Sunday, November 30, 2008

NCDC: '08 Hurricanes Cost $54 Billion

The hurricane season came to an end on Sunday and not a moment too soon for insurers.

According to the National Climatic Data Center, the financial damage as a result of this year's Atlantic hurricanes is estimated at $54 billion. That figure is second in recorded history, only surpassed in 2005 when Hurricanes Katrina and Rita contributed to a financial toll of $128 billion.

According to government studies, when adjusted for inflation and other factors like population density in coastal areas, a number of hurricane seasons from early last century could be viewed as more expensive.

This year was the fourth busiest Atlantic hurricane year since 1944. According to the NCDC, 2008 is "the only year on record in which a major hurricane existed in every month from July through November in the north Atlantic."

Hurricane Ike, which ravaged parts of Texas, will go down as the season's most destructive hurricane.

Wednesday, November 26, 2008


The Daily Insurer will not publish news on Thursday and Friday in honor of the Thanksgiving holiday.

Fresh updates will resume on Monday, Dec. 1. Thank you so much for reading our site!!

Baton Rouge Agent Arrested, Issued C&D Order

A Baton Rouge agent has been arrested, issued a cease and desist order and notice of license revocation and fine for insurance fraud, theft and forgery.

Winston Earl Harris, 63, was arrested by Louisiana State Police on charges of Insurance Fraud, Theft and Forgery. He was also served with a cease and desist order, notice of license revocation and a $25,000 fine by Department of Insurance Fraud Section Investigators for alleged misappropriation, insurance fraud and forgery.

Harris is alleged to have misappropriated over $310,411 in the form of commission payments. He is alleged to have accomplished this by producing false documents and forging signatures.

Department records show that Harris was issued a Life and Health license in May 1998 which was valid until this action.

TDI Notes October Enforcement Actions

The Texas Department of Insurance announced enforcement actions taken by Commissioner Mike Geeslin that became final during October.

The actions include three license revocations and fines and restitution totaling $42,600. Copies of Geeslin’s orders may be obtained by contacting TDI’s Public Information Office.

An order imposing disciplinary measures becomes final 20 days after the agent or insurance company has received notice of the order unless a motion for rehearing is filed within that period. A motion for rehearing stays the finality of an order until the Commissioner of Insurance acts upon the motion or upon the operation of law. Commissioner's orders are subject to appeal to state district court.


Bazemore, Vincent John Jr. of Aubrey
Order Number: 080912
Date of Order: 10/24/2008
Order Final In: October
Action Taken: General Life, Accident and Health License revoked
Violation: Engaged in fraudulent or dishonest acts or practices; Securities fraud

Byrne, William Erik of Corpus Christi
Order Number: 080921
Date of Order: 10/29/2008
Order Final In: October
Action Taken: $10,000 fine
Violation: Sold variable annuity policies not approved by TDI; Unauthorized insurance

First American Title Insurance Company - Corpus Christi of Corpus Christi
Order Number: 080872
Date of Order: 10/3/2008
Order Final In: October
Action Taken: $2,300 fine
Violation: Illegal rebates for referrals of title insurance business; Provided door prizes for real estate open house events

Hill, Michelle Nanette of Irving
Order Number: 080913
Date of Order: 10/24/2008
Order Final In: October
Action Taken: $4,800 fine
Violation: Failed to timely file Annual Agent Reports for Risk Retention and Purchasing Groups

Humana Health Plan of Texas, Inc. of Green Bay, WI
Order Number: 080873
Date of Order: 10/3/2008
Order Final In: October
Action Taken: $2,500 fine
Violation: Failed to pay independent review organization fees on a timely basis

Johnson, Andrew P.; d/b/a Dimmit County Land Title Company of Carrizo Springs
Order Number: 080871
Date of Order: 10/3/2008
Order Final In: October
Action Taken: $10,000 fine
Violation: Failed to timely provide an annual trust fund account audit report

Medfund USA, LLC of Riverview, FL
Order Number: 080874
Date of Order: 10/3/2008
Order Final In: October
Action Taken: Cease and Desist Order
Violation: Unauthorized insurance

Musick, Leon Douglas of Fort Worth
Order Number: 080875
Date of Order: 10/3/2008
Order Final In: October
Action Taken: General Life, Accident and Health License revoked
Violation: Engaged in fraudulent or dishonest acts or practices; Marketing and selling unregistered securities

Ogundana, Sylvester Lanre of Houston
Order Number: 080911
Date of Order: 10/24/2008
Order Final In: October
Action Taken: General Life, Accident and Health License and General Property and Casualty License revoked
Violation: Engaged in fraudulent or dishonest acts or practices; Misappropriated or converted money belonging to an insurer or insured

Paradise Settlement Services, LLC, Harris, Earl Lee, III, Perkins, Dee, Crantz, Kevin Peter of Lewisville, Plano, Euless
Order Number: 080887
Date of Order: 10/10/2008
Order Final In: October
Action Taken: $10,000 in fines; Cease and Desist Order
Violation: Unlicensed personnel acting as escrow officers

Union Insurance Company of Des Moines, Iowa
Order Number: 080920
Date of Order: 10/29/2008
Order Final In: October
Action Taken: $3,000 fine
Violation: Failed to pay independent review organization fees on a timely basis.

MSAG Holds Thanksgiving Food Drive

The Main Street America Group (MSAG) has collected more than 1 ton of non-perishable goods during its annual Thanksgiving food drive. Just in time for the holiday season, the food items have been donated to several food banks located in five of the cities where Main Street America operates.

The two-week drive, which took place during the first half of November, experienced a more than 30 percent spike in the amount of food collected compared to the super regional property-casualty insurance company’s 2007 food drive.

“We feel companywide activities like this are critical because Main Street America is committed to making a positive impact in the communities where we work and live,” said Main Street America chairman, president and CEO Tom Van Berkel. “With the current economic environment, we know the need for non-perishable goods is greater than ever in our local communities. This is the third year we have conducted our food drive and the results speak to the continuing generosity of our 950 employees.”

Local organizations that received goods from Main Street America’s food drive this year included:

  • Auburn, Mass. – 185 pounds for Worcester (Mass.) County Food Bank.
  • Jacksonville, Fla. – 921 pounds for Second Harvest Food Bank of Northeast Florida.
  • Keene, N.H. – 531 pounds for The Community Kitchen.
  • Richmond, Va. – 305 pounds for Central Virginia Food Bank.
  • Syracuse, N.Y. – 228 pounds for The Food Bank of Central N.Y.

In addition to its annual Thanksgiving food drive, Main Street America’s employees also hold an annual Toys for Tots holiday toy drive. This year’s drive is scheduled for Dec. 1-12, 2008.

Suspect Arrested in Georgia Arson Cases

Authorities in DeKalb County reported the early morning arrest Tuesday of Jeffrey Tremaine Sprowl, 21, of Stone Mountain, who is under investigation for allegedly setting a number of suspicious fires during a 12-hour period Sunday and early Monday.

According to fire investigators, the fires began around 4 p.m. Sunday. The latest fire early Monday morning took place at a day care center. Another fire heavily damaged a hair salon, while a third fire damaged an auto dealership. There were no injuries and no cars suffered damage.

In one of the other suspicious fires, the Indian Creek Baptist Church suffered heavy damage, but there were no injuries.

Tuesday, November 25, 2008

Calif. Notes 20.5% Rate Cut for Doctors' Company

California Insurance Commissioner Steve Poizner announced a 20.5 percent rate cut for medical malpractice insurance offered by The Doctors Company (Doctors) following its acquisition of SCPIE Holdings Inc. (SCPIE), saving $54.3 million annually.

"Prior to the Department's approval of the deal, concerns were expressed that this transaction would reduce competition in the medical malpractice insurance market in California and therefore lead to higher prices," said Poizner. "Thankfully, that has shown to not be the case. Competition remains strong. We will continue to monitor the new company and ensure that its rates are appropriate."

Poizner approved the transaction at the end of June. A condition of the authorization was that the company submit rate applications for both Doctors and SCPIE by Sept. 1, 2008, and at least every three years thereafter.

The combined rate decrease between the two companies is 20.5 percent. Individually, SCPIE had a 23.9 percent decrease ($29 million) and Doctors Company had an 18.0 percent decrease ($25.3 million).

Zenith Files for 4.0% Rate Increase

Zenith National Insurance Corp. reported that its wholly owned subsidiary, Zenith Insurance Company, has filed today with the California Department of Insurance its workers’ compensation rates for use in California on or after Jan. 1, 2009.

The new rates represent an average increase of 4.0% when compared to rates in effect since Jan. 1, 2008.

Rates charged to employers are also affected by changes in experience modification factors and net credits and debits applied to individual accounts.

M/H/S Forms New Full-Service Insurer

Atlanta-based Morris|Hardwick|Schneider (M|H|S), a real estate closing law firm, has established a new full-service insurance company.

LandCastle Insurance Services Inc. will cater to the real estate settlement industry, offering homeowner’s insurance and broad spectrum of all personal and commercial insurance products across 24 states and the District of Columbia.

The new company further expands the ability of M|H|S and its title company, LandCastle Title, to provide end-to-end real estate services.

LandCastle Insurance Services operates under a broker-based model, in which it gathers quotes from multiple carriers and presents the policy with the best available price and coverage for the client. The personal insurance products offered include:

-- Homeowners
-- Flood
-- Life
-- Renters
-- Auto
-- Health: Group and Individual
-- Condo Contents Coverage
-- Boat
-- Personal Umbrella
-- Builder’s Risk
-- RV

-- Motorcycle

The commercial insurance products offered are geared to the special needs of the real estate industry. Such products include:

-- General Liability

-- Fidelity Bonds
-- Group Health Insurance
-- Surety Bonds
-- Workers Compensation
-- Employment Practices Liability Insurance
-- Business Owner’s Policies (BOP)
-- Business Auto
-- Errors & Omissions

Jennifer Frank, LandCastle Insurance Services president and LandCastle Title president of business management, will lead the company alongside a management team with more than 20 years experience in the insurance industry, including Sonny O’Steen, managing director of operations, and Frank Laisch, vice president and head of marketing.

Through direct licensure and strategic partnerships, LandCastle Insurance Services serves the following states:

-- Alabama

-- Illinois

-- Mississippi

-- Texas

-- Arizona

-- Indiana

-- New York

-- Virginia

-- California*

-- Kentucky

-- North Carolina

-- West Virginia

-- Delaware

-- Louisiana

-- Ohio

-- Wisconsin

-- District of Columbia

-- Maryland

-- Pennsylvania

-- Florida

-- Michigan

-- South Carolina

-- Georgia

-- Minnesota*

-- Tennessee

*At time of print, license still being processed

Individuals, Businesses Can Donate to Fire Victims

Individuals and businesses desiring to donate in-kind products to California wildfire survivors may do so with an online system that cuts out "the middle man."

In-kind products, tangible goods and services, are matched directly with appropriate private nonprofit organizations through the Governor's Office of Emergency Services Web site: Click on the link titled: How To Donate.

California uses the national nonprofit Aidmatrix Network, which is partially funded by the Federal Emergency Management Agency (FEMA).

"Essentially, we are a conduit - a private-public portal - between the donors and the nonprofits," said Tom Maruyama, state coordinating officer for the federal wildfire disasters. "We've partnered with dozens of charitable organizations including the American Red Cross, Salvation Army, the United Way, food banks and others to maximize assistance to disaster victims."

In the aftermath of the devastating fires, in-kind household goods, such as appliances, bedding, cleaning kits or furniture will be needed most by those requiring alternative housing prior to rebuilding. Donors offer their goods online. The offers are reviewed for suitability before being accepted for delivery to the appropriate charity.

"The Aidmatrix Network is a nationwide, web-based donations management tool used by federal and state emergency managers to connect donors with those in need," said Mark Neveau, federal coordinating officer. "The electronic system ensures the donated goods go where they are intended. The process for donating is fully explained."

Currently, food donations are not urgently needed for wildfire survivors. Cash donations can be made through the California Volunteers Web site, Click on "How you can help" in the Southern California Fires section.

Four Arrested in Motor Vehicle Accident Scam

Four Massachusetts individuals have pled guilty in Suffolk Superior Court in connection with their participation in staging fraudulent motor vehicle accidents to scam insurance companies.

The four defendants, Laura Battista, 58, of Weymouth, William Penta, 44, of Revere, Janet Vaccari, 46, of Reading, and Vaccari’s daughter Deana Pistone, 25, of Wakefield, pled guilty to charges of Motor Vehicle Insurance Fraud, Conspiracy to Commit Motor Vehicle Insurance Fraud, Larceny by False Pretenses and Attempted Larceny. Superior Court Judge Carol Ball sentenced the defendants as follows:

Laura Battista:
Five years of probation
$12,941.25 restitution
100 hours of community service

William Penta:
Two years in the House of Correction, suspended for two years, during which time he will be on probation
$4,303.75 restitution
40 hours of community service

Deana Pistone:
Two years of probation
40 hours of community service

Janet Vaccari:
Five years of probation
$8,420.38 restitution
100 hours of community service

The two remaining co-defendants, Fred Battista, age 46, of Revere, and David Forlizzi, age 47, of Hudson, NH, are scheduled for a pre-trial hearing on Dec. 18, in Suffolk Superior Court. Fred Battista is charged with Motor Vehicle Insurance Fraud (3 counts), Conspiracy to Commit Motor Vehicle Insurance Fraud (2 counts), Larceny by False Pretenses (2 counts) and Attempted Larceny. David Forlizzi is charged withMotor Vehicle Insurance Fraud (3 counts), Conspiracy to Commit Motor Vehicle Insurance Fraud (3 counts), Larceny by False Pretenses (2 counts), Attempted Larceny and Being a Habitual Offender.

An investigation conducted by the Attorney General’s Office began in July 2007 after the matter was referred by the Insurance Fraud Bureau (IFB). During the course of the investigation authorities discovered that on various dates between May 2006 and June 2007, fraudulent claims involving three staged accidents were submitted to insurance companies. Authorities allege that Penta, Vaccari, Pistone, and Laura Battista knew Forlizzi and Fred Battista, both employees of Winthrop Collision Center, also known as Collision Headquarters, were willing to pay people to submit fraudulent motor vehicle insurance claims. Investigators believe that Forlizzi and Fred Battista schemed to collect insurance money from these staged accidents.

One of the accidents involved Janet Vaccari, who submitted a claim to her insurance company Plymouth Rock Assurance Corporation (PRAC), stating that she had been involved in a motor vehicle accident with Laura Battista. PRAC paid Vaccari’s claim, and also paid Laura Battista based on the fraudulent information given by Vaccari. After receiving her check, Vaccari signed over her insurance check to the Winthrop Collision Center for repairs on her vehicle. Authorities discovered that David Forlizzi assisted Vaccari in staging this accident with the help of Laura Battista, and her stepson, Fred Battista.

During the investigation authorities discovered that a second fraudulent claim was submitted by Deana Pistone to her insurance company, also PRAC, alleging that her vehicle had been vandalized. She claimed to PRAC that as a result of the vandalism she brought her car to Winthrop Collision Center for repair. She later withdrew her claim after PRAC began investigating the incident. Pistone admitted that the claim was false and that Forlizzi convinced her to submit a false claim.

A third claim found to be fraudulent was submitted by William Penta, who stated to his insurance company, National Grange Mutual Insurance (NGM) that he had struck a parked vehicle belonging to Laura Battista. NGM paid the claim for the damage to the vehicle which Penta was driving, and also paid Laura Battista for the alleged damage to her vehicle. Penta also filed a Personal Injury Protection (“PIP”) claim for injuries sustained in the accident. Investigators discovered that Penta had known Fred Battista prior to the staged accident, and it is through this relationship that Penta became involved in the insurance fraud scheme.

A Suffolk County Grand Jury returned indictments against all six defendants on March 27, 2008. On April 15, 2008, they were arraigned in Suffolk Superior Court and entered pleas of not guilty and released on personal recognizance. Today, four of the defendants pled guilty, were sentenced to probation and ordered to pay restitution. The two remaining defendants are scheduled for a pre-trial hearing on Dec. 18.

ACE Group Unveils New Swiss Company

Following the redomestication of ACE Limited’s holding company to Zurich in July 2008, the ACE Group has now taken the additional step of founding a new Swiss insurance company.

The new company – ACE Insurance (Switzerland) Limited, a subsidiary of ACE Limited - will manage the insurance and reinsurance business of the Zurich branch with the goal of further strengthening ACE’s position in the Swiss market

ACE has been active as a local insurer in Switzerland since the opening of the Zurich branch of ACE European Group Limited, London, in 2003. In addition, ACE’s reinsurance activities in continental Europe were moved to Zurich in 2005. This business will also now be written through ACE Insurance (Switzerland) Limited.

Woman Reports Car Stolen After It Was in a Crash

A Jamestown, New York woman who reported her car stolen was arrested when investigators linked the vehicle to a hit and run accident that occurred in Buffalo two hours prior to the time the woman said she last saw the car.

Christine Cook, 35, was arrested by Depew police following an investigation by David Hahn of the Frauds Bureau of the New York State Insurance Department. She was charged with insurance fraud and grand larceny.

Cook contacted Buffalo police and reported that her car had been stolen in the city sometime prior to 9:30 a.m., March 17. She also reported the theft to her insurer, Progressive Insurance Company.

However, Hahn said that an investigation revealed that Cook’s 2000 Ford Mustang was involved in a hit and run accident two hours earlier in which the driver fled the scene, leaving the keys in the car’s ignition.

If she is convicted, Cook could be sentenced to up to seven years in prison.

AIG Notes Voluntary Comp Restrictions for Execs

American International Group Inc. (AIG) has announced voluntary restrictions on executive compensation that include a $1 salary for its Chief Executive Officer; no 2008 annual bonuses and no salary increases through 2009 for AIG’s top-seven-officer Leadership Group; and no salary increases through 2009 for the 50 next-highest executives, in addition to other bonus, severance and retention award restrictions.

AIG is also developing a funding structure to ensure that no taxpayer dollars are used for annual bonus or future cash performance awards for AIG’s “Senior Partners,” the top 60 members of management.

Edward Liddy, AIG’s chairman and CEO, said AIG’s senior executives recognize AIG’s obligation to taxpayers. “We are extremely grateful for the assistance we have received, and we know we have an obligation to use that assistance to help AIG recover, contribute to the economy and repay taxpayers,” Liddy said. “This action by the senior management team demonstrates not only that we understand our obligation to taxpayers and shareholders, but also that we are committed to the future success of this organization.”

Under the voluntary restrictions announced today:

  • Liddy, who joined AIG on Sept. 18, will receive an annual base salary of $1 for 2008 and 2009. His initial compensation will consist entirely of equity grants, showing his confidence in AIG and its team. He will not receive an annual bonus in those years, although he may be eligible for a special bonus for extraordinary performance payable in 2010.
  • Liddy will not be eligible for severance payments.
  • Paula Rosput Reynolds, vice chairman and chief restructuring officer, who joined AIG in October, will receive no salary or bonus whatsoever in 2008. In 2009 and beyond, other than her base salary, any other compensation she receives will be tied directly to the progress of the restructuring efforts.
  • The other five members of AIG’s top-seven-officer Leadership Group will not receive annual bonuses for 2008 or salary increases through 2009.
  • AIG’s Senior Partners will not earn long-term performance awards in 2008. Furthermore, they will not receive salary increases in 2009, and their 2008 and 2009 annual bonuses will be limited. In addition to Liddy foregoing any severance payments, there will be restrictions on severance payments to members of this management group, which exceed TARP severance restrictions.

“We believe these actions demonstrate that we are focused on overcoming our financial challenges so AIG can return value to taxpayers and shareholders,” Liddy added.

Monday, November 24, 2008

New York Chiropractor Nabbed in Fraud Scheme

A Suffolk County, New York chiropractor who reportedly continued to submit claims for treating a patient four years after he stopped the treatments was arrested for insurance fraud, the New York State Insurance Department reported.

Dr. Richard Nebiosini, 48, of Medford, was arrested by the Suffolk County District Attorney’s office for insurance fraud.

According to investigators, Nebiosini provided chiropractic treatments to the patient for 10 years until 2004. However, they said that he submitted 96 fraudulent claims totaling $3,201 to CNA Insurance from 2004 until May 2008 for treatments that were never rendered. Investigators said the false claims were discovered when the insurance company contacted the former patient to verify whether she was still being treated.

Nebiosini was released pending a hearing to be scheduled in Suffolk County Court. If he is convicted, he could be sentenced to up to four years in prison.

Arthur J. Gallagher Purchases Georgia Agency

Arthur J. Gallagher & Co. announced that its subsidiary, Risk Placement Services Inc., acquired Continental Special Risks Inc., in Roswell, Georgia.

Founded in 1984, Continental Special Risks is a wholesale insurance broker and managing general agent. They provide excess and surplus property/casualty coverage including professional and general liability, commercial package and property, and other specialty insurance products and services for their retail insurance agent clients throughout the Southeast.

Robert Schacher, Donna Schacher and their associates will continue to operate out of their current location under the direction of Joel Cavaness, president of Risk Placement Services Inc.

New York Woman Sues Hospital for Botched Work

In a more unusual medical case, a New York City woman is suing Brooklyn Hospital Center after an alleged "medical mistake" resulted in the removal of both her hands and her feet.

According to the New York Daily News, Tabitha Mullings is now a quadruple amputee after she was initially admitted two months ago in dealing with a kidney stone.

The woman was reportedly given painkillers and sent home, but an infection that was left untreated blocked blood flow to her hands and feet and she fell into a semi-coma for two weeks.

When the 32-year-old mother of three woke up, doctors reportedly told her that they had to amputate both her hands and her feet. She also reportedly lost sight in one eye.

Mullings is suing the hospital for $100 million dollars, claiming she never received a blood test to look for the infection that ultimately resulted in the amputations.

Aid Available for California Wildfire Victims

The federal disaster declaration for the wildfires that began Friday, Nov. 13, opens the door for recovery assistance for residents of Los Angeles, Orange, Riverside and Santa Barbara counties, according to officials from the Federal Emergency Management Agency (FEMA) and the Governor's Office of Emergency Services (OES).

Disaster assistance may include:

  • Grants from FEMA for rental payments for temporary housing, if not covered by insurance, if you cannot live in your home or apartment. Initial assistance may be provided for up to two months for homeowners and at least one month for renters. Payments may be extended after the initial period based on a review of your needs.

  • Grants from FEMA for home repairs and replacement of essential household items not covered by insurance to make damaged dwellings safe, sanitary and functional.

  • Low-interest disaster loans from the U.S. Small Business Administration (SBA) which can cover uncompensated losses for personal property, including automobiles, up to $40,000 for both homeowners and renters, and up to $200,000 for homeowners for physical damage to their primary residence. SBA loans also may be used to pay for insurance deductibles.

  • Low-interest business loans are also provided by SBA for up to $2 million for uncompensated physical losses suffered by businesses of any size and private, nonprofit organizations. Additionally, working capital loans are available for economic injuries sustained by small businesses and most private, nonprofit organizations of all sizes in the declared counties and the adjoining counties. The combination of the two business loans cannot exceed $2 million.

  • Grants from FEMA and the State of California to replace personal property and help meet medical, dental, funeral, transportation and other serious disaster-related needs not covered by your insurance or other federal, state and charitable aid programs.

  • Grants administered by the California Department of Social Services' (CDSS) State Supplemental Grant Program (SSGP) may assist with eligible items not already addressed by the FEMA grant, SBA or insurance. Individuals who receive a maximum FEMA grant will have their applications automatically transferred to SSGP for consideration. Additional information is available by calling 1-800-759-6807.

  • Loans from the Farm Service Agency of the U.S. Department of Agriculture up to $500,000 for farmers, ranchers and aquaculture operators to cover production and property losses, excluding primary residence.

  • Tax relief guidance for people and businesses affected by the wildfires is provided by the Franchise Tax Board (FTB). California matches the postponement period announced by the Internal Revenue Service giving affected taxpayers an automatic postponement to Feb. 11, 2009, for returns that would have been due between Nov. 13, 2008, and Feb. 11, 2009. Taxpayers who have questions can call FTB toll-free at 1-800-852-5711, Monday through Friday, 7 a.m. to 6 p.m.

How to Apply for Assistance:

If you live in one of the declared counties, you can apply for aid from FEMA, SBA and the state by phone from 8 a.m. to 10 p.m. daily. To register, call (800) 621-FEMA (3362) or go online at (TTY 800-462-7585). Completing the application takes approximately 20 to 30 minutes. You don't have to visit a Local Assistance Center (LAC) to register.

AIR Unveils Flood Model for Great Britain

AIR Worldwide Corp. (AIR) announced the availability of the AIR Inland Flood Model for Great Britain.

The new probabilistic model will help companies better manage on-and-off flood plain risk for properties in England, Wales, and Scotland. It covers residential and commercial lines of business including Alternative Living Expenses (ALE) and Business Interruption (BI). The model incorporates original research by AIR that has been peer-reviewed by a team of leading flood risk experts in the U.K.

The AIR Inland Flood Model for Great Britain captures storm systems of varying size—from large-scale events affecting the entire country to highly localized thunderstorms. Using results from Numerical Weather Prediction (NWP) modeling, AIR has developed an innovative and sophisticated rainfall generation module that produces a realistic simulation of rainfall patterns that account for storm duration and the geographic area of rainfall.

Additionally, AIR’s model incorporates a novel approach to estimating river run-off. The process incorporates pre-storm conditions based on five days of preceding rainfall activity, resulting in a long-term memory of pre-event soil conditions for each simulated event.

With approximately 50 percent of the losses from the 2007 floods occurring off-flood plain and much of that loss occurring in highly exposed urban areas, AIR developed an explicit model for off-flood plain loss estimation. The off-flood plain model accounts for elevation, runoff, and the impact of drainage backups, facility aging, and other urban risks at each modeled location.

AIR's model estimates damage to buildings and contents caused by flood, by incorporating damage functions that vary by occupancy, construction, and height. Since flood damage is highly dependent on height, AIR's model enables companies to analyze the risk to a specific floor or floors of interest, including basements. The model also accounts for alternative accommodation and the time required for drying and cleaning the property as well as business interruption losses which vary by occupancy and account for building size and complexity, and business characteristics such as resiliency and the ability to relocate.

Losses from the AIR Inland Flood Model for Great Britain have been validated through extensive analysis of personal and commercial lines claims data from the 2007 floods, representing roughly 30% of the industry exposure.

Georgia Authorities Search for Suspected Arsonist

Authorities in Stone Mountain, Georgia are on the hunt for an arsonist who they believe set nearly a dozen suspicious fires during a 12-hour period yesterday and early today.

According to fire investigators, the fires began around 4 p.m. Sunday. The latest fire early this morning took place at a day care center. Another fire heavily damaged a hair salon, while a third fire damaged an auto dealership. There were no injuries and no cars suffered damage.

In one of the other suspicious fires, the Indian Creek Baptist Church suffered heavy damage, but there were no injuries.

No arrests have been made as of Monday morning.

New York Agent Arrested for Larceny

A 50-year-old Rockland County, New York insurance broker was arrested on charges that he stole $6,500 that two businesses gave him to pay for workers’ compensation and business liability insurance premiums, the New York State Insurance Department reported.

Fred P. Ramos, of Tappan, was charged with grand larceny, petit larceny and offering a false instrument for filing. He was arrested by the Rockland County District Attorney’s office following an investigation by the Insurance Department’s Frauds Bureau and the Workers’ Compensation Inspector General’s Office.

Ramos is accused of keeping $6,000 he received for liability insurance premiums from one business and another $500 he received for workers’ comp premiums from a second business. Investigators also charged that he filed documents falsely stating that the second business was insured for workers’ comp.

If he is convicted, Ramos could be sentenced to up to seven years in prison. He also faces revocation of his insurance broker’s license. Ramos was released pending a hearing in Orangetown Town Court.

Mercer: Jump in Deductible for Employer Coverage

The median individual deductible for health insurance coverage required by employers offering PPOs jumped to $1,000 in 2008, up from $500 last year, according to Mercer's National Survey of Employer-Sponsored Health Plans.

In 2000, only about half of employers imposed a health insurance deductible for PPO coverage (compared to about four-fifths today), and the median amount was just $250. PPOs are the most popular health plan, enrolling 69 percent of all covered employees (CDHPs enroll 7 percent).

Mercer's survey includes private/public employer health plan sponsors with 10+ employees. Nearly 2,900 employers participated in 2008.

What makes this finding more startling is that it refers to traditional PPOs - not the high-deductible plans where a health insurance deductible of at least $1,100 is required in order to deposit tax-free money in a Health Savings Account, or HSA. The HSA is the type of health insurance coverage that is spreading most rapidly.

The PPO health insurance deductible is lower among larger employers. In organizations with 500+ employees, the median health insurance deductible for individual and family health insurance coverage is $300 and $800, respectively. But large employers have been moving quickly to add HSA options to their health insurance coverage.

Health insurance coverage spending in an economic downturn

The Mercer survey found the average cost per employee for health insurance coverage rose 6.3 percent in 2008. Annual cost increases leveled off at about 6 percent in 2005 and have remained there. Employers expect a similar increase for 2009 - 6.4 percent. That projection reflects changes that employers plan to make in the level of benefits, the type of plan offered or the plan vendor. (If employers made no changes, the cost of their largest medical plan would rise by about 8 percent, they predict.)

A big question for employers is whether their cost projections, provided in late summer, will hold in the face of the current economic downturn. Utilization tends to increase during a recession. When job security is in jeopardy and insurance is tied to employment, consumers rush to get care they might otherwise delay. In addition, laid-off employees paying for coverage under COBRA provisions typically have far higher utilization than active employees. More employees are at risk for stress-related behavioral-health and medical conditions as they deal with investment losses, job insecurity and declining housing values.

Prices may also rise, as health plans and providers search for ways to recoup their investment losses; high unemployment leads to more uncompensated care; and public safety nets such as Medicaid respond to higher enrollments by freezing increases in provider compensation.

Consumer-directed health plans may prove a refuge

Rumors of the demise of the consumer-directed health plan are not borne out by Mercer's 2008 survey.

There was a sharp increase in the number of large employers offering CDHPs (a health plan coupled with either a Health Savings Account or a Health Reimbursement Arrangement) in 2008, from 14 percent to 20 percent of employers with 500 or more employees. The plans are most common among largest employers (20,000 or more employees), where they are offered by 45 percent, up from 41 percent in 2007. However, growth has been slower among small employers: Mercer found that 9 percent of employers with 10-499 employees offer a CDHP, up from 7 percent in 2007. These employers are more likely to offer a high-deductible PPO without an account feature.

Enrollment in CDHPs reached 7 percent of all covered employees in 2008, up from 5 percent last year. As employees shift from more expensive plans into less expensive ones, employers' overall cost per employee drops. This migration into lower-cost CDHPs is one factor helping to hold down benefit cost increases.

The new plan model's appeal to employers seems clear: CDHPs delivered substantially lower cost per employee than PPOs or HMOs in 2008. CDHP cost averaged $6,207 per employee, compared to $7,815 for PPOs and $7,768 for HMOs. Of the two types of CDHPs, HSA-based plans were less expensive than HRA-based plans ($6,027 compared to $6,420).

The most obvious explanation for the difference in cost between CDHPs and the other medical plan types is the higher deductible. But even compared to the average cost of PPOs with deductibles of $1,000 or higher ($6,661 per employee), CDHPs still cost less by over $400, even though CDHP enrollees are not significantly younger than enrollees in PPOs with a high-deductible and are more likely to elect dependent coverage (which drives up cost per employee). The 2008 cost increase for CDHPs was 4.0 percent, compared to 6.3 percent for PPOs and 9.1 percent for HMOs.

Most of the CDHPs added in 2008 were based on HSAs, which don't require an employer contribution. Employer account contributions are a standard feature of HRAs but not of HSAs: over a fourth of large HSA sponsors (29 percent) do not contribute. Among those that do, the average contribution is $694.

The flip side of consumerism - employee health management

Employers are looking to put more teeth into employee health management programs, in hopes that encouraging better health habits will lead to lower health spending and a more productive workforce. While the majority of employers offer one or more health management programs, large employers, in particular, are now adding incentives to encourage employees to use the programs or improve health habits. Of large employers offering a health management program, 26 percent use incentives, up from 23 percent in 2007.

The full report on the Mercer survey, including a separate appendix of tables of responses broken out by employer size, region and industry, will be published in late March 2009. The report costs $600 and the report and tables cost $1,200. For more information, visit or call Tara Lewis at 212-345-2451.

Friday, November 21, 2008

EXCLUSIVE: Business Networking Can Prove Valuable for Agents

By Carrie Podber

Social Networking - You’ve heard the term, you know you need to be part of it but what does it really mean and how do you get the most out of it?

Social Networking is about building relationships in an online environment. The concept originated with the dating sites, where people where afforded the opportunity to meet like-minded individuals in the interest of forming personal relationships. Followed by MySpace, which began with bands placing profiles to share their music and Facebook, for students, which allowed for friends to keep in touch and share pictures. These are all Social “Personal” Networking sites so how do you utilize Social Network for “Business”?

Shortly after the inception of MySpace, echain community launched its first prototype and beta test, for the business community to build relationships, collaborate and share knowledge and advice. Several years later when Facebook opened up its community to the masses the term “Social Networking” became widely accepted.

echain is a business social network that differentiates itself from the dozens of other sites out there. Built by an entrepreneur that understands the value of relationships to the success of business, it helps build relationships among its members in all states, that otherwise would not have had an opportunity to meet. The site has community blogs, individual blogs, personal profiles, business profiles, videos, represents trusted products and services and offers group health insurance to all its participating members.

In today’s economy, business people are much more aware of the value of their time and the necessity of meeting the right people. echain facilitates introductions online so that you can maximize your offline time. It functions as a Social Marketing, Social Media and cost effective Public Relations community ranging from entrepreneurs to medium sized companies seeking to showcase and grow their business through the power of relationships.

echain is a monthly membership community and in the process of working with several non profits/charities/causes and will be donating a portion of proceeds to participating organizations. Each month the member chooses which organization their monthly membership fee is allocated to. The mission is to help everyone grow business, build strategic, synergistic and revenue relationships by working together as a community.

Please visit us online at and set your profile up today!

Los Angeles Looks to Pay $13M to Finalize Lawsuits

The city of Los Angeles will reportedly pay out some $13 million to finalize lawsuits from the turbulent 2007 May Day demonstration that injured dozens.

The $13 million reportedly does not include claims filed by some journalists who were also injured.

The L.A. City Council will need to approve the $13 million settlement, and the total could increase due to journalists' claims filed at the state level.

Back on May 1, 2007, members of the Los Angeles Police Department attempted to break up a protest in MacArthur Park, but they were using rubber bullets and batons during a mostly peaceful protest.

As a result of the actions that took place, two commanding officers were reassigned, one ended up resigning, and a number of police officers still face a possible termination over what happened on that day.

In response, the police issued a statement, noting, "Through the administrative process, we trust that each of the officers involved will be given a fair review that will evaluate their actions in the context of what they had been ordered to do, the tools and training they were given to accomplish those tasks, and the conditions under which they were operating."

State Farm, Farmers Given Green Light to Up Prices

California Insurance Commissioner Steve Poizner has given the green light to two of California's largest home insurers - State Farm and Farmers - to increase premiums by a combined $115 million.

State Farm (top insurer) customers will soon face an average 6.9% hike and Farmers (third largest insurer) policyholders' rates will climb 4.1%.

"In an economy like this, Californians are relying on the insurance commissioner to keep premiums as low as possible, but Commissioner Poizner refused to hold a hearing to investigate rate hikes that will affect more than 2.5 million homeowners," said Douglas Heller, Consumer Watchdog's executive director. "We reviewed the proposed rate increases and concluded that they were unjustified. The commissioner should not have allowed these insurers to jack up prices like this."

The group is expressing concern that other insurers will press the Department of Insurance for more rate hikes as their investment portfolios drop.

The group pointed to Allstate (second largest insurer), which was forced to lower its California homeowners' insurance rates by about $250 million last spring. Allstate requested a 6.9% rate hike increase for homeowners in September. That proposal is still under review by the Department of Insurance.

FEMA Unveils Study on Quake Impact in NMSZ

The Department of Homeland Security's Federal Emergency Management Agency (FEMA) has released a report, Impact of Earthquakes on the Central USA, which presents the findings of a two-year study on the impact of a 7.7 magnitude earthquake on states in the New Madrid Seismic Zone (NMSZ).

The study, the first of its kind to be conducted on such a large scale, is part of FEMA's NMSZ Catastrophic Earthquake Disaster Response Planning Initiative. It is primarily intended to provide scientific data upon which to base response and recovery planning for the devastating earthquakes that have long been predicted for the New Madrid region, which includes areas of Alabama, Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee. The study is available for download at, click on the second small screen on the left or wait for and click on the headline "New Comprehensive Report on Earthquakes in the Central USA."

According to the study, areas within the NMSZ would experience widespread and catastrophic physical damage, negative social impacts, and economic losses. Three different earthquake events were considered, one for each segment of the New Madrid Fault - northeast, central and southwest. For example, an earthquake event that occurs in the southwestern part of the seismic zone would cause significant damage in northeast Arkansas, northwest Mississippi, western Tennessee and portions of western Kentucky, and is likely to cause damage to the greatest number of homes and affect the largest number of people. The study notes that the total economic impact of a series of NMSZ earthquakes is likely to constitute the highest economic losses due to a natural disaster in the United States.

The report provides state-specific information, including damage levels specific to building and occupancy type; essential facilities; highway bridges; electric power, potable water, waste water and communications facilities; and pipeline damage where appropriate. It also identifies the counties that could be expected to sustain the most damage in each state and provides information on potential interruptions of utility services and impacts on essential facilities, such as hospitals, schools, emergency operations centers, and police and fire stations.

The assessments provided in the study have been used to facilitate earthquake response operations planning sessions in 30 FEMA-supported workshops, conducted with the 747 counties and the eight states in the NMSZ. The workshops were designed to support the development of integrated state and local plans for response and recovery operations following a catastrophic earthquake. Participants included more than 3,800 representatives of federal, state, tribal, local and county emergency management and responder organizations, as well as the private sector.

Additional planning workshops are scheduled, including FEMA regional- and national-level workshops. A capstone workshop will involve the integration of all the plans developed through the scenario-based workshops.

The scenarios for the workshops were developed using FEMA's Hazards U.S. Multi-Hazard (HAZUS-MH) earthquake impact modeling software. HAZUS-MH is a tool used to assess risk and provide estimates of hazard-related damage and takes into account various impacts of a hazard event, such as the physical damage, economic loss and social impacts resulting from earthquakes, floods and hurricanes.

IBC Warns Consumers About Phone Fraud Scam

Insurance Bureau of Canada (IBC) is warning consumers to avoid disclosing financial information over the phone after several consumers received calls from fraudsters pretending to be insurance industry representatives.

“Consumers today really need to stay vigilant,” said Rick Dubin, vice-president, Investigations. “These con artists will do whatever they have to do to get your financial information.”

The caller claims to be from the policyholder’s insurance company and demands the immediate payment, by credit card, of an outstanding amount on the client’s premium. The caller threatens to cancel the policy if payment is not received. The calls have taken place across the country, indicating an organized crime ring might be at work.

“The bottom line is that you should never divulge financial information during a phone call you did not initiate, and your insurance company would never ask you to,” said Dubin.

Any consumer who thinks they may have been targeted for this form of fraud is asked to write down as much information as possible, including originating phone number, and call the IBC Tips Line at 1-877-IBC-TIPS.

Rate Change Ordered for TWIA

The Texas Department of Insurance (TDI) has granted a rate increase for the Texas Windstorm Insurance Association (TWIA), the state’s insurer of last resort for windstorm coverage.

Texas Insurance Commissioner Mike Geeslin approved rate increases of 12.3 percent for residential and 15.6 percent for commercial policies, effective Feb. 1, 2009. State law caps rate changes for the Windstorm Association at 10 percent, but the Texas Department of Insurance (TDI) has the authority to suspend the cap after catastrophic losses.

“These rate increases are a continuation of our long term goal to build up the financial strength of TWIA," said Geeslin. “While some may argue that they need to be higher, we need to be mindful that our coastal region is in recovery. Coastal residents are overburdened as it is."

To make sure that all claims by TWIA policyholders can be paid, state law permits the Association to assess member insurance companies if the Association's funds are depleted. However, these assessments may be offset by premium tax credits, which reduces the amount paid by insurers into the state's general revenue fund. To date, insurers have been assessed $530 million to pay claims from hurricanes Dolly and Ike, $230 million of which is subject to tax credits.

The Commissioner noted that TDI will continue to work with the Legislature on new ways to improve funding for TWIA that will lessen the reliance on state revenues and ultimately Texas taxpayers. "Adequate reserves cannot be rebuilt overnight," said Geeslin. "It's a gradual process that takes time, and the rate increase announced today is just one step."

TWIA policyholders would see the increase at the time of their policy renewal, beginning Feb. 1, 2009.

For more information about homeowners insurance and windstorm coverage, visit ( or call TDI’s Consumer Help Line at 1-800-252-3439.

Florida Teen Takes Own Life in Front of Webcam

Authorities in Florida are investigating the death of a 19-year-old male who reportedly committed suicide in front of a live online webcam audience.

Abraham Biggs reportedly blogged about his plan to kill himself, then carried it out with a lethal combination of benzodiazepine, a depressant used to treat insomnia, and opiates.

Authorities reported that some audience members were encouraging Biggs on, while others tried to talk him out of it, and a few were debating whether the dose he took was enough to kill him.

One viewer finally notified the moderator, who traced the Pembroke Pines teen's location and called police, however the teen was dead by the time they arrived.

New York Man Nabbed in Work Comp Scam

A 34-year-old Tompkins County, New York man was arrested on charges that he fraudulently accepted $10,000 in workers’ compensation benefits, the New York State Insurance Department reported.

James P. Queen, of Groton, was charged with workers’ comp fraud and offering a false instrument for filing. He was arrested by Cortland police and released in his own recognizance pending a hearing to be scheduled in Cortland County Court.

Queen is accused of accepting $3,000 in workers’ comp benefits from the New York State Insurance Fund and stating that he was not working as the result of a job-related knee injury. At the same time, he was employed by a private security business, investigators said. He later collected $7,000 in workers’ comp benefits from AIG Insurance, again falsely claiming he was unable to work because he had injured the same knee.

If he is convicted, Queen could be sentenced to up to four years in prison.

GoHealth Partners with

Online health insurance portal recently partnered with ( an online health news syndicator based in Norwalk, Conn., to provide health insurance shoppers with the latest in health and health insurance news.

At, shoppers can read's daily news feed to stay informed about top health news stories around the world. covers a vast range of health and health care topics -- including everything from physical and mental health to environmental health to health technology. The online news syndicator also reports on breaking medical insurance news and trends in the insurance industry.

In addition to breaking health news, also keeps readers up-to-date on the latest prescription drug approvals by the Food and Drug Administration (FDA), along with providing some helpful health tips for everyday well-being.

"'s daily news articles are a great way to stay informed about the most pressing health care issues," said Brandon Cruz, president and CTO of GoHealth Insurance's parent company, Norvax Inc. "We're proud to partner with a trusted online news source like to provide health and health insurance news to consumers every day on"

For health professionals, there is also a news section devoted to physicians at The "Physician's Briefing" health news section reports on top stories from the peer-reviewed medical journals all over the world and covers reports from the FDA, Centers for Disease Control and Prevention (CDC), and the National Institutes of Health (NIH). Health professionals must register to view articles in the Physician's Briefing.

The news feed on is also available in Spanish and Japanese.

To find the daily news feed at, browse to

J.D. Power: Customers Happier with Local Agencies

Insurance customers who interact with a local agency tend to be more satisfied than customers who interact with their insurer's call center, according to the J.D. Power and Associates 2008 Insurance Customer Contact Study(SM).

The inaugural study is based on customer interaction with their insurance carrier either through an agency, call center or Web channel. For each service channel, the study examines the key practices that drive high satisfaction levels, which may lead to policy retention and customer advocacy. Across all service channels, routine service interaction is the most important element driving customer satisfaction, accounting for 38 percent of overall customer satisfaction with their insurer.

The study finds that more than 75 percent of personal auto and home insurance customers interacted with their insurer either through an agency, call center or Web site during the past 12 months. Among insurance customers who interact with a local agency, satisfaction averages 884 points on a 1,000-point scale, compared with 824 points among those who interact with their insurer's call center. While 78 percent of insurance customers are serviced through agencies, only 30 percent interact exclusively with their agency. Slightly more than one-half of all customers report using their insurer's call center or Web site, and 64 percent use a combination of agency, call center and Web site channels to interact with their insurer during the course of a year.

Regardless of the service channel a customer chooses, those who accomplish their reason for contact through a single channel are significantly more satisfied with their insurer than those who had to use multiple service channels to resolve their issues.

The study also finds that agent-served customers tend to be more loyal to their agent than they are to their insurer. Among customers who perceive their agent to be independent, 44 percent say they "definitely will" renew with their insurer, while 60 percent say they "definitely will" continue doing business with their agency. Furthermore, only 7 percent of customers indicate they "definitely will not" switch insurers if their agent recommended another company.

The study also reveals the following insurance customer behavior patterns:

-- One-fourth of a customer's overall impression of their agent, agency staff, or call center representative is driven by their courtesy and friendliness.

-- Two in five customers meet with their agent in person, and most visit their agent without a scheduled appointment.

-- Time is critical in satisfying call center customers, as key satisfaction drivers include not being placed on hold, connecting to a call center representative within two minutes and accessing account information within one minute.

The 2008 Insurance Customer Contact Study is based on responses from 11,828 home and auto insurance customers who interacted with their current insurer within the past 12 months. The online study was fielded in June 2008.

To view the management discussion, which highlights these top service practices based on study findings, click here:

Thursday, November 20, 2008

AIR: Calif. Wildfire Losses Between $600M-$800M

Catastrophe risk modeling firm AIR Worldwide estimates that total insured losses from the Freeway Complex, Sayre and Tea Fires in Southern California will likely range between $600 and $800 million.

These estimates include damage to or destruction of primary structures, their contents, and estimated additional living expenses for residential policies or business interruption for commercial properties. Additionally, AIR will be dispatching a post-disaster survey team to Southern California.

"The actual fire perimeters continue to be refined as more information comes in," explained Dr. Tomas Girnius, Senior Research Scientist at AIR Worldwide. "Similarly, there is some uncertainty with respect to the extent to which fire suppression activities have been fully effective within all three perimeters. While many homes and businesses will have survived, the number of claims is likely to be significantly larger than the number of destroyed structures—although the size of each claim for a slightly damaged home is expected to be small."

Dying winds and mild temperatures helped firefighters control the wildfires that began raging across southern California last weekend. By this morning, Thursday, Nov. 20, two of the three fires are fully contained and the third, already reduced to a slow-moving, smoldering ground fire, is 95% contained.

Since the first of the fires—the Tea Fire—broke out above Santa Barbara last Thursday evening, the fires have destroyed about 1,000 buildings, damaged another 300, burned through nearly 65 square miles of land, and caused the evacuation of more than 50,000 people. On Monday, California Gov. Arnold Schwarzenegger declared a state of emergency in the four counties affected by the fires and President Bush authorized emergency federal aid for the state. Tuesday, the Santa Barbara County Sheriff said the Tea Fire had been accidentally caused by a bonfire built by a group of college students.

"The Southern California Santa Ana winds uncharacteristically blew only intermittently and without much strength in September and October—but beginning last Thursday they arrived with near hurricane-force gusts of 70 mph," said Dr. Girnius. "Conditions in the Los Angeles region were dry and temperatures were high, contributing to the ferocity of the fires."

Fed by the winds, the Sayre Fire, which began Friday, and the Freeway Complex Fire, which began Saturday, together burned through nearly 42,000 acres of land. High temperatures in the region today are in the upper 60’s and 70’s, winds are quiet, and humidity has increased.

However, even as evacuees have begun to return home—many to pick through the charred remains of their belongings—a Fire Weather Watch has been declared for this evening into tomorrow morning for the Santa Ynez Mountains above Santa Barbara and along the south coast of Santa Barbara County.

A new round of gusty, though less intense, northerly Sundowner Winds—the local name for Santa Ana-type winds—are expected to begin again just when the humidity also is expected to fall to critical levels.

Aon: Consumer-Driven Health Plans on the Increase

Aon Consulting Worldwide and the International Society of Certified Employee Benefit Specialists (ISCEBS), a community of employee benefits and compensation professionals, surveyed 336 employers and found that 45 percent have a consumer-driven health (CDH) plan, up from 37 percent last year, which reflects the need to curtail costs and increase consumer involvement in health care.

Of those surveyed with a CDH program, goals range from introducing "consumerism" into the purchasing of health care (36 percent) and controlling rising health care costs (35 percent), to providing a vehicle for retiree medical savings (3 percent) and encouraging better use of health care services (2 percent).

As for employee participation, 24 percent of employers have between 11 percent and 35 percent enrollment; 17 percent have between 36 percent and 60 percent enrollment; and 20 percent have more than 60 percent enrollment. Conversely, employers believe workers do not enroll in CDH plans due to concerns of high out-of-pocket costs (59 percent); traditional plan design preference (18 percent); lack of knowledge about CDH plans (9 percent); and a perception that CDH plans are too complex (6 percent).

HRAs and HSAs

The split between Health Reimbursement Arrangements (HRA) and Health Savings Accounts (HSA) is similar to 2007 with 49 percent of employers using the HSA model, 38 percent the HRA model and 12 percent offering both (last year was 48 percent, 42 percent and 10 percent, respectively). Of those, 84 percent offer the HRA or HSA as an optional plan, while the remaining 16 percent have implemented a "total replacement" CDH program where the only plan choices offered to employees are CDH plans.

Nearly 60 percent of organizations offering an HSA contribute employer money to the plan. This includes a flat dollar amount of less than $500 per person (10 percent); a flat dollar amount of $500 or more (44 percent); or a matching employer contribution (4 percent). Meanwhile, employers offering an HRA plan make varying amounts of contributions to the account. The HRA contributions for someone with single coverage are: less than $300 - 5 percent; $300 to $499 - 6 percent; $500 to $799 - 62 percent; $800 to $999 - 4 percent; and $1,000 or more - 23 percent.

As for HRA and HSA deductibles, 7 percent of employers have an individual deductible of less than $1,000; 37 percent have a deductible between $1,000 and $1,499; 27 percent have a deductible between $1,500 and $1,999; 11 percent have a deductible between $2,000 and $2,499; and 18 percent have a deductible of $2,500 or more. These deductible levels are similar to last year.

Organizations Not Currently Offering CDH/Five-Year Outlook

Fifty-five percent of all employers surveyed are not currently offering a CDH plan. However, of these employers, 11 percent are planning to offer a CDH plan this year or next year and 28 percent are undecided on an effective date. The remaining 61 percent of these employers are not seriously considering a CDH plan in the near future due to satisfaction with their traditional plan designs (27 percent); a belief that not enough employees will enroll in the CDH plan to make it worth offering (17 percent); a feeling that a CDH plan will siphon off healthy employees from their traditional plans, hurting overall plan costs (17 percent); a belief that the CDH concept is too new (17 percent); a concern of exposing their employees to potentially high-claim costs (10 percent); and a belief that consumerism will not change employee purchasing behavior (7 percent).

As for future considerations, 73 percent of all employers surveyed thought they would be offering a CDH plan in the next five years, while 7 percent said they didn't think that would be the case and 20 percent said they didn't know. Meanwhile, 45 percent of those surveyed believe that a CDH program will prove to be successful in controlling health care costs in the next five years, 19 percent said no and 36 percent didn't know.