Maurice "Hank" Greenberg, one-time CEO of American International Group and one of the insurer's largest shareholders, is reuniting with some of his former colleagues for a new insurance venture.
Greenberg's firm, C.V. Starr & Company, has launched Iron-Starr Agency Limited, a joint venture with Ironshore Inc. Iron-Starr Excess will act as a specialty lines insurance and reinsurance managing general agency, domiciled in Bermuda, according to an announcement from C.V. Starr.
Initially, Iron-Starr Excess will focus on the production of excess financial and commercial lines insurance and reinsurance products through U.S. insurers, Bermuda or other offshore carriers, including catastrophic excess casualty insurance for Fortune 2000 and other clients. It will issue policy limits up to $75 million.
"There are significant opportunities in this market, and C.V. Starr together with Ironshore has the team to get the job done," Greenberg said in a statement.
Kevin Kelley, Ironshore's CEO who used to work under Greenberg at AIG's Lexington Insurance subsidiary, said in a prepared statement that the partnership allows his company to enter the excess casualty market "with additional backing and support to offer larger limits, consistent with the needs of these clients."
"We look forward to developing a long-standing relationship with C. V. Starr and are excited about this new venture," he said. "This arrangement will assure customers that during these challenging times, they have a syndicated alternative that understands their needs and has the experience to be a long-term solution on Finance."
Ironshore also features six former AIG employees as its executives.
Greenberg has been a frequent critic of the $150 billion federal bailout of AIG, the company he left in 2005 amid money mismanagement claims by former New York Attorney General Eliot Spitzer.
In November, Greenberg told IFAwebnews.com that while the impact of the relief funding will take years to realize, he believes AIG will be minimized to a worldwide property-casualty company with "some modest life remaining assets, but it is hard to tell."
Greenberg has also been skeptical of the government's 79.9% ownership role in the insurer, as it could hurt raising capital in the future.
C.V. Starr is an independently owned holding company with insurance agencies and a portfolio of global investments. Through its insurance operations, C.V. Starr writes specialty lines covering aviation, marine, energy, excess casualty and property, accident and health, including risks with international exposures.
Ex-AIG CEO Hank Greenberg launches new insurer
Madoff torts likely to plump up some insurance prices
Frenzy of litigation could strain liability lines already stretched thin by subprime mess; ‘lot of links in the chain’
Madoff’s alleged $50 billion fraud is likely to produce substantial insured losses and put additional pressure on the industry’s already battered professional liability lines, observers say.
Aon Benfield estimates the direct insured losses resulting from the investment fraud at $760 million to $3.8 billion, with a best estimate of $1.8 billion, according to a preliminary analysis released recently by the Chicago-based reinsurance brokerage.
Suits against money management firms that sent investors to Bernard L. Madoff Investments Securities have mounted since last month, when federal prosecutors charged the Wall Street fund manager with running a massive Ponzi scheme.
Claims are being directed at financial institutions, investment funds and money managers who dealt with Mr. Madoff; some lawsuits extend to include parent companies, accounting firms and auditors tied to the investments, said Kevin LaCroix, a partner with executive liability intermediary OakBridge Insurance Services in Beachwood, Ohio.
For example, a suit against investment adviser Ascot Partners—which invested nearly $1.8 billion in assets with Mr. Madoff—also named Ascot’s auditor, BDO Seidman.
“Basically, anyone who stood in between the investor and Madoff” could be targeted, Mr. LaCroix said. “There are a lot of links in the chain” and “burned investors will be examining all the relationships as they try to recover their losses.”
The size and scope of this scheme “will add up to a lot of liability somewhere” said Greg Flood, the New York-based president of IronPro, a professional liability division of Bermuda-based Ironshore Insurance. “Industry-wide claims costs between $1 billion and $2 billion would be very easy to imagine,” he said. Mr. Flood said he was not aware of any Madoff-related exposure at Ironshore.
Lawsuits are likely to focus on the due diligence performed by the institutions that invested clients’ money with Mr. Madoff. Other allegations could include negligence, mismanagement and breach of fiduciary duty, legal experts say.
New York-based Fairfield Greenwich Group, a large institutional investor in Madoff funds, faces a $7.5 billion suit by investors. In the suit, plaintiffs argued the hedge fund managers collected millions of dollars in fees while failing to carry out due diligence that would have uncovered the fraud.
Claimants primarily will call upon firms’ errors and omissions and directors and officers liability policies, but other types of coverage also may be sought to pay for the losses, including crime insurance and fidelity bonds, observers say.
Subprime loan-related claims already have generated an estimated $3.5 billion worth of D&O claims for financial institutions and pushed up prices for liability coverage for financial institutions by as much as 100%, according to market experts.
D&O rates for financial institutions have risen for the past five quarters year over year and, given the Madoff impact, “we expect that trend may continue,” said Michael O’Connell, New York-based managing director of the financial institutions practice for Aon Risk Services, a unit of Aon Corp.
“It’s certainly something the E&O and D&O lines are bracing for,” said Michael White, senior vice president and financial institutions industry leader for the executive risks practice for Willis HRH in New York. He noted that recent renewal negotiations for financial institution coverage have featured a heightened interest by underwriters in clients’ potential exposure to Mr. Madoff. Industry observers also say they would not be surprised to see insurers writing Madoff exclusions into policies.
Among the leading providers of financial institution insurance generally are American International Group, Chubb Corp., ACE Ltd. and XL Capital are likely to face the highest claims, observers say. AIG and ACE declined to comment, while Chubb and XL did not respond to requests for comment.
The final cost to insurers may depend on the amount of coverage the institutions bought, but losses could be restricted because money management firms typically cannot purchase high limits, observers say.
“Most of the firms would not have adequate limits of coverage to indemnify the people who would sue,” said Marshall Gilinksy, a shareholder in the New York office of Anderson Kill & Olick. He noted that typical E&O policy limits for financial advisory firms might be about $15 million to $20 million and available up to $30 million. Limits for financial institutions are more difficult to generalize, he said.
“It would not be unusual for a money management firm to have limits of $10 million” for E&O liability, Mr. LaCroix said.
Defense costs, which are expected to be “significant,” are likely to erode policy limits because liability coverage typically includes defense costs inside limits, legal experts say.
Insurers also may be looking closely to see whether the allegations raised trigger coverage exclusions, particularly those around conduct resulting in personal profit or gain, said Mr. LaCroix.
But Willis’ Mr. White said he thinks “it’s going to be difficult (for the carriers) to try to deny coverage” broadly due to the nature of the investors’ claims.
Cheap Car Insurance Policy Options in 42 States
Phoenix Arizona, January 21, 2009 Serenity Insurance Group announced today that they have been appointed with Safeco Insurance to provide Homeowner’s Insurance, Renter’s Insurance, Umbrella Policies, ATV Insurance and RV Insurance in 42 States. Serenity Group has the ability to provide car insurance coverage in 47 states from several different companies and they currently provide auto insurance quotes for high risk requiring a Form SR22 and for preferred drivers requiring cheap car insurance and motorcycle insurance.
Serenity’s agents are bilingual and Serenity has a large customer service staff to assist customers . Serenity has provided insurance for tens of thousands of customers throughout the Unites States. Cheap car insurance has become one of Serenity’s specialties and their agents are becoming known throughout the industry as the experts in finding the companies who can provide the least expensive rates.
Innovation is also one of Serenity’s attributes. Serenity can quote and complete a purchase for auto insurance in less than 7 minutes. All transactions can be completed via the internet, with the help of agents to secure the least expensive and best insurance scenario for the customer. For over fifteen years Serenity Insurance has provided cheap auto insurance, SR-22 insurance and high risk auto insurance in 47 states.
Rather than going from company to company and getting a quote from each of them, Serenity’s experienced agents rate customers with all of the companies they represent to find the best rate and situation for that person. Serenity has extensive experience finding cheap car insurance rates for all customers and SR22 insurance is not their only business. Serenity can offer complete insurance packages for the homeowner, renter, motorcycle or ATV rider, Recreational vehicle owner,or an umbrella policy.
About Serenity Insurance Group
Serenity Insurance began as a unique insurance agency primarily focused on serving the specialized insurance needs for drivers with alcohol related offenses. Mr. Thomas A. Black, the founder and CEO of Serenity Insurance has over 30 years experience in the insurance business. Mr. Black believes that when people make a serious mistake and get an alcohol related offense they need an insurance agency that understands what is involved from society’s point of view as well as from the offenders point of view. Serenity Insurance helps people get back on their feet by acting as a resource for answers related to SR-22 insurance and providing affordable insurance. Serenity now serves 47 states and is committed to treating all people with dignity and respect while maintaining complete confidentiality.
Serenity works very closely with Alcohol Treatment Centers supporting their efforts to get offenders back on their feet as contributing members of society as quickly as possible. Serenity stands firmly committed to providing caring confidential service combined with affordable insurance for people requiring an SR22 filing.
Former AIG Execs Creates U.S. P/C Operation
Ironshore Inc. has appointed Steven England as executive vice president responsible for running its newly created U.S. Property/ Casualty underwriting operations based in St. Louis, Missouri.
The new unit, Ironshore National Branch, will act as a U.S. underwriting office for certain of Ironshore's property/ casualty operations. Ironshore National Branch will build out a national distribution platform for Ironshore products utilizing primarily a wholesale brokerage distribution strategy.
Jordan Gantz and Jim Dowdy have also joined the group and both report to Steve England.
England was most recently president of AIG Landmark, where he managed the start up of an agribusiness practice. Prior to heading up AIG Landmark, he was regional vice president for AIG's Commercial Insurance Group in Houston, Texas. he will report to Shaun Kelly, CEO of Ironshore's U.S Operations.
Gantz has been in the insurance industry for 23 years. Prior to joining Ironshore, he was most recently senior vice president for AIG Landmark where he managed the casualty start-up of the agribusiness practice. Before joining AIG Landmark, he was the chief underwriting officer in Bermuda for Allied World Assurance Co.
Dowdy has 27 years' experience in the insurance industry. Most recently, he was senior vice president for AIG Landmark where he managed the property start-up of the agribusiness practice. Prior to AIG Landmark, Dowdy was zonal property manager for Lexington Insurance Co.'s Northeast Zone.
Siemens upbeat on bribery insurance payout -report
FRANKFURT - Siemens (SIEGn.DE) is optimistic it will get a payout from 250 million euros ($331.4 million) of insurance cover it took out for damages caused by senior company officials, a German newspaper reported on Sunday.
The Sueddeutsche Zeitung cited company sources at the German engineering group as saying an insurance consortium led by Allianz (ALVG.DE) was prepared to pay, though not the full amount, and that talks were under way to determine the exact sum.
Siemens and Allianz declined comment on the report.
Siemens years ago took out the policy covering actions by top executives and supervisory board members.
It now wants it to cover some of the nearly 2 billion euros in costs it incurred from a bribery scandal that cost the jobs of former Chief Executive Klaus Kleinfeld and ex-CEO and former supervisory board Chairman Heinrich von Pierer.
Von Pierer and Kleinfeld, who resigned from their posts in 2007, have not been accused of crimes and both have denied any wrongdoing.
Siemens last month agreed to pay more than $1.3 billion to settle corruption probes in the United States and Germany, ending two years of uproar that rocked the company. Siemens is also seeking compensation from former officials in the case.
Ironshore Hires Another Top AIG Executive
AIG Environmental executives (from left): John O’Brien, Executive Vice President; Joseph Boren, Chairman/CEO; and Peter Gilbertson, Director of Marketing.
Ironshore recruits another AIG executive to head excess liability unit
Ironshore Inc. has expanded its management team with the appointment of former American International Group (AIG) Cat Excess Liability president Geoff Smith as worldwide head of its newly-launched excess liability facility. Mr. Smith is the latest in a line of recent recruitments from AIG.
In his new role, Mr. Smith, who will work out of New York and report to Shaun Kelly, CEO of Ironshore's US operations, and Keven Kelley, CEO of Ironshore, who in turn both joined the company from New York-based American International Group's (AIG) Lexington Co. last month, will provide global strategic direction and consistency across all of Ironshore's platforms writing the liability product set.
A new unit will be established to write catastrophic excess casualty insurance for Ironshore Bermuda, targeting Fortune 2000 and other clients purchasing cat excess coverages.
Mr. Smith has 24 years of liability underwriting experience in the re/insurance market, working at AIG since December 2000 and serving as vice-president at General Reinsurance Corp. in the National Account from February 1998 to December 2000.
"Hiring Geoff is a big win for Ironshore as we expand into the cat excess liability arena,' said Mr. Kelly. "He brings a wealth of expertise in underwriting and managing excess liability portfolios.
"The launch of this cat excess liability unit will further add to Ironshore's product and geographic diversification."
Recession compounds woes as millions lose jobs, insurance
Struggling states slashing health care for poor
WASHINGTON — Even as President-elect Barack Obama plans an ambitious push to expand health coverage nationwide, states around the country are slashing health services to their poorest residents amid the economic downturn.
The cutbacks in public assistance come as millions of Americans are losing their jobs and health insurance.
In many cases, the cuts are so deep that even the huge federal rescue package being assembled on Capitol Hill may not be enough to restore services being eliminated in the burgeoning crisis, health officials warn.
On top of that, the faltering economy has all but killed trailblazing campaigns from California to Connecticut to expand coverage for the working poor—once seen as hopeful signs for national health-care reform.
In California, whose problems dwarf those in other states, nearly 500,000 poor people may soon lose access to free care as the state seeks to slash more than $1 billion from its budget for health care and social services.
South Carolina has cut treatment for low-income women under 40 with breast or cervical cancer and stopped providing nutritional supplements to people suffering kidney failure.
In southern Nevada, cancer patients without health coverage no longer have a place to get chemotherapy after the state's largest public hospital stopped providing outpatient oncology services.
Although Illinois is feeling a financial crunch, a top official says it is not contemplating cutbacks in services to people enrolled in Medicaid, the primary federally funded health program for the poor administered by the states.
Instead, Illinois hopes to wring more efficiencies from Medicaid by reviewing pharmacy outlays, strengthening disease management and tightening medical oversight, according to Theresa Eagleson, administrator of the division of medical programs at the Illinois Department of Healthcare and Family Services.
Eagleson said the state was seeing "a bit of an uptick" in people applying for Medicaid, above the 3 percent increase in enrollment projected for this fiscal year.
Because most of the increase consists of families and children, who are much less expensive to cover than seniors and people with disabilities, costs are not excessive and "our budget is fairly in line with what we projected," Eagleson said.
Still, Illinois' cash crunch is hurting hospitals, nursing homes and doctors across the state. Although the state was able to settle $800 million in Medicaid claims recently with new short-term borrowing, $1 billion in medical bills from providers remain outstanding, Eagleson said.
Anecdotal reports indicate that providers are closing shop or reducing access for Medicaid patients facing financial difficulties. About 1.4 million Illinoisans depend on Medicaid.
The Democratic-controlled House began offering some help Wednesday, passing a bill to extend federally funded health insurance to 4 million more children.
The legislation—expected to be signed by Obama—would commit about $33 billion over the next 4 1/2 years to the popular State Children's Health Insurance Program.
The 12-year-old program now covers 7 million children from families just above the poverty line that earn too much to qualify for Medicaid.
Congress also is at work on a stimulus package that could include as much as $100 billion to assist Medicaid.
Lawmakers plan additional assistance to help Americans keep their health insurance if they lose their jobs.
But even some congressional leaders concede the help will be insufficient.
"Let's be honest," said Assistant Senate Majority Leader Dick Durbin (D-Ill.), a close Obama ally. "We won't be able to save every soul here."
At least 44 states are facing budget shortfalls over the next two years totaling more than $350 billion, according to a recent survey by the Center on Budget and Policy Priorities, a liberal think tank.
In the last recession — which was mild compared to what many economists say is happening now—more than 1 million people lost health coverage as 34 states cut eligibility for public health programs, the center found.
Without the flexibility to run deficits like the federal government, state officials have been scrambling for months to cut aid to schools, universities and, increasingly, residents who rely on the state for medical care.
Nationwide, roughly 60 million low-income people use Medicaid to get some form of health care, including basic physician services, prescription drugs, X-rays, dental care and even hospice care. But some of those services are now in jeopardy.
Tribune reporter Judith Graham contributed to this report.
Ironshore Inc - Madoff May Cost Insurers $1 Billion to Cover Funds
Bernard Madoff, president and founder of Bernard L. Mandoff Investment Securities LLC, right, walks out of Manhattan federal court in New York, Jan. 5, 2009. Photographer: Jin Lee/Bloomberg News
Bernard Madoff’s alleged Ponzi scheme may cost insurers who cover financial institutions more than $1 billion as they pay legal costs for investment managers who gave client money to Madoff, an industry executive said.
Insurers who sell such coverage never expected, or charged their clients, for the possibility of investor losses in such a massive fraud, said Greg Flood, the president of the management liability practice at Ironshore Inc., the Bermuda-based insurer.
“This isn’t supposed to happen in America,” Flood said. “There will be extraordinary losses paid for this year.” About $1 billion in claims costs industrywide “wouldn’t be too difficult to imagine.”
The final cost to insurers will depend on how many of the hedge funds and banks that directed money to Madoff had insurance, and the results of legal proceedings. Insurers of executives and corporate boards, a group that includes Zurich- based Ace Ltd.,XL Holdings Ltd., Chubb Corp. and American International Group Inc., already face a raft of claims after the collapse of the subprime mortgage market.
As Madoff cases go to court, expenses will accumulate because insurers selling “errors and omissions coverage” typically have an obligation to advance payment for defense, said Matthew Schlesinger, a partner at Reed Smith LLP in Washington.
Legal Fees
“Defense costs for funds facing Madoff-related suits could be high,” said Schlesinger, who specializes in recovering money from insurers. The cases “may turn on what funds knew about Madoff and whether or not funds managed investments appropriately.”
Before his arrest on a charge of securities fraud on Dec. 11, Madoff confessed to his sons that his “giant Ponzi scheme” may have cost clients as much as $50 billion, according to an FBI complaint. Some of those investors include so-called funds-of- funds, which invest customer money in a variety of hedge funds.
A total of $1 billion in claims from Madoff litigation “feels a little low to me,” said Lauri Floresca, senior managing director at Nasdaq OMX Group Inc.’s Carpenter Moore insurance brokerage. “The big unknown is how many companies will end up having insurance.”
Securities-fraud class-action lawsuits rose last year to the highest level since 2004. That may push insurer liability costs tied to subprime suits over $4.5 billion, according to Floresca.
Substantial Reserves
Chubb was spending more on professional liability claims and expenses in most of 2008 than the company collected in premiums for the coverage, Chief Executive Officer John Finnegan said in an Oct. 23 conference call.
“It is an evolving situation, and obviously it has not been evolving favorably recently,” Finnegan said. “But we are reserving pretty substantially for that class of business.”
Ace advanced 25 cents to $49.75 at 4:15 p.m. in New York Stock Exchange composite trading. Warren, New Jersey-based Chubb fell $1.18, or 2.5 percent, to $45.25, while Bermuda-based XL slipped 3 cents to $4.30. New York-based AIG dropped 3 cents to $1.62.
Hedge funds and unregulated investment vehicles catering to the wealthy, which made up a portion of Madoff’s investors, often don’t buy coverage, said Frank Vento, head of investment management practice at Marsh & McLennan Cos.’s flagship brokerage unit. New York-based Marsh & McLennan, the second-biggest insurance broker, hasn’t noticed an increase in claims stemming from Madoff, said Vento, of Marsh Inc.
“I think it’s too early to tell,” Vento said. Registered mutual funds and their advisers pay about $250 million for errors and omissions insurance each year, Vento said.
AIG’s Christina Pretto, Ace’s Stephen Wasdick and Chubb’s Mark Greenberg declined to comment. XL spokeswoman Carol Parker Trott didn’t return a call.
Health Insurance Reform
A Fresh Call For Health Insurance Reform
By ARIELLE LEVIN BECKER
It wasn't that Debbie Hunsinger didn't know about the lump in her breast. She did. And it wasn't that she didn't care about her health. Back when she had health insurance, she never missed a physical.
But a divorce left her without health coverage, and although she owned a deli in South Meriden, Hunsinger couldn't afford health insurance. She couldn't afford to see a doctor, either, so she decided not to deal with the lump. At the time, it was pretty small.
But by the time she finally got it checked out, about six months later at a free screening, it wasn't small.
And the cancer had spread to her lymph nodes and right arm.
If the cancer had been caught earlier, if she hadn't been one of the more than 300,000 people in Connecticut without health insurance, Hunsinger, 47, figures she might be healthy and back at work by now. Instead, she's facing dozens more rounds of chemotherapy and radiation and an uncertain prognosis.
Hunsinger thinks something must change. "I would hate to have anybody have to go through this just because they don't have health insurance," she said.
Her struggle is one of the reasons advocates say that it is finally time to make broad changes — an effort that will get a jump-start today in Hartford when the Universal Health Care Foundation of Connecticut unveils its proposal calling for major changes in the health system and a plan that the group says could insure 98 percent of state residents by 2014.
It is the first of many proposals — both state and federal — expected to be aired in what many people say is the year for health reform.
State legislators expect to address the issue in the current session, and the topic is expected to be a top priority for President-elect Barack Obama. Already, members of Obama's health care advisory team have been gathering input through meetings on health care reform, including one at the UConn Health Center last week.
It won't be an easy year, though. The prospect of new state spending or major federal reform might face tough obstacles as state legislators grapple with a projected $6 billion biennial budget gap and the Obama administration confronts an economy in shambles.
But advocates for reform say that the economic crisis and growing unemployment, with more Americans at risk of losing their health insurance, makes this precisely the time to tackle health reform.
"Fixing health care is about fixing the economy, that's sort of the bottom line," said Juan A. Figueroa, president of the Universal Health Care Foundation.
Figueroa said that the foundation's plan would put Connecticut in a strong position as the federal government addresses health reform, allowing the state to shape the national debate and be ready to tap into any resources that the federal government makes available for health reform.
The proposal calls for a new health program, called SustiNet after the Latin word for "sustains," that would extend health insurance to anyone who wants it while emphasizing preventive care and other changes.
The plan, which would begin enrollment in 2011, would create a gigantic health insurance pool by combining the existing pool of state employees and retirees with people now covered under state assistance programs.
The pool would also be open to the public, starting with those without access to employer-sponsored insurance, those whose employer-sponsored insurance is inadequate or unaffordable, and employees of small businesses, nonprofit groups and municipalities.
Ultimately, any employer in the state could use the state's pool instead of their own insurance. Employers who wish to participate would pay in as they would any other health insurance plan.
Mid-size and large employers would not, however, be able to simply drop coverage and allow the state to pay the cost of their employees' care. Employers with payrolls above $318,000 that do not offer insurance or provide adequate coverage to their employees would be required to help pay the cost of the program.
The plan is for the pool to compete with, not replace, private insurance plans. The proposal would not require everyone to be covered, but would automatically enroll people without insurance unless they opt out of the plan.
The foundation believes that the size of the pool will lead to lower costs — a critical element of the plan. According to the foundation, the plan would save individuals and employers $1.7 billion by 2014, although it would require the state to spend an additional $950 million in 2014, the year that the plan is expected to be fully operating.
That figure includes the cost of subsidizing coverage for previously uninsured people and increasing the notoriously low payments that doctors receive for seeing HUSKY and Medicaid patients.
The concept of expanding the state's employee insurance pool isn't entirely new. A proposal last year to open that pool to municipalities and small businesses passed the General Assembly, with strong support from Democratic leadership. But Gov. M. Jodi Rell vetoed the bill.
Figueroa said that the foundation's proposal offers a far more comprehensive approach and that he hopes Rell and other state officials will be supportive.
"This is a time not to be weak-kneed about these issues," he said. "This is a time to exercise strong leadership."
The foundation's figures for 2014 are based on several assumptions, including:
•$570 million in premiums paid by individuals covered by the plan; premiums would be charged on a sliding scale, based on people's ability to pay.
•$80 million in "shared responsibility payments" from employers with payrolls over $318,000 that don't provide insurance coverage to their employees.
•$240 million in revenue from companies whose employees join SustiNet because their company-sponsored plan is inadequate.
•An additional $800 million in federal funding by expanding the federally subsidized HUSKY program.
Health Care for the Unemployed
Paying For Health Care is Difficult for the Unemployed
With California unemployment rates at an all-time high, people are facing a double whammy -- losing their job and their health care. A new report finds it will take a big bite out of your unemployment check to keep your health insurance. Kelley Weiss reports.
The report is by the consumer advocacy group Families USA. It shows most laid-off workers have to spend about three-quarters of their unemployment benefits to keep their health care insurance. That's if they opt to get COBRA insurance. It's a plan that lets you keep your health benefits for the short-term. But there's a catch. Since your employer is no longer chipping in, you have to pay the whole cost. In California the report says COBRA insurance for a family, on average, is about $1,000 a month.
Betsy Imholtz is with the Consumers Union West Coast office. She says whether to pay for COBRA is a tough decision.
Imholtz: "Once they see the price and the cost there is invariably sticker shock, it's a huge amount of money, so people are really scrambling."
Imholtz says if people are priced out, they'll go without health care. She says even if COBRA plans are expensive, it's probably the best option laid-off worker have.
SCHIPing away at the need for health insurance
When Bill Clinton's health care proposal was foundering in the summer of 1994, a group of senators suggested that the administration put off trying to get universal coverage and insist instead on insuring all children. The idea was to make, at least, a down payment on reform.
The White House said no and pressed on with its doomed effort to get a bigger bill. The Republicans won control of Congress in the fall. It wasn't until 1997, thanks to the unlikely duo of Sens. Ted Kennedy and Orrin Hatch, that a children's health care program was finally passed.
One of the clearest signals President-elect Barack Obama has sent is his determination to learn from the Clinton years, and particularly from the former president's failures on health care.
When Tom Daschle, Obama's pick to be secretary of health and human services, returned to the Senate last week for his first round of confirmation hearings, he offered a long list of criticisms that others had directed at the original health care reform effort. This time, he said, would be different.
And this week, the House of Representatives is determined to prove Daschle right. It is scheduled to take up an extension of the State Children's Health Insurance Program (SCHIP), as the Kennedy-Hatch initiative is called, so that 10 million kids can get health insurance. Getting more children covered before Congress starts wrangling over the larger health care bill is good politics, and the right thing to do. Congress needs to act anyway, because the program expires March 31. It might as well act fast, and act generously.
The SCHIP bill is unfinished business from the Bush years, and Democrats have no better way to show, and quickly, how different their approach to government will be from the style and priorities that prevailed during the outgoing president's term.
President Bush twice vetoed an extension of SCHIP. He opposed the additional $35 billion the Democrats wanted to spend to cover more children and also disliked the tobacco tax they proposed using to pay for it. There are many big things people hold against Bush, but this one has always stuck in my craw. If "compassionate conservatism" - remember that phrase? - means anything, surely it should mean helping more kids go to the doctor when they need to.
Some advocates of universal coverage have argued that an expansion of SCHIP should be delayed so that the issue of covering kids can be taken up as part of a larger health proposal. The worry is that passing the most popular part of reform now (is there a more sympathetic group to cover than children?) would make it easier to delay the broader effort.
These are good faith concerns, but Congress would be right to ignore them. The economic downturn has made the expansion of SCHIP all the more urgent.
It's not just that sharp increases in unemployment add to the ranks of the uninsured. State governments are hurting, too, and they are responding to revenue shortfalls by shrinking health care programs.
According to Families USA, a group that pushes for fundamental health care reform, states have enacted budget cuts that will leave some 275,000 people without health coverage, including 260,000 children in California. By the end of this year, if further proposed cuts go through, the number losing health coverage nationwide could rise to more than 1 million, almost half of them children. Other states have reduced benefits to those they still insure.
All this makes the case for fiscal relief to the states in a stimulus bill more compelling. It also makes clear that universal health insurance coverage should be an urgent priority. But getting the children's program done in the meantime could create momentum for the larger program and reduce the size of the problem that needs to be solved in a comprehensive bill - 10 million kids now, the rest later.
Senate Majority Leader Harry Reid has not made any commitments as to when he would take up children's health care, though he has listed it as a priority. It would do the new president and members of the Democrats' expanded congressional majority no harm to move expeditiously on a proposal that is simultaneously bipartisan - SCHIP has always enjoyed significant Republican support - and embodies Obama's oft-stated commitment to "programs that work." This one surely does.
How often did Obama promise to "turn the page," implying that his presidency would be very different from President Bush's while also taking lessons from President Bill Clinton's shortcomings? Winning a quick health care victory for children would prove he's determined to do both.
'No Insurance' Towing Filling Dallas Impound Lots
DALLAS: Drivers be warned! Dallas police are on the lookout for a different kind of offender – those driving without insurance.
A new city ordinance mandates that cars be towed as a consequence for no coverage. The ordinance has been in effect for nine days and police are already calling it successful.
Among the cars in the City of Dallas impound lots are those that were brought in because the driver didn't have insurance. In fact, in just the first nine days of the New Year, Dallas police said they towed 256 cars and that another 56 we're towed from accident sites.
Saturday was another busy day at the impound lots, where there was no shortage of people coming to claim their cars.
The new uninsured motorist ordinance makes it mandatory to at least have liability auto coverage. If uninsured drivers in Dallas are pulled over, or get into an accident, their cars can be impounded with no questions asked.
Most drivers who spoke to CBS 11 News said it's an expensive lesson learned and one they wish they could have avoided. "I didn't know it [the ordinance] was going to be enforced like that," said driver Demond Graves. "I heard it a couple times on the news but I didn't know it's was gonna be all like that."
Andrew Delara was among those busted for driving without insurance. "I was going to get insurance today, but they beat me to it!" he said.
Enforcement of the new ordinance has caught many off guard. "I'm sure some are still surprised when it happens to them, because it is something new," explained Lt. Andy Harvey with the Dallas Police Department.
Drivers are not only responsible for the cost of the tow, but also receive a $350 fine and are charged $20 a day, for every day their car is kept at the impound lot. The average cost of basic liability coverage is $36 a month.
The new ordinance could be making a difference. One North Texas insurance agent said she has seen an increase in the number of drivers getting policies since the end of last year.
The largest federal health insurance program
A focused remedy is best cure for healthcare crisis
As the Senate considers the nomination of former Sen. Tom Daschle as secretary of health and human services—and as the nation looks forward to health reform—it is important that policymakers focus on what it means to “fix” health care and ask some hard questions about how we deliver medical care.
First off, everyone should agree that we must strive to get every American the health care coverage they need.
Second, we can all agree that getting health care costs under control is both a health and economic imperative. Despite the “good news” this week that health care spending rose 6.1% to $2.2 trillion in 2007, that slowdown from previous years is still substantially higher than general inflation and health care now gobbles up 16.2 % of gross domestic product.
But high costs and the uninsured are only the visible problems with health care. The invisible problem is poor-quality care. Our third area of agreement must go beyond getting people care, to getting them the right care.
Poor quality care and the uninsured are inextricably linked, even though few understand the link. Poor quality care robs the system of precious resources—dollars and services—that could be used to expand access and coverage.
Lawmakers need look no farther than their own back yard to ask questions about the quality and inefficiency problems. Medicare is the largest federal health insurance program, so lawmakers should ask why an elderly person spends about 11 days in the hospital in Bend, Oregon in the last two years of life, compared to 23 in Detroit or nearly 35 in Manhattan. Or why they see doctors about 15 times in Ogden, Utah in the last six months of life compared to 42 in Detroit or 60 in Los Angeles.
They should ask why researchers found that only 57 percent of female patients aged 65–69 in Mississippi got regular mammograms, compared to 70 percent in Michigan or 74 percent in Maine, the top state. Or why in Alaska, only 71 percent of patients with diabetes got important blood tests in 2003–2005, compared to 86 percent in Michigan or 92 percent in Vermont. Or most tragically, why more than 1.6 out of every 1,000 Medicare beneficiaries in Louisiana lost a leg to amputation, compared to 0.9 in Michigan or 0.50 in Utah, a more than three-fold difference from top to bottom?
They should also ask hard questions about why people get care they may not need. Why are antibiotics prescribed inappropriately for children’s ear infections 13 million times a year, when more than 80 percent of infections get better within three days without antibiotics?
Why in a decade did spending for back surgery called lumbar fusion rise 500 percent—from $75 million to $482 million—despite a lack of evidence supporting the effectiveness. And why do some regions of the country use vastly more resources to treat patients with similar illnesses without achieving better outcomes.
They will find what Dartmouth researchers found, that a whopping 30 percent of health care spending—nearly $700 billion a year—pays for services that may not improve people’s health.
That’s money that could be used to cover the uninsured—if we can figure out how.
A good place to start is improving the information we have about the actual performance of doctors and hospitals with wider spread use of reports such as those Medicare has begun to make available on hospitals and a few pioneering community organizations, such as the Greater Detroit Area Health Council (GDAHC), have made available on both hospitals and doctors’ practices in their communities (www.SaveLivesSaveDollars.org). Patients need this information to make informed choices about their own care. Doctors and hospitals need this information to help them improve care. And both consumers and purchasers need information about the value they are getting for their health-care dollars.
A second step is to put serious dollars into quality improvement efforts, building on Medicare pilot programs that spur hospitals and physician group practices to improve care and launch experiments that encourage disparate medical providers to work in teams to coordinate care and deliver it efficiently.
Finally, our payment system must reward providers for giving patients the right care at the right time, the right way.
Now we pay providers for “doing things”: the more treatments and procedures they provide and the more they use expensive technology, the more they get paid. We need to reward, not punish, providers who deliver high-quality, cost-effective care. Moreover, providers should be fairly compensated for preventive care, for time spent coaching patients and for coordinating care for those with chronic conditions.
Many of these concepts are being tested on the ground in living laboratories such as GDAHC’s Save Dollars Save Lives campaign, one of 14 communities working with the Robert Wood Johnson Foundation’s Aligning Forces for Quality program to bring together those who get care, give care and pay for care to improve the quality of care.
As Washington turns it eye to health care reform, by all means let’s start with getting everyone access to care, but everyone should also understand that what happens to them once they get inside the hospital or doctors’ office is just as important as getting them in the door.
Dr. Risa Lavizzo-Mourey is president and CEO of the Robert Wood Johnson Foundation, and Vernice Davis Anthony is president and CEO of the Greater Detroit Area Health Council
How to get flood insurance
What you should know about flood insurance
Here's some basic information about flood insurance provided by Mike Howard, a spokesman for the Bothell office of the Federal Emergency Management Agency.
Q: How do I get flood insurance?
A: It's available only from the Federal Emergency Management Agency. But numerous insurance agencies can help owners of homes and businesses obtain it.
Q: How much does flood insurance typically cost?
A: The average annual cost for a residential policy in Washington state is $580. In King County, the average annual cost is $590.
Q: Is everyone eligible to buy flood insurance?
A: Anyone is eligible who lives in a community participating in the national flood insurance program. That program ensures communities are passing ordinances that protect their citizens against flooding. Virtually every community in Washington state participates in the program.
Q: If I sustained flood damage once and made a claim, can I still get insurance now?
A: Yes. That is the virtue of the national flood insurance program. But your degree of flood risk may affect your policy's cost.
Q: If my property floods repeatedly, can I still be insured?
A: Again, yes, if you've paid the premiums. No matter how often an area floods, properties there can be protected by insurance, so long as the properties comply with flood plain ordinances.
But FEMA may work with your community to reduce the incidence of flooding by encouraging a buyout or facilitating the elevation of your property.
Q: How can I learn more?
A: Visit www.fema.gov/hazard/flood/index.shtm or call 1-800- 621-3362.
Insurance scams charged in New Jersey
New Jersey authorities have charged seven people in an alleged workers' compensation scam that they say left many people without insurance.
Those charged are accused of operating companies that linked workers' compensation insurance carriers and clients.
The companies are charged with submitting false information and claims to the insurers and pocketing the benefit payments. The owners of the companies also kept money submitted by clients to pay insurance premiums, the state alleges.
The scam netted about $1.5 million for those who owned the companies or operated as insurance brokers.
Indicted on charges of conspiracy, racketeering and related charges were: Justin Sciarra, 59, of Medford; Paul Brown, 43, of Bellmawr; Michael Magee, 34, of Berlin; James Maconaghy, 41, of Mount Laurel; William Griffith, 53, of Reading, Pa.; Paul Hopkins, 58, and his wife Adrienne, 48, both of Marlton.
10.9 million Americans Have Individual Health Insurance Policies
About 10.9 million Americans under age 65 purchased individual health insurance policies at some point in 2006, but only 7 million were covered by these policies for the full year, according to the latest News and Numbers from the Agency for Healthcare Research and Quality. The 3.9 million individuals who had individual health insurance policies for part of the year were covered for about six months on average.
AHRQ's analysis also shows that of Americans who bought individual policies for part of the year, nearly 44 percent were able to obtain coverage for the full year because they or their spouse got a job that offered health insurance or they had incomes low enough to quality for Medicaid or other public insurance. Most of this coverage came from employers.
Forty percent obtained employer-sponsored health insurance.
Three percent enrolled in Medicaid or other public insurance.
Less than 1 percent obtained both employment-based insurance and public insurance.
People buy individual health insurance generally because they can't get insurance from their employers, have lost a job that offers insurance, or do not qualify for Medicaid or other public programs.
AHRQ, which is part of the U.S. Department of Health and Human Services, works to enhance the quality, safety, efficiency, and effectiveness of health care in the United States. The data in this AHRQ News and Numbers summary are taken from the Medical Expenditure Panel Survey, a detailed source of information on the health services used by Americans, the frequency with which they are used, the cost of those services, and how they are paid. For more information, go to Length of Coverage in the Individual Health Insurance Market for the Non-Elderly U.S. Population, 2006, MEPS Statistical Brief 227.
Blue Shield of California Reinstates Insurance for Patients it Dropped
Karen Vincis insurer - Blue Shield
In a bid to put to rest legal troubles over a practice of canceling patients’ health insurance policies after they got sick, Blue Shield of California has agreed to grant coverage again to nearly 700 such patients.
The company will also reimburse them for medical bills they’d paid when they didn’t have coverage. The state of California, in return, dropped its case against the company and stopped its pursuit of $12.6 million in proposed fines, the Los Angeles Times reported this morning.
A number of big California health insurers got into public relations and legal messes over the cancellation of plans after patients get sick, a practice that goes by the medical sounding term “recission.” The insurers claimed the patients weren’t upfront about their medical histories and preexisting conditions when they applied for coverage.
Other companies that have agreed to reinstate patients’ policies include Health Net, WellPoint’s Anthem Blue Cross and Kaiser Permanente.
Blue Shield didn’t admit wrongdoing and, in a prepared statement, said, “With this settlement, we can put these matters to rest and enter 2009 with new procedures in place to clarify the responsibilities of insurers and our customers in the future,” according to LAT.
Some consumer advocates weren’t satisfied. Jerry Flanagan of the advocacy group Consumer Watchdog, told the Times, that the settlement “does not adequately protect against future rescissions — no admission of wrongdoing, no mandatory fines, no clarification of the legal standard” for rescissions
Florida Task Force Set to Vote on Citizens Insurance Reforms Today
1.4 million? An 11-member task force charged with making recommendations on how to depopulate Florida's high risk property insurer and return it to its original purpose as a market of last resort is voting today in Tampa today.
The Citizens Property Insurance Corporation Mission Review Task Force has been asked to develop a report on changes -- statutory and operational-- needed to return Citizens "to its former role as a state-created, noncompetitive residual market mechanism that provides property insurance coverage to risks that are otherwise entitled but unable to obtain such coverage in the private insurance market."
Citizens has become the largest home insurer in the state. It now has about 1.1 million policies, which is down from a high of 1.4 million due to depopulation efforts undertaken in 2008.
But critics, including private market competitors, want to see Citizens shrink even more. The recommendations before the task force would block more homeowners from accepting policies from Citizens if they have reasonably priced options in the private marketplace.
The task force is being asked whether the so-called "15 percent" rule should be retained. This rule provides that a homeowner with a private market offer can still get Citizens coverage if the premium quote from the private carrier is more than 15 percent higher than the Citizens premium. The adoption of this rule several years ago has meant some homeowners are now in Citizens because it is cheaper, not because there is a lack of private insurance available.
The task force is also being asked to vote whether to eliminate the current freeze on Citizens' rates that has been in place since 2007.
Today's meeting is the last for the task force, which must submit its recommendations to the Florida Legislature by Jan. 31.
Members of the task force include representatives of the Legislature, Gov. Charlie Crist, Chief Financial Officer Alex Sink, the Office of Insurance Regulation and Citizens.
AIG's Boren, O'Brien to Head New Ironshore Environmental Insurance Unit
AIG President, Joe Boren, confers with AIG Environmental President (and President of the National Brownfield Association), Ken Cornell
Bermuda-based Ironshore Inc. announced that Joe Boren and John O'Brien have joined as CEO and president, respectively, of its newly established Environmental Insurance facility.
The company said the new unit will write environmental and casualty products with focus on middle market commercial risks. The products will serve wholesale and retail markets and will include products for contractors, fixed facilities including real estate, professional service companies and manufacturing operations.
Both men are joining Ironshore from AIG Environmental, one of the largest writers of environmental insurance.
Boren will report to Shaun Kelly, CEO of Ironshore's U.S. operations, who also came to Ironshore from AIG along with his boss, Kevin Kelley, formerly head of AIG's Lexington Insurance and now CEO of all Ironshore operations.
The Ironshore Environmental Insurance unit will be located at Ironshore's New York office.
Boren was formerly chairman and CEO of AIG Environmental, where he has worked for the last 13 years. Prior to AIG, he worked for 25 years in the environmental industry, starting as a regulator and ending as chief operating officer of an environmental firm.
O'Brien was president and chief operating officer of AIG Environmental and had been with AIG for the last 17 years. He joined the AIG companies in 1992 as an underwriter and most recently served as executive vice preident of AIG Environmental's commercial and middle market divisions.
FACTBOX-US healthcare spending hit $2.2 trillion in 2007
Jan 6 (Reuters) - U.S. healthcare spending rose to $2.2 trillion in 2007, or $7,421 per person, an increase of more than 6 percent from the previous year, the U.S. Centers for Medicare and Medicaid Services reported on Tuesday.
Here are some facts about healthcare spending in 2007:
- Healthcare made up 16.2 percent of U.S. Gross Domestic Product in 2007.
- In 2007, 31 percent of healthcare dollars went to hospitals, 21 percent to physicians and clinics, 7 percent on administrative costs, 10 percent to drugs, 25 percent to "other" and 6 percent to nursing homes.
- Private insurance paid 35 percent of this; Medicare 19 percent; Medicaid and the State Children's Health Insurance Program 15 percent; 12 percent from other public funds; 7 percent from other private sources; and 12 percent was paid for out of pocket by patients.
- Hospital spending was $696.5 billion while doctor and clinical services spending was $478.8 billion.
- Medicare, the federal health insurance program for the elderly, spent $431.2 billion overall in 2007 while Medicaid, the state-federal health insurance plan for the poor and disabled, spent $329.4 billion.
- Private health insurance premiums were $775 billion while patients spent $268.6 billion out of their own pockets.
Obama's Health Care Resolutions Can't Be Kept
Beware a politician’s promises.
-- that if they like the health insurance they have today, nothing will change, and
-- that his health reform plan will save the typical American family $2,500 annually in health care costs.
Yet, if Obama sticks with the health proposals he has outlined so far, it is highly unlikely that either of these promises can be kept. And that’s putting it charitably.
The main problem is that Obama has proposed creating a new government-sponsored enterprise — a taxpayer-financed health plan, run by federal officials, that would “compete” directly with private health plans. Moreover, the “competition” would take place through a new “national health insurance exchange,” something the president-elect envisions as a kind of national shopping mall for coverage, managed by Washington.
Unfortunately, rigorous analysis indicates this approach would end up displacing much of today’s existing private health coverage. Millions of Americans, especially those now getting coverage provided by their employers, would lose the private insurance plans they have today.
A government-run health plan is, of course, not a new idea. A perennial favorite among “liberal” health policy wonks, the program’s most recent high-profile champions include Tom Daschle, Obama’s choice for secretary of the U.S. Department of Health and Human Services (HHS), and Senator Max Baucus, chairman of the powerful Senate Finance Committee.
In the Obama version, the new government health plan would be open to the uninsured and those ineligible for other government coverage, like Medicare and Medicaid. It would feature comprehensive benefits like those available in the Federal Employees Health Benefits Program (FEHBP), the program that covers members of Congress, federal workers and retirees.
It sounds reasonable, but there’s one little problem with using the FEHBP as a model: It offers no government health plan at all. The FEHBP promotes premium-saving competition among a wide variety of health plans, but they are all private plans, ranging from managed care plans to health savings accounts.
In the FEHBP system, all of the risks and liabilities are assumed by private-sector plans, not by the taxpayers. But under the proposed new government health plan, taxpayers would be saddled with all the risks, losses, and liabilities—just as with the recent series of big bailouts.
Worse, in the Obama version, government officials would not only participate in the national competition by entering their own plan, they would also set the rules for the competition itself. It would be like having an umpire who not only makes the calls, but also fields one of the teams on the field. Some “fair” competition.
But “fairness” is not the biggest issue. What really matters is how it would affect your health coverage.
When the Obama health plan was unveiled, the Lewin Group, a nationally respected and politically independent econometrics firm based in Virginia, put it under the microscope. Their October 2008 analysis estimated the plan would help 26.6 million Americans gain health insurance coverage. A good thing, to be sure.
But Lewin concluded that the proposal would produce some very unpleasant changes, as well. Many employers would stop offering private coverage, switching an estimated 18.6 million employees over to the new government plan. Overall, Lewin estimated, 21.6 million Americans would lose their existing private health coverage, while the ranks of those insured by government (i.e., taxpayers) — under Medicaid and SCHIP, as well as the new plan — would swell by an estimated 48.3 million. These are bad things.
More recently, in a special Capitol Hill briefing, the Lewin Group unveiled an updated analysis of the government plan, based on different design elements. They projected that the loss of private health insurance coverage could range from a low of 10.4 million to a high of 118.5 million, depending on such factors as the pool of eligible enrollees and the kind of payment rates adopted by the new government plan.
Employers make the key decision to keep or dump health insurance; employees have little or no say in that decision. That’s why no one can promise that “nothing will change” for individuals and families who like their existing coverage.
President-elect Obama promised many changes. But in health care, he promised that change would ensure patient choice of doctor and care, without government interference. He also promised that (1) those who want to keep their current coverage would have no problem doing so and (2) those without coverage would get the same kind of insurance available to members of Congress. These are wonderful promises. But they can’t be kept with the approach he has suggested taking.
4 indicted in $1 billion insurance fraud scam
Four men are facing federal charges in a $1 billion Miami life insurance fraud first exposed in 2004.
A 25-count grand jury indictment Monday charges the four played roles in a scam that affected more than 28,000 Mutual Benefits Corp. investors. The company sold investments based on life insurance policies for the elderly, AIDS patients and terminally ill people. The longer a person lives, the less valuable the investment becomes.
Prosecutors say MBC failed to disclose risks, falsified life expectancy figures and mismanaged premium funds.
Federal regulators closed MBC in 2004 and its former president was previously convicted of securities fraud. Those charged in the latest indictment include two former MBC executives and two attorneys.
UK floods may spark car insurance increase
Car insurance is set to rise sharply because of the summer floods, warn experts.
Insurance companies face an estimated £3.3billion claims from customers whose homes were inundated.
This means they cannot afford to follow their usual practice of subsidising motor insurance with profits from property insurance.
The flash floods caused chaos across the country
As a result the cost of motor premiums must rise by as much as 10 per cent, says Europe's largest firm of non-life actuaries, EMB. its annual review shows that for every £100 insurers received in motor insurance premiums, they paid out £106.
They subsidised the shortfall with reserves made up of profits from property premiums. These are expected to be wiped out by the costs of the floods.
The predicted rise will be another blow for millions of motorists who have already seen their car insurance rise this year.
Premiums are rising because, despite the number of accidents falling, the cost of repairs and medical bills is rising. Passengers are more likely to survive crashes but may suffer cripplinginjuries and make hefty damagesclaims.
Uninsured drivers involved in accidents and fraudulent claims also push up bills. Since the floods, many home insurance firms have considered inflation-busting premium rises.
Earlier this month 5million households on flood plains were warned they face large increases. The industry is bracing itself for more claims caused by floods and droughts.
The prices of bread, beer and whisky are expected to rise amid fears the grain harvest will be the worst for 20 years because of the winter's bad weather and the widespread flooding.
The cost of a brand-name large white loaf has already risen by 9p to 54p in many leading chains. This could now go as high as 65p.
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