President Releases “Consolidated” Health Reform Proposal.
In an effort to rekindle health care reform talks, the White House today unveiled their “consolidated” health reform proposal. The plan went live on the White House website at 10a.m., and is an attempt to merge the separate versions of health care reform passed last year by the House and Senate into one unified “White House preferred” package. This proposal will serve as the starting point for discussions at the bipartisan summit to be held on Thursday at the Blair House. The proposal largely tracks much of the Senate language, with some notable changes. Gone is the “Nebraska Kickback” that was included in the bill in order to get the vote of Sen. Ben Nelson (D-NE).  In an attempt to garner support from labor unions, the plan also increases the threshold for the “Cadillac Tax” from $23,000 per policy to $27,000 and delays its implementation until 2018. And, despite repeated calls from liberals to add a public option, the proposal does not include this controver sial provision.  

Finally, the legislation would create a federal rate board, called the Health Insurance Rate Authority, which would broadly determine what premium rate increases are reasonable and justifiable. The seven-member board would have consumer, industry and medical representatives, as well as experts in health economics. Attached to this update is the White House-prepared summary of their proposal, and the Big “I” will continue working on its independent analysis of the proposal. The White House is publicly stating it is attempting to restart bipartisanship with its consolidated proposal and Blair House Summit. The effort, however, generated one of the more humorous press quips by an unnamed health care lobbyist: "Saying that the president's proposal today is bipartisan because it includes a handful of Republican ideas on waste, fraud and abuse is like throwing a couple of chocolate chips into a jar of peanut butter and calling it a Reese's."

Blair House Summit. On Thursday the President will be hosting a televised, bipartisan meeting to discuss health care reform solutions/ideas in front of the American public. “The President’s Proposal” as it is called, will be the starting point for the discussions, though there are already questions about how well received the proposal will be on Thursday.  White House Communications Director Dan Pfieffer stated that “the President is coming to the meeting with an open mind.”  And although generally skeptical of the summit and its potential for restarting discussions, Senate Republican Leader Mitch McConnell stated that “I will be there and my members will be there and ready to participate.”   Whether this Summit ends up being a true path towards progress in negotiations, or just a political TV opportunity, won’t be known until Thursday, but we have our suspicions!

The Piecemeal Approach.  As promised by Democratic Leadership, while continuing to work on comprehensive health care reform they are also identifying and independently moving  less controversial ‘pieces’ of the health reform bills.  And first up, drum roll please…..is repeal of the McCarran Ferguson antitrust exemption for health insurers.  The bill, to be considered by the House of Representatives this week, would repeal the antitrust exemptions for health insurers only, thereby subjecting them to Department of Justice antitrust enforcement.  Currently, of course, health insurers are exempted from federal enforcement but are subject to state antiturst laws and enforcement. As recently as last week, reports were indicating that the House would consider legislation repealing McCarran Ferguson antitrust exemption for both health insurers and medical liability insurers. Additionally, there were very concerning plans by some to add language allowing the Federal Trade Commission (FTC) to investigate the entire business of insurance.  The Big I worked with a broad range of property/casualty associations and companies to lobby aggressively against both the addition of medical liability insurance (which is a property/casualty product) and any FTC language.  Though the Big I is still opposed to the repeal of McCarran Ferguson for health insurers, it was a major win for the Big I to have both medical liability and FTC oversight stripped from the legislation.

The Board of Fire Prevention Regulations has approved an emergency amendment to 527 CMR 32 Approved Smoke Detectors. This regulation applies to residential units undergoing sale or transfer of buildings containing up to five residential units. The regulation, which was scheduled to go into effect January 1, 2010, has been moved to April 5, 2010.

The regulation requires photoelectric smoke detectors within 20 feet of a kitchen or bath containing a shower. Areas located beyond 20 feet will be required to contain dual detection by either a single unit or two separate units.

In addition to the date change the regulation has been clarified to indicate it applies to residential units constructed prior to January 1975 that have not undergone major alteration covered by the State Building Code. It also contains a provision for low voltage household warning systems that may have been installed in these homes.

The Division of Fire Safety (formerly the Office of the State Fire Marshall) offers a brochure press release which explain the new regulation: “A Guide to the Massachusetts Smoke and Carbon Monoxide Requirements When Selling a One– or Two-Family Residence” and a press release “Revised Smoke Alarm Regulations.” The Division of Fire Safety also notes that your local fire department may be able to provide detailed guidance regarding compliance with the new regulation.

By Curtis M. Pearsall, CPCU, AIAF, CPIA
Special Consultant to the Utica National E&O Program

One would think that insuring homeowners is fairly straight forward. After all, the coverages are fairly standard among the carriers; an HO 3 with company A is probably pretty close to an HO 3 with company B (assuming that they are both on the same edition date). But in the world of E&O claims, things are a bit different.

More than 15% of E&O claims in 2009 were generated by this one line of business, which certainly shows that things can go wrong. Plus, when losses happen, they have some severity potential — and can range from a couple thousand dollars, to hundreds of thousands of dollars in the event of a total loss. On average, an E&O claim involving an underlying Homeowners coverage is around $30,000.

By examining the causes of losses more closely, it appears that in many situations it is not necessarily a coverage issue that caused the loss; the cause of the E&O claim resulted from an agency procedural error. Consider the following claim and ask yourself, “Could this happen in myagency?”  

The client, Justine X., requested that the agent procure HO coverage for her. Although the agent was told by the client that she owned a German Shepherd, the agent answered “no” to the question “Do you own any dogs?” when he uploaded the application to XY Mutual. The dog subsequently bit/chased a mailman, causing the mailman to fall and severely fracture his leg. The insurance carrier denied coverage, stating it would never have written an HO risk with a dog of this type because their underwriting guidelines prohibit this exposure. It was clear there was definite liability against the agent and thus after gathering medical costs on the mailman, the case against the agency’s client was settled for $210,000, with Utica paying the entire amount.

Here are other “common mistakes” agents make. As you review these, what do you think the agent could have done differently or better?

1.    The agent determines the homeowners limit rather than asking the client for a limit.The agent needs to be careful taking this position. While most companies provide “estimators” for the agent to use to “approximate” the value, these are not 100% perfect as there may be uniqueness to the house the estimator does not factor in. When calculating the amount, it is important to advise the customer that this is not a guarantee that the home can be replaced for this amount. You might be better off recommending that the customer secures the services of a licensed appraiser.

2.    The agent fails to have the customer sign the application.There is really no excuse for this. When providing HO coverage for a customer, you should meet with them to complete the 1) application and have them sign it. If coverage is being secured online, it is still recommended that you get an application completed and signed for your file. Without a signed application, the agency will be exposed to claims by both the carrier and the client if the application contains a misrepresentation.

3.    The agent fails to advise the carrier of issues pertaining to the risk – such as dogs, prior cancellations for non-pay, type of construction or size of a dwelling, loss history, etc. This situation would certainly be avoided if you comply with the recommendations in #2 above. The carrier counts on you to provide an accurate description of HO exposures. Without asking the customer the appropriate questions, it would be rather difficult to know the correct answers. Don’t think you know the right answers, either – ask the questions and document the responses.

4.    The timing of when to switch from a Builder's Risk to an HO policy – i.e., switching to an HO when the building is still vacant and unoccupied. This is a common question. By and large, when the customers move into the house (at the time of the closing), the building is no longer considered “vacant and unoccupied.” In those situations where the homeowner is  responsible for insuring a home under construction, some companies may consider providing a homeowners policy with certain stipulations. Either way, it is strongly suggested that you contact the HO carrier for their perspective and advice.

5.    The agent fails to advise a client to increase limits to keep up with the rising cost of construction and materials.With the increasing cost of construction, copper, plywood and other building materials, it is generally recommended adopting the inflation increases of the carriers you represent.

Other recommendations:

Receipt of the policy– Advise clients, verbally andin writing, that when they receive their policy they need to review it to ensure everything is in order. The agency should also review the policy to make sure it matches what was requested.

Educating your customers– Education is an extremely effective way to reduce the potential for an E&O claim. A monthly newsletter – in printed form and on your Web site – is a great means to accomplish this. Do your customers know the limitations within a HO policy? Do they know how much coverage applies for their sons/daughters while they are away at college? Does your agency know if the customer has a business in their home and how best to insure it? Can the staff recite the differences between various HO forms?

If you or any of your staff have questions, please e-mail me at [email protected]. Good luck and good selling!

Over the last several months, MAIA has participated, as a member of a sub-committee of the WC Bureau, on meeting with representatives of the Department of Industrial Accidents (DIA) and the Patrick Administration's Underground Task Force to review and better understand its rationale and enforcement of its policy on verifying workers' compensation coverage for employers coming in from other states. The purpose of the DIA's policy (below) on Out of State coverage is to make sure that everyone in Massachusetts is covered for workers' compensation and that the proper premium is being paid so that the WC Trust Fund won't have to pay for claims filed that are not covered by a WC policy.

The following is the Department of Industrial Accidents' official policy for Out of State workers' compensation coverage:

"An Out of State workers' compensation policy is acceptable if Massachusetts is specifically listed in Section 3.A of the policy's Information Page.

"If Massachusetts is specifically listed in Section 3.C of the Information Page, the policy is acceptable only if the Insurer (Insurance Carrier) verifies the coverage in Massachusetts. The insurer must forward a statement verifying workers' compensation coverage in Massachusetts to the Office of Investigations. If the insurer fails to meet this requirement a Stop Work Order shall be issued immediately.

"Furthermore, any notation in Section 3.C of the policy's information page that "all states are covered" or "all states are covered except those listed in Item 3.A and the States of: ND OH WA WY" or something similar is acceptable only upon verification of workers' compensation coverage in Massachusetts by the insurer. The insurer must forward a statement verifying workers' compensation coverage in Massachusetts to the Office of Investigations. If the insurer fails to meet this requirement a Stop Work Order shall be issued immediately."

By way of background, in late September of 2008 and then again in May 2009, the DIA began working with the Massachusetts State Police, at the invitation of the State Police, to make sure that drivers of trucks coming into Massachusetts are covered by a WC policy. If the truck is making stops in Massachusetts, the driver is asked to contact the President of the company that he is working for in order to confirm if there is WC coverage and who the insurer is.  The insurer is then contacted to confirm that there is Massachusetts WC coverage, and they ask the company to fax a confirmation to the DIA. If there is no WC coverage, a stop work order is issued and the company has the right to appeal. If there is an appeal, a hearing is held within  14 days, but the truck is allowed to continue on its route. If a truck is stopped and is simply passing through Massachusetts (interstate commerce), the DIA doesn't investigate.

The WC Bureau’s sub-committee had proposed changes to the DIA’s Out of State Coverage policy, but the DIA only agreed to change the word “guarantee” in its policy to “verify”.  The DIA’s policy continues the practice of verifying WC coverage with the carrier whenever Massachusetts (MA) is listed in Item 3C of the WC policy. (The sub-committee had proposed that the DIA automatically accept any policy that showed MA in Item 3C.) The DIA has, however, adopted our proposal to accept, upon verification with the carrier, any policy that has “all states are covered” or similar language in Item 3C. (The DIA’s prior practice was to issue a Stop Work Order immediately.)

If you have questions regarding the DIA’s Out of State Coverage Policy, please contact Dan Foley by phone at 800.972.9312 or 508.634.2900 or by email at [email protected].

By, Gryphon Daily PM News

A thin market is a market with a low number of buyers and sellers. When a thin market situation exists, the market experiences a wider difference between the bid and ask quotes, making it difficult for potential buyers and sellers to transact in. This type of market has high volatility and low liquidity.

A thin market can happen with stocks, bonds, futures and even with currency trading. Once a thin market happens, it will normally begin to exhibit signs of recovery in a short period of time once the triggers for the activity have subsided. 

By, Katherine Carlile, Gryphon Daily PM News

This stock market report delivers the latest stock market news straight to your inbox

In this stock market report, I am going to give you an update of a couple of positions currently being held by the Platinum Stocks team. If you listened to these recommendations, you should continue to keep a close eye on your positions so that you are able to act quickly when the perfect opportunity to sell presents itself.

A few weeks ago, you were alerted about the profit potential in crude oil put options. The thing that you have to understand about crude oil is that its price is heavily dependent on the strength of consumer and investor confidence. For the last two weeks, crude oil has been on the rise, but that came to a crashing halt this week as worries about the economy increased.

As you know from reading this stock market report, crude oil is one of those markets where consistent rallies are not easily sustained. Over the last few weeks, $80-a-barrel oil is a mark that is gone almost as quickly as it happens. Add the fluctuating dollar to the falling consumer sentiments, and you are left with a pretty bleak picture in the crude oil market.

The foresight and the skill required to successfully trade commodities takes time to develop. No one expects you become a commodities guru overnight. That is why you should continue to follow the expert recommendations of the Platinum Stocks team.