MORE BAD NEWS FOR AIG - The Justice Department has started a criminal investigation to determine if AIG Financial Products violated the law by helping a subsidiary, PNC Financial, to remove bad loans from its balance sheet.

8% INCREASE IN HEALTH CARE COST FOR 2005 - According to Towers Perrin, employers can expect an 8% increase in 2005 health care costs and, thus, the first significant break in the double-digit cost spiral in over half a decade. But before employers and employees rejoice, closer analysis reveals that, dollar for dollar, next year's cost increase, at an average of $582 per employee, is still unsustainable for most employers. The survey found that the average reported 2005 cost of medical coverage for all types of health plans combined is $328 per month ($3,936 annually) for employee-only coverage; $668 per month ($8,016 annually) for employee-plus-one-dependent coverage and $945 per month ($11,340 annually) for family coverage.  

ABA SAYS FEE LIMIT WON'T HELP HEALTH CARE COSTS – A report from the American Bar Association (ABA) concludes that proposed limits to lawyer contingent fees in medical malpractice cases on Florida's Nov. 2nd ballot will have no positive impact on efforts to reduce health care costs for patients, nor will a limit make it any easier for doctors to continue doing business and treat their patients. Consider the source.

HURRICANE LOSSES SECOND ONLY TO 9/11 – The four major hurricanes of 2004 will cost the industry about $23 billion. That surpasses Hurricane Andrew's cost adjusted loss of $20 billion plus, but still trails the $32 billion in insured losses from the Sept. 11, 2001 attacks.

DRUGS FROM ABROAD - Despite federal laws banning the practice, Illinois and Wisconsin have launched the nation's first state-sponsored program to help residents buy cheaper prescription drugs from both Europe and Canada.  More information on the program is available at http://www.i-saverx.net/. 

WHERE THEY STAND – For AARP's perspective on where Bush and Kerry stand on Medicare, Social Security and other issues of concern to seniors, click here.
 

NAIFA OPENS CAPITOL OFFICE - To re-establish its presence on Capitol Hill, the National Association of Insurance and Financial Advisors (NAIFA) recently opened a new office three blocks from the U.S. Capitol. "Since selling our downtown office and moving to Virginia, we have been striving to establish the identity we had on Capitol Hill for nearly half a century," said David F. Woods, CLU, ChFC, LUTCF, NAIFA's chief executive officer. "An office just a short walk from the Capitol puts us right back in the middle of the action."

PENSION AGENCY AT RISK – AS we have reported previously, the longer-term solvency of the Pension Benefit Guaranty Corp (PBGC) is at risk. Expect a significantly increased deficit for fiscal 2004, which ended Sept. 30, eclipsing 2003's record $11.2 billion deficit. The steel industry started the problems, but now troubled airlines are straining the safety net for traditional pensions that guarantee a set payout at retirement. 

BANK OF AMERICA CUTS 4,500 - Bank of America will cut an additional 4,500 jobs from its ranks, increasing the number of jobs lost since its FleetBoston acquisition to 17,000...about 10% of its total work force. 

VIOXX FEEDING FRENZY – Citing an unreleased study by U.S. regulators, The WSJ reports that Merck's drug Vioxx may have led to more than 27,000 heart attacks and sudden cardiac deaths before it was withdrawn. Predictably, ads from trial lawyers have already started to feed the frenzy with television ads soliciting clients.

VIOXX RECALL MAY SAVE MONEY – An unseen benefit of the recall of Vioxx could be a reduction of health care costs. Many insurers feel that the Vioxx recall, together with the chemically-related Celebrex (Pfizer), may be a reason to encourage broader use of cheaper painkillers. Health insurers say both drugs are over-used, and lack clear advantages over cheaper alternatives like aspirin. 

CIVIL JUSTICE REFORM IMPORTANT – The Property Casualty Insurers Association of America (PCI) stressed that reform of the civil justice system is a priority for the insurance industry and should be for consumers across the nation. "A shocking statistic is that one of every 11 obstetricians nationwide have stopped delivering babies because of the cost of medical liability insurance. Unpredictable and excessive verdicts on non-economic damage awards, particularly in personal injury litigation, have driven up losses that eventually increase liability premiums as well as the cost of a host of consumer goods and services for everyone. Major reform of the justice system, particularly in the area of non-economic damages, must be a priority for all states and for Congress." 

TORT COST - A Tillinghast-Towers Perrin report said that in 2002 the tort system cost each man, woman and child $809 annually, which is quite a jump from 1950 when the U.S. judicial tort system cost each citizen only $12 per year.

TEXAS CHIROPRACTIC FRUAD - A Dallas jury ordered Texas' largest chiropractic chain, Accident & Injury Pain Center, Inc., to pay Allstate $2.8 million in actual damages and $3 million in punitive damages. The clinics, together with related entities and various chiropractors, osteopaths and medical doctors, were found to have conspired to commit common law fraud by over-treatment and unnecessary referrals. 

BEYOND THE PORK - On the business side, the American Jobs Creation Act of 2004 also creates a new deduction, equivalent to a 3% tax rate cut, for domestic manufacturers and expanded the definition of a "manufacturer" to include such entities as construction companies, engineering and architectural firms, film and music companies and the oil and gas industry.  The $100,000 Section 179 expense limit (indexed for inflation) is extended through 2007, changes are made to depreciation and S corporation tax rules, farmers receive tax breaks and incentives and a temporary tax incentive is created to encourage companies to reinvest foreign earnings in the U.S.  On the personal side, taxpayers will be given the option in 2004 and 2005 to deduct local and state sales tax instead of local and state income tax.  This primarily benefits the residents of the nine states without local and state income tax.  

BANKS TO ISSUE AMEX CARDS - The Supreme Court's decision to let stand a lower court ruling which ended the longstanding rules restricting American Express cards from being issued by banks will open up a new market for AMEX. MBNA has become the first bank to offer American Express, along with Visa and MasterCard affinity cards that express and support personal and professional interests. 

SUPREME COURT UPHOLDS DO-NOT-CALL – The Supreme Court has decided to let a lower court ruling on the do-not-call registry stand. This from The National Association of Insurance and Financial Advisors (NAIFA): "The FCC's unwillingness to exempt insurance agents from its rule and subsequent court decisions, including the high court's, are disappointing to those agents whose legitimate use of the phone to inform the public of the need for financial security has been hampered by the do-not-call registry. With that said, we respect the law of the land and will continue to keep our members informed to ensure that they are in compliance with the law."

PREMIUMS STABLE BUT MORE HO SHOPPERS - According to J.D. Power, despite the fact that homeowners insurance premiums have largely stabilized, a record number of long-term home owners indicate they shopped for a new insurer in the past year. Median home insurance premiums in 2004 of $600 annually...up from $580 in 2003 and $452 in 2001. That is an increase of 33% during the past three years. The rate of shopping has grown 22% among those customers who have owned their home for 20 years or more...typically these customers are an insurer's most loyal and profitable customers. Study didn't say why but we'd guess the Internet has had an impact.

KEY BUSINESS TAX DEDUCTIONS – Here are seven common small business tax deductions to reduce your tax bill for 2004.  1. Employee Benefit, 2. Automobile Expenses (FYI...the 2004 standard business mileage rate is 37.5 cents per mile), 3. Taxes Paid, 4. Home Office, 5. Depreciation,  6. Professional Fees, 7. Meals and Entertainment (subject to the 50% limitation). Remember to keep on file the records and documentation necessary to substantiate all of your deductions and go to http://www.InvestSafe.com for more details.

PROTECTING U.S. SOLDIERS – The House overwhelmingly passed a bill to "protect U.S. soldiers from predatory life insurance and mutual fund sales on military bases."  The legislation bans the sale of some high-priced mutual fund plans (typically with 50% first year commissions) and strengthens state regulation of other financial products on military bases.  The hope is that the bill can clear the Senate and be signed into law by the end of the year.

SOARING COSTS OF SENIOR CARE – That's the title of an interesting USA Today article from earlier this month.  The article takes a global look at the challenges faced by developed countries in supporting a rapidly growing senior citizen population.  One interesting finding in the article: "Other industrialized countries spend a smaller share of their nation's income on medical care than the United States.  But they often have more physicians per capita, and their citizens live longer."  The article can be found here.

KEY TO CRUSHING THE COMPETITION - When it comes to elevating independent insurance agents and brokers over their larger competitors, the key is establishing customer relationships based on personal service and individual trust. At the "Big "I" Convention, seminar participants asserted that independent agents and brokers have an innate advantage over many larger companies because they can offer the personal service that their larger competitors cannot or will not offer.

BROKER-DEALERS SELLING LIFE SETTLEMENTS – Advanced Settlements sees growth in the life settlement markets as "more broker-dealers are recognizing that life settlements play a key role in developing a fully integrated wealth management strategy for high net worth seniors. Over the past year, we have experienced a dramatic increase in the number of life settlement cases, many of which are originating from registered reps affiliated with brokerage firms."

AMERICANS ASSOCIATE LTCI WITH NURSING HOMES – A MetLife poll reveals that most Americans lack a basic understanding of long-term care. Only about one in three (37%) Americans between the ages of 40 and 70 have the information they need to help them make decisions about their long-term care needs. According to the survey findings, 55% of individuals between the ages of 40 and 70 incorrectly associate long-term care exclusively with nursing homes. Only one in five (18%) respondents correctly identify their home as the most likely place where long-term care services will need to be provided. A study by the National Alliance of Caregiving and AARP indicates that more than half (55%) of long-term care recipients live in their own home.

CREDIT CARD PAYMENT OPTION FOR LTCI - John Hancock is offering long-term care insurance with a new credit card payment option. Currently, Hancock is the only top-five carrier to make this option available.

GOAL SETTING DRIVES RETIREMENT - An American Express study has found that participants who have set a retirement goal are more likely to consider themselves confident in their retirement planning. Those surveyed who indicated a strong level of retirement planning knowledge correlated strongly to those with confidence in their investing skills and to those who set retirement goals. As one would expect, confidence in investing skills also was a strong driver of overall confidence in retirement planning.