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Archive for the ‘Insurance’ Category

First, what is the problem with the range of insurance policies on offer from the insurance industry? Why is it necessary for the Department of Insurance to intervene in the market? The answer is simple. California has been hit hard by the recession. Gone are the days when people were proud to live in the “Golden State”. The problem is seen most obviously in the repeated failures of the state to deal with its massive deficit. Now translate this into the millions of people living in the state who cannot find work paying enough money to live on. Their poverty means it is impossible to pay for insurance and eat. Not surprisingly, millions of drivers are on the roads without insurance. In 2008, the Department of Insurance estimated about 18% of Californian drivers were uninsured. Since then, the unemployment rate has doubled.

Why is this a problem? Well, although many drivers buy uninsured or underinsured cover, you have to be able to identify the other driver in the accident. If you cannot, say because it’s a hit-and-run, you cannot show the other driver was uninsured and so cannot claim on the policy. Since most uninsured drivers prefer not to wait around to admit their criminal offense (that costs them a fine and may result in their vehicle being impounded), all that can, drive away from the scene of the accident as quickly as possible. That is bad luck for you and great news for the insurers who take your premium and rarely have to pay out. Read the rest of this entry »

The world is often a confusing place and nowhere is the confusion likely to be so complete as in the tax system. Here we have the best brains in the Government taking on the best brains in the private sector. The Government wants the maximum tax take. The private sector wants to arrange things so that no one with money ever has to pay any tax. Somewhere in the middle the two world-views collide and, usually, some tax is paid. Anyway, when President Obama signed the healthcare reform bill into law, some of the largest employers in the US let out a collective sigh of pain. As an example, Caterpillar is the world’s largest manufacturer of excavators and bulldozers. The day after the President’s signature, Caterpillar announced it was taking a charge of $100 million to earnings over an expected loss of tax benefits. A number of other influential corporations have also made allowances in their accounts. The reason is that the healthcare reform ended a tax break given to cover the cost of supplying drugs to early retirees. Read the rest of this entry »

There are times when you get an overview and then it hits you, “Somethings just don’t add up.” Well, you remember Wellpoint, don’t you? This is the friendly company that, around January or February, announced it was going to increase premium rates by up to 39% in a number of states around the Union. President Obama got himself all worked up, citing them as the real reason why all the Democrats in Washington should band together and take a stand against the insurance industry. Then, sure as eggs is eggs, there was a stampede to get the healthcare reform bill to the President for him to sign it into law. Those Democrats sure did have fun beating on Wellpoint. So the big question is what happened next? Here’s one of the largest corporations in the insurance market demanding premium increases. Did it get its way?

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The world of insurance is ruled by statistics. Actuaries collect all the information they can about every traffic accident in the US. Then, because everyone wants the most complete information possible, the insurers share the information about their own claims and the accidents they have found where no claim was made. It makes for an impressive amount of data. The majority of the information about claims is routed through the Comprehensive Loss Underwriting Exchange (CLUE). Because this is a national resource, all the major insurers from around the country search it before making quotes for new business. If there are no claims registered against your name, the premium will be the standard rates for someone of your gender, age and driving experience with local variations based on where you live. But if one or more claims are registered, the new insurers may decide you are a high-risk driver and try to deter you with a high premium. There’s nothing illegal or unethical about this. It’s just the way the business works.

Because it’s a national resource, the quality of the information is usually quite reliable. When a search is made, your history over the last seven years is supplied. If you are worried about what data is stored about you, the Fair Credit Reporting Act gives you the right to a copy. Write to Consumer Disclosure, PO Box 105108, Atlanta, Georgia 30348-5108, or you can call (866) 527-2600 toll free. If you find any of the information is wrong, you are either allowed to have it put right or to have an explanatory note attached to the information explaining how the loss came to be made. Unfortunately, some of the insurers run private exchanges in individual states. It can be more difficult to police the accuracy of this information. That’s why it’s good news to see Attorneys General policing the system. In Massachusetts, for example, ten insurance companies have agreed to pay penalties for failing to correct records in their private exchange. The initial findings of at-fault were accurate, but the companies then failed to record when appeals reversed the findings. This left thousands of motorists wrongly recorded as at fault. So, if you have any reason to suspect your local insurance industry is relying on inaccurate information about your claims history, it’s vital you take action. Failure to have the record set straight can cost you thousands of dollars over the years. If the information in CLUE is correct, get your local state’s Department of Insurance to check into any local databases. Read the rest of this entry »