Health insurance premiums in Massachusetts are expected increase between 8 and 13 percent, driven primarily by the cost of expensive specialty drugs. The premium increases are expected to affect the rest of the country as well.

According to a recent article by the Associated Press (published by the Insurance Journal, here), specialty drugs accounted for 19 percent—about $40 billion—of pharmaceutical spending last year. Express Scripts, a company that manages prescription programs, estimates that by 2009, that $40 billion figure will inflate to $90 billion, as new drugs and treatments emerge.

Specialty drugs: Biotechnology treatments involving genetic engineering, unique treatments for rare diseases, cancer medications that have to be administered in medical facilities and other high-cost treatments.

Matthew Connell, the senior director of pharmacy services for Blue Cross and Blue Shield of Mass., told the Boston Globe, "The specialty drug slice of the pie is growing fast. It's only about half of one percent of all pharmacy [prescriptions], but it accounts for as much as 13 percent of pharmacy costs."

According to the AP, insurance companies, have, in the past, cited the rising costs of prescription drugs, higher costs from doctors and imaging technology for the increase in health insurance premiums. This is the first time they've included specialty drugs into the contributing factors.

Insures are trying to hold down the cost of health insurance premiums by taking efforts to control the use and cost of specialty drugs, reports the AP. Such efforts include requiring physicians to obtain permission before prescribing specialty drugs and barring the prescription and use of drugs not approved by the Food and Drug Administration (FDA).

Read the full AP report courtesy of the Insurance Journal here.

Posted by Megan Mahan at 08:53 AM | Permalink
 

A little off-the-beaten-path insurance news today:

According to an AP story (made available today on InsuranceJournal.com), a national company that insured Montana's jockeys (and no, I'm not talking about underpants) has dropped coverage on all four of the state's race tracks. The Montana tracks were just four of 19 tracks in the U.S. that lost jockey coverage, said Scot Meader who is the director of the Missoula County Fairgrounds in Montana.

The news has been made especially bittersweet as Montana's governor recently included $350,000 in the state's two-year budget for horse racing.

Even if another insurer stepped in to insure the jockeys, chances are the policy premiums would be much too steep. According to the AP, Meader received one quote from a California insurer who put premiums as high as $8,000 to $10,000 per day, compared with $2,000 per race day for this year. Accident deductibles have also jumped, which hits the Missoula track in a soft spot as they've had "quite a few jockey injuries and claims in the past five years."

Horse racing has been approved for 2006 reports the AP, but the state has yet to make a formal decision about the 2007 racing season; the Missoula County Fair Commission has asked Meader to try and secure another jockey insurance provider.

For now, the four Montana tracks will work together to find a jockey insurance provider. In the meantime, the future of Montana horse racing will hang in the balance. Buck Smith, who is chairman of the fair commission, told the AP that come January, "If we've exhausted every possibility for jockey insurance and there is none, there is no decision to be made."

Race lovers can check out the full story courtesy of IJ, here. (And yes, our statistician Peter D. moonlights as a jockey.)

Posted by Megan Mahan at 02:00 PM | Permalink
 

A recent poll conducted for the insurance industry found that 80 percent of Americans want Congress to take measures to make healthcare more affordable. This according to a story by WNDU 16 out of South Bend, Indiana.

The insurance industry seems to be responding to said poll, and pitched a plan on Monday which would come with a taxpayer price tag of $300 million. It's worth it, said Jay Gellert, a member of the policy committee for America's Health Insurance Plans. And under the proposed plan, the industry says America's uninsured could have coverage within the next decade. How?

The new plan calls for:

• Expanded state programs like Medicaid, to cover more children and low-income families, including those that exceed the poverty level but can't afford health insurance
• Formation of "universal health accounts" with the government kicking in up to 50 cents for every dollar a low-income family saves
• A $500 tax credit for low-income families that buy health insurance for their kids
• $50 billion in state grants to help insure their residents

Sounds pretty good, right?

The clincher: who's going to foot the $300 billion needed to implement such a plan? The insurance industry doesn't have any suggestions on how to pay for it, but WNDU reports that insurers still plan to market the plan "aggressively" to the new Congress. And despite the fact that plan proponents don't yet have all the answers to get the ball rolling, healthcare advocates support the initiative, saying they're glad to see the insurance industry get involved.

"I think what this initiative does is get us off the dime and stop people from saying this is a problem that's not solvable," said Dr. George Benjamin of the American Public Health Association.

Encouraging, indeed.

We'll keep an eye on this story and post updates here as they come. And, if you're looking for more resources on finding affordable medical insurance in your state, check out our state-specific insurance articles in our resource center!

Posted by Megan Mahan at 01:23 PM | Permalink | Comments (1)
 

[Disclaimer: this post could be a little depressing.]

I think climate change is a fascinating subject. I know, I know—it may seem morbid to be fascinated by something that promises to be (and perhaps already is) such a destructive force. But what intrigues me is not the potential devastation, but humankind’s response to this challenge—and on a more specific level, the insurance industry’s response.

Insurance is all about managing risk. You are managing risk when you buy a policy, and insurers are doing the same when they issue one. If the latter party thinks something (or someone) is risky, they charge more—partly because they need to have enough cash on hand when when 16-year-old Johnny totals the family station wagon or when a hurricane comes trundling down Hurricane Alley.

If you believe the science of climate change, it looks like we’re in for a bumpy ride – one that’s fraught with risks, both known and unknown.

Continue reading "Insurance, Climate Change and Other Light Topics" »

Posted by Jeb Foster at 02:46 PM | Permalink | Comments (2)
 

Back in the 1990s, recently-retired tennis star Andre Agassi starred in a series of commercials for Canon cameras in which he said, "Image is everything." The tagline had two meanings--one referring to photo quality, the other to Agassi's iconoclastic and ill-advised fashion sense.

(If he doesn't cringe every time he sees himself in a mullet and denim shorts, I'd be really surprised.)

"The insurance industry's image is still in the mullet and jean shorts stage."

From anecdotal evidence, I'd say insurers are down there with journalists and lawyers in terms of popular support, battling it out with each other to prevent falling down the list into the area reserved for tobacco company executives and used-car salesmen.

It doesn't have to be that way.

It doesn't have to be that way because insurance companies provide an invaluable service: they solve the age-old problem of risk with a remarkably simple and effective solution: they pool and spread it. That's it.

Without insurance we'd never build houses, drive cars or wrestle anacondas--the risks would be too great. What if hail wrecks my roof? What if one of my dinner guests sues me for tripping on the stairs? We'd never start businesses, either.

The other day, flipping through a magazine, I noticed a full-page Allstate ad that brought up this very notion. Front and center was an image of a guy tip-toeing his way through a morass of banana peels. The headline read, "You probably don't spend much time think about insurance. But trying doing anything without it." Clever, right? Without insurance, the risk associated with even mundane daily stuff would be too great; we'd be constantly slipping on banana peels.

I, for one, tend forget this about insurance--and that's pretty incredible coming from someone who writes about it every day. I, like you, gripe about cutting a check every six months for auto and home insurance, not realizing that I am actually getting something for my money even if I never file a claim--peace of mind in the face of risk.

So here's a bit of free advice for the unpopular insurance industry: we all need to be reminded why we pay you once or twice a year. It may improve your image a bit.

Posted by Jeb Foster at 01:01 PM | Permalink | Comments (4)
 

As we commemorate the 5th anniversary of the September 11 terrorist attacks, it's difficult to process the
destruction of human life on the level it occurred that day. It seems we all either know someone who was hurt or killed in the attacks, know someone who knows someone, or—worse yet—were touched by it personally ourselves.

Though the value of human life lost that day can never be truly quantified, these horrendous acts have also cost our country and its citizens billions of dollars in insurance claims. In fact, according to a paper published recently by the Insurance Information Institute (III), $35.6 billion have been paid out in property, life and liability claims as a result. Even more staggering, economic losses in New York City alone have exceeded $90 billion.

Five years after the fact, Insurance industry leaders and public policymakers continue to consider how the underwriting of political risks--particularly international terrorism--is best handled within the insurance and reinsurance sectors.

To find out how these losses have affected the insurance industry as a whole, I highly recommend the III article. You can find it here.

Posted by Penny Hagerman at 08:56 AM | Permalink
 

The job of sniffing out insurance fraud has gotten a lot more exciting lately as states have begun to treat the crime more seriously using undercover agents and wiretaps to collect evidentiary support.

In New York, the milieu of many a mafia flick and the state with the second highest auto insurance premiums in the nation, they are taking an "organized crime approach." Everyone likes a good mobster movie; and undercover agents faking illnesses to nab corrupt doctors, lawyers and "silent owners" or sneaking into offices after hours to tap phone lines smacks of Scorsese.

Not only that, it's proving effective. New York Deputy Attorney General Peter Pope told the Associated Press, "If I'm trying to prove the patient in fact didn't have the symptoms he was being treated for, the only way to do that is to find real patients or send undercovers into the clinic. The biggest investigations and those with the widest reach occurred when we were listening in with court approval.''

The Coalition Against Insurance Fraud reported that many individuals have a lax attitude when it comes to defrauding insurers--one in four Americans say it's okay for others to make fraudulent claims and one in ten say they would do so if they knew they wouldn't get caught. So it's not surprising that insurance fraud is prevalent across all insurance types. According to the National Insurance Crime Bureau (NICB), it costs the industry between $85 and $120 billion annually and each American household $200 to $300 per year.

Continue reading "The Cost of Fraud" »

Posted by maribeth neelis at 04:49 PM | Permalink | Comments (1)
 

People have strong opinions about insurance.

When it comes to South Asian Islamic clerics' feelings about life insurance, that's a bit of an understatement.

According to an Associated Press story, a prominent Islamic seminary in India has denounced the practice of buying life insurance. Clerics at the seminary say it violates Islamic law.

"Life is given by Allah and to insure it or assure it, is a crime in the eyes of Allah," clerics at the Dar-ul-Uloom seminary told the AP.

The seminary issued its directive on Aug. 7, saying "insurance is not permissible because it is a sort of gambling. Moreover, it also involves interest money which is illegal under Shariat." (Shariat = Islamic law).

Read the entire story.

Posted by Jeb Foster at 04:44 PM | Permalink | Comments (2)
 

Terror in the Superdome. "Brownie" asleep at the switch. Reconstruction money going to bottles of Dom Perignon and sexual reassignment surgery. FEMA trailers made of carcinogenic material.

In the year since Katrina, there has been little good news coming from Gulf Coast. That's either because there hasn't been much good news to report or, more likely, because bad stories tend to hog the headlines.

The other day I came across this story from Reuters about how most Gulf Coast residents are actually happy with the way insurers have handled their claims. The story reported on findings from the Insurance Information Institute—an organization Reuters notes is both non-profit and associated with the insurance industry. While I wish the evidence of this happiness came from an independent polling agency and not the Insurance Information Institute, I am confident the data is right on the money. (I don't mean to question the integrity of the III, but I think the results would have greater impact had they been issued by a polling agency without the word 'insurance' in its name.)

According the III, 90 percent of homeowners in Louisiana and Mississippi were satisfied with how insurers handled their claims. That not a small percentage, folks. Further, only 2 percent of Katrina-related homeowner's claims are in dispute, according to the report.

Clearly insurers are doing something right down there, even though headlines suggest otherwise. Here are a few other possible conclusions from the III's report:

• The media is fixated on bad news.
• Insurers actually aren't evil and are, in fact, doing a lot of good work.
• Insurers need to spend more of their giant profits on a PR campaign that highlights their contributions to the rebuilding of the Gulf Coast.

Here's the entire III release.

Posted by Jeb Foster at 01:37 PM | Permalink | Comments (3)
 

The Denver Post, my city's major daily, recently ran a feature on the rise of "scooter nation." Aside from using one too many puns in the headline, the article was an interesting exploration of an urban phenomenon that's spurred by environmental awareness and old fashioned thriftiness.

While the environmental benefits of scooters, also called mopeds, can be debated--"I would never discourage anyone from buying a scooter, but you have to be realistic about the environment impact, which really is not much," a Denver Department of Health official tells the Post--the argument for their thriftiness is airtight.

According to the article, scooters get 85 miles per gallon, making even Toyota Prius drivers burn with envy. Additionally, the Post notes that some scooterists [my term] suspend their car insurance during the warmer, scooter-friendly months. Insurance for scooters costs much less, about $100, according to the article. (Some states don't require insurance, but I recommend coverage for any activity that involves high speeds, metal and pavement.)

If $3 gas prices have you considering a Vespa or other diminutive motorcycle, make sure to check with your state's DMV to learn about motor scooter regulation before you put the For Sale sign on your car or suspend your car insurance. Also ...

• Don't drink and scoot. This includes lattes.
• Wear a helmet. Buy a cool, expensive helmet if it'll mean you're more likely to wear it.
• Drive defensively. You're almost as low on the highway food chain as the guy on the ten speed.
• Again, check with your state's DMV to see what its scooter restrictions are regarding licensing, registration and insurance.

If you're looking for an automotive alternative that's a little less Euro and a little more techno, there is always the Segway, which enables one to steer clear of the gas pump entirely. And Progressive offers specialized Segway insurance.

[Links]:
http://www.vespanomics.com
http://www.segway.com/

Posted by Jeb Foster at 04:07 PM | Permalink | Comments (2)
 

The Texas Department of Insurance recently ordered an unlicensed travel insurance company to stop writing policies, the Insurance Journal reported yesterday.

The faux insurer, Trip Assured, has been writing polices that cover trip cancellation and delay; evacuation; flight insurance; lost or stolen baggage; and airline penalty protection.

"Because the company is unlicensed," the Insurance Journal writes, "there has been no regulatory oversight to ensure lawful policy forms, fair rates, and financial solvency." The article didn't mention whether there had been any complaints filed against the company.

This story brings up two very blog-worthy subjects - traveler's insurance and insurance fraud.

Continue reading "On Traveler's Insurance and Insurance Fraud" »

Posted by Jeb Foster at 10:23 AM | Permalink | Comments (1)
 

Most smokers probably know they pay more than the rest of us for car, home and life insurance because of their nicotine habit. Of course, knowing that doesn't make cigarettes any less addictive, and, besides, economic penalties have never been a strong deterrent to lighting up.

Enter Nic Vax, the smoking vaccine.

According to a recent story in the New York Times, Nabi Biopharmaceuticals, the maker of Nic Vax, is leading the way toward a "cure" for cigarette addiction. The vaccine is still in the trial stage, so FDA approval and commercial distribution will likely be a few years, provided the trails are successful.

Although it sounds like science fiction, researchers are in the process of developing anti-nicotine antibodies that prevent nicotine from crossing the blood barrier, eliminating the pleasure of the puff and, thus, curbing its addictive, relapse-inducing nature. Denied the positive reinforcement of that delightful, post-dinner buzz, the user is left with nothing but an expensive package of carcinogens.

A smoking vaccine, if it ever hits the shelves, would likely have a huge effect on the insurance industry. Think about it: all of a sudden there would be fewer people taxing the medical system with smoking-related ailments. Houses that would've burned down because of an errant ash will remain standing.

Along with hurricane-proof homes, I imagine a smoking vaccine is an insurer's dream.

Posted by Jeb Foster at 03:58 PM | Permalink | Comments (1)
 

Consumers Union, publisher of Consumer Reports, recently joined the debate over credit-based auto insurance pricing.

The non-profit organization says the use of credit scores in determining how much people pay for car insurance is both "unfair" and "unnecessary."

Their findings were published under a report (lengthily) titled "Score Wars: Consumers Caught in the Crossfire and The Case for Banning the Use of Credit Information in Insurance."

Although insurance carriers each have unique methods for setting premiums, many have recently added credit scores into the mix. The result is that drivers who have less than stellar credit can potentially pay hundreds more on car insurance--even if they have a spotless driving record.

Continue reading "Consumer Reports Blasts Insurers for Using Credit Scores" »

Posted by Jeb Foster at 03:11 PM | Permalink
 

In a recent post I asked the question "What does the insurance industry think about climate change?"

As it happens, the National Association of Insurance Commissioners has established a task force to explore the subject. In an interview with Insurance Networking News, Tim Wagner, who co-leads the task force, spoke about the formation of the group and what he hopes it will achieve:

For me, personally, I want insurers to acknowledge and become involved in managing this change. It's ironic that the European reinsurers have been on this issue, and the U.S. insurance industry has not been as engaged. ... Basically, we need to start thinking about the risk management associated with the change of climate and demographics.

Wager also offered an explanation for the tardy industry response to the climate change challenge: "In insurance we tend to look at the past instead of the future, and when you have a dynamic change taking place, looking at the past doesn't work so well." Still, he says, history does offer some sobering lessons:

You know, 20th century historian Arnold Toynbee analyzed 21 failed civilizations and found two reasons for their failures. The first reason was the concentration of wealth, and the second reason was the inability to adapt to change. I think we need to recognize that things are changing and start planning for that event.

Wise counsel.

Posted by Jeb Foster at 09:24 AM | Permalink