s Department of Labor and Workforce Development, or LWD, carried out a reorganization of its Fraud and Risk Prevention Unit. The department crossmatched government hiring data and has identified 76,000 questionable claims between the months of April and September. It has also prevented payment of about 35,000 people who made unemployment insurance claims but were still working a regular job. The success of the anti-fraud campaign earned the LWD the Unemployment Insurance Innovation Award for Integrity, given by the Office of Unemployment Insurance under the U.S. Department of Labor. The award was given in October of this year for being the only agency in the country to take an aggressive move towards preventing the most common kind of insurance fraud.

The LWD’s Assistant Commissioner of Income Security said in a statement that unemployment insurance fraud cases would take several weeks to discover after the payments had been improperly collected. Thanks to the anti-fraud campaign, “now, we catch them in the first week”.  This saves the tax payers a lot of money.  The crossmatching system works by flagging any new hire date detected when one tries to certify their insurance checks, both by phone or online. Once the system indicates this, the person is then required to clarify or resolve the discrepancy with a representative of the LWD, or else the insurance payments will not be given out.  Labor Commissioner Harold J. Wirth, in full support of the anti-fraud system, stated that cases of fraud result in “a tax increase on the people”, and that the state would spend too much time and money on tracking down people to recover the fraudulent payments.

The crosschecking system is only one of a number of innovative programs launched in the Fraud and Risk Assessment department of the LWD. It also uses the Unemployment Insurance State Information Data Exchange System in identifying fraud cases as the system works to standardize and automate any information collected from employers when any employee leaves their work. With this data, the state of New Jersey has managed to crack down on unemployment fraud using an exact and reliable database of employee records.

-Mike

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

Tuesday’s Post 11/22/11 A new study by the Insurance Institute for Highway Safety (IIHS) has reported reduced chances of fatal injuries and deaths for drivers of recently manufactured pickups  and SUVs, compared to those made more than ten years ago. IIHS is a nonprofit organization that researches possible ways of minimizing vehicular injuries, deaths and property damage also resulting in lower auto insurance costs. This research is financed by all the major auto insurance companies. IIHS says that although pickups still pose a greater risk compared to other vehicles in their weight range, this risk has significantly declined over the last decade. It also reveals that SUVs are now less likely to experience fatal accidents compared to other vehicles of a similar weight. The chief administrative officer of IIHS, said improvements to SUVs have made the vehicles safer for both their drivers and other road users. The survey found that the new design improvements in pickups and SUVs, coupled with improved car protection measures, cut their chances of overriding smaller vehicles during a crash. 

According to the research, minivans and cars that weighed between 3,000 and 3,500 lbs.  and had been manufactured not more than four years earlier registered 6 deaths per million people in 2008– 09, compared  to 2000–01 when the death rate per million was 44. This was nearly a two-thirds decline in the number of deaths. Minivans and cars of the same weight involved in accidents in 2008–09 registered a death rate of 17 people for every million.

IIHS attributes improved safety conditions to the joint efforts of automakers, researchers and federal safety officials. This research was commissioned by the National Highway Traffic Safety Administration (NHTSA) after noting a rapid increase in the number of pickups and SUVs on the road. The study was meant to find ways of reducing damages caused by road accidents involving different models of vehicles. The research recommended a number of improvements that included better designs for pickups and SUVs that would align their front areas to match those of cars, hence allowing them to better control energy during a crash while directing it away from occupant compartments.  According to the researchers, in both of the periods, death toll proportionately increased with vehicle weights and this will always find the outcomes of crashes. Nolan says SUVs and pickups caused more deaths of car and minivan passengers in 2000–01 than other vehicles of similar weight. The report also indicated a decline in death rates for minivan and car occupants between the two periods of study. Among the reasons attributed to this decline include reduced frequency of travel as a result of increased gas costs, economic depression, better occupant protection and increased use of electronic stability control (ESC) systems.

Federal Safety had directed automakers to incorporate design changes by September 2009. IIHS reported that many vehicle manufacturers had compiled with this directive before the September deadline, and this could have contributed to the reduction in fatal accidents in 2008–09.

-Mike

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