U.S. TREASURY SAYS HEALTH COSTS IMPEDE GROWTH - U.S. Treasury Secretary John Snow has renewed his call for Capitol Hill to act on President George W. Bush's health care ideas, citing high insurance costs as a drag on the economy. "The rising cost of health insurance is bad for the small business community, and it impedes growth in the overall American economy."  There seems little question that health care costs are having an impact on job creation, with employers reluctant to add new jobs that bring with them high health insurance premiums.

THIS IS REALLY HELPING WITH THE HEALTH CARE CRISIS – The Oxford, MS Scruggs Law Firm has now filed class action lawsuits for uninsured patients against 50+ nonprofit hospitals and the American Hospital Association. The lawsuits charge the defendants, and those in which the AHA is also named as a defendant, with failing to fulfill their government obligations to provide charitable healthcare to their uninsured patients in return for which the defendant hospital systems and hospitals receive substantial tax exemptions. 

ESTIMATED HURRICANE CHARLEY CLAIMS – Looks like losses related to Hurricane Charley will come in between $6 to $8 billion. One carrier, however, predicts as much as $14 billion. That would make Charley the most expensive storm to hit the United States since Hurricane Andrew ripped up parts of the Greater Miami area in 1992, causing $20.3 billion in insured losses, in today's dollars, according to Insurance Services Office Inc., which tallies claims for the insurance industry. The estimated losses from Charley are described by the rating services as "manageable." Of course, as this is being written, Tropical Storm Gaston is lashing the East Coast with heavy rains and Frances, a Category 3 hurricane, may be taking aim at the Mid-Atlantic or Florida coast.

CITIGROUP SUED OVER ENRON – Goodness, I'm really getting disgusted with having to write week after week about lawsuits and regulator fines brought against our leading financial institutions. What is the matter with some of our corporate executives? They sure seem to talk a good game about ethics; it's about time to start living up to that talk. Anyway, a group of investors, including the Bank of New York, allege they were defrauded in a "massive scheme of deception" when they bought $2.4 billion of notes linked to the creditworthiness of bankrupt energy trader Enron.  A lawsuit has been filed against Citigroup contending that its Citibank unit "aided Enron in artificially maintaining the former energy trader's creditworthiness."

SOCIAL SECURITY/MEDICARE MESS – Federal Reserve Chairman Alan Greenspan has gone on record saying that public finances and the economy will be hurt without swift fixes to the social safety net, such as raising the age for full retirement benefits. "If we delay, the adjustments could be abrupt and painful." Because of the aging of the population and rising medical costs, Medicare may face a bleaker future than Social Security. U.S. Social Security trustees now estimate the program's assets will be exhausted in 2042 and said benefit payments would start outstripping income in 2018. Payments for the hospital insurance trust fund will outpace income this year.

SNOOPY SELLS - In a widely anticipated move, MetLife is selling one of its units, State Street Research, to BlackRock, Inc., a large U.S. fixed income manager, for $375 million in cash and stock. 
 

PARMALAT SUES EX-AUDITORS - Parmalat sued its former auditors Deloitte & Touche and Grant Thornton for $10 billion as "active conspirators" with Parmalat's former management and aiding them in driving the company into insolvency. "None of these transactions or financial manipulations was intended to or did benefit Parmalat. They were designed to and did loot the company." Parmalat has also sued Citigroup for $10 billion for playing a crucial part in its involuntary bankruptcy. 

SOX IS SERIOUS - As the November 15 deadline looms for Section 404 of the Sarbanes-Oxley (SOX) Act, many publicly held small to medium-sized businesses are scrambling to prove they have established internal financial controls, according to the Information Technology Solution Providers Alliance (ITSPA). See more at http://www.itspa.net.

PENSION CRISIS REVIVED - News that United Airlines may possibly terminate its union pension plans has revived the simmering U.S. pension crisis.  If that happens, the PBGC estimates that it would be liable for $6.4 billion in benefits, which could double the current PBGC deficit.  Since stronger companies must fund the PBGC through insurance premiums, the end result might be more companies reconsidering whether to maintain their defined benefit plans.

HMOS EARN $10.2 BILLION ALMOST DOUBLING PROFITS – Weiss reports that the nation's HMOs nearly doubled their profits during 2003, earning $10.2 billion, an 86% increase over the $5.5 billion reported in 2002. "The industry's soaring profits continue to irk both consumers and businesses who are shouldering skyrocketing healthcare costs without any perceived improvement in benefits. We may soon see the next wave of consumer backlash forcing HMOs to evolve their cost structures." Blue Cross Blue Shield plans, as a group, produced a $5.4 billion profit, a 63% increase compared to the $3.3 billion profit recorded in 2002. 

FPA'S FINANCIAL PLANNING FIRMS STUDY - A recent study conducted by the Financial Planning Association (FPA) discovered that firms with a CFP on staff had over $300,000 more in revenue than firms with no CFP professionals on staff. Other findings from the 2004 survey include: 

• Assets under management or advice increased by 34%. Half of this growth was attributed to portfolio performance and half to new assets. More than 20% of participants had one million dollars or more in firm revenue, double the figure from five years ago.
• Solo (single-professional) firms increased revenue by 21%, but suffered a notable decline in operational efficiency. Although more money is being made, much of it is going toward rapidly increasing overhead expenses. 
• The gap between the top 25% and the other 75% is widening. Owners in the top 25% are taking home over $250,000 more per year than their peers. 
• More at www.fpanet.org/

MORE ON RICE MOTLEY – This also from Fortune...this firm was featured in the film "The Insider" and was responsible for "the great tobacco industry takedown of 1998, which will ultimately put about $246 billion in tobacco revenues into state treasuries and another $2 billion to $3 billion (yes, billion) to Motley Rice."

REVERSE TITHING, CHURCH COULD PAY $1.5 BILLION – According to an attorney for more than 100 alleged victims, abuse by priests could cost the Roman Catholic Archdiocese of Los Angeles more than $1.5 billion in damages. Wow! That is a lot of alms for the poor. Let's hope the attorneys remember their favorite charities when they collect their $500 million or so. 

USE OF SUPPLEMENTAL RETIREMENT PLANS – The Todd Organization reports that America's 50 largest financial institutions each use one or more supplemental retirement plans (a.k.a. "nonqualified plans") to help retain and attract key employees. Of particular note: 96% of institutions offer one or more voluntary deferred compensation plans; 74% of institutions have a defined contribution matching program; and 80% of institutions offer a supplemental executive retirement plan that will pay a defined benefit. What is the point? Small companies can use similar programs...go call on them!

UNINSUREDS INCREASE, SOLUTIONS OFFERED - The U.S Census Bureau now estimates the number of Americans without health insurance at 45 million in 2003...up about 1.4 million. The National Association of Health Underwriters offers this insight: "Americans' understanding of health insurance has evolved over the years from protection from catastrophic or unexpected accidents or illnesses to a pre-paid health care system. These are two very different concepts, and as a result, the cost of health insurance has increased dramatically, in lock step with increases in the cost of medical care." See more on NAHU's proposed solutions at http://www.nahu.org. America's Health Insurance Plans (AHIP) has also offered a plan.  See more details at their site (http://www.ahip.org). All we know is that "someone" better "do something" relatively soon.

UNINSUREDS INCREASE, QUESTIONS POSED - In light of the large number of uninsured Americans, the American Academy of Actuaries is offering a guide to the questions that candidates for office should answer.  "The Academy's Election Guide 2004: The Questions Candidates Should Answer about Americans Without Health Insurance" is available on the Academy's website: http://www.actuary.org.

MORE ON HEALTH CARE COSTS – According to a Mercer Human Resource Consulting survey, employers, facing another double-digit increase in health care costs in 2005, probably will require their employees to pay an even greater share of the cost through higher requirement contributions and co-payment fees or by limiting their choice of insurance plans. 

FPA AGREES TO SEC MOTION - The Financial Planning Association (FPA) has agreed not to oppose a formal motion filed in federal court by the SEC delaying a legal challenge until next year, giving the SEC time to act on a controversial proposed 1999 rule allowing broker-dealers to offer fee-based financial planning services without registering under the Investment Advisers Act of 1940. 

INCREASE IN HSA ACTIVITY - UnitedHealth Group and others are seeing a rapid acceleration in Health Savings Account (HSA) sales activity across its businesses, providing clear evidence of the enthusiasm for consumer-driven health programs. If you are anywhere near the benefits market, don't miss this opportunity to help your clients!

MEDIGAP RATES VARY DRAMATICALLY – Either the industry has some very bad actuaries or there is "something rotten in Denmark."  Weiss reports that, although Medicare supplement insurance benefits (Medigap) have been standardized since 1992, consumers continue to confront dramatic variations in premium rates for policies offering identical coverage. Weiss analyzed more than 800,000 premium rates among 129 insurers offering Medigap insurance in 2004 and found that wide disparities in Medigap rates continue to exist for all plans. The national average cost of a Medigap policy for a 65-year-old female ranged from $1,113 to $3,323. Disparities in pricing on specific plans vary even more dramatically; for instance rates for the popular Plan C varied from a minimum of $615 to a maximum of $6,271. Due to the broad ranges in premium rates for plans, Weiss advises consumers to shop around. We advise agents and companies to do the same in order to avoid facing a major embarrassment with highly unhappy clients.  More information on the pricing disparities can be found at http://www.weissratings.com/

FPA OFFERS FREE BROCHURE ON INVESTING - In today's world it is never too early to start planning for the future. However, many potential investors view the financial planning process as complex and confusing. In an effort to inform the public of the ease of financial planning, the Financial Planning Association (FPA®) is offering a free brochure entitled 20 Keys to Being a Smart Investor. The brochure provides principles and techniques that help investors identify their needs and realistically achieve their family's financial goals. The brochure is also available online at: www.fpanet.org/public/tools/investing_brochure.cfm

DISABILITY CLAIMS RELATED TO OBESITY - A UnumProvident report showed a tenfold increase over the past decade in short term disability claims in which obesity was identified as the primary diagnosis. The company reports striking increases in claims for conditions in which obesity is either a risk factor or is strongly associated. The disability claim experience of these chronic health conditions includes: 4000% increase in syndromes that are primarily symptom-based such as fibromyalgia, chronic fatigue syndrome, irritable bowel syndrome or Gulf War syndrome; 100% increase in hypertension and diabetes: 78% increase in musculoskeletal disorders among others.

SEC BARS PAYOFFS TO BROKERS - The SEC is moving ahead with reforms of the mutual fund industry by barring mutual funds from channeling brokerage commissions to firms based on their promotion and sale of the funds' shares. The SEC Commissioners also voted unanimously to reveal the roles played by fund managers, their pay and their possible conflicts of interest. 

WORKSITE LIFE SALES OUTPACE DISABILITY - According to Eastbridge Consulting, voluntary life sales outpaced disability sales in 2003, reversing the result seen in 2002. In 2003, disability accounted for 23% of new worksite sales while life accounted for 25%. Voluntary term life sales grew slightly more than universal/whole life sales in 2003.

401(k) DAY – In an effort to spotlight the importance of employer-sponsored profit sharing and 401(k) plans, the Profit Sharing/401k Council of America (PSCA) has named September 7, the day after Labor Day, as 401(k) Day.  Visit http://www.401k.org for information and tools that can be used with both employers and employees.

RETURN OF PREMIUM TERM - Return of premium term riders are regaining popularity. They have been around quite awhile, but are now really moving into the mainstream term market. Reason: Market appeal..."If you don't die, you'll get all your payments back," does have an appeal. Of course, I've always liked the permanent insurance appeal of getting your money back plus some!

CUSTOMER TREATMENT ONLINE - The Summer 2004 Online Customer Respect Study focuses on how corporations treat their customers online.  In the insurance company category, Western & Southern, Phoenix, Amica and Progressive fared well in the study, while Knights of Columbus, Lincoln National and Old Republic scored lowest.  For details, click here.

U.S. CALL CENTERS TO DROP BY 2008? - According to research by market analysis firm Datamonitor, call center numbers and agent positions in the U.S. are to take a tumble. The report says that Canada will be the major benefactor of America's loss. The U.S. currently houses 2.86 million agent positions in 50,600 call centers. By 2008, Datamonitor expects this to shrink to 2.72 million spread through 47,500 call centers.

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