Monthly Archives: March 2013

Seniors Can Lower Their Auto Rates

There are more seniors on the road than ever before and even though their numbers are growing, a 10 year study by the Insurance Institute for Highway Safety showed that there were few older drivers dying in crashes and fewer involved in fatal collisions in general. This is an important finding for seniors.  While your auto insurance rates are based on a variety of factors such as your driving record, how far you drive every year and the car you drive, a major factor in determining your premium is your age. The highest insurance rates are generally reserved for younger drivers new drivers in drivers in their teens through their mid-20s are highest and rates begin to trend lower for drivers in the middle years; rates tend to be lower for drivers in their 40s, 50s and early 60s and then begin to climb again starting at age 70.  If the fatality and injury rates are declining for persons in their early 70s, it could have a beneficial impact on rates.

According to the IIHS study, deaths among drivers 70 and older fell 21 percent between 1997 and 2006. Older drivers actually experienced bigger declines in fatal crash involvements than some other age cohorts. It’s not clear why fatalities are declining in this group but in part it could be due to automobile safety and the possibility that older adults self-limit driving as they age and develop physical and cognitive impairments.

By 2006 when the study ended there were more than 20 million licensed drivers 70 and older, about 2 million more than were driving when the study began in 1997 and even though the numbers are going down, it is still true that crash rates and fatal crash rates increase starting at age 70 and rise even more after age 80.  

There are some strategies you can use as a senior driver to help keep your costs low. First, while it is generally true that rates will at around 70, individual companies have their own underwriting rules if you are being faced with a rate increase is worthwhile to take an opportunity to shop around a little to see if you can find a company that changes your rates at a slightly older age.

You can also take advantage of bundling discounts by making certain that your Washington auto insurance is combined with your homeowner’s policy or life insurance. Bundling can produce significant discounts. You should also do a review of your mileage there are significant premium discounts that occur as your mileage drops remember to let your insurance company know that you are no longer commuting or driving long distances. 

Look into taking a traffic safety course such as that offered by the AARP. These courses can be taken in person and sometimes online and the successful passage of safety course will get you a discount on your auto insurance policy.

Insurance companies frequently offer some discounts for a variety of safety and theft related devices so you can save some money by getting a safer car. Check with your agent or insurance company before you go car shopping to see if anti-theft devices, backup cameras and collision avoidance systems will have an impact on your insurance premium.

Finally, you can raise your deductible change your car insurance coverage in order to save on your premiums. Just make sure you have the coverage you need and that you have set a deductible that is comfortable for you to cover in case of a claim. 

Long Term Care Insurance

Can we talk?  Nobody’s getting any younger anywhere and here on the Peninsula we have a little head start on those getting older.  The median age in Jefferson County is 53.9, the 10th-oldest median age population, by county, in the U.S.  In Clallam County, the median age is 49 years, but Sequim is well over that at 57.9 years.  In short, around here, we are on the crest of the age wave.  

If you are at or around median age and thinking about managing your future risks, you probably have already given some thought to long terms care insurance.   It is a difficult area not only for the individual purchaser, but for insurers as well. The problem for both underwriters and consumers is that it is very hard to project risk and the cost of claims and therefore to set premiums.  

From the consumers perspective there is a tradeoff between self-funding long term care and purchasing protection.  If you have a sufficient amount in savings, long term care insurance may be an “unnecessary” expense.  Financial analysts sometimes counsel high net worth individuals to save their money and self-fund long term care; insurance agent’s counter that purchasing a high deductible policy affords even the wealthy protection against catastrophic situations and point out comparable investments – like expensive cars – get insured without a second thought. There are no easy answers and they will be further complicated by the prospect of federal government support for options in long term are insurance. 

Insurers themselves have a problem because their claims risk is a moving target.  Insurers collect premiums for years before the vast majority of the insured will become old enough to need care, but health care costs are increasing and people are living longer.  Long-term care insurance has only been offered since the late ’80s, and it is only now that claims are coming in that the real costs to insurers is becoming apparent. This cost problem is compounded by low returns insurance companies are making on the premiums and underwriting concerns have lead major players such as the Unum Group, Guardian, MetLife and Allianz to leave the long term care insurance business.

A recent change that has gotten a lot of public attention is “gender-distinct” pricing, a new strategy that will significantly raise rates for single women.  Genworth Financial, the nation’s largest long-term care insurance provider with more than a million policy holders, has won approval in some states to raise rates for single women purchasing new policies. Women, most of them single by the time they reach advanced age, cost the company $2 of every $3 in benefits paid.   Women are also disadvantaged because there is a widespread assumption that they will be the ones providing care.  Many women report they have never considered purchase of long term care insurance – something Genworth refers to as a “double whammy.”     

Companies still offering long term care insurance are making adjustments by hiking premiums on policies in place, increasing elimination periods — the period during which a beneficiary must cover his or her own costs — and reducing inflation protection.  Underwriting is now requiring home visits instead of phone interviews, blood tests and an examination of medical records.  

If you are considering long term care insurance, there are some strategies to consider.  You may be able to lower premium costs by partially self-insuring.  You can also buy longer wait periods – like increasing the deductible on your care insurance – and consider skipping things like inflation riders. Make sure whatever you purchase is from a highly rated insurance company.  If you are planning on being around for a long time you want to make sure your insurer is as well.  

Anatomy Of An Insurance Fraud

If you follow our blog, you know we have done several pieces on insurance fraud of various kinds – not only here in the U.S., but Russia also evidently has a very large fraud problem.  Big insurance fraud is big business and the FBI has recently concluded prosecution in one of the largest single no-fault automobile insurance fraud schemes ever charged.  While the full scope of the fraud may never be known, 10 defendants, including one licensed doctor as well as chiropractors, clinic managers and lawyers were accused of defrauding private insurance companies of more than $279 million under New York’s no-fault automobile insurance law. Some of the defendants were also charged with racketeering and money laundering and the attorney pled guilty to conspiracy to commit health care fraud.      

Significant-in-insurance-fraud-300x225.jpg How did it work?  All vehicles registered in New York State are required to have a no-fault automobile insurance policy.  These “no-fault” policies were designed to reduce the overhead of personal injury lawsuit, thereby reducing claim costs.  No-fault policies allow drivers and passengers of registered and insured vehicles to receive benefits of up to $50,000 per person for injuries sustained in an automobile accident and require prompt payment for medical treatments.  Claimants can assign their rights to reimbursement from an insurance company to medical clinics or other providers that provide medical care.  New York Law also requires that medical clinics in the state be incorporated, owned, operated, and/or controlled by a licensed medical practitioner in order to be eligible for reimbursement.  This is similar to Washington State and its view of the corporate practice of medicine.  

The New York fraud came about when the real owners of medical clinics paid doctors, to use their licenses to form professional corporations and use those corporations to bill private insurers for bogus medical treatments. One defendant owned, operated, and controlled at least four clinics.  The clinic controllers instructed doctors to make excessive and unwarranted referrals for almost every patient they saw – including physical therapy, acupuncture, and chiropractic treatments and treatments for psychology, neurology and orthopedics to name only a few.  Clinic doctor’s also prescribed functional capacity tests unnecessary MRI’s, X-rays, orthopedics, and medical supplies. These clinics and their owners got thousands of dollars in kickbacks for patient referrals.  

Patients with claims were sent to personal injury lawyers to file lawsuits against the insurance companies.  Since the success of these suits depended in part on how many medical treatments the patients received, accident victims had an incentive to get many treatments at the cooperating clinics. One attorney pled guilty to paying a clinic manager to refer patients who had received unnecessary treatments in order to file personal injury lawsuits. The whole scheme involved a web of referrals, charges for bogus services and kickbacks among all the players.  

We do not have no-fault auto insurance in Washington State, but there is a potential for fraud through this sort of collusion in any state.  The Coalition Against Insurance Fraud estimates, conservatively, there is nearly $80 billion in fraudulent claims in the U.S. annually. A lot of insurance fraud goes undetected and unreported, so this is likely a low number.  It should concern all of us since those excess costs are passed back to consumers in the form of higher than necessary premiums. This bust shows why the prevalence of auto insurance fraud in New York, Florida and New Jersey make these states auto insurance premiums among the nation’s highest.

Affordable Care Act – Update

The furor about the Affordable Care Act – often dubbed ObamaCare – has died down a bit since the election and, like it or not, the Act is moving toward implementation.  A number of provisions have been implemented through 2012 and more are on the way in 2013.  As of today, insurance plans must cover free annual physicals for women and an array of other testing, screening and counseling services.  Insurers are also prevented from charging out-of-pocket costs to patients receiving mammograms and colonoscopies – these are two very widely used preventive care procedures.  The Act has allowed children to remain on their parents’ insurance plans until they turn 26 and ruled they cannot deny coverage to children with pre-existing conditions, terminate coverage except for customer fraud or cap the benefits customers can receive in a lifetime. On the premium front, insurance companies must now spend at least 80 percent to 85 percent of premiums on direct medical costs or rebate a portion of premiums.  

At our last update, we looked at progress on the state Health Exchanges and they have been a lot in the news in recent weeks.  The Washington state Health Benefit Exchange has an official name – Washington Healthplanfinder – and a new website: http://wahbexchange.org/ where people can go for information.  Washington State has been a national leader in efforts to roll out a state operated exchange where citizens and small businesses can shop for health care plans.  The Healthplanfinder is a one-stop-shopping portal that will help Washingtonians compare Qualified Health Plans (QHP), determine eligibility for tax credits or less expensive co-pays and deductibles and get assistance finding, selecting and enrolling in a health plan.  

Just this month, some new rule-making has been proposed that bears on the health exchanges and the Small Business Health Options Program (SHOP).  These will be of particular interest to local business owners because they bear on options for Washington health insurance available to businesses and employees.   Under the proposed rule, state officials in states like Washington which operate their own exchanges would be permitted to design employer plan selections for SHOP exchanges in whatever manner they see fit.  This is likely to insure a range of plans and rates for employers to choose from.  Employers in states that have defaulted into a federally facilitated exchange may select only one health plan off the exchange to offer its employees. 

Stay tuned folks, there is certainly going to be more to follow as the Patient Protection and Affordable Care Act rolls out over the next several years.  We will try to keep you in the know.