Insurance

Personal lines insurers are evolving their business models in response to consumer-led pressures, according to a new study by Conning Research & Consulting.

"Changes in consumer preferences and behaviors have accelerated in recent years, and likely will for the foreseeable future, thanks in large part to demographic, economic and technology impacts," said Alan Dobbins, analyst at Conning Research & Consulting. "Information flow has increased significantly, and consumers are willingly trading privacy for empowerment. He's talking about programs like Progressive Insurance's Snapshot discount.

Conning says consumers now have the ability to shop price or opt for usage-based coverage to reduce their costs, and carriers have much more behavioral information available to set rates appropriately and compete for new business." Over the next few years expect many copycast insurance products because of the Snapshot discount's success.

The Conning Research study, "Consumer Trends in Personal Lines Insurance: Preparing for Tomorrow's Market" reviews ongoing consumer trends, resulting insurer response and opportunity, and discusses expected changes through 2015.

"Keeping pace with the myriad changes to consumer makeup and preferences is a challenge for personal lines insurers, but now represents table stakes for the national carriers," said Stephan Christiansen, director of research at Conning. "The continuing shift to direct distribution is changing the relationship with the insured and the expectations for service and communication. Resolving the tensions arising from the rapidly evolving relationships represents a significant opportunity for leading firms."

Health care costs for commercial insurers rose 7.11% last year and could rise at a faster pace this year, according to Standard & Poor's Financial Services LLC.

The increase was down slightly from 7.52% in 2010 based on the S&P Healthcare Economic Commercial Index. But it also was up sharply from the 5.65% increase in 2009.

Health care costs, which tend to lag the general economy, increased at a slower pace as the economy was beginning to pull out of the economic downturn, said Maureen Maitland, vice president of S&P Indices. Its possible individuals put off needed care as well because oif the tough economy.

With a gradual recovery taking hold, costs are expected to increase at a faster rate in 2012. But with insurers tightening heir belts with the new medical loss ratio rules 2012 will be an interesting year of change.

Rules that allow some small employers to avoid regulation under the federal Affordable Care Act are unlikely to have a major impact on the future cost of health insurance unless those rules are relaxed to allow more businesses to opt out, according to a new RAND Corporation study.

An analysis of two rules that allow small businesses to avoid participating in health reform concludes they will have only a minor impact because relatively few businesses are likely to take advantage of the options, according to findings published in the February edition of the journal Health Affairs.

"We found that keeping the rules as they are written, particularly the limitations on maintaining a grandfathered plan, will be essential to keeping premiums affordable in small business insurance exchanges," said Christine Eibner, the study's lead author and a senior economist at RAND, a nonprofit research organization.

The laws governing health insurance premiums for employers with 100 or fewer workers will change under the Affordable Care Act. Beginning in 2014, insurers will be able to set premiums higher or lower for enrollees at small businesses based only by the enrollees' age, family size, geographic location and whether they use tobacco. Traditional underwriting factors such as gender, health status or previous claims history will no longer be allowed to affect premiums.

The goal of these strategies is to spread the financial risk associated with insuring unusually sick or high-cost enrollees across a wider pool of employers and employees.

Concerns have arisen that such cost sharing could be undermined if small employers with relatively healthy workers and dependents avoid the new regulations by self-insuring or by maintaining grandfathered health insurance plans - two options that allow them to avoid regulation under the Affordable Care Act.

Are you surprised by these findings, have you seen any that contradict this Rand study... please comment.

In an effort to reign in spiraling health costs more insurers, including United Health, are rejecting the traditional fee-for-service payment model, and instead tying payment to quality outcomes. WellPoint and Aetna both have announced similar payment overhauls, according tothe Wall Street Journal.

UnitedHealth is launching new "value-based" provider contracts that offer financial rewards for doctors who deliver high-quality and efficient care, including meeting such goals as avoiding hospital readmissions and ensuring patients get recommended screenings, reported The Wall Street Journal.

"This is not just an exercise or a pilot," UnitedHealth's Chief Clinical Officer Sam Ho told the WSJ. "It represents a significant change in the architecture of our compensation models for doctors and hospitals."

The program also will realize significant savings as much as twice as much as it would spend on incentive payments for doctors because patients will be healthier, according to Bloomberg. The company projected per member, per month savings from anywhere between $1.35 and $7.80, reported the WSJ.

Aetna is taking a similar track with its monthly incentive per patient payment to doctors who participate in its Medical Home initiative.

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With the White House under fire for its new rule requiring employers, including religious organizations, to offer health insurance that fully covers birth control coverage, ABC News has learned that later today the White House will likely announce an attempt to accommodate these religious groups.

The move, based on state models, will almost certainly not satisfy bishops and other religious leaders since it will preserve the goal of women employees having their birth control fully covered by health insurance.

Essentially, this is a political compromise to get the issue off the front page. The goal of the polciy change allows respect of religious beliefs but will not back off from the goal of full birth control coverage, which is exactly what several states already do.

Analysis

What the White House will likely announce later today is that the relationship between the religious employer and the insurance company will not need to have any component involving contraception. The insurance company will reach out on its own to the women employees. Does this improve the situation as the employee may be going against the religious organization's policy? What do you think?

As gas prices swell to more than $4/ gallon this spring and summer toward record highs according to experts, Congress may act to help commuters with mass transit benefits. The tax-favored status of an employee benefit tapped by those who use mass transit to get to and from work would be boosted under a provision in highway funding legislation approved Tuesday by a Senate panel.

The benefit, approved by the Senate Finance Committee on a 17-6 vote, would allow employees to reduce their taxable salaries by up to $240 a month for pay for mass transit expenses under a model similar to dependent care expense reimbursement or flexible savings accounts.

The current monthly maximum contribution is $125. The new higher limit would expire at the end of 2012.

As recently as 2009 Congress passed the 2009 economic stimulus law, under which employees were able to reduce their taxable salaries by up to $230 a month to pay for mass transit expenses. At that time, the maximum contribution was $120 per month.

On the defensive, the White House scrambled Thursday, according to CNN, to explain its requirement that church-affiliated employers cover birth control after House Speaker John Boehner called it unconstitutional and demanded immediate reconsideration.

Under President Barack Obama's health care reform law, most employers and insurance plans will have to cover birth control free of charge as a preventive service for women. The administration had already ruled that churches and houses of worship do not have to follow that requirement, but officials recently announced that many religious-affiliated institutions such as hospitals, colleges and charities must comply.

The wave of protest that followed appears to have taken administration officials by surprise. Catholic and Protestant evangelical leaders criticized the decision as infringing on freedom of religion. Some religious liberals called it politically risky for Obama in a close election year.

"I think this mandate violates our Constitution," Boehner, R-Ohio, said Thursday. "I think it violates the rights of these religious organizations. And I would hope that the administration would back up and take another look at this." Boehner is Catholic and is joined by Catholic Bishops across the nation in opposing this policy.

Also joining in disapproval was a group that includes Democratic lawmakers who helped engineer final passage of the health care law. The group "Democrats for Life of America" represents anti-abortion lawmakers who provided the margin of victory for passage of the health care overhaul.

Medicare Advantage enrollments have risen a bigger-than-expected 10% since this time last year according to the Department of Health and Human Services.

And in even better news average premiums have fallen 7% to $31.54/month as average premiums have fallen from $33.97 in 2011 while enrollment inceased from 11.7 million to 12.8 millio persons for 2012.

"The Medicare Advantage program is stronger than ever," said Secretary Sebelius. "Premiums are down on average, enrollment is up, and thanks to the Affordable Care Act we have unprecedented new tools to ensure that seniors and people with disabilities are getting the best value out of their coverage."

The report stated that since 2010, when the Affordable Care Act was passed, Medicare Advantage premiums have fallen by 16 percent and enrollment has climbed by 17 percent.

Analysis

While this could be true, I do not see a cause and effect that is obvious, or evidence from HHS to support it. What HHS offers is this: "Not only are average premiums lower, but plans are better, with more beneficiaries enrolled in 4 and 5 star plans," said CMS Acting Administrator Marilyn Tavenner. "The Affordable Care Act has strengthened Medicare Advantage by motivating plans to improve the quality of their coverage." Again, ths is great, but this evidence is not definitive.

Better quality plans are likley to lead to health care efficiencies which would bring down monthly premiums, but this may take more than a year to see results of dramatic savings. Call me a hopeful skeptic needing more evidence, but what are your thoughts?

Homeowners insurance rates are increasing enormously in 11 states for 2012 following record 2011 catastrophes.

Several home insurers will make hikes of 18% or more on specific homeowners insurance lines in 11 states, which include Tennessee; South Dakota; Kentucky; Arizona; Virginia; Maine; Colorado; South Carolina; Alabama; Kansas; and Georgia since Dec. 1.

Although the average of these changes is 18%, one rate hike implemented by Travelers Personal Security Insurance Co. raised one of its homeowners products 25.5% effective Dec. 23, according to Insurance News Net. This change alone impacted about 50,000 policyholders, according to Best's filings.

Three EMC Insurance Cos. subsidiaries in Alabama raised rates on specific homeowners lines about 20% effective Dec. 1, which impacted about 3,800 policyholders.

Because of 2011's active season of tornados and the Texas wildfires, the Southeast and Midwest regions have been particularly impacted and thus the premiums have risen moreso there with insurers responding with large rate increases.

Meanwhile the NAIC reports that homeowners insurance premiums have continued rising in Louisiana and remain among the highest in the nation. Louisiana is currently ranked third behind Texas and Florida. However, the rate of the 2009 Louisiana increases have slowed since immediately after Hurricane Katrina, according to data released by the National Association of Insurance Commissioners. In 2009 Louisiana premiums rose just 1.8% on average.

Mississippi and Oklahoma round out the top five for highest homeowner's insurance premiums while the states with the lowest premiums are: 1- Idaho, 2- Wisconsin, 3- Utah, 4- Oregon, and 5- Washington.

While the phrase, "be careful what you ask for", may be somewhat appropriate, torrents of rain finally fell on drought-stricken and wildfire-prone Texas, but destructive tornados unfortunately, hitched a ride.

Three tornados spun forth by the needed thundestorms, including powerful winds and flooding that caused San Antonio authorities to rescue 14 rescues of individuals from their vehicles while nine inches of rain, deluged the city.

The squall of storms swept from north to south, first pounding Dallas and Fort Worth overnight and then moved toward San Antonio and south Texas. As the storms inched south and settled over Central Texas and Austin, record amounts of rain -- more than 5 inches in some areas of the capital -- drenched areas that just a few months ago battled the most devastating wildfires the state has ever seen.

The downpours were seen as a blessing in some regions, including Washington County, a rural area northwest of Houston that hasn't seen much rain this year and was scorched by massive wildfires in 2011.

Before tornado's strike near your clients, here's what you need to know about tornado coverage?

And look at this link to learn about flood iinsurance coverage?