SENIORS' CLASS ACTION ON ANNUITIES – An 80-plus year-old couple has filed a class action lawsuit on behalf of themselves and other senior citizens in California who claim to have been sold annuity policies that "offer no hope of benefit payouts for at least ten years" and that may include early withdrawal penalties. The lawsuit alleges that American Investors Life Insurance Company engages in unfair business practices by improperly targeting the marketing and sale of its annuities to senior citizens. 

RETIREMENT PLANS PROBED – The New York Times reports that the SEC has asked two dozen fund firms to provide details about payments they may make to ensure their funds are included in corporate 401(k) plans. 

RISING RATES HELP PENSION WOES – Rising Federal interest rates will help defined benefit pension plans with their underfunding problems. In fact, USA Today reports that even a 1% rise in rates could cut the funding gap in underfunded pensions by as much as $133 billion.

SEX BIAS COSTS – To avoid a trial, Morgan Stanley settled sex bias charges for $54 million in response to a class action lawsuit brought on behalf of 300 women brokers. One "lucky litigation" winner walked away with $12 million of the settlement...less, we assume, legal fees. The trial would have been the first of a brokerage based on Equal Employment Opportunity Commission claims.

UNINSURED UPS AND DOWNS - According to the U.S. Centers for Disease Control and Prevention, 43.6 million Americans of all ages, or 15.2% of the population, had no health insurance in 2003, up from 14.7% in 2002 but down from 15.4% in 1997. The federal government is picking up the tab for many uninsureds by requiring hospitals to accept all patients in their "emergency room" operations and underwriting part of that cost.

STABLE LIFE INSURANCE INDUSTRY - Moody's has changed its outlook on the U.S. life insurance industry to stable from negative. The negative outlook had been in place since the third quarter of 2002. The rating agency said that the key credit concerns--investment losses, equity market declines, and low interest rates--that had prompted several rating adjustments downward and negative outlooks during the past 2 years have subsided to a significant extent. 
 

HEALTH INSURANCE FRAUD – According to Blue Cross Blue Shield, health insurance fraud soared 66% in 2003, costing some $162 million in lost revenue.  The top scams uncovered are medically unnecessary procedures disguised as valid procedures (e.g., calling a "tummy tuck" an appendectomy) and excessive prescriptions written for painkillers, such as Oxycontin.

BANK INSURANCE EARNINGS JUMP - U.S. bank holding companies earned a record $8.36 billion in insurance agency commissions and fee income in 2003, up 42.5% over 2002. Complete report is available here. 

SENATE CLASS ACTION VOTE - The American Insurance Association (AIA) issued the following statement on the Senate's vote on class action reform: "It is tremendously disappointing that partisan wrangling and election-year politics thwarted the Class Action Fairness Act on Thursday night. A strong bipartisan majority of senators supports this important legal reform, which would help consumers and end years of well-documented abuses of our legal system. The bill failed not on the merits, but on unrelated political disputes," said Melissa Shelk, AIA vice president, federal affairs. "The Class Action Fairness Act will make the American legal system fairer and simpler, and we will continue to advocate its passage this year." 

FINALLY - The MONY Group is now officially a wholly owned subsidiary of AXA Financial. Under terms of the merger agreement with AXA Financial, MONY stockholders of record will receive $31.00 in cash from AXA plus dividends from MONY of $0.34755 for each share of MONY common stock owned.  MONY common stock was de-listed and ceased trading prior to the opening of the NYSE on July 8. 

MCI RETIREMENT FUND LAWSUIT – WorldCom announced that it and 19 former executives, including ex-CEO Bernie Ebbers, will pay more than $50 million to settle a $500 million lawsuit brought by employees who lost retirement savings due to the company's bankruptcy. Ebbers has agreed to pay up to $4 million and is still facing criminal fraud charges. It appears that WorldCom has managed to come up with a total of about $800 million to offset the approximately $200 billion losses of its creditors, shareholders and employees. Merrill Lynch, the trustee for WorldCom's 401(k) plan, is still facing a trial. 

INSURANCE SURVEY FOR 2004 - National Marketing Services has an informative and free survey of leading insurance executives available by clicking here.  Some key findings: Pricing catapulted to the top of concerns facing major reinsurers and carriers in 2004, dramatically surpassing last year's concerns about terrorism; Despite some emerging concerns about President Bush and lingering worries about terrorism, industry executives support a Bush re-election bid by 57% against a 19% support factor for Kerry.

DIOCESE FILES BANKRUPTCY - The Archdiocese of Portland, Oregon has paid out over $21 million to settle abuse lawsuits in the last 4 years (and as much as $53 million since 1960) and has now reached the end of its financial rope. Faced with current suits totaling over $155 million, the diocese has become the first in the U.S. to be forced into bankruptcy due to legal problems.
 

LIFE PREMIUM UP 10% IN FIRST QUARTER - LIMRA reports Universal life (UL) policies continued to drive individual life insurance sales growth in the first quarter of 2004, while variable products began to show signs of a possible turnaround after a prolonged decline. Overall, first quarter new premium and face amounts were up 10% and policies issued were up 1% over first quarter 2003. With a premium increase of 30% over first quarter 2003, UL enjoyed its thirteenth consecutive quarter of double-digit sales growth. UL now accounts for 38% of annualized new premium. 

"FAIR TAX" – According to Kiplinger, "talk of a national sales tax has grown in recent months."  Enactment of what is known as the "Fair Tax," however, is a long shot.  Under the proposal, income, gift, estate and payroll taxes would all be repealed and replaced with a 29.9% sales tax on the sale of all goods and services, including sales of homes, food and prescription medicines. 

AMERICANS KEEN ON ASSET ALLOCATION - The Hartford and Ibbotson Associates recently surveyed investors and found that eight out of 10 investors indicated that they are practicing asset allocation. However, when asked to explain what they believe asset allocation is, the majority describes simple "diversification" of assets rather than true asset allocation. Also, those who claim to be most familiar with asset allocation tend to have greater invested assets and believe that their investments have exceeded expectations.

NICE TAX AUDIT FOR AETNA - The Congressional Joint Committee on Taxation has approved a tax refund, including interest, of approximately $740 million (after tax) for Aetna. The refund relates to businesses that were sold by the company in the 1990s. The payment also finalizes the IRS audit of Aetna's tax returns for the years 1991 through 2001. 

EVERYBODY NEEDS LIFE INSURANCE! – A Swiss Re sigma study shows that virtually every country in the world has a "protection gap" and if the "gap were to be filled, the average amount a family spends on life insurance premiums each year would need to increase by USD 98 to USD 444, depending on the country." Get the entire study at http://www.swissre.com.

WOMEN AND FINANCES – Prudential Financial has published its third study on "The Financial Experience and Behaviors Among Women."  One finding is that women want financial guidance from professional advisors. For a copy of the study, click here. 

METLIFE'S "DECUMULATION" BROCHURE - A new resource, developed in partnership with the National Association for Variable Annuities (NAVA), to help consumers understand the benefits of having a guaranteed income stream during retirement is available through MetLife. Until now most advice has been focused on accumulating retirement savings, with very little attention paid to how a retiree can protect his or her nest egg. By shifting the retirement focus from asset accumulation to income replacement, individuals will become more familiar with the risks they will face in the "decumulation" phase of their life: inflation, market and longevity risks. Find the brochure here.

DEFERRED COMP TROUBLES – Investment News and others are predicting trouble for a staple concept of the insurance industry...deferred compensation. After Enron, the IRS has begun to target such plans as priority audit items and Congress appears likely to pass legislation that financial advisers say could make deferred compensation plans much less attractive for executives. Good article at www.investmentnews.com and search archives for deferred compensation. 

AMERICAN COLLEGE IN INDIA - The American College has entered into an agreement with the International Academy of Insurance and Financial Management (IAIFM) to provide The College's continuum of educational programs for professionals in India's life insurance industry. "With a population estimated at over a billion people, India represents an enormous insurance market and educational opportunity for our institution," said Larry Barton, PhD., CEO of The American College. 

NEW PRODUCTS FOR BENEFITS MARKETING PROFESSIONALS - There are numerous products and services making their way into company benefit plans and workplace marketing: Identity Theft; Tax Preparation; Mortgage Financing; Pet Insurance; Travel/Cruises; Voluntary, Payroll Deducted, P&C; Video e-mail/Embedded Website Video; Benefits Statements; Lead Services; Legal Plans; Payroll Deducted Computer Purchases; Collateralized Loans (Insurance Renewals). These areas will be reviewed in Las Vegas on August 3 - 5 at BENEFITS MARKETING MANIA 2004. Complete meeting details can be found at www.benefitsmarketing.org.

KAPLAN PROFESSIONAL ACQUIRES INSURANCE ACHIEVEMENT - Kaplan Professional has acquired Insurance Achievement (IA), a developer and publisher of study and exam prep materials for insurance industry designations. IA was founded over 35 years ago by friend and insurance legend, Robert Rackley, JD, CLU, ChFC, CPCU (and just about every other industry designation!).