From Dr. Jack Nordhaus
QUOTE OF THE DAY:
"Many receive advice; only the wise profit from it”.
Publilius Syrus (1st. century, CE)
A GROWING NICHE MARKET
You're Gay and Married: Do You Get an Auto Insurance Discount?
By Mark Chalon Smith
Posted : 05/11/2012
Summary
We answer some questions about same-sex marriage and insurance in the wake of President Obama's declaration of support for same-sex nuptials.
President Barack Obama can add another historic moment to his presidency: He made headlines this week when he supported same-sex marriages during an interview on ABC News.
Despite the unprecedented moment of having a president endorse same-sex marriage, the issue of whether or not to legalize such marriages is left to individual states.
North Carolina voters this week approved a constitutional amendment defining marriage solely as a union between a man and a woman. North Carolina is the 30th state to ban same-sex marriages. In six states -- Connecticut, Iowa, Massachusetts, New Hampshire, New York and Vermont -- it is legal for couples of the same sex to marry.
Some auto insurers recognizing same-sex marriages
Although the issue is controversial among voters, insurance companies increasingly are accommodating people in same-sex marriages. Esurance, State Farm and Allstate, for instance, offer reduced car insurance rates to married gay couples in states that recognize same-sex marriage. Esurance also offers the same discount to gay and lesbian couples who are domestic partners or are in civil unions in California, Illinois, Oregon, and Washington.
Recognizing gay and lesbian couples is just good business for insurers, says Thomas Roth, the president and founder of Community Marketing Inc., a San Francisco-based company that helps companies connect with gay and lesbian communities.
"Insurance sales can become a long-term income stream if the agent builds a solid relationship with the client," whether he or she is gay or straight, he says.
Danny Miller, Esurance's senior manager for public relations and communications, says his company's auto insurance discount for a same-sex couple can reach 10%, depending on various factors, including driving and accident history. Married people tend to file fewer claims than single people, so insurers consider married drivers a lower risk.
Auto insurance discounts for some same-sex couples, even if not married
Esurance was one of the first insurers to provide discounts for domestic partners who share a policy, says Eric Madia, Esurance's director of product and actuarial management. That policy began in 2004 in California, he says, months before the state adopted the California Insurance Equality Act. The law, which took effect in 2005, prevents insurers from selling policies that treat registered domestic partners and married spouses differently.
To qualify for a discount, Madia says Esurance might require a copy of the certificate documenting the civil union or domestic partnership.
These are positive trends, says Roth, who also advises insurance companies and their agents to keep abreast of recent laws and understand the needs of gay and lesbian clients.
"One important way for an agent to deliver solid service is to know and be able to discuss the legal nuances around relationship recognition and regulations in the state" where they operate, he says. "Some states recognize same-gender relationships with marriage, domestic partnerships or civil unions. Others ban recognition of these relationships outright."
Roth continues: "So the agent has to be prepared with the right answers as questions arise. Demonstrating a genuine interest (in clients) by being able to help them maneuver through the evolving laws of their land will establish rapport, trust, long-term business, and, ultimately, referrals."
Health insurance and gay couples
When it comes to Health insurance, gay couples who are not married may be less likely to share health insurance through one partner's employer.
However, employment experts note that many employers have started to offer benefits to domestic partners in recent years. It's a trend, they note, that should grow as small firms start to follow the lead of larger companies that already provide domestic partner benefit plans.
As of May 2008, 9,374 employers offered domestic partner benefits, according to an Employee Benefit Research Institute report. Of that number, 8,653 are private-sector companies, with 270 of the Fortune 500 companies offering domestic partner benefits.
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Insurance Exchange Gives Retail Agents More Market Access
by BusinessInsurance.com
May 13,2012
While brokers and agents have long invested in agency management systems to capture and format insurance application data, and insurers have devised portals with product and service information, integrating this information has been the goal of the insurance exchange movement.
An early manifestation of the exchange model is Dallas-based MarketScout, which launched its exchange in 2000 and now has some 47,000 users.
Licensed agents use the Web-based MarketScout exchange to access insurance companies writing policies for hundreds of industries and coverage types across the United States.
“The reason that we built the exchange was because thousands of retail agents across the country lacked access to a plethora of markets that are organized according to expertise,” said MarketScout CEO Richard Kerr.
In addition to giving retail agents market access, the insurance exchange has evolved in recent years, Mr. Kerr said, noting that exchanges need to offer a wide variety of products and services to attract agents.
“The exchange is going to be tasked with solving problems for the retail agents, such as accounting, automation, training and human resources,” he said. “We really believe that this is the way that retail distribution and product access is morphing into. Exchanges are beginning to provide everything that agents need.”
On a separate front, the Washington-based Council of Insurance Agents & Brokers partnered with Atlanta-based LexisNexis Risk Solutions in 2010 to launch the LexisNexis Insurance Exchange
That same year, Lloyd's of London unveiled its exchange, which offers its brokers and managing agents a standardized way to exchange electronic information. The Message Exchange Ltd., which Lloyd's website said processed 800,000 messages last year, this year is ramping up transmission of endorsements and other insurance-related information.
Mr. Kerr said a growing exchange realm ultimately will benefit brokers and agents by increasing products and services available to them.
“You are going to see different exchanges competing for customers,” he said.
Chris Gagnon, the council's director of strategic technology, agreed. “In our nirvana, all carriers, brokers and agents would get on board,” he said
Clyde Owen, Hartford, Conn.-based general manager of the LexisNexis Insurance Exchange, said a primary goal of the exchange is to give insurance intermediaries information in an easily searchable manner, as opposed to asking them to maintain knowledge of multiple programs, insurers, and markets.
“Our goal is to take information about the industry and share it with people who need to know it, when they need to know it,” Mr. Owen said. “Brokers or producers don't have a Google for the information they need, so they tend to place most business with the few insurers they know best, which is not always in the best interest for insureds.”
According to LexisNexis Risk Solutions, by the end of 2011, about 20,000 submissions had been entered into the system in which more than 300 underwriters participate. In 2012, Roseland, N.J.-based Crump Insurance Services Inc. joined the exchange.
“We recognized that the exchange portal would be a valuable tool for retail agents to easily identify markets for their accounts in one place,” said Michael S. Oliver, senior VP at 5Star Specialty Programs, a Naperville, Ill.-based managing general agent that is part of Crump. “It also enables 5Star to identify those classes and lines of business we have the ability to provide product for, which reduces nonproductive activity for both the retail agency and 5Star.”
Another merit of the exchange is that it is cloud-based and accessible through a Web browser, eliminating the need for a capital outlay of hardware and software for participants, Mr. Owen said, adding that the exchange also encrypts all data.
A future concern is data security. Mr. Owen said that while there's not yet a critical mass of data to aggregate, clear of personally identifiable information and release for analysis, the exchange will release anonymous data in the future.
“As the exchange grows, you are going to get richer data sets to run more analytics,” Mr. Owen said.
Even though this data will be scrubbed, Mr. Gagnon said it could give rise to competitive concerns in certain instances. For example, if a broker or insurer has most of the business in a specific niche line of coverage, a competitor could analyze exchange data in an attempt to discern the “secret sauce” underlying the success, he said.
Nonetheless, Mr. Gagnon said he expects analysis of the placement data to be used largely for the benefit of the industry as a whole.
“Data is the key to our industry,” he said. “Being able to trend and derive models from actual data aggregated from an exchange would change the industry in a profound way.”
‘SCARE ‘EM, THEN SAVE ‘EM’ ARTICLE FOR MARKETING LIFE AND ANNUITIES
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How Much Money Will I Need to Retire Just for Health Care Costs?
May 13
Posted by Julie Campbell
A 65-year old couple who intend to retire this year will need $240,000 for their medical expenses.
An analysis released by Fidelity to answer the question “how much money will I need to retire just for health care costs?” has shown that a couple who is 65 years old and intends to begin retirement in 2012 will require approximately $240,000 to pay for the medical expenses they will incur over the rest of their lives, if they do not have employer-provided retiree coverage.
This is an increase of 4% over the estimate from last year, which was $230,000.
In 2011, Fidelity’s estimates had declined by 8% from what they had been the year before. The report for 2010 showed that the same 65-year-old couple who had intended to retire that year would have needed $250,000 in order to cover all of their future medical costs. That year was the first time that Fidelity had seen an annual decrease in the 10 years that it had been making the reports.
For many Americans, medical costs will be the largest expense they will face during their retirement.
It should be noted that the Fidelity projections do not include any of the additional costs that are associated with services such as nursing home care, and they apply to individuals who will have standard Medicare coverage. Of those costs that are a part of the estimates, approximately 45% will be paid out of pocket by these couples, unless additional coverage is purchased in order to make the payments.
Since 2002, when the calculations were first made by Fidelity, the estimate has increased by an annual average of 6 percent (with, of course, the exception of 2011’s decline).
According to the executive vice president of the Benefits Consulting business at Fidelity, Brad Kimler, “Today’s workers must understand that the cost of health care is expected to continue rising significantly in future years.”
Medical inflation is increasing faster than cost of living adjustments and salary increases for the majority of individuals. Unfortunately, this means that when they ask themselves, how much money will I need to retire just for health care costs, the answer will likely only be higher every year.