Friday, April 30, 2010

Watch out for Health Care Scams!

The passage of the new health care reform legislation is supposed to make it easier to get health insurance. Because the regulations are still new and some are being challenged in the courts, scam artist are having a ball with their efforts to rip us off.

This bulletin from the California Insurance Commissioner highlights the need to be cautious no matter where you live. Some folks are going door to door selling "Obama Care" polices and making false claims just to get you to enroll in a "health plan" now. Most of these scams use high pressure tactics like telling you there is a limited time frame to get coverage or that the coverage will cost more or be unavailable later.

Get their business card and check with the Dept. of Insurance in your state to see if they are licensed. In California and most states an insurance agent must display their license number on all materials, including advertisements and business cards. Check out http://www.healthreform.gov/reports/statehealthreform/california.html to find out what changes are coming to California and your state.

Also in the news, Anthem Blue Cross agreed to halt its planned rate increase in California after an investigation by the Dept. of Insurance found errors in the rate filling and inaccurate data that the rate filling was based on. Anthem has said that they will resubmit a new rate filling.

Thursday, April 22, 2010

You can leave your carrier and take your discount with you, almost.

Election time in California, the increasing bombardment of voters by candidates. Why the other candidate spells doom for California, and how I, the only candidate worth voting for, can save this great state. The stream of mailers that hearken the end of the world if a proposition is not passed, or conversely, if it does pass.

And on the list of propositions, Prop 17. This proposition would allow you to receive your continuous auto coverage discount even if you switch carriers. You would have to provide proof that you had no lapses in coverage for longer than 90 days during the last 5 years. However, if  the lapse was due to non-payment, you would not get the discount regardless of how brief the lapse.

Huh? What if I lose my job or am sick for an extended period of time and can't pay my auto insurance? Or if I have my car insured and go on vacation and forget to pay my auto insurance, my policy lapses and I lose my discount?  That's how it reads to me. Check out the voter guide, page 2 under proposal.

The other thing that gets me is that Mercury Insurance is the sole corporate sponsor. Why would they sponsor such a bill? Could it be to circumvent some of the current pricing protections?  Recently the Dept. of Insurance started an investigation into Mercury for overcharging customers and violating state regulations with regards to rating certain types of customers. See the LA Times article here.

Some consumer groups say that this is an attempt to get around the pricing protections that voters approved with Prop. 103 back in 1988. That may be.

For now though, I think Prop. 17 is not what we need. I'm voting no.

Friday, April 16, 2010

Flood Program is back in business, for now.

We'll, the Senate was all rested up from their spring break and finally got back to business. Yesterday they overcame the block that Sen. Coburn enacted before the Senate went on spring break. The President signed the bill last night and the National Flood Insurance Program (NFIP) is back in business.

They did cover the two gaps in the program retroactively, which means that policies that expired or were renewing during that time will not have a lapse in coverage.

The only down side is that we get to go through another round of funding approvals next month as the programs funding expires, again, on  May 21.

Why do they need funding from Congress? Well, the NFIP is a government program. They have had to pay out billions in losses for Katrina as well as the annual flooding in the Midwest. Charging higher premiums would be the only way to increase their revenues. Flood insurance is already pretty pricey. Also, the fact that not that many people are in areas that are required to have flood insurance means less revenue for the NFIP.

Remember that insurance is not an even exchange. You are paying a premium per year to have insurance, let say $700.00 a year, and if something happens you pay a deductible, say $1,000.00. Your out of pocket costs are $1,700.00 for the loss. The insurance company pays the rest up to the policy limit. This could be in the tens of thousands or more.

Lets say you have a flood. Big rain storm hits, the storm drain overflowed and you live down hill. You have paid for a flood policy. You have a $2,000 deductible. You paid $1,200 for the policy for the year. The damage to you home is $50,000. You have only paid $3,200 to have the insurance company pay the rest.

Now a regular insurance company, Fidelity, Farmers, State Farm, etc., has to meet state requirements for solvency. They have to have the ability at all times to pay out every policy they have issued and then they have to have additional reserves. They can have extra funds through re-insurance ( an insurance companies insurance policy) and thought investments in the stock and bond markets.

NFIP relies on congress for funding and premiums paid by existing policy holders.

Hopefully next month congress will act a bit faster. Or better still, approve funding for a much longer period than one month.