INDUSTRY GROUPS PRAISE LEGAL REFORM AGENDA - President George Bush publicly launched a major effort to enact significant legal reform during his second term, a move praised by the American Insurance Association (AIA). "President Bush is shining a welcome public spotlight this week on the urgent need for specific civil justice reforms to address the growing problem of lawsuit abuse. The Administration's legal reform agenda, focused on class action, medical liability and asbestos litigation reforms, targets areas of the judicial system that too often encourage frivolous lawsuits and excessive awards, placing a tremendous cost burden on our entire economy, businesses and consumers alike." Americas' Health Insurance Plans (AHIP) CEO Karen Ignagni adds, "President Bush is right to put the issue front-and-center. It is time for this litigation shakedown to end. A few should not profit at the expense of millions of patients, consumers, doctors and employers. AHIP will be working hard in the coming year to enact at the federal and state level appropriate lawsuit reforms that seek to re-balance the scales, and, in doing so, to ensure that our legal system punishes wrongful conduct, while not rewarding wrongful lawsuits."

BIG "I"...ASBESTOS BILL A GOOD START - The Independent Insurance Agents & Brokers of America (the Big "I") applauded Senate Judiciary Committee Chairman Arlen Specter (R-Pa.) for moving quickly to hold hearings on proposed asbestos legislation, but would like to see additional protections added to insulate insurers and manufacturers against potential insolvency and to avoid putting asbestos cases back into the court system. 

INSURERS ALSO CONCERNED ABOUT ASBESTOS REFORM – Insurers are concerned that the "Fairness in Asbestos Injury Resolution Act" (FAIR Act) will not become a true exclusive remedy for all asbestos claims; rather, substantial leakage of claims back into the tort system could occur as the direct result of several provisions dealing with the fund's start-up and either full or partial sunset. "The last thing that a national trust fund should do is to allow asbestos litigation to continue after the bill is signed into law, or be constructed in a way that ever allows a return to the same litigation system that has created the problem in the first place. AIA could only support a trust fund construct if that fund became the exclusive remedy for all asbestos claims. Without including all claims, there is no finality, and the way some of the medical criteria and awards structure are constructed, insurers are concerned that a fund is 'made to fail.'" 

HEALTH COST IS TOP CONCERN – Despite a lack of knowledge about HSAs by the general public, a Forbes Health Day News survey indicates that nearly two-thirds of respondents feel lowering the cost of health care and health insurance should be a leading priority of the Bush Administration. Strangely, while related to reductions in health care costs, malpractice reform and the importation of prescription drugs from Canada were ranked low on the list of priorities. To us this indicates a lack of public knowledge of what needs to be done to reduce health care costs and/or a flawed survey.

$40 MILLION DEAL - State Farm has reached agreement with a multi-state task force to pay $40 million to compensate about 30,000 customers who bought damaged cars without knowing their true background.  In an internal review, State Farm discovered that it did not properly document vehicles taken from policyholders due to damage or theft.  In a proactive move, the company then approached the states in order to address the errors.

EMPLOYERS ATTACK ROOT CAUSES OF HEALTH CARE INFLATION – A new Hewitt survey reveals that employers are critically concerned with the business impact of escalating health care costs and are looking beyond cost shifting to attack the root causes of rising costs. In fact, some companies are shifting responsibility for health care strategy to finance and purchasing executives, a responsibility previously held by human resources. "Increasingly, companies are recognizing that incremental changes are insufficient to attack the health care cost crisis, so they are moving beyond the more common methods for controlling costs to create more sustained and systematic changes. Employers are looking to tackle the root causes of inflation through consumer-driven plans, employee education, influencing positive employee behavior changes through condition management and wellness programs, and improving the amount and quality of data available on health care costs and quality."  It's no wonder this issue has become a business priority, what with the Office of the Actuary at the Centers for Medicare & Medicaid estimating that overall U.S. health spending grew "only" 7.7% in 2003 to $1.7 trillion, or an average of $5,670 per U.S. resident. 

FINANCIAL ADVISORS WILL PROFIT BY NEW SOCIAL SECURITY PLAN - If President Bush's Social Security plan becomes reality, financial advisors, brokers and other investment advisors should be very happy. The privatization of a portion of contributions to retirement savings in the stock and bond markets could result in a bonanza of fees.  However, with few details of the proposed changes announced to date and opposition mounting, advisors shouldn't "count their fees before they hatch."  For a view of criticism of the President's proposed changes, read the AARP article "Don't Mess with Success."

ADMINISTRATION TO OFFER PBGC PROPOSALS SOON - Treasury Secretary John Snow will soon release the Administration's plan to strengthen the Pension Benefit Guaranty Corporation (PBGC) by addressing the agency's $23 billion deficit. No specific plans as yet, but we believe it is a fair guess that it will cost the taxpayers money.

PUBLIC PENSION LIMITS INCREASING – Finally learning what the private sector has known for some time, pension plans with too generous benefits can bankrupt even government entities. Consequently, more states and other public entities are limiting pension benefits for newly hired public workers.  California Gov. Arnold Schwarzenegger has proposed removing new state workers from the state's defined-benefit retirement plan and placing them in a defined-contribution plan. It is about time. 
 

100 INSURANCE INDUSTRY MOST POWERFUL - The fourth annual "INSURANCE NEWSCAST 100 Insurance Industry Most Powerful - North America" list has now been compiled and can be seen here.

FRAUD ADDS $5 BILLION TO AUTO INJURY INSURANCE CLAIMS - The Insurance Research Council (IRC) estimates in a new report that fraud and buildup added between $4.3 and $5.8 billion to auto injury settlements in 2002, which represents between 11% and 15% of all dollars paid for private passenger auto injury insurance claims in that year. Good news is that this estimate is somewhat lower than in an IRC study of claims paid in 1992. In that study, the IRC found that fraud and buildup added between 17% and 20% of total claim dollars paid in 1992. 

INSURANCE FRAUD – The Coalition Against Insurance Fraud (http://www.insurancefraud.org) has issued a list of eight insurance swindles consumers must watch for in 2005:  airbag fraud, stolen premiums, churning, "sliding" unwanted expenses into a policy, staged accidents, windshield fraud and fake viatical investments.

TRIA REPORT – The report published by the Congressional Budget Office on the pro's and con's of extending the federal Terrorism Risk Insurance Act (TRIA), which expires at the end of this year, can be found by clicking here.

REAL ESTATE REBOUND – USA Today reports that real estate funds jumped 32% in value last year. The strong showing was based upon low interest rates and an improved economy.  There is, however, concern that real estate investments may suffer the same "irrational exuberance" fate as the "dot-com" bust.

DOCTOR'S SUIT AGAINST HMOS TO PROCEED – The Supreme Court, without comment, refused to review the class-action status for a lawsuit on behalf of more than 600,000 doctors against six HMO's for alleged violation of federal racketeering law by systematically underpaying for medical services. This means the lawsuit will proceed.

WELLS FARGO AND BARCLAYS TALK MERGER - British bank Barclays and U.S. bank Wells Fargo are talking merger that could result in an international financial giant worth about $180 billion.

ENRON/WORLDCOM SETTLEMENTS - Former directors of Enron will pay $168 million as part of a shareholder lawsuit over the collapse of the energy trading company. About $13 million will come from the directors' own pockets and insurance proceeds will pay $155 million. Former directors of WorldCom have agreed to a $54 million settlement of an investor class-action lawsuit that includes $18 million from their own pockets.
 

A "ROSIER" REPORT – America's Health Insurance Plans (AHIP) is presenting a more favorable view of the response to HSAs, reporting that about 438,000 people chose the new plans through September of last year.  "These early data demonstrate that the market is reacting very quickly to health savings accounts," according to Karen Ignagni, AHIP president and CEO.  Despite the positive AHIP outlook, the fact remains that the cost of these plans still remains out of reach for many of the uninsured.  The average cost for the high-deductible health insurance portion of HSAs is about $200 per month for individuals nationwide and is over $400 per month for family coverage, with many states having even higher premiums.  Many of the uninsured can't afford these costs, much less contributions to the savings component of HSAs.

RETIREMENT SAVINGS AHEAD OF COLLEGE SAVINGS – According to the latest Allstate "Retirement Reality Check" survey, while most people with children younger than 18 say they can save for retirement and college expenses, when forced to prioritize, fully one-third admit they are saving mostly for retirement and putting only a little money toward college. Only 5% said they have put off saving for retirement until they have paid for their child's college -compared with the 33% who said they're doing the opposite. Interestingly, respondents with the least amount of college education are most likely to put their children's education and paying for it above their own retirement savings goals.
 
WHAT'S IN A NAME? – Apparently a lot according to Manulife.  Manulife USA has announced that its line of U.S. life insurance products will now be sold under the John Hancock name, hoping to leverage the Hancock brand name recognition into increased sales. 

SAVING CARD FOR UNINSURED –Several pharmaceutical companies are now offering a drug savings card to help reduce health costs for the roughly 45 million uninsured Americans. The free card is called Together RX Access and gives patients discounts on brand-name and generic medicines (http://www.togetherrxaccess.com). Critics say the move is calculated to divert attention from high prices and the debate over importing cheaper medicines from Canada. 

PIA AND BIG "I" ON NAIC COMPENSATION DISCLOSURE MODEL - The National Association of Professional Insurance Agents (PIA) is opposed to the version of a compensation disclosure model law that was passed by the National Association of Insurance Commissioners (NAIC) and vowed to continue working to secure changes to improve the "deeply flawed" model. The PIA believes the model still has numerous deficiencies that need to be corrected; these include: the distinction between independent agents and brokers must be improved; a better definition of the kinds of "insurance placements" covered by the model is needed and additional technical changes are needed. The PIA believes the model passed by the NAIC attempts to craft a solution to the problem of alleged bid-rigging at several major Fortune 500 brokerage firms, but then over-reaches by imposing broad disclosure requirements on the entire retail sector. The Big "I" appears to be taking a less aggressive stance and stated, "We look forward to working with state regulators, individual commissioners and the NAIC on a number of issues, with a focus on those matters that continue to be problems. Any reforms to be made must help consumers obtain meaningful, relevant, and understandable information, yet do so without creating needless and costly impediments to doing business."

STRONG CORRELATION BETWEEN CREDIT SCORE AND CLAIMS - A Texas Department of Insurance (TDI) report on insurer use of credit information confirms a "strong relationship" between a person's credit history and his/her propensity for filing claims, once again proving the validity of the use of credit information in determining an insurance customer's potential risk. No big surprise here but it does bolster company claims that credit reports are legitimate underwriting information. 

NO-CHARGE INSURANCE TO HELP SELL CARS - Volkswagen of America will offer the industry's first no-charge insurance policy to customers who purchase or lease selected models during a three-month test in Illinois and Wisconsin. Volkswagen will pay the premiums based on a new insurance model devised by Creative Innovators Associates. Details on the pilot program can be found at http://www.cia123.com.

MEDICAL EMERGENCIES TOP FEAR FOR TRAVELERS - According to a survey by the Chubb Group, more than 70% of Americans surveyed said their greatest concern when traveling is suffering a medical emergency...more than double the fear of being mugged (30.7%), three times the fear of being injured in a terrorist attack (23.4%). 

RETIREE DRUG COVERAGE - Deloitte Consulting reports that a surprising 90% employers currently offering their retirees prescription drug coverage intend to continue offering drug coverage after the new Medicare Part D drug coverage is available in 2006.  According to the survey, "This is good news for retirees, but it is even better news for taxpayers because keeping employers in the retiree drug benefit game will save the Medicare program literally millions." 

SMILE AND MAKE MORE MONEY – We can't believe this isn't self-evident. In a recent article by Jeffery Gitomer in the American City Business Journal, the author states, "It costs nothing extra to be friendly. But it can cost a fortune if you're not. Friendliness 'totally' affects a customer's loyalty and a company's morale and profitability."