Insurance Q&A

March 28, 2013

California pension fund loses millions on green tech: ‘A noble way to lose money’

Filed under: Uncategorized — rrroark @ 6:26 pm

California’s public employee pension system has lost millions of dollars on its green investments, which a top investment officer for the fund called “a noble way to lose money.”

Joseph Dear, CalPERS’ chief investment officer, made the comments at the Wall Street Journal’s ECO:nomics conference this week, where he said the pension fund has pulled back on its clean energy investments to avoid losing even more.

“We’re all familiar with the J-curve in private equity. Well, for CalPERS, clean-tech investing has got an L-curve for ‘lose,’ Dear told the conference, the Sacramento Bee reported. “Our experience is that this has been a noble way to lose money. And we’re not here to lose money. We have dialed back.”

via California pension fund loses millions on green tech: ‘A noble way to lose money’ |


Allianz disputes lawsuit alleging liability for another insurer’s failure | Business Insurance

Filed under: Uncategorized — rrroark @ 6:20 pm

Allianz S.E. on Thursday said it will vigorously push back against a lawsuit filed last week in Florida that asserts the company is responsible for the demise of Magnolia Insurance Co.

“These claims are wholly unfounded,” said Hugo Kidston, global head of communications for Allianz Global Corporate & Specialty. “Allianz will robustly defend itself.”

The lawsuit, brought on behalf of the Florida Department of Financial Services, alleges that a $23.8 million loan made in 2008 to Magnolia’s parent company, Irl Financial Group Inc., by New York-based Allianz Risk Transfer, as well as fees and payments resulting from a subsequent managing general agency agreement and other service agreements signed by subsidiaries of both firms, were the cause of Magnolia’s demise.

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via Allianz disputes lawsuit alleging liability for another insurer's failure | Business Insurance.

July 9, 2012

Law will cut defined benefit pension contributions, but increase PBGC premiums | Business Insurance

Filed under: Uncategorized — rrroark @ 1:45 pm

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via Law will cut defined benefit pension contributions, but increase PBGC premiums | Business Insu

ASHINGTON—President Barack Obama has signed into law legislation that will allow employers to slash their defined benefit plan contributions by billions of dollars throughout the next several years, but it also boosts their pension insurance premiums.

The pension-related provisions were included as part of a broader transportation funding bill, H.R. 4348, that President Obama signed Friday.

Under the new law, employers can use higher interest rates to value plan liabilities, thus reducing the value of the liabilities and the contributions they must make to the plans.

Employers will continue to value plan liabilities based on interest rates on top-rated corporate bonds for three different segments, averaged over 24 months. Segments refer to when benefits are paid to participants.

Under this methodology, interest rates that value plan liabilities are based on the maturity date of the corporate bonds. For example, interest rates on pension liabilities to be paid within the next five years will be based on corporate bonds maturing within five years.

Over the next decade, the interest rate changes will boost federal tax revenues by more than $9.4 billion, according to the congressional Joint Committee on Taxation. That is because using higher interest rates will decrease the value of plan liabilities, reducing required tax-deductible plan contributions, which in turn will increase employers’ taxable incomes.

However, the actual interest rate for each segment in 2012 would have to be within 10% of the average of those segment rates for the preceding 25-year period. In succeeding years, this 10% corridor would increase and top out at 30% in 2016.

June 1, 2012

Inflation Sedation

Filed under: Uncategorized — rrroark @ 12:30 pm

Remember when a can of soda cost a nickel? And candy bars were just a dime? Those days are long gone, as inflation over time has raised the price of just about everything. In the past, what your clients earned through wage gains or from their investments generally outpaced the rate of inflation. That difference, in the long term, has helped raise the overall standard of living of many people. Today’s inflation rates create a very different reality for your clients — one that is potentially quite frightening.

The most widely used measure of inflation is the Consumer Price Index (CPI). It is used to measure the changes in prices of all goods and services purchased for consumption by households. It is also an important measure of the overall health of the economy. Over the past 12 months, the Consumer Price Index (CPI) increased 2.9%, according to the Bureau of Labor Statistics. But does that paint the whole picture? Would you say the impact to your clients’ budget has been only 2.9% in the last year? Not likely.

The CPI number has, in the last few years, been suppressed by the lowering cost of some non-essential but useful items, like televisions and computers. The things we have to buy — life’s essentials — are skyrocketing. In the last 12 months, the price of beef is up 11.5%. Milk is up 9.2%. Gas? Up almost 10%. And the prices for college and health care have routinely outpaced that of general inflation for a decade or more.

Calculating inflation’s toll

A recent study by the American Institute for Economic Research developed the Everyday Price Index (EPI) to better reflect the day-to-day experiences of Americans. What they essentially did makes sense. They tweaked the calculation to scale back the percentage on some of the bigger categories with products that consumers can delay or avoid purchasing and focused on categories that are needed and purchased on a daily or weekly basis. A nice, new 50-inch HDTV or an iPhone is a luxury to many, while breakfast and dinner or the gas for the drive to work is not. With these revisions, the EPI for 2011 came in at a staggering 8% — well above the 2.9% increase indicated by the CPI.

In reality, those with additional mouths to feed or who have above-average commutes are likely experiencing even higher rates. CPI and EPI are just different attempts to capture a majority of the prices people are paying for an “average” basket of goods. What really matters, at the end of the day, for all individuals, is that their own income is keeping up with their own expenses.

So where does that leave your clients? In a financially scary place. Today’s inflation rates present a very serious challenge for those living on a fixed budget or in retirement. At the 8% EPI rate, the average American will lose half his purchasing power in just nine years. Even at the CPI rate of 2.9%, purchasing power would be halved in 25 years. But people in or near retirement could still have several decades of need for inflation-protected income. Making the situation worse, interest rates are still near record lows, and most bank savings accounts, money market and CDs are yielding less than 1%.

“Going broke safely” is a situation where investors have unknowingly kept money in low-yielding accounts or under the mattress. While it allows investors to sleep at night, inflation, over time, will erode the purchasing power of that safe money.

via Inflation Sedation.

November 11, 2010

MetLife to Stop Selling New LTC Policies

Filed under: Uncategorized — rrroark @ 6:19 pm

MetLife Inc. says it will no longer sell new long term care (LTC) insurance policies in either the individual or group markets after the end of the year.

The move will not affect coverage for the company’s existing LTC insureds, the company says.

The decision to stop writing new LTC insurance business, effective Dec. 30, came after an “extensive review” of the market, according to the announcement by MetLife (NYSE: MET), New York.

The company will continue to accept new applications for individual LTC policies if they are received by Dec. 30. For existing group and multi-life LTC insurance plans, it will stop accepting new enrollments throughout 2011, with the timing based “on existing contractual obligations” with employers, MetLife said.

Current insureds can keep their coverage and, if permitted under the terms of their policy, change benefits such as inflation protection.

God Help You. You’re on Dialysis.

Filed under: Uncategorized — rrroark @ 11:37 am

Every year, more than 100,000 Americans start dialysis. One in four of them will die within 12 months—a fatality rate that is one of the worst in the industrialized world. Oh, and dialysis arguably costs more here than anywhere else. Although taxpayers cover most of the bill, the government has kept confidential clinic data that could help patients make better decisions. How did our first foray into near-universal coverage, begun four decades ago with such great hope, turn out this way? And what lessons does it hold for the future of health-care reform?

In October 1972, after a month of deliberation, Congress launched the nation’s most ambitious experiment in universal health care: a change to the Social Security Act that granted comprehensive coverage under Medicare to virtually anyone diagnosed with kidney failure, regardless of age or income.

It was a supremely hopeful moment. Although the technology to keep kidney patients alive through dialysis had arrived, it was still unattainable for all but a lucky few. At one hospital, a death panel—or “God committee” in the parlance of the time—was deciding who got it and who didn’t.

Read the rest at “The Atlantic”

Crossposted at Politician, Tar, Feathers (Some Assembly Required)

November 8, 2010

The Election and Insurance Comissioners

Filed under: Uncategorized — rrroark @ 12:51 am

Last week’s election results for state gubernatorial races across the nation are likely to radically change the complexion of the state insurance regulatory system, with commissioner positions hinging on the actions of newly elected governors.

Only 11 states have elected commissioners, and only three of those seats were contested last Tuesday.

Sandy Praeger faced no opposition and will stay as insurance commissioner in Kansas. The only other incumbent running in a commissioner’s race—Democrat Kim Holland in Oklahoma, the vice president of the National Association of Insurance Commissioners—lost to Republican challenger John Doak.

In all other states, insurance commissioners are appointed by the governor, and of the states that do not elect commissioners there will be new governors in two dozen states due to either term limits or because incumbents are not seeking re-election.

September 23, 2010

Changes That Start Today

Filed under: Uncategorized — rrroark @ 11:37 am

If you get insurance through your boss: Many people who are insured through work won’t notice immediate changes to their health plans until their health plans renew, which is tied to companies’ open enrollment periods.

But the mandates could kick in sooner for health plans sold to new entities or individuals after September 23.

Here are some key changes coming into effect:

* Coverage expansion for adult dependents until age 26. Employers will have to provide coverage for dependents of workers who don’t have access to other employer-based health care coverage ’till age 26. Some states already mandate this coverage until age 28 or 29. (If your employer pays any or all of your dependent coverage, consider how pleased that will make him/her.)

* Children no longer denied coverage for pre-existing conditions: Insurance plans can’t deny coverage due to a pre-existing condition to children under age 19. For adults, the same provision goes into effect in 2014. (As a result most carriers will no longer write a “child only” policy which have been popular with parents looking for a less expensive alternative to their group policy at work.)

* Prohibit insurers from rescinding coverage: It‘s illegal for insurers to drop a customer when they become sick or search for an error on a customer’s insurance application and then deny payment for service when the person gets sick. (So they need to make sure of what they are getting into, expect longer underwriting delays and more cost for obtaining physicians statements prior to issuance.)

* Free Preventive Care: All new plans must cover certain preventive services such as mammograms and colonoscopies without charging a deductible, co-pay or coinsurance. If individuals keep their existing plans or if a group plan doesn’t make major changes, the provisions won’t kick in until the plans get changed. (TANSTAAFL, there ain’t no such thing as a free lunch. Your rates will increase if you weren’t already pying for this previously optional coverage.)

* No lifetime limits on coverage: Insurers no longer can impose lifetime dollar limits on essential benefits, like hospital stays or expensive treatments. (Again TANSTAAFL, rates to increase.)

* Unrestricted doctor choice: Plans must allow pediatricians and obstetrician/gynecologists to get primary care physician status. This eliminates the requirement for patients to get prior-authorization from their insurer or a doctor’s referral to see a pediatrician or OB/GYN. (Already been done for years by every top-tier insurance company.)

* Level charges for emergency services: Insurers must remove prior authorizations for ER services. Also, insurers can’t charge higher co-payments or co-insurance for out-of-network ER providers. (Already been done for years by every top-tier insurance company.)

* Patient-friendly appeals process: Insurers will have to establish new internal and external appeals processes for claims. This means that while a claim is under appeal, your insurer has to continue to pay your claims, and continue paying for subsequent treatment, until the matter is resolved.

Small business impact: The changes that kick in on Sept. 23 also apply to small businesses with 50 employees or more that already offered insurance coverage prior to reform.

Companies that didn’t offer coverage pre-reform and have no more than 25 workers will be given incentives such as tax credits and grants to encourage them to offer insurance coverage. (See the post below to see the hoops they have to go through to do that. It appears that it will be better financially for the small employer to only hire single people or drop coverage entirely.)

If you buy insurance yourself: For consumers who buy health insurance directly from insurers, some of the same key changes go into effect this month.

Most importantly, insurers can’t drop you when you get sick or because you made a mistake on your coverage application. Insurers also can’t set annual or lifetime limits. (Again TANSTAAFL, rates to increase.)

If you have children under age 26, you can insure them if your policy allows for dependent coverage. Individual plans can’t deny or exclude coverage to any child under age 19 for pre-existing conditions. (Again TANSTAAFL, rates to increase.)

If you’re a senior citizen: If you have Medicare prescription drug coverage and are affected by the donut hole, this year you will get a one-time tax-free $250 rebate to help pay for prescriptions.

The prescription drug coverage gap that develops when Medicare stops paying for drug coverage and patients can’t afford to pay for drugs out-of-pocket is called the “donut hole.”

In 2011, if high prescription drug costs put you in the donut hole, you’ll get a 50% discount on covered brand-name drugs while you’re in the donut hole.

Also in 2011, Medicare will cover certain preventive services without charging you Medicare Part B (coverage for doctors’ services, outpatient care, home health services) coinsurance or deductible.

Also in 2011, if you have a Medicare Advantage PFFS Plan and live in a Metropolitan area, cuts to the program will cause you to lose that plan. In order to maintain the loss limitation of a Medicare Advantage plan, you are going to have to switch to a plan that requirs you use a network (HMO, POS, or PPO.)

Small Business Tax Credit Flow Chart

Filed under: Uncategorized — rrroark @ 11:02 am

Click on image to download a pdf

Health Care “Reform” Flow Chart

Filed under: Uncategorized — rrroark @ 10:58 am

Click on image to download a pdf

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