Friday, December 30, 2011
This blog previously reported that officials from one prominent business organization in the state had no intention of pushing back against the legislation at the time citing both internal and external political concerns. That said, they suggested that there would likely be “private” support of a legal challenge from within their organization if in fact the law was challenged.
It will be interesting to see how this “leading from behind” approach plays out. In a conversation with my source shortly before the lawsuit was filed, it was noted that Michigan self-insured employers are now starting to pay more attention to the law and what it means to them.
More specifically, this blog has learned that one prominent multi-state self-insured employer based in Michigan calculated its yearly projected expenses to comply with new law to be more than $250,000. Of course, the administrative headaches are just a bonus.
But even with such a direct adverse impact on their company, senior company executives remain guarded about expressing opposition to the new law.
Now that the legal flaws of new law have been laid bare in the detailed complaint filed against the state and word is starting to get out about its practical impact, we’ll see if any heads pop up out of the foxholes.
And while the this legal challenge is important to self-insured employers in Michigan and to other entities that pay healthclaims for Michigan residents for services received within the state, its significance extends more broadly.
Michigan is not the only state that is strapped for cash and looking for new revenue streams. If its new health plan tax law goes unchallenged, this will likely embolden other states to consider this same approach and the cornerstone of ERISA preemption will be greatly compromised, and with it, the viability of self-insured health plans.
I suspect that if Michigan self-insured employers in large numbers estimated the financial impact to their balance sheets if they were forced to switch to fully-insured health plans and publicly communicated this to policy-makers and business association leaders early on this train would have been pulled off the track before arriving at the courthouse door.
The state has declined to comment on the lawsuit thus far but is required to file a formal legal response in the next 30 days so it will soon become clear how they intend to fight this challenge.
Perhaps the business community may yet demonstrate some clarity with regard to where it stands.
The captive industry in South Carolina fell on hard times during the regime of Insurance Commissioner Scott Richardson who left office at the end of 2010. When newly-elected Governor Nikki Haley named David Black as his replacement in February, this blog reflected the puzzlement expressed by many industry and political insiders.
Mr. Black was a largely unknown quantity aside from being the CEO of an inconsequential life insurance company.
But the sparse resume and lack of ART industry credentials didn’t deter Governor Haley from appointing Mr. Black and pronouncing him as a savior. Consider her comments when naming him to the position where she said “Understanding the importance of your industry, I chose David Black to lead the Department of Insurance. He has the energy and capability to revitalize the captive industry for our state.”
As it turned out, he had neither
Earlier this week, Mr. Black abruptly announced his resignation to his staff via e-mail giving no specific reason for his decision.
So now Governor Haley has a chance for a second bite of the apple to get it right. This means naming someone to the position who is willing and capable to shake up the bureaucracy within the department and establish a firewall between the regulation of traditional insurance companies and alternative risk transfer programs, as originally envisioned by former commissioner Ernie Csiszar more than a decade ago.
A tall order for sure and we’ll be watching.
A very different story continues to play out in nearby Tennessee where Governor Bill Haslam tapped Julie Mix McPeak to head up the insurance department in that state.
This blog noted that Ms. McPeak had both the credentials and reputation to turn heads within the ART marketplace when word of her appointment surfaced. But her future success was not assured.
The first order of business as it related to the ART industry was to shepherd a bill through the Legislature that made comprehensive updates to the state’s captive statute. This effort proved more difficult than expected but Ms. McPeak was up to the task and that legislation, which she helped draft, was signed into law.
Since that development, she has been working methodically to assemble a top notch regulatory team and now most of the key positions have been filled and she introduced these individuals at an industry event earlier this month.
So armed with a progressive captive stature and a regulatory team inspired to transform Tennessee into a premiere captive insurance domicile, the stage has now been set for her to make it happen.
But let’s not get ahead of ourselves as there are certain to be pitfalls ahead as the domicile finds its footing under Ms. McPeak’s leadership in 2012. That said, the fact that leadership is on display is certainly refreshing for those vested in the growth of the ART marketplace.
This tale of two domiciles will continue.
Wednesday, December 28, 2011
We feel this coverage is important for two reasons. One reason is we do not send out professional reconstruction appraisers to every house. Instead, insurance companies use in house software that helps determine reconstruction cost on your house using things like square footage, construction type, location, year built, etc. to come up with a value. These programs are usually very accurate but nothing replaces the accuracy of an in home visit with measuring tape and details of the type of amenities in the house. The Extended Dwelling Coverage endorsement helps make sure that if for some reason the calculations on the house are a little off, there is still enough insurance there to replace the house to its original state.
The second reason we encourage this endorsement is for catastrophe situations. Let’s say a tornado wipes out not only your house but two other neighborhoods worth of homes. Every builder and building supplier in town will be in demand. Economics 101 will tell you that if demand goes up and supply is the same, then prices are going to rise. That home that only cost $200,000 to rebuild just got a lot more expensive but if you have the Extended Dwelling Coverage on your homeowner you would be in a much better situation.
One thing to note about this endorsement, you can’t use it to underinsure your home. In our example above, you can’t insure the house for only $160,000 and add the 25% Extended Dwelling Coverage (which would put your total insurance at $200,000). That is not the intent of the coverage. The insure companies will use their software to figure out a good estimate of the cost to rebuild your house and you would have to have it insured for that amount in order to add the coverage.
Thursday, December 22, 2011
4) Don’t skimp on heat in your home: This time last year our big recommendation in our “Traveling Over the Holiday” blog article was to keep the heat in your house at a reasonable level so your pipes don’t freeze. Again, we recommend this.
Those are just a few simple tips. We here at Fey Insurance hope you have a wonderful Holiday and Merry Christmas
Wednesday, December 14, 2011
Thursday, November 10, 2011
Friday, November 4, 2011
Finally, having a working smoke alarm dramatically increased your chances of surviving a fire. Always remember to practice a hoe escape plan frequently with your family.
Source: US Fire Association
Thursday, October 27, 2011
Friday, October 21, 2011
When canceling an existing claims-made policy, it is usually advisable to purchase and extended reporting period. This is commonly referred to as tail coverage. Various lengths of time are available. Tail coverage extends the claim reporting period under the claims-made policy to cover claims that have occurred during the coverage period, and not yet reported by the cancellation date.
While most occurrence-based policies are somewhat similar, claims-made policies are usually specific to each company issuing the policy. The insurance agent must d o a careful review of these differences to determine applicability to a particular operation.
Thursday, October 6, 2011
Thursday, September 29, 2011
Most corporate security types say the biggest issues involve personal mobile devices use to "hack" into corporate servers and data bases. Data encryption and passwords are highly recommended along with the ability to wipe out data from a Smartphone or tablet issued by the company. The latter can be extremely helpful in the event a personal Smartphone is stolen, and the corporate IT people want to wipe the phone of all secure access information remotely. Some corporations allow access to company data through personal mobile devices but only with devices that were provided by the corporation. Some corporations are requiring employees to register personal devices with corporate security/data processing so they can control how their corporate data is being accessed. All of these precautions are highly recommended by Fey Insurance.
It isn't just the business world that faces possible problems with personal smart phones, iPads, etc. accessing data. Accessing your personal and private financial information via Smartphone, iPads, etc can also be an issue. Many people have their banking applications on their devices as well as applications that have all their stored passwords. A lost device could result in access to your personal bank accounts and do a lot of financial damage. Password protecting your devices is key. The more passwords and protection you employ the better in protecting you and your family from potential financial ruin. Apple iPhones have tracking capabilities so if your phone is lost you can use your personal computer or another iPhone to track its location. They also allow you to wipe the phones clean of all data and make them useless to anyone who might find the lost phone and want to cause serious problems with your data.
If you have further questions, consult your Smartphone or table manufacturer, your phone service carrier or your corporate IT/security people for help.
Wednesday, September 21, 2011
Click below to read the article:
As Homeowners Dive Into Pool Of Flood Insurance, Caveats Abound
Saturday, September 10, 2011
Professor Timothy Stoltzfus Jost is the designated “consumer representative” on the NAIC’s ERISA (B) Subgroup , which is tasked with developing various policy recommendations related to how states should adapt their insurance regulations to better coordinate with PPACA implementation. The esteemed professor is not shy in sharing his opinion that smaller self-insured group health plans, facilitated by stop-loss insurance, should be made extinct.
During the Workgroup’s last conference call, Professor Jost presented a formal statement entitled The Affordable Care Act and Stop-Loss Insurance. This scholarly work was quite the hit piece on self-insurance disguised with big words, extensive footnoting and misleading legal references.
His central thesis is that smaller employers should not be allowed to self-insure because they do so primarily to escape state regulation, and going forward to sidestep new PPACA regulation. He also pushes the dubious argument that self-insured plans contribute to adverse selection (see my earlier blog post on this subject).
Virtually all of Professor Jost’s points can and will be rebutted privately and publicly as this NAIC policy development process moves forward, but first let’s take some time to consider the source.
He is currently a law professor at the Washington and Lee University of Law, with multiple other academic appointments dating back to 1979. Along the way, he has written several books and academic papers on the subject of health care with titles such as The Threats Facing our Public Health Care Programs and a Rights-Based Response; and Health Care at Risk: a Critique of the Consumer-Driven Movement.
And by the way, he is a graduate of the University of California at Santa Cruz. In case you are not familiar with this school, it makes U.C. Berkley look like a bastion of conservatism.
So what about private sector experience over his 35 year career? You guessed it, zero. How about past experience as a regulator who at least could interact with the private sector? No again. What we have here is the classic liberal elite academic who looks at the world through prisms of theory and ideology.
Professor Jost holds himself out to be a patient’s rights advocate and clearly views the NAIC as a forum to present his “ivory tower” perspective. OK fine, there’s certainly room for a diversity of qualified opinions as part of the policy development process.
The problem is that while Professor Jost may well have valid perspectives to contribute on true consumer (patient) protection issues, he’s out of his league in commenting on how health care delivery should be financed.
Moreover, if he was truly concerned about the ability of individuals to receive quality, affordable health care, Professor Jost should actually be a proponent of self-insured health plans (regardless of size) because these plans generally do a better job on both counts as compared to the fully-insured marketplace.
It appears the professor is in need of some timely continuing education.
Friday, September 9, 2011
The Risk Retention Modernization Act (H.R. 2126) includes a dispute resolution provision whereby RRGs who believe they are being illegally regulated in non-domiciliary states can access the equivalent of a federal arbitration process as an alternative to initiating costly legal action.
An earlier version of the legislation provided that this dispute resolution mechanism would be administered within the Treasury Department due to technical jurisdiction requirements, but left discretion Treasury to fit this function in as part their exiting organizational chart.
Fast forward to the recent passage of the Dodd-Frank financial reform legislation, which among other things created a new Federal Insurance Office (FIO) to be housed within the Treasury Department. As a result of this development, the current version of the legislation specifically designates FIO as the entity responsible to arbitrate RRG disputes with state regulators.
Supporters of the legislation have always known that there would be some push back in Congress from members concerned that such a dispute resolution would infringe on the authority of state insurance regulators. Of course, the opposite is actually true and this position has gained traction in recent months.
But just as the policy argument has largely been settled, at least one member of Congress key to the legislation’s eventual message has raised a new concern. In a meeting earlier this week to discuss the legislation, Rep. Judy Biggert (R-IL), chairwoman of the House Subcommittee of Capital Markets within the House Financial Services Committee, voiced strong concerns about this new responsibility assigned to the FIO.
Her objection was not really specific to RRG regulation, but rather reflects a broader view held by many Republicans that the FIO is being given too much authority. In hindsight, this objection was not particularly surprising.
While PPACA has garnered the lion share of public attention for those critical of government expanding its regulatory reach, the distaste for Dodd-Frank is significant among most Republican members of Congress. As a result, any manifestation of this law, such as the FIO, can spark a reflexive push back as demonstrated by Rep. Biggert’s comments.
It is important to note that this new wrinkle does not mean that H.R. 2126 cannot pass. The lobbying process on Capitol Hill is inherently complicated and this is just the latest example.
In the end, if the case can be made that the practical advantages this legislation offers to small and mid-sized companies trump more abstract political concerns, the LRRA will be successfully modernized.
Stay tuned for additional inside reports on how this legislation is progressing on Capitol Hill.
Now on the surface, this may sound like a laudable focus because almost everyone agrees that there is a role for government in making sure that sensible workplace safety standards are established and adhered to. But of course, in this current political climate Obama regulators just don’t know when to say when.
Specifically, OSHA has recently started to subpoena workplace safety audits prepared by workers’ compensation self-insurers and insurance carriers. Keep in mind that that these audits are prepared on voluntary basis so that employers/insurers are better able to proactively address any safety deficiencies that may exist. Such audits are particularly important tools for workers’ compensation self-insurers because they “own” every dollar saved on payments to injured workers.
Historically, OSHA has not attempted to access such audits because everyone understood that employers would likely stop preparing these risk management tools if they could be used against them in regulatory enforcement and/or legal proceedings.
This precedence has been overturned by a recent federal district court ruling stating that OSHA does have the right to subpoena safety audits and related documentation. Specifically, the ruling in the case of Solis v. Grinnell Mutual Reinsurance Company concluded that audit subpoena are generally enforceable if:
1) They reasonably relate to an investigation within OSHA’s authority;
2) The requested documents are relevant to OSHA’s investigation;
3) The request is not too vague
4) Proper administrative procedures have been followed; and
5) The subpoena does not demand information for an “illegitimate purpose”
According to OSHA’s internal policy regarding voluntary self-audits, the agency will not “routinely” request such audits at the beginning of an inspection, or use the audits to identify hazards to inspect.
But now with a favorable court ruling in their back pocket, it’s very reasonable to expect that OSHA regulators will, in fact, make safety audit subpoenas a routine part of their investigative process.
Of course, and ironically, the real victims are the workers as many employers are likely to curtail such formal audits in response to OSHA’s invasive zeal. Another classic example of “no good deed goes unpunished” apparently embraced by this administration.
Thursday, September 8, 2011
In anticipation of this legislative development, I spoke with senior representatives from a leading Michigan employer organization to explore possible response options, including litigation coordination if necessary. When asked specifically what their appetite was for legal action assuming the legislation is signed into law, their answer was pretty clear – “zero.”
Given that this association represents many self-insured employers such strong push back was surprising to say the least. Then the “off the record” discussion began.
It turns out that there had been some significant wheeling and dealing between the Legislature, the governor and the business community in order to craft various budget reform initiatives designed to head off a projected deficit.
My contacts confided in me that their organization is privately opposed to the health plan tax proposal but will not go on record to say so, much less getting involved in possible litigation. They cite two reasons for this seemingly contradictory stance.
First, their membership includes health insurance companies in addition to self-insured employers and they believe an outspoken defense of self-insurers would alienate this other membership constituency. The other rationale is if the boat was rocked on this issue, then some of the other “deals” presumed to be favorable to the employer community could fall apart.
Of course, the big picture was not taken into account. They acknowledge that the immediate negative financial impact for self-insured employers is bad but manageable. Not considered was that if state efforts to tax and/or regulate self-insured health plans are left unchecked, self-insurance may cease to be an attractive option for employers in Michigan and elsewhere, which would effectively trap employers in the traditional health insurance marketplace – a much more ominous situation than being subject to a one percent tax as problematic as that may be.
My contacts appreciated this analysis and agreed that there are, in fact, bigger issues at play. That said, the bottom line is that many within the leadership of their very influential organization would likely applaud an effort to push back against the health plan tax, but this would be private support with no organizational fingerprints.
So there you have it. The very important fight over ERISA preemption has been dealt away in Michigan in favor of other business community priorities that likely are less important to employers from a P&L perspective. It’s uncertain how things will eventually play out in Michigan, but this look behind the curtain on the relationship between state employer organizations and government exemplifies why the self-insurance industry has an ongoing challenge at the state level.
While the ability of employers to self-insure is more significant than most tax and regulatory initiatives (again from a P&L perspective), self-insurance issues simply do not get much attention for state organizations, which tend to have more broad-based legislative agendas. To be fair, this is understandable because these groups generally have diverse membership constituencies and not have the resources to focus on issues that only a single constituency. Moreover, the member representatives do not generally insist that their organization put self-insurance issues front and center.
To the extent that employers can be mobilized to rattle the cages of state business associations to pay more attention to self-insurance issues we may be able to turn “private support” to visible public advocacy on the future threats that are almost certain to arise.
Let the cage rattling begin.
Friday, August 26, 2011
“Wear and tear” is defined by Wikipedia as “damage that naturally and inevitably occurs as a result of normal wear or aging.” An example on a home would be a house settling over time, a pipe that corrodes and leaks water over several months or years, or a roof that after 15 years starts to drop shingles. All these items would not be covered under an insurance policy as an insurance policy does not cover “Wear and Tear”. Insurance policies cover “Sudden and Accidental” events.
So what is “Sudden and Accidental”? The best way to define it is by giving examples. If a pipe in your house just suddenly burst from pressure or because of freezing that is sudden and was done accidently. If wind blows through your neighborhood and suddenly blows off your roof or chunks of your roof that is sudden and accidental. If a tree falls and damages your home that event is sudden and accidental.
“Sudden and Accidental” events are things people can not totally prevent which is why insurance exists and covers them. On the other hand, “Wear and Tear” damage can be prevented by making sure your property is well maintained and updated. Insurance policies are not maintenance contracts.
So next time you have damage to your property ask yourself is this “Wear and Tear” or “Sudden and Accidental”? If it is “Sudden and Accidental” be sure to call your insurance agent or if you are not sure which it falls under call your insurance agent and let them help you figure that out.
Wednesday, August 17, 2011
(1) If your son or daughter is going away to school over 100 miles from home without a car, most companies will rate your Personal Auto Policy for them being married which is a nice discount. Let us know if this discount might apply to your family and your Personal Auto Policy.
(2) Most insurance companies will extend personal property (contents) coverage and personal liability for your son or daughter while they are in college and living in a dormitory. Some, but not all, will also extend coverage if they are living in off campus facilities such as an apartment or other student housing. Please check with us to see if your insurance company provides this extended protection. If not, we should be able to write a Tenant/Homeowner for your student to cover both their personal property and personal liability while they are an undergraduate. If they are in graduate school, they should definitely have their own Tenant/Homeowner Policy.
(3) If you or your children are using a rental truck to take their things back to college, U-Haul, Penske, Hertz and other will offer you coverage on the vehicle (collision damage waiver) and extended liability. While these may be covered by your Personal Auto Policy, not all companies extend the protection, so check with us before renting the vehicle. Whether or not they are covered will depend on the length and Gross Vehicle Weight of the vehicle and several other factors. We may be suggesting you buy the extra protection from the rental company before your trip.
Tuesday, August 9, 2011
In a typical homeowner policy there is wording that refers to a 60 day period. For sixty days your homeowner policy will have no change in coverage once it becomes vacant. However, and this is important, once the house has been vacant for 60 days some of the coverages are no longer provided. Example, vandalism or malicious mischief claims would no longer be covered. Same with glass breakage claims. The reason for this is that a homeowner policy is priced and designed for buildings that are being lived in and cared for by the owners. Once the owner no longer lives there and it is vacant then the building is more at risk for claims and therefore the insurance companies require it be on a special vacancy policy. What does vacancy mean? Vacancy means the following, “Substantially empty of personal property necessary to sustain normal occupancy.”
So if you are considering purchasing a new home and leaving the current home vacant until it sells, please be sure to call your insurance agent so they can make sure coverages don’t disappear from your policy
Thursday, July 28, 2011
Why do insurance policies contain such provisions? The homeowners insurance policy is written to provide coverage for the average policy holder. Most of us do not own collections or keep large amounts of cash at our homes. While the policy provides some limited coverage for special types of property, it in no way serves the needs of the unique collector.
There is, however, a solution for the collector or owner of unusual property items. It is possible to amend your homeowners policy, by endorsement, to provide special coverage for unique collection items such as coins or stamps. By asking your agent to include a schedule property floater in your coverage, you can specifically insure items of special interest. The personal property floater also expands coverage for perils not included in the homeowner policy.
Thursday, July 21, 2011
Our hope is that you have enjoyed the 99 other posts and found some information that was helpful in each one. For the years to come we will continue to add helpful content so that our clients and readers can enjoy a safe and protected life.
Thursday, July 14, 2011
Four Key Objectives must be accomplished as quickly as reasonably possible:
1) Rebuild the building, or find a move to an alternate permanent location.
2) Find, purchase, and have operational, replacement machinery and equipment.
3) Replace and/or replenish stock (raw materials for manufacturing operations).
4) Return operations to the same level existing just prior to the loss.
Business Income’s Necessity
According to the Federal Emergency Management Agency (FEMA), there is a structure fire ever 4.5 minutes. Approximately 25 percent of businesses never reopen after a shutdown of just 30 or more days, according to the insurance industry. When you include the number of business failures within five years that are directly traceable to the same kind of claim, the number could approach 40 percent.
Business closings as a result of natural disasters also reach 25percent. The U.S. Small Business Administration reports that more than 90 percent of small businesses fail within two years after being struck by a disaster. Combining these two pieces of statistical data, losses can lead to the closure of thousands of business in any given year due to an interruption in operations.
Once total revenues and the total amount of non-continuing expenses (production-related expenses that do not continue during the interruption) is known and applied to an honest worst-case scenario estimate of the time necessary to resume operations, the correct coinsurance percentage can be calculated. Coinsurance percentages, in 10 percent increments, can be from 50 percent to 100 percent- each representing a proportion of one year (50 percent equals six months; 60 percent equals 7.2 months; 100 percent equals 12 months). It is also sometimes possible to obtain a 15-month business-interruption period at a corresponding coinsurance limit of 125 percent.
Most businesses that close and never reopen after a catastrophic closure (30 days or more), don’t close because of the lack of building and business personal property coverage. They close because there is no money coming in the door. Few businesses can remain viable without a source of income. Many business expenses continue even during the period of temporary closing.
Obviously, the optimal goal is to have the building, contents and business income all properly insured. Ultimately, only the business can provide these figures, but this simple approach can make this exercise much easier. Once you accept the reality that loss of income is as important to the insure as insuring your property, we can help guide you to the proper coverage to further protect your business.
Thursday, July 7, 2011
Fortunately, many insurance companies offer extended dwelling coverage to help prevent such shortfalls.
How it works
Two coverage levels give you options: Extended dwelling coverage is available at levels of 25% or %50% of additional Coverage A amounts, allowing people to choose the level that fits their needs.
Example: A home is insured for a Dwelling Limit (Coverage A) of $100,000. Following a total loss, reconstruction cost amount to $120,000. Without extended dwelling coverage, the policy holder could incur significant out of pocket expenses or be forced to make difficult rebuilding choices to reduce the costs. With 25% or 50% in extended dwelling coverage, the home would have those extra costs covered (i.e. 25%-Dwelling is increase to $125,000 or 50%-Dwelling is increased to $150,000).
Wednesday, June 29, 2011
The institute for Highway Safety has provided a method to take much of the guesswork out of selecting the proper booster seat for your child. Seat belts are designed with adults in mind- so a child booster seat is an absolute necessity, and extra care needs to be taken when securing young children.
Children usually resist wearing a seatbelt because it is uncomfortable. Boosters elevate children so that the safety belts installed in the vehicles by manufacturers will fit the child better. The booster seat allows the lap belt to fit properly over the child’s thighs and not their abdomen. The shoulder belt should fit across the middle of the child’s shoulder. Not only will the belt be more comfortable, it will provide maximum protection in a crash.
The institute’s researchers used a specially designed test dummy configured as a 6 year old child. The researchers determined the effectiveness of how a 3-point lap and shoulder belt fit the dummy under a range of configurations representing many different automobile models. Based on a range of scores, a booster seat rating was assigned to each seat.
Saturday, June 18, 2011
According to knowledgeable sources, preliminary discussions about finding a reasonable compromise to allow well run New York SIGs to continue to operate have not panned out. At issue has been the posting of security to satisfy regulator concerns about solvency going forward.
The state’s workers’ compensation board pushed back against formulas proposed by industry that would allow funds sufficient access to cash to pay claims and other operating expenses. As a result, a new law has been passed requiring funds to post security equal to 160% of expected claims. With such a high bar, it is likely that the baby will be thrown out with the bath water.
There is some uncertainty, however, as the regulations to implement the new law has yet to be written and industry continues to press its case to the Governor and the Legislature that this law will have significant negative ramifications for the state’s workers’ compensation system. So stay tuned as there may additional twists to this story in months ahead.
But while New York has been the epicenter of actual legislative/regulatory activity affecting SIGs, it’s worth noting that the New York experience has spurred discussions in national forums.
Just last month at the National Council of Self-Insurers (NCSI) Annual Meeting, representatives from the California Self-Insurers Security Fund presented a session on SIGs. Although some good objective data was provided, there was an obvious bias evidenced by the fact that they were quick to point out the isolated problems within the SIG industry without acknowledging that the overwhelming number of SIGs are well run and provide smaller employers an important risk financing option.
It should not be surprising that the presentation concluded with comments suggesting that national standards for SIG regulation should be considered.
This discussion promises to pick up again next month Southeastern Association of Workers’ Compensation Administrators (SAWCA) Annual Meeting as one of the featured sessions will discuss “warning signs for a SIG default.” This meeting typically attracts a large number of regulators so the meeting room is likely to be filled with those who may be inclined to make it more difficult for SIGs to operate.
While a serious regulatory push with national reach may not be right around the corner, those who have an interest in maintaining sensible SIG regulation should nonetheless pay attention to the discussions that are going on because developments can accelerate with little warning.
Not only do you have regulators encouraging each other to conform to group think about how to deal with SIGs, but the traditional insurance industry never misses an opportunity to stir the pot by trying to make funds look bad. The confluence of these dynamics should keep SIG industry stakeholders on their toes.
So we’ll watch to see how things continue to play out in New York while keeping an eye on other states who may not be able to resist on messing with a good thing.
Wednesday, June 15, 2011
Some examples of their courses are:
Cybersafe which teaches kids how to safely use the internet. They teach them how to see warning signs and unsafe situations online.
Another course is all about avoiding being bullied or how to deal appropriately with a bully. The course is called Bully Proofing.
Their most popular class is the Babysitter Training course. This course helps kids develop the skills needed to take care of other children.
Knowledge and education are always a good defense against certain dangers. Kidproof’s classes are a great way for parents to help make children aware and educated on today’s dangers. Visit www.kidproofsaftey.com today.
Kidproof is always looking to expand to help get the word out to parents in different communities in
Monday, June 13, 2011
This discussion has heated up as policy-makers look ahead to 2014 when state insurance exchanges are slated to come on-line and they try to predict market conditions and that time. For PPACA supporters, there’s a lot riding on making sure the exchanges work as promised so they are taking aim at any real or perceived obstacles. Adverse selection drivers are at the top of the list.
We saw this first in the HHS Report on the Large Group Market, which was published in March. In the report HHS commented that if low attachment point policies in the reinsurance (read stop-loss) market become more widely available by 2014, a significant number of fully-insured employers with “low risk” employees will switch to self-insurance, therefore creating adverse selection in the marketplace.
This section of the report concludes that “these results highlight the importance of closely monitoring the availability and pricing of reinsurance (stop-loss insurance) and closely monitoring decisions made by small employers to self-insure.”
A working draft of a recent NAIC white paper on the subject of adverse selection also points the finger at self-insurance as contributing to adverse selection. The NAIC writes: “Employers with favorable risk demographics have an incentive to self-fund while those with less desirable risks would tend to opt for fully-insured plans either through the exchange or in the outside market.”
Neither HHS nor the NAIC acknowledges one very important fact as part of their analysis, which is that most companies with fewer than 100 employees simply do not know if their group is a good risk because claims data is generally not available to them. In this regard, their “premeditation” argument is compromised.
Now it’s true that employers that switch to self-insurance can often improve the aggregate risk profile of their groups over time, regardless of the baseline at the time of transition, through wellness programs and other innovative plan design strategies, but shouldn’t that be the objective of all group health plans?
Let’s also recognize the importance of the HHS comment about “closely monitoring” the stop-loss market as way to guard against adverse selection. As described in my previous blog posting, Treasury Department Gets Schooled on stop-Loss Insurance, federal regulators now have a keen interest in stop-loss insurance for a variety of reasons.
This new federal attention combined with the ongoing desire by state legislators to expand their authority over self-insured health plans creates a very uncertain environment for future legislative/regulatory activity that could affect the ability of small and even mid-sized companies to self-insure.
There’s one last development on this subject worth mentioning. Some key House Republican staffers have indicated a renewed interest in introducing association health plan (AHP) legislation, but are holding back because of anticipated criticism that self-insured AHPs would contribute to adverse selection. So the education process continues on multiple fronts.
Thursday, June 9, 2011
The pool itself has coverage on your homeowner policy under Section I, Other Structures. Normally this coverage is 10% to 20% of the amount of insurance you have on your home. Let’s say you have your house insured for $200,000; under a typical homeowner policy you will have $20,000 in coverage for Other Structures. As a pool owner you need to ask yourself, is that enough to cover my pool if it was damaged? If not you may need to increase your Other Structures coverage.
Liability is always a big concern when a pool is involved. It is important for pool owners to know that many insurance companies require pools to be fenced. If they are not the pool owner may find their homeowner carrier canceling their insurance. So if you are someone that currently doesn’t have a pool but plan to add one, make sure to include a fence in your planning process.
Umbrella insurance policies are something we at Fey Insurance Services always recommend but if you are a pool owner we strongly recommend them. Unfortunately drowning is a real risk when you own a pool. Heaven forbid this ever happened at your pool but if tragedy did strike you would want to have all the liability coverage you can to help protect you.
So before you pull the winter cover off your pool, be sure to consult with your insurance agent and do a review of your homeowner insurance. Enjoy the summer!
Thursday, June 2, 2011
With all the devastation that is occurring in the country from tornados, home insurance has become a hot topic. More specifically, having the correct amount of insurance on your home has become a hot topic. A few weeks back we posted a blog article about a house's "Market Value" vs. "Construction Replacement Cost". Just a few days ago USA Today journalist Sandra Block posted a wonderful article in the Money section of USA Today on the same topic. Here is a link to this article:
Will Your Homeowners Insurance Cover You if Disaster Hits? by Sandra Block (June 1, 2011) USA Today
Thursday, May 26, 2011
More precisely, Treasury/IRS is suspicious that self-insured health plans with low attachment point stop-loss policies are really fully-insured plans in disguise. This was made clear in a meeting this week with senior Treasury Department and IRS officials when Treasury’s point person on the issue commented that “obviously products that look, smell and breathe like health insurance have our attention.”
While the audience was new the line of interrogation was not.
In meetings with HHS and DOL officials late last year in connection with the preparation of PPACA-mandated reports on self-insured group health plans, pointed questions were raised about “sham self-insurance,” which has become a popular catch phrase among the regulator class.
Of course, this suspicion did not materialize immaculately. The HHS/DOL team volunteered that they had been lead to believe that sham self-insurance is commonplace. While they did not disclose their sources, it is reasonable to believe that our friends from AHIP were among those whispering in their ears.
Getting back to the meeting this week, Treasury/IRS picked up where HHS and DOL left off although without any obvious bias. Stop-loss was clearly a new animal to them and my sense was that they were truly interested to understand it better.
Joining me was the “Seal Team Six” of stop-loss insurance experts who deftly responded to questions about low attachment point stop-loss polices by pointing out that this does fit the business model of carriers which control the vast majority of the marketplace.
As part of this discussion it was pointed out that contrary to the hype that small employers are moving to self-insurance in big numbers (and buying low attachment point policies) to avoid PPACA regulatory requirements, the facts don’t bear this out. In fact, the carrier representatives noted that that the lack of claims data is a major hurdle for companies with fewer than 100 employees for making the switch to self-insurance. They reported that the real growth in the stop-loss marketplace is actually coming from larger employers who may have not utilized stop-loss insurance in the past but are buying it now in response to unlimited lifetime limits.
Oh and by the way, the contention that there is a motivation among smaller employers to self-insure to avoid new regulatory requirements is specious because for non-grandfathered self-insured plans there really are no significant regulatory advantages.
We also highlighted the fact that states regulate stop-loss insurance separately than health insurance, PPACA regulatory guidance has acknowledged the difference, and legal precedent supports this position. All in all we made a pretty compelling case why stop-loss insurance should not be construed as health insurance.
While a contrary interpretation would create tax complications for stop-loss carriers, the broader concern is that if the IRS comes out with a new definition of stop-loss insurance this could completely disrupt the current regulatory environment.
Our audience maintained poker faces throughout the meeting (which I suppose is typical of tax people) so it was tough to get a read on how they were digesting our input. We’ll know for sure when the proposed rule comes out, but that won’t like be published for a while because the new compensation rules are not scheduled to take effect until 2013.
In the meantime, it should be instructive to those in the self-insurance industry that federal regulators are watching what is going in the marketplace. For companies pushing the envelope with “innovative” stop-loss products beware that you may be inviting negative attention.
Now my neighbor lives next door to an insurance man so he was already well versed in whose insurance takes care of the damages to his SUV but for those of you that are not as privileged to live next to an insurance man I thought I would explain. Even though it was my tree that caused the damage my homeowner policy would not be involved in paying for the damages. In order for me to be responsible I would have to be negligent in some way but since it was an “act of God” (wind) negligence could not be pointed at me. Therefore, the coverage for the damage to his vehicle would fall under his personal auto policy. More specifically it would be his comprehensive or “other than collision” coverage. Since this coverage usually has a deductible (the amount the policy holder has to pay out of pocket before the insurance company takes care of the rest) I offered to help pay the amount he would have to pay out of pocket. I was not required to do this but since I like my neighbor and it was my tree, I felt it was the right thing to do.
There is, however, one situation that could have made the tree limb fall my fault. If for some reason my neighbor felt that my tree was unhealthy and dangerous he could compose a letter and “send receipt” a letter to me (meaning upon delivery I would have to sign a document stating I had received the letter). In the letter he would have to state that he felt my tree was in danger of falling and causing damage to his property. If that had been the case and my neighbor had sent me the letter he could have had grounds that I was negligent. This in turn would cause my homeowner policy to pay out for his damages and not his personal auto policy.
By the way, my tree is very healthy so there is no need for my neighbor to write a letter.