By Weamein Yee
October 13th, 2009
Later this week, the Senate’s Finance Committee will vote on the proposed healthcare reform bill, estimated to cost $829 billion over 10 years. If the committee approves the measure, which it is expected to, the bill will then be merge with the version that has already been passed by the Senate’s health committee.
On the heels of this vote, a trade association made up of a number of health insurers, released a report sharply criticizing the reform bill, stating that the current legislation would lead to a rise in insurance premiums of $4,000 by 2019. The White House and consumer groups blasted the America’s Health Insurance Plans’ report calling it misleading.
While the insurance industry had pledged support earlier in the year for healthcare reform, that support has appear to have wavered in recent months. Insurers are at odds with Congress over a weak mandate to purchase coverage in exchange for the abandonment of the practice of denying coverage and charging higher premiums for individuals with pre-existing conditions.
While the Senate version doesn’t contain the much criticized “public” option, there is a strong possibility that the House version will contain it and it will be interesting to see what happens the committee to reconcile the two versions meets.
By Weamein Yee
October 7th, 2009
Many different groups are having misgivings about a new, proposed Federal Insurance Office. Regulatory reform has been expected for some time and it has been known that the government would create some sort of federal agency to keep a closer tab on the insurance industry.
The reform in it’s current iteration has broader powers being given to the new federal agency than in previous proposals. Insurers, trade associations, state regulators, and consumer interest groups are all unclear as to what the eventual outcome will be and how this new agency will interact with current state laws and how it will affect both the industry and it’s customers.
While insurers have long railed at the inefficiencies of dealing with fifty different sets of laws and regulators, they are probably uncertain whether or not if it’s in their best interest to keep the status quo. With last year’s financial panic, there have been strong head winds in Congress for a much stricter regulatory code across the entire financial system but having some sort of federal agency in charge in a period of deregulation is a far cry from what will likely be the case in these economic times.
State regulators also have their misgivings and for years have fought attempts from the federal government to encroach on their regulatory powers. Consumer groups are also worried about what this will mean for consumer protection issues.
Of course the federal government is also concerned with systemic risk factors in the industry and wouldn’t like to see a repeat of the AIG fiasco. There needs to be a better solution in place, rather than needing to throw hundreds of billions of dollars at a problem to keep the financial system from collapsing.
There doesn’t appear to be anyone particularly thrilled with the current reform proposal and we are likely to see considerable lobbying efforts from a number of different groups. There have been a number of delays already in the proposed financial reform and some officials are growing concerned that it won’t be in place by the end of the year.
By Weamein Yee
October 2nd, 2009
The insurance industry desperately hoped for a quiet hurricane season this year, and thus far their wish has come true. Hard hit from declining underwriting activity and investment losses stemming from the financial crisis, this was a year that they could have done without extensive claims payouts.
By contrast, 2008 was the most expensive year for insurers since the record payouts for Katrina. There were a number of significant storms last year, lead by Hurricane Ike with an estimated $12 billion in payouts, so far this year only one tropical storm has made landfall in U.S. territory.
Coupled with a partial rebound with the stock market, insurers are looking much better than they were at the start of the year when many firms posted losses due to the financial crisis. Most of those firm will likely post profit this quarter as a result of the quiet hurricane season.
While there is still the chance for another land strike this year, it’s starting to get fairly late in the season. Many coastal residents are likely to see premium drops next year as insurers will be hard pressed to get rate hikes by insurance regulators with the lack of storm activity this year.
