NAIFA CONVENTION
REPORT – This E-News is being written as we attend the NAIFA Convention
in Las Vegas...and what a convention it is! Attendance is up significantly
over last year, exhibitors are up and attitude is soaring. Reasons: New
members exceeded cancellations for the first time in several years and
the association "operated in the black" for every month last year. Congratulations
to David Woods, CEO, the NAIFA Board and the entire membership.
| MORE ON APPRENTICE
& LIFE INSURANCE AWARENESS MONTH
– We've had the opportunity to hear LIFE's new spokesman, former Apprentice
candidate, Kwame Jackson. He is a gifted speaker and his story is a wonderful
tribute to the value of life insurance. Kwame's mother died when he was
15 and she just 41. His father was left with three boys to raise and educate,
but his mother was a CPA who practiced what she preached. She had purchased
life insurance to help the family financially survive the loss...Kwame
is proof of his mother's love and foresight. Please go to www.life-line.org
for more stories like Kwame's and please call on your clients about the
remarkable results of life insurance. |
HURRICANES...WITH AN "S"
– Charlie and Frances have left their mark on Florida and the insurance
industry, but everyone is bracing for the impact of Ivan...currently a
Category 5 hurricane that could make it "Ivan the Terrible." Floridians
are hoping its path will drift westward but, regardless of the location
of the landfall, Ivan will certainly bring hardship to people and large
losses to the property and casualty business. Hurricane tally to date for
2004 could approach $20 billion with the combined losses including Ivan
likely to exceed those of Andrew in 1992...the costliest single natural
disaster to insurers in U.S. history.
NEW OFFICERS - At
their Fall Meeting this week, the National Association of Insurance Commissioners
(NAIC) elected three new officers, filling president, vice president and
secretary-treasurer vacancies. More information is available at www.naic.org.
GM HEALTH CARE COSTS
- General Motors, which last year spent $4.8 billion on health insurance
for its workers, is imploring Washington to rein in excessive growth in
costs of the health care industry. Quoting the CE0, "This thing has just
gotten to be absurd. That's a huge cost driver," the head of the world's
largest automaker said. FYI, GM and Ford both spend over $1,000 per vehicle
on health care.
HEALTHCARE PREMIUMS TO
RISE 9% IN 2005 – Well, 9% is bad but at least it isn't "double digits."
Reasons: Growing price competition and a slowdown in the rate of increase
in medical costs. Oh yes, the 2005 rate of increase is expected to be four
times the rate of inflation. To address rising premiums, employers
continue to reduce benefits and shift costs to employees. According
to a recent Harris Poll, "majorities of the public think that the cost
of prescription drugs, hospitals and doctors' services are unreasonably
high." As an indication of the high level of public concern over
health care costs, "majorities favor federal government price controls
of prescription drugs and hospitals, and a plurality favor price controls
for doctors' bills."
SYMETRA FINANCIAL
– After 47 years as Safeco, the Washington-based life insurance and investments
company is now officially Symetra Financial. See their new Web site at
http://www.symetra.com.
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INSURER VERSUS INSURER
– Beating the three-year statute of limitations by a day, insurers for
some World Trade Center buildings filed suit against American Airlines,
United Airlines and others on September 10, alleging their negligence allowed
the 9/11/2001 hijackings. Because the Air Transportation Act limits
the liability of airlines, plane manufacturers and airports to the amount
of their insurance coverage, "this lawsuit is basically about insurance
companies who paid losses litigating over liability insurance proceeds...it's
basically insurer versus insurer."
S&P ON HURRICANE EFFECTS
- Standard & Poor's Ratings Services says it appears that the combined
effects of Hurricanes Frances and Charley will produce insured losses well
below those associated with Hurricane Andrew in 1992...but Ivan is on the
way! If Ivan does hit Florida and the gross losses of primary homeowners'
writers should exceed the reinsurance coverage provided by the Florida
Hurricane Catastrophe Fund, individual companies' reinsurance programs
would be affected. Reinsurers, in turn, might rethink their approach to
modeling catastrophes to give greater weight to the frequency of such events
than before.
'EQUITABLE LIFE' IS NO
LONGER - AXA Financial has announced that The Equitable Life Assurance
Society of the United States (Equitable Life), a wholly-owned insurer offering
life insurance and annuity products, has been renamed AXA Equitable Life
Insurance Company. The new name leverages the equity of the strong Equitable
and AXA brands but brings an end to the Equitable Life brand after 145
years.
LIFE INSURERS' INVESTMENT
RETURNS - Life insurers suffered a steep decline in gross investment
returns over the last five years, led by falling interest rates, corporate
defaults, and rating agency downgrades, according to a new study by Conning
Research & Consulting. Gross investment income returns for 1999 to
2003 dropped by 1.3 percentage points from 8.1% in 1999 to 6.8% in 2003.
However, the investment expense ratio somewhat cushioned the blow, improving
each year during the study period.
DOCTORS' CLASS LAWSUIT
– A court has ruled that the doctors suing HMOs over claims they were
shortchanged on payments will have class action status. The group consists
of some 700,000 doctors who have signed onto a lawsuit against the industry.
This could lead to another billion dollars or so changing hands.
PENSION UPS AND DOWNS
- In a piece of good pension news, Enron will pay $321 million from the
proceeds of a pipeline sale to fully fund four defined benefit plans covering
17,000 of the bankrupt energy company's employees. In the "not-so-good-news"
category, US Airways, which filed for its second bankruptcy over the weekend,
has asked a judge for permission to skip a $110 million pension plan payment
due this week. The airline also indicated that it might seek to terminate
certain of its pension plans. |
